Investors have hoped for a long time that AeroVironment (NASDAQ:AVAV) would be able to take full advantage of the extensive potential in manufacturing drones. Yet despite ongoing efforts, the company has largely failed to meet its potential, and some shareholders in AeroVironment have become impatient about its inability to use some of its competitive edges to produce more impressive financial results.

Coming into Tuesday's fiscal second-quarter financial report, AeroVironment shareholders were prepared for the company to lose more money, but they wanted at least to see signs of upticks on the sales front. Instead, AeroVironment was able to post a profit, and a massive sales gain now has investors wondering if now could finally be the time for the drone maker's prospects to soar. Let's look more closely at how AeroVironment did and what's ahead for the company.

Depiction of unmanned aerial vehicle scanning landscape and navigating.

Image source: AeroVironment.

Profits for AeroVironment

AeroVironment's fiscal second-quarter numbers were impressive. Revenue jumped 47% to $73.8 million, nearly doubling the growth rate that most of those following the stock were expecting from the drone maker. Net income of $7.02 million reversed a loss in the year-ago quarter, and earnings of $0.29 per share were far better than the consensus forecast for a modest per-share loss.

The unmanned aerial segment was instrumental in driving AeroVironment's numbers higher. Sales for the division were up 57% and accounted for the vast majority of the company's overall revenue. Gross profit for the segment almost doubled from year-ago levels. By contrast, the efficient energy systems business saw more modest revenue gains of just 6%, and gross profit growth of 12% showed that the unit doesn't have the same potential that the drone side of the business offers.

As we've seen in previous quarters, AeroVironment did a stellar job of keeping its costs under control. Overhead expenses were up just 8% from the year-ago quarter despite the much faster revenue growth rate, and research and development costs were down more than 15% over the same period. Costs of sales also helped keep gross margin levels relatively high throughout the company.

Backlog figures also pointed to continued success. As of the end of October, funded backlog had climbed more than 60% over the past six months to $127.1 million, representing roughly five months' worth of sales.

CEO Wahid Nawabi was quite pleased with how AeroVironment did. "Our outstanding team delivered another solid quarter of financial and operational results," Nawabi said, "driven by robust, global customer demand across our business and continued effective execution." The CEO also called out what he called "innovative solutions" in helping to push backlogs higher.

Can AeroVironment keep gaining altitude?

AeroVironment sees reason to think that the company is finally getting the recognition it deserves. In August, the Army listed AeroVironment among its top tier suppliers in its Superior Supplier Incentive Program rankings. Strong performance in its drone and tactical missile systems businesses has helped position the company for that award, and a strong reputation could bring in new business in the future.

Despite the enthusiasm and extremely good performance, AeroVironment nevertheless left its guidance for the full fiscal year unchanged from what it said three months ago. The drone maker still anticipates revenue of $280 million to $300 million for fiscal 2018, and earnings should come in between $0.45 and $0.65 per share.

Shareholders in AeroVironment were ecstatic about the surprise profit, and the stock soared more than 20% in after-hours trading following the announcement. If the unmanned aerial systems business continues to gain momentum in the quarters to come, then AeroVironment investors could finally start to see the company realize the vision that they've had for it all along.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.