What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-05 compared with 2025-08-07 · 177 added, 139 removed, 304 unchanged (51% of the section changed)

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In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections captioned “Forward-Looking Statements” and “Risk Factors” in this Quarterly Report, our 2024 Annual Report, as filed as Exhibit 99.2 to our Current Report on Form 8-K filed with the U.S.

Securities and Exchange Commission (the “SEC”) on June 24, 2025 (the “June 24, 2025 8-K”), and our other documents on file with the SEC.

Securities and Exchange Commission (the “SEC”).

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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the interruption of the flow of materials from international vendors, which could disrupt our supply chain, including as a result of the imposition of new and/or additional duties, tariffs and other charges or restrictions on imports and exports;

changes in the global trade

environment, including the imposition of import tariffs or other import restrictions;

geopolitical, macroeconomic and other market conditions unrelated to our operating performance including but not limited to a pandemic, the Ukraine-Russia war, attacks on shipping in the Red Sea, conflict in the Middle East, inflation and interest rates;

changes in the global trade environment, including the imposition of import tariffs or other import restrictions;

geopolitical, macroeconomic

and other market conditions unrelated to our operating performance including but not limited to a pandemic, the Ukraine-Russia war, attacks on shipping in the Red Sea, conflict in the Middle East, inflation and interest rates;

our ability to convert our orders in backlog into revenue;

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our substantial indebtedness, risks related to actual or threatened public health epidemics, pandemics, outbreaks or crises;

changes to laws and regulations, including changes to tax laws and regulations, that are applied adversely to us or our customers, including our ability to optimize those changes brought about by the passage of the Inflation Reduction Act (“IRA”) or any repeal thereof;

our ability to consummate the APA transaction (as defined below) and to successfully integrate APA (defined below) into our existing operations and realize the anticipated benefits of the acquisition;

and other factors described in more detail in the section captioned “Risk Factors” in this Quarterly Report, our 2024 Annual Report, as filed as Exhibit 99.2 to our June 24, 2025 8-K, and our other documents on file with the SEC.

our ability to successfully integrate APA (defined below) into our existing operations and realize the anticipated benefits or synergies of the acquisition;

and other factors described in more detail in the section captioned “Risk Factors” in this Quarterly Report, our 2024 Annual Report, and our other documents on file with the SEC.

Given these uncertainties, you should not place undue reliance on forward-looking statements.

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Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

We are a leading global provider of solar tracking technology to utility-scale and distributed generation customers, who construct, develop and operate solar PV sites.

With solutions engineered to withstand harsh weather conditions, Array’s high-quality solar trackers, software platforms and field services combine to maximize energy production and deliver value to our customers for the entire lifecycle of a project.

Trackers move solar panels throughout the day to maintain an optimal orientation to the sun, which significantly increases their energy production.

We are a leading global provider of solar tracking technology and fixed-tilt systems to utility-scale and distributed generation customers who construct, develop, and operate solar PV sites.

With solutions engineered to withstand harsh weather conditions, Array’s high-quality solar trackers, fixed-tilt systems, software platforms, foundation solutions, and field services combine to optimize energy production and deliver value to our customers for the entire lifecycle of a project.

Trackers move solar panels throughout the day to maintain an optimal orientation to the sun, which significantly increases energy production.

Solar energy projects that use trackers typically generate more energy and deliver a lower Levelized Cost of Energy than projects that use “fixed tilt” mounting systems, which do not move.

Hybrid sites utilizing trackers and fixed-tilt can be utilized to optimize productivity based on the topography, geography, and environment.

The vast majority of ground mounted solar systems in the U.S.

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To avoid infringing on our U.S.

patent, our competitors must use designs that we believe are inherently less efficient and reliable.

patent, our competitors must use

designs that we believe are inherently less efficient and reliable.

For example, our largest competitor’s design requires one motor for each row of solar panels.

As a result, we believe our products have greater reliability,

lower installation costs, reduced maintenance requirements and competitive manufacturing costs.

As a result, we believe our products have greater reliability, lower installation costs, reduced maintenance requirements and competitive manufacturing costs.

