What happened

Drone maker AeroVironment (AVAV 3.40%) reported quarterly results that easily topped expectations and showed impressive growth to its backlog. Investors are excited about what is to come, sending shares up as much as 30% on Wednesday.

So what

AeroVironment makes a range of small to midsize unmanned aerial vehicles (UAVs) for military and commercial customers. The company's products have been a key part of the U.S. government aid package to Ukraine, and the war has arguably improved AeroVironment's standing as a defense contractor by proving the effectiveness of its products.

Late Tuesday, the company reported adjusted earnings of $1 per share on revenue of $152.3 million for its fiscal first quarter, which ended July 29. The results easily topped Wall Street expectations for a $0.26-per-share profit on sales of $128.5 million.

AeroVironment is seeing strong year-over-year growth, with revenue up 40% from the same three months a year ago and net income and adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) up 361% and 185%, respectively. Profitability was up because AeroVironment is increasing the number of products it is selling.

The company finished the quarter with a funded backlog of $539.7 million in future business, an increase of 27% from the prior quarter.

Now what

AeroVironment now expects revenue of between $645 million and $675 million in fiscal 2024, an increase of $15 million from the guidance it presented back in June. It also slightly raised net income guidance for the year to between $51 million and $59 million.

The backlog of orders should provide full coverage to that revenue view, and AeroVironment's 45% gross margin in the quarter was notable. The company does see costs increasing in the quarters to come as it invests in its business, but the strong demand for its SwitchBlade military UAV positions AeroVironment well for growth.

AeroVironment has historically been a volatile stock by defense industry standards, and with Wednesday's jump the shares are now up more than 40% year to date. There might be little room left to run in the short term, but AeroVironment is set up well to deliver for shareholders over time.