AeroVironment (NASDAQ:AVAV) executives outlined how the company has repositioned its business following the acquisition of BlueHalo, while also discussing demand drivers across loitering munitions, uncrewed aircraft systems, and counter-drone technologies. Speaking at an aerospace and defense conference, Denise Pacioni, head of investor relations, and Jeff Rodrian, head of MacCready Works, described the company’s segment structure, product priorities, and lessons learned from evolving battlefield conditions.
Business reshaped by the BlueHalo acquisition
Pacioni said the company has undergone a “remarkable shift” over the last year, noting that roughly 18 months ago AeroVironment operated in three segments—loitering munitions, uncrewed aircraft, and MacCready Works—at a time when the company was “probably a $700 million company.” She said the May 1 closing of the BlueHalo acquisition was “very transformational,” adding that BlueHalo brought new technologies and expanded the company into complementary market areas.
- Segment 1 (primarily legacy AeroVironment): uncrewed aircraft systems and loitering munitions, plus MacCready Works and unmanned ground and underwater vehicles (UGV/UUV).
- Segment 2 (primarily legacy BlueHalo): Space and Directed Energy, and Cyber Emission Systems.
She highlighted how BlueHalo strengthened AeroVironment’s counter-UAS portfolio, which now includes Titan (RF detect and defeat), Locust (a directed-energy laser solution), and Freedom Eagle 1 (FE1), which she described as the company’s entry into the missile market aimed at reducing the cost imbalance of using “very expensive missiles to take down very cheap drones.” She noted these products are split across segments in the company’s financial reporting: Titan and FE1 are included in the first segment, while the Locust laser system sits in the second segment under Space and Directed Energy.
MacCready Works and “software-defined” autonomy
Rodrian described MacCready Works as the company’s innovation engine, formed about 10 years ago as Switchblade and Puma entered rapid growth. He said the group was created to focus on what comes next and avoid “the classical innovator’s dilemma,” with a planning horizon often centered on five-year technology arcs.
As an example, Rodrian said MacCready Works began investing five years ago in autonomy and visual navigation capabilities designed for GPS-denied and RF-denied environments. He said those software advances are now being infused into existing systems such as Switchblade and Puma, and are also shaping future programs tied to autonomy, AI, and computer vision.
Growth areas: loitering munitions, counter-UAS, and maritime demand
Pacioni said the company sees “a lot of high growth areas” and “macro tailwinds” across the sector. She cited Titan as an RF detect-and-defeat counter-UAS product with potential demand extending beyond traditional military customers to areas like airports, stadiums, and airbases.
In loitering munitions, Pacioni pointed to the Switchblade family and said the company is working on “different block variations.” She said AeroVironment recently announced Switchblade 400, describing it as a response to customer demand for a one-person-portable system with a heavier warhead capability. She also discussed Red Dragon as a one-way attack product and said she expects warfare to incorporate layered strategies that may include swarms, with the goal of keeping warfighters farther from direct contact.
In uncrewed aircraft, she highlighted Puma and P550, and said P550 “is something that’s going to have a very strong growth trajectory.” She also cited rising interest in JUMP 20, described as a Group 3 solution, noting maritime activity and that AeroVironment was “named as one of four” participants on a naval IDIQ contract.
For directed energy, Pacioni said the company has delivered nine Locust systems and that they are “being used” and “deployed,” adding that directed energy is likely to be a growth driver as counter-drone threats evolve. She also said the company continues to develop capabilities within Cyber Emission Systems but emphasized that much of that work is proprietary and cannot be discussed in detail.
Red Dragon: longer range, GPS-denied operations, and scaling considerations
Rodrian described Red Dragon as a rapid integration of software-defined capabilities designed to operate without GPS and to continue missions even with intermittent data links. He said the product was shaped by real-world feedback from Ukraine, including repeated trips by company teams to learn from battlefield conditions.
He said Red Dragon differs in form factor from tube-launched Switchblade, using a fixed-wing configuration optimized for long-range missions. Rodrian said Red Dragon can fly “over hundreds of kilometers” on a single flight and was designed with mass production in mind, referencing reports of thousands of drones being used monthly in Ukraine and the need for scalable U.S. manufacturing.
SCAR/Badger stop-work order and renegotiation timeline
Pacioni addressed questions about the SCAR program and the company’s Badger product, referencing a recent 8-K filing and confirming that a stop-work order was issued. She emphasized the program was not canceled, but paused, with “pencils down” until terms can be renegotiated. She said both parties are working in good faith and that the customer indicated a desire to resolve the matter within 90 days.
She said the contract structure has evolved, with earlier phases described as cost-plus and later phases planned as firm fixed price. Pacioni said the renegotiation may lead to reduced initial capabilities and a “more commercialized product,” which she argued could improve production efficiency by focusing on “one line” rather than separate configurations and could broaden the addressable market beyond a single customer.
She said the company expects to provide an update around its March 10 earnings report, though she did not commit to a specific timing for resolution. She also stated the initial contract was described publicly as running through FY2030 and valued at $1.7 billion with an additional $300 million add-on, while noting the entire contract is being renegotiated and could look different going forward.
Separately, executives discussed scaling production and supply chain considerations. Rodrian cited semiconductors, sensors, and compute modules as areas requiring long-term sourcing agreements, while Pacioni said the company has been investing in capacity—highlighting plans for a 100,000-square-foot Salt Lake City facility intended to support Switchblade production and other programs. She added that AeroVironment has historically self-funded development and views firm fixed-price contracting as aligned with its approach.
About AeroVironment (NASDAQ:AVAV)
AeroVironment, Inc (NASDAQ:AVAV) is a technology company specializing in unmanned aerial systems (UAS), tactical missiles and precision loitering munitions, electric vehicle charging and scalable energy systems. Headquartered in Monrovia, California, the company develops solutions for defense, public safety and commercial markets. Their offerings include small UAS for intelligence, surveillance and reconnaissance, as well as advanced weapons systems designed to meet the needs of modern military operations.
The company’s unmanned aerial systems portfolio features platforms such as the Raven, Puma and Switchblade series, which are deployed by the U.S.