Our core U.S.

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We sell our products to engineering, procurement and construction firms (“EPCs”) that build solar energy projects and to large solar developers, independent power producers and utilities, often under master supply agreements or multi-year procurement contracts.

During the six months ended June 30, 2025, we derived 72% and 28% of our revenues from customers in the U.S.

During the nine months ended September 30, 2025, we derived 79% and 21% of our revenues from customers in the U.S.

and the rest of the world, respectively.

As of June 30, 2025, we had shipped approximately 91 gigawatts of trackers to customers worldwide.

Equity Purchase Agreement with APA Solar

On June 17, 2025, our wholly-owned subsidiary, STINorland USA, Inc.

(“STI USA”), entered into a definitive agreement with APA Solar, LLC (“APA”), SunHoldings, LLC ("”SunHoldings”), and the guarantors thereto (such transaction, the “APA Transaction”) to acquire all of the issued and outstanding equity interests of APA, a company that designs, engineers, and manufactures solar racking, mounting and foundation systems.

The APA Transaction is expected to close in the third quarter of 2025, subject to certain closing conditions customary for a transaction of this nature.

As of September 30, 2025, we had shipped approximately 95 gigawatts of trackers to customers worldwide.

Acquisition of APA Solar

On August 14, 2025 (the “Closing Date”), our wholly owned subsidiary STINorland USA, Inc., a California corporation (“Buyer”), completed the acquisition of 100% of the issued and outstanding equity interests of APA Solar, LLC (“APA”, and such acquisition the “APA Acquisition”), pursuant to the terms of the equity purchase agreement, dated as of June 17, 2025, by and among the Company, Buyer, APA, SunHoldings, LLC, an Ohio limited liability company (“Seller”) and the guarantors party thereto (as amended, the “Purchase Agreement”).

The cash paid as of the Closing Date was $159.9 million, net of $10.1 million in preliminary and customary purchase price adjustments, which includes $6.2 million to retire debt.

For GAAP purposes, the aggregate cash consideration paid was approximately $166.1 million, subject to final post-closing settlement.

The Purchase Agreement also includes an earnout provision estimated to have a fair value of approximately $20.0 million as of the Closing Date (the “Earnout Consideration”), which is included in the purchase consideration, under which the Seller may receive shares of Company common stock, or equivalent cash value at the Buyer’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending on September 30, 2028.

As a result, the purchase consideration for the APA Acquisition totaled approximately $186.1 million.

Subject to the terms and conditions set forth in the Purchase Agreement, the Company has also agreed to pay aggregate deferred purchase price consideration of approximately $40.0 million payable in three installments over a two-year period based on service within five business days after the first and second anniversaries from the Closing Date and as set forth in Note 3 - Acquisition (the “Deferred Consideration”).

Each of the Earnout Consideration and Deferred Consideration are described in more detail below.

The Company is currently finalizing the valuation of the acquired assets and liabilities and assessing the related accounting impacts.

In connection with the acquisition of APA, the Company entered into lease agreements with related parties owned by certain members of APA's management team, which currently govern the occupation and use of two manufacturing facilities and three warehouses in Ohio.

Each of the leases expires in 2030, with two five-year renewal options.

The Company makes monthly lease payments based on APA's actual rent expense.

addition, the Company is responsible for the actual insurance costs, tenant improvements required to conduct operations, and real estate taxes.

Expenses related to these operating lease agreements are allocated based on usage to Cost of product and service revenue and General and administrative expenses in the accompanying condensed Consolidated statements of operations.

Total costs related to these operating lease agreements were $0.4 million for the three and nine months ended September 30, 2025.

APA designs, engineers, and manufactures solar racking, mounting and foundation systems, and the integration of such systems into our business model through the acquisition of APA expands our product portfolio to better serve the evolving needs of the solar industry and our customers.

2.875% Convertible Senior Notes due 2031

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We expense these costs as incurred prior to a respective product being ready for commercial production.

Total engineering expense was $4.5 million and $4.1 million during the three months ended June 30, 2025 and 2024, respectively, of which $2.5 million and $1.8 million were related to R&D activities performed by the Company during the same periods, respectively.

