AeroVironment Inc. narrowed its loss in its fiscal first quarter as sales of its small unmanned aircraft to the military picked up. The loss was better than Wall Street expected.

Late Wednesday, the Monrovia company reported a net loss of $3.4 million (-16 cents per share) for the quarter ended July 31, compared with a loss of $3.6 million (-17 cents) a year earlier.

Revenue rose 1 percent to $38.2 million. A 49 percent increase in revenue from drone sales was offset by a 13 percent decline in contract services revenue.

Analysts surveyed by Thomson Reuters on average expected a per-share net loss of 23 cents on higher revenue of $39.2 million.

“We delivered the financial performance we expected for the first quarter, and we made good progress toward achieving full-year revenue guidance,” Chief Executive Tim Conver said in a statement. “We are also gaining greater visibility into the multiple, significant market opportunities that lie ahead of us for both unmanned aircraft systems and electric vehicle solutions.”

Shares were down 97 cents, or 4 percent, to $22.38 in midday trading on the Nasdaq.