Image source: Aerovironment.

What: Shares of drone company Aerovironment (NASDAQ:AVAV) jumped 14% in March after the company reported better-than-expected earnings.

So what: Fiscal third-quarter revenue fell slightly to $67.6 million, but the company reported a profit of $6.2 million, or $0.27 per share, helped by a $1.1 million tax benefit. Management was very bullish on the business, though, saying full-year revenue would meet guidance of $260 million to $280 million and gross margin would be higher than expected at 38% to 39.5%. 

The Switchblade product, in particular, appears to be gaining momentum, with four different variations and new demand for small missile systems from the military.

Now what: The surprise was that Aerovironment posted a profit at all. The company has been planning to invest heavily in the business as drone demand from commercial customers builds and regulatory agencies decide how to regulate the market. That plan left investors expecting breakeven results, at best, for the full year, with the hope that profits would come down the road. Now it appears that we can expect even stronger financials near term, and view commercial drones as a tailwind over the next decade.

Travis Hoium owns shares of AeroVironment. The Motley Fool recommends AeroVironment. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.