AeroVironment (NASDAQ:AVAV) has been in the crosshairs of growth investors for years. The company has been a first-mover in the drone industry, with experience in helping both military and commercial operators make the most of the new capabilities that unmanned aerial vehicles can bring. Yet despite the promise that many see for drones, AeroVironment hasn't been able to convert its opportunities into results as quickly as many investors had hoped.

Coming into Wednesday's fiscal first-quarter financial report, AeroVironment shareholders were looking for encouraging numbers from the drone-maker. What they got was highly impressive growth, and the company seems more confident than ever about its future.

Graphic of unmanned aerial vehicle monitoring and communicating over a desert landscape.

Image source: AeroVironment.

Big gains for AeroVironment

AeroVironment's fiscal first-quarter numbers got the new fiscal year off to a good start. Revenue soared by 127% to $78 million, easily topping the consensus forecast among those following the stock for about $73 million in sales. Net income came in at $27.3 million, reversing a year-ago loss of $5.86 million. And even after accounting for one-time gains from discontinued operations, adjusted earnings of $0.85 per share crushed the $0.30 that most investors were expecting to see.

The biggest event driving AeroVironment's results was the company's strategic decision to sell off its efficient energy systems (EES) division. Before the move, AeroVironment had divided its attention between the drone business and offering electric vehicle owners the charging technology they need. But back in June, the company sold off its charging division to Germany's Webasto for $35 million, becoming at long last a pure play on drones.

AeroVironment saw success throughout its remaining business areas during the quarter. Product sales nearly tripled from year-earlier levels, reflecting customer interest in AeroVironment's key product lines. Contract services were also strong, rising more than 45%. In terms of profitability, margin performance improved dramatically, with gross margin soaring 17 percentage points to 42% due largely to the more favorable mix of product-related revenue. Backlog levels more than doubled to $157 million as of the end of July.

The drone-maker also did a good job controlling costs. Gains in key items were minimal, including just $900,000 in extra research and development spending and a $700 million rise in overhead expenses. Reduced tax provisions came as a result of tax reform.

Can AeroVironment fly even higher?

AeroVironment has a lot of optimism. As CEO Wahid Nawabi said, "With the divestiture of our efficient energy systems business, we have transformed AeroVironment into a future-defining technologies solution provider serving large and growing global defense, telecommunications, and commercial markets."

Nawabi pointed to especially strong demand for its small unmanned aerial systems and tactical missile systems as helping to drive the company forward.

Even with the strong results, though, AeroVironment didn't make any changes to its fiscal 2019 guidance. For the full year, the company sees revenue coming in between $290 million and $310 million. AeroVironment expects earnings to finish in a range of $1.10 to $1.40 per share.

The wild card is what will happen with the HAPSMobile global broadband communications project. This joint venture, in which AeroVironment holds a 5% stake (with Japan's SoftBank holding the other 95%), seeks to use high-altitude, long-endurance solar-powered drones for surveillance and monitoring or to provide internet access to areas without conventional land-based broadband access. AeroVironment has an option to increase its stake in the joint venture to 19% if it chooses, but the company has made its financial assumptions based on keeping its current stake unchanged.

Shareholders in AeroVironment were pleased with the news, and the stock climbed 5% in pre-market trading Thursday following the Wednesday afternoon announcement. Now that AeroVironment is focused on drones, it'll be interesting to see how much more quickly it moves to capitalize on the many areas in which experts see them as a lucrative growth opportunity.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool recommends AeroVironment. The Motley Fool has a disclosure policy.