Total engineering expense was $8.9 million and $8.3 million during the six months ended June 30, 2025 and 2024, respectively, of which

$4.9 million and $3.7 million were related to R&D activities performed by the Company during the same periods, respectively.

Total engineering expense was $4.8 million and $4.4 million during the three months ended September 30, 2025 and 2024, respectively, of which $2.3 million and $1.6 million were related to R&D activities performed by the Company during the same periods, respectively.

Total engineering expense was $13.7 million and $12.7 million during the nine months ended September 30, 2025 and 2024, respectively, of which $7.2 million and $5.3 million were related to R&D activities performed by the Company during the same periods, respectively.

Factors Affecting Results of Operations

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Because we recognize revenue on projects as legal title to equipment is transferred from us to the customer, any delays in large projects from one quarter to another for any reason may cause our results of operations for a particular period to fall below expectations and make the timing of revenue difficult to forecast.

Our end-users’ ability to install solar energy systems has been affected by a number of factors including:

Our end-users’ ability to install solar energy systems can be affected by a number of factors including:

Inclement weather can affect our customers’ ability to install their systems, particularly in the northeastern U.S., Europe and Brazil.

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interest rate environment .

We have had customers delay planned installations or look to renegotiate power purchase agreements to improve project returns based on various rate environments.

We have had customers delay planned installations or look to renegotiate power purchase agreements to improve project returns based on various rate

environments.

For example, in anticipation of interest rate reductions and more favorable project financing conditions later in 2024, some customers delayed installations.

While the Federal Reserve began lowering interest rates in the second half of 2024, they have remained flat so far in 2025, with varying outlooks on whether additional rate cuts may occur.

While the Federal Reserve began lowering interest rates in the second half of 2024, there are varying outlooks on whether additional rate cuts may occur.

Customers must weigh this uncertainty in conjunction with other macroeconomic factors when assessing the returns and timing for relevant projects.

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Each utility has unique specifications for access to its grid, which is generally not consistent across the industry.

As the supply of renewables projects has increased, severe shortages and long lead-times in the supply of switches, transformers and high voltage breakers used in the interconnection of utility scale solar power plants to the grid, has affected the timing and completion of these projects, including for some of our customers.

As the supply of renewables projects has increased, shortages and long lead-times in the supply of switches, transformers and high voltage breakers used in the interconnection of utility scale solar power plants to the grid, has historically affected the timing and completion of these projects, including for some of our customers.

• Macroeconomic factors.

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Department of Treasury to issue updated guidance, including on commencement of construction, within 45 days.

Customers are navigating short-term uncertainty while the new guidance on commencement of construction is unknown.

If these financial benefits vary significantly from our investment assumptions or if the program gets changed or repealed during the current legislative cycle, our business, financial condition, and results of operations could be adversely affected.

On August 15, 2025, Treasury and the IRS issued Notice 2025-42 consistent with the executive order, which eliminates the 5% safe harbor for

utility-scale solar projects and only allows the physical work test to determine when a project begins construction.

If solar developers are unable to satisfy the physical work test, our business, financial condition, and results of operations could be adversely affected.

The OBBB also extended key provisions of the 2017 Tax Cuts and Jobs Act including, but not limited to, federal bonus depreciation and deductions for domestic research and development expenditures.

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Specifically, taxpayers cannot claim the credit in taxable years beginning after enactment of the OBBB if they are prohibited foreign entities (which are generally entities that are formed in or controlled by covered nations, including China, Russia, Iran, and North Korea, as well as entities determined to be under effective control as a result of contracts entered into with such entities).

The credit is also disallowed in taxable years beginning after enactment of the OBBB for eligible components that receive material

assistance from a prohibited foreign entity.

The credit is also disallowed in taxable years beginning after enactment of the OBBB for eligible components that receive material assistance from a prohibited foreign entity.

We are currently analyzing the impact of the foreign entity of concern limitations may have for credits claimed in 2026 and future years.

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These measures aim to reduce delays to get the product to project sites on time.

There is still uncertainty on how long these disruptions and the severity of their impact on our operations will last, but we continue to monitor the situation and evaluate our procurement and

supply chain strategies, as to reduce any negative impact on our business, financial condition, and results of operations.

There is still uncertainty on how long these disruptions and the severity of their impact on our operations will last, but we continue to monitor the situation and evaluate our procurement and supply chain strategies, as to reduce any negative impact on our business, financial condition, and results of operations.

Inflationary pressures may continue to negatively impact our results of operations in the near-term.

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Subject to certain certification and utilization conditions, imports of CSPV cells and modules covered by the circumvention determinations that entered the U.S.

during the two-year period prior to June 6, 2024 were not subject to AD/CVD cash deposit or duty requirements.

during the two-year period prior to June 6, 2024 were

not subject to AD/CVD cash deposit or duty requirements.

Imports of CSPV cells and modules from the four Southeast Asian countries covered by the circumvention determination that entered the U.S.

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On February 1, 2025, President Trump issued executive orders directing the U.S.

to impose new tariffs on imports from Canada, Mexico, and China, to take effect on February 4, 2025, and on February 3, 2025,

President Trump announced his intention to pause these tariffs on Canada and Mexico for a one-month period.

to impose new tariffs on imports from Canada, Mexico, and China, to take effect on February 4, 2025, and on February 3, 2025, President Trump announced his intention to pause these tariffs on Canada and Mexico for a one-month period.

The tariffs impose an additional 25% ad valorem rate of duty on all imports from Canada and Mexico (other than imports of Canadian energy resources exports, which are subject to a 10% ad valorem rate of duty) and an additional 10% ad valorem rate of duty on all imports from China.

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initiated a new Section 232 investigation into imports of unmanned aircraft systems and their parts and components;

and announced a 50% tariff on imports of copper following the conclusion of a Section 232 investigation, effective August 1, 2025.

and announced a 50% tariff on imports of copper following the conclusion of a Section 232

investigation, effective August 1, 2025.

Finally, President Trump has most recently threatened to increase tariffs on imports from Canada to 35% and on imports from Mexico to 30%.

Initially, Canada and Mexico were not subject to reciprocal tariffs as they were subject to earlier tariff actions.

We are currently evaluating the potential impact of the imposition of the announced tariffs, and any additional or retaliatory tariffs, to our business and financial condition.

We are continuing to evaluate the potential impact of the imposition of the announced tariffs, and any additional or retaliatory tariffs, to our business and financial condition.

The actual impact of the new tariffs is subject to a number of factors, including the effective date and duration of such tariffs, changes in the amount, scope and nature of the tariffs in the future, any countermeasures that the target countries may take and any mitigating actions that may become available.

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We also utilize metrics related to price and cost of goods sold per MW, including average selling price and cost per watt (“CPW”).

ASP is calculated by dividing total applicable revenues by total applicable MWs, whereas

CPW is calculated by dividing total applicable costs of goods sold by total applicable MWs.

ASP is calculated by dividing total applicable revenues by total applicable MWs, whereas CPW is calculated by dividing total applicable costs of goods sold by total applicable MWs.

These metrics enable us to evaluate trends in pricing, manufacturing cost, and customer profitability.

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The following discussion describes certain line items in our condensed consolidated statements of operations.

We generate revenue from the sale of solar tracking systems, parts, software, and services.

We primarily generate revenue from the sale of solar tracking systems, fixed tilt systems, foundation solutions, parts, software, and services.

Our customers include EPCs, utilities, solar developers, and independent power producers.

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Our revenue is affected by changes in the volume and ASPs of solar tracking systems purchased by our customers.

The quarterly volume and ASP of our systems is driven by the supply of, and demand for, our products, changes in project mix between module type and wattage, geographic mix of our customers, strength of competitors’ product offerings, commodity prices and availability of government incentives to the end-users of our products.

The quarterly volume and ASP of our systems is driven by the supply of, and demand for, our products, changes in project mix between module type and wattage, geographic mix of our customers, strength

of competitors’ product offerings, commodity prices and availability of government incentives to the end-users of our products.

Our revenue growth is dependent on continued growth in the size and number of solar energy projects installed each year, as well as our ability to maintain market share in each geography where we compete, expand our global footprint to new and evolving markets, grow our production capabilities to satisfy demand, and continue to develop and introduce new innovative products that integrate emerging technologies and the performance requirements of our customers.

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Cost of Revenue and Gross Profit

Cost of product and service revenue consists primarily of product costs, including raw materials, purchased components, net of any incentives or rebates earned from our suppliers, salaries, wages and benefits of manufacturing personnel, freight, tariffs, customer support, product warranty, amortization of developed technology, and depreciation of manufacturing and testing equipment.

Cost of product and service revenue consists primarily of product costs, including raw materials, purchased components, net of any incentives or rebates earned from our suppliers, salaries, wages and benefits of manufacturing personnel, freight, tariffs, customer support, product warranty, amortization of developed technology and backlog, and depreciation of manufacturing and testing equipment.

Our product costs are affected by (i) the underlying cost of raw materials, including steel and aluminum, (ii) component costs, including electric motors and gearboxes, (iii) technological innovation, and (iv) economies of scale and improvements in production processes and automation.

We may experience disruptions to our supply chain and increased material and freight costs like those experienced in 2021 and 2022 during the COVID-19 pandemic.

When possible, we

modify our production schedules and processes to mitigate the impact of these disruptions and cost increases on our margins.

We may experience disruptions to our supply chain and increased material and freight costs.

When possible, we modify our production schedules and processes to mitigate the impact of these disruptions and cost increases on our margins.

We do not currently hedge against changes in the price of our raw materials.

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General and administrative expense consists primarily of salaries, benefits, and equity-based compensation related to our executive, sales, engineering, finance, human resources, information technology, and legal personnel, as well as travel, facility costs, marketing, provision for credit losses, professional fees, and third party services.

The majority of our sales during the six months ended June 30, 2025 and 2024, were in the U.S.;

The majority of our sales during the nine months ended September 30, 2025 and 2024, were in the U.S.;

however, we also have a sales presence in Spain, Brazil, South Africa and Australia.

We intend to continue to expand our sales presence and marketing efforts to additional countries.

Contingent consideration consists of the changes in fair value of the TRA entered into with a former indirect stockholder, concurrent with the acquisition of Array Technologies Patent Holdings Co., LLC by ATI Investment Parent, LLC.

The TRA liability was recorded at fair value as of July 8, 2016 and subsequent changes in the fair value are recognized in earnings.

For discussion and analysis of the TRA see Note 11 – Commitments and Contingencies .

The TRA liability and Earnout Consideration were recorded at fair value and subsequent changes in the fair values are

recognized in earnings.

See Note 12 – Commitments and Contingencies for discussion and analysis of the TRA and Earnout Consideration.

Depreciation consists of costs associated with property, plant and equipment not used in manufacturing of our products.

We expect that as we continue to grow both our revenue and our general and administrative personnel, we may require some additional property, plant and equipment to support this growth resulting in additional depreciation expense.

Amortization consists of the expense recognized over the expected period of use of our customer relationships, contractual backlog, and STI trade name intangible assets.

Amortization related to certain acquired intangible assets is recorded as Total cost of revenue under Amortization of developed technology.

Amortization consists of the expense recognized over the expected period of use of our Customer relationships, Trade name, and Computer software and other intangible assets.

Amortization related to certain acquired intangible assets is recorded as Total cost of revenue under Amortization of developed technology and backlog.

Non-Operating Expenses

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and other debt held by our STI Operations (“Other Debt”).

Gain on extinguishment of debts, net consists of the difference between the cash paid and the carrying value of repurchased 2028 Convertible Notes.

Gain on extinguishment of debts, net consists of the difference between the cash paid and the carrying value of repurchased 2028 Convertible Notes and the fully repaid Term Loan Facility.

We are subject to U.S.

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The following table sets forth our consolidated statement of operations (in thousands, except percentages):

Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)

Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)

2025 2024 $ % 2025 2024 $ %

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Cost of product and service revenue 283,386 149,452 133,934 90 % 767,161 410,299 356,862 87 %

Amortization of developed technology 3,640 3,640 — — % 7,279 7,279 — — %

Amortization of developed technology and backlog

4,434 3,639 795 22 % 11,713 10,918 795 7 %

Total cost of revenue 287,820 153,091 134,729 88 % 778,874 421,217 357,657 85 %

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Depreciation and amortization 6,958 8,880 (1,922) (22) % 17,951 27,384 (9,433) (34) %

Goodwill impairment — 162,000 (162,000) (100) % — 162,000 (162,000) (100) %

Total operating expenses 60,220 210,990 (150,770) (71) % 160,112 304,017 (143,905) (47) %

Income from operations 46,376 39,602 6,774 17 % 73,660 48,016 25,644 53 %

Income (loss) from operations 45,451 (132,675) 178,126 (134) % 119,111 (84,659) 203,770 (241) %

Interest income 2,977 4,223 (1,246) (30) % 10,096 12,685 (2,589) (20) %

Interest expense (5,046) (8,264) 3,218 39 % (21,849) (25,818) 3,969 15 %

Foreign currency gain (loss), net 1,343 (468) 1,811 387 % 2,032 (967) 2,999 310 %

Foreign currency (loss) gain, net (6) (106) 100 94 % 2,026 (1,073) 3,099 289 %

Gain on extinguishment of debts, net — — — — % 14,207 — 14,207 100 %

Other expense, net (79) (1,794) 1,715 96 % (56) (980) 924 94 %

Other income (expense), net 68 (682) 750 110 % 12 (1,662) 1,674 101 %

Total other income (expense), net (2,007) (4,829) 2,822 58 % 4,492 (15,868) 20,360 128 %

Income before income tax expense 56,879 33,508 23,371 70 % 80,159 36,977 43,182 117 %

Income (loss) before income tax expense 43,444 (137,504) 180,948 (132) % 123,603 (100,527) 224,130 (223) %

Income tax expense 9,941 3,850 6,091 158 % 30,092 12,964 17,128 132 %

Net income $ 43,262 $ 25,698 $ 17,564 68 % $ 60,008 $ 27,863 $ 32,145 115 %

Net income (loss) $ 33,503 $ (141,354) $ 174,857 (124) % $ 93,511 $ (113,491) $ 207,002 (182) %

The following table provides details on our operating results by reportable segment for the respective periods (in thousands, except percentages):

Three Months Ended June 30, Increase/(Decrease) Six Months Ended June 30, Increase/(Decrease)

Three Months Ended September 30, Increase/(Decrease) Nine Months Ended September 30, Increase/(Decrease)

2025 2024 $ % 2025 2024 $ %

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Total $ 105,671 $ 78,315 $ 27,356 35 % $ 279,223 $ 219,358 $ 59,865 27 %

Comparison of the three and six months ended June 30, 2025 and 2024

Consolidated revenue increased $106.5 million, or 42%, for the three months ended June 30, 2025, compared to the three months ended June 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 58%.

Array Legacy Operations revenue increased by $106.7 million, or 58%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily driven by an increase of approximately 81% in volume, partially offset by a decrease of approximately 13% in ASPs, reflecting the commodity price decrease at the time when revenue contracts were executed.

Revenue from STI Operations decreased by 0.2 million, or 0.4% for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

The decrease was primarily driven by a decrease of approximately 8% in volume and an increase of approximately 5% in ASPs, partially offset by a favorable foreign currency impact of approximately 3%.

Consolidated revenue increased $255.4 million, or 62%, for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 69% and STI Operations of 45%.

Array Legacy Operations revenue increased by $205.6 million, or 69%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 primarily driven by an increase of approximately 94% in volume, partially offset by a decrease of approximately 13% in ASPs, reflecting the commodity price decrease at the time when revenue contracts were executed.

Revenue from STI Operations increased by $49.9 million, or 45% for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase was primarily driven by an increase of approximately 63% in volume, partially offset by a decrease of approximately 7% in ASPs and