Weekend Update #284
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Chipmakers set the tone for markets this week, with technology stocks driving broader equity gains as SK Hynix attracted overwhelming investor demand ahead of its US listing. The Korean memory leader's American depositary receipts, priced following a $26.5 billion offering—the largest US listing ever by a foreign company—surged roughly 15% in their trading debut after the deal was more than seven times oversubscribed. The strong reception helped offset a weaker start to the week, when Samsung Electronics' record quarterly profit failed to prevent a sharp selloff in the Kospi that briefly triggered a circuit breaker. Meanwhile, geopolitical tensions kept energy markets on edge as renewed US-Iran hostilities near the Strait of Hormuz slowed tanker traffic following a second consecutive day of US airstrikes.
Minutes from the Federal Reserve's June 16-17 meeting, released Wednesday, revealed that several policymakers saw a case for further rate hikes even though the committee ultimately left policy unchanged, reflecting persistent inflation concerns despite modest easing in labor-market risks. The two-year Treasury yield fell three basis points to 4.19% following the release. Earlier in the week, the ISM Services PMI slipped 0.5 points to 54.0 in June as business activity and new orders softened, although the employment component posted its first increase since February. Price pressures also moderated, with the prices-paid index declining to a four-month low of 67.7. Taken together, the data suggest the economy continues to expand but at a slower pace, leaving investors focused on whether the Fed's next move could still be toward additional policy tightening.
SK Hynix dominated the corporate calendar after CEO Kwak Noh-Jung said memory shortages are likely to persist beyond 2030 as customers increasingly secure long-term supply agreements. Investors also expect the company's US listing to help narrow its valuation discount relative to Micron Technology. Samsung reported preliminary June-quarter operating profit of 89.4 trillion won on revenue of 171 trillion won, though the stock fell more than 10% as investors took profits following an almost 150% year-to-date rally. Elsewhere across the AI ecosystem, Broadcom signed a multi-generation agreement to develop custom AI ASICs for Apple, while China approved limited purchases of Nvidia H200 GPUs by leading domestic AI firms to ease supply shortages. In digital assets, Strategy Inc. sold $216 million of Bitcoin as part of a financing overhaul after reporting an $8.32 billion quarterly loss tied to its cryptocurrency holdings.
Looking ahead, markets will closely monitor negotiations between the US and Iran as both sides continue technical talks aimed at reaching a broader peace agreement by mid-August, despite the latest clashes near Hormuz. Any further disruption to tanker traffic or breakdown in ceasefire discussions could quickly reignite volatility in energy markets. Oil traders are also assessing Saudi Aramco's decision to cut its Arab Light crude price to Asia by $11 per barrel—its largest reduction in at least 26 years—alongside OPEC+'s latest modest production increase. Attention will also shift to the start of earnings season, which moves into full swing next week and is expected to provide investors with the first broad read on corporate demand, AI spending, and the durability of profit margins in the second half of the year. Fed officials' public comments will also remain in focus following the June meeting minutes, with any renewed hawkish rhetoric likely to pressure Treasury yields.
Friday's Close
(Weekly Performance)
S&P 500 7,575.39 +1.23%
Nasdaq 26,281.61 +1.74%
Dow Jones 52,637.01 -0.50%
Thank you Blue Room Senior Analyst NICK PEART.
Wahid Nawabi
Chairman, President, & Chief Executive Officer
Thank you, Denise. Welcome, everyone, to our fourth quarter and full fiscal year 2026 earnings conference call. I will begin by summarizing our quarterly and full year performance, followed by Sean, who will review our financial results in greater detail and then discuss guidance for fiscal year 2027. After this, Sean, Denise and I will take your questions.
I'm pleased to report record fourth quarter results across several key financial performance metrics, delivering AV's strongest financial performance to date. We reported fourth quarter revenues of nearly $642 million with increased funded backlog of $1.2 billion, strong adjusted EBITDA of $140 million and bookings of $572 million.
For the full fiscal year, we delivered revenue of nearly $2 billion, ahead of our most recent quarterly guidance and in line with our initial guidance from about a year ago and bookings of $2.7 billion.
Full year adjusted EBITDA of $286 million came in above the high-end of our most recent guidance range and non-GAAP EPS was $3.31 per share, well above the higher end of our guidance.
With demand for our solutions continuing to rise, our work over the past year has positioned AV as a stronger, more resilient and diversified company. Before outlining several opportunities and key growth drivers that will help us reach our strategic goals for fiscal year 2027 and beyond, let me first cover some key highlights from the fourth quarter and full fiscal year 2026.
First, we achieved record fourth quarter revenue of $642 million and record full year revenue of nearly $2 billion. Organic revenue growth for the quarter was 31% and 30% for the full fiscal year.
Second, we delivered strong fourth quarter adjusted EBITDA of $140 million or 22% of revenue on higher sales volume, demonstrating AV's profitability potential with increased volume.
Third, we developed and launched several new products, won several key program awards and made strong software advancements that will strategically facilitate growth for AV into the future.
Fourth, we successfully diversified our portfolio with the transformational acquisition of BlueHalo, nearly doubling in size and adding additional capabilities in Counter-UAS platforms, Space Technologies, Cyber and Advanced Solutions.
And fifth, looking ahead, we're establishing fiscal year 2027 revenue guidance to between $2.125 billion and $2.225 billion. Adjusted EBITDA guidance for fiscal year 2027 is set between $305 million and $325 million.
Our confidence in fiscal year 2027 is grounded in the momentum we built this past year and the significant wins we have achieved across our platforms. In lethal drones, we introduced several new products, including Switchblade 400 and MAYHEM 10. Our new one-way attack solution, Red Dragon, was awarded several contracts and we're preparing to bring additional Switchblade production online at our Salt Lake City facility at the beginning of next calendar year.
Our non-lethal drones reached several successful milestones as well. AV P550 was selected for the US Army's long-range reconnaissance program. JUMP 20-X secured multiple contract awards and VAPOR CLE won a significant award for the US Army's medium range reconnaissance program.
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These materials do not purport to be all-inclusive or to contain all the information that a prospective investor may desire in considering an investment. These materials are intended merely for preliminary discussion only and may not be relied upon for making any investment decision. Any discussion or information contained in this presentation does not serve as a receipt of, or as a substitute for, personalized investment advice from Blueroom or your advisor.
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