AeroVironment (AVAV.US) shares surged more than 20% in after-hours trading on Monday after the drone manufacturer reported fiscal 2026 fourth-quarter revenue and profit that significantly exceeded Wall Street expectations.

The company's quarterly revenue more than doubled to $642 million, far surpassing the analyst consensus estimate of $559 million. Revenue from its autonomous systems business reached $492 million, also well above the average analyst forecast of $402 million.

Earnings per share came in at $1.84, exceeding the average analyst expectation of $1.46. The company's funded order backlog grew 65% year-over-year to $1.2 billion, although it was only slightly higher than the $1.1 billion reported in the previous quarter.

AeroVironment CEO Wahid Nawabi stated that the company is well-positioned to benefit from the growing global demand for drones, counter-drone systems, and space technology. In a recent interview, Nawabi noted that recent conflicts in Ukraine and Iran have fundamentally altered the nature of modern warfare.

"We have long known this inflection point was coming," Nawabi said. "The last couple of high-profile conflicts have really brought this trend into the spotlight."

Guidance and Future Outlook

Looking ahead, the drone manufacturer provided its fiscal 2027 outlook. It expects revenue in the range of $2.13 billion to $2.23 billion, compared to the analyst consensus estimate of $2.17 billion. It forecasts adjusted earnings per share between $3.02 and $3.34, while analysts had previously expected $3.94 per share.

Despite the stock being down more than 40% year-to-date, the company faces significant growth opportunities, particularly with the U.S. Department of Defense's drone-related budget potentially exceeding $75 billion next year.

"It's not just the U.S. Department of Defense, all of our allies are behind in the adoption and deployment of this technology," Nawabi said. "We are now playing catch-up. Our military services are catching up very, very quickly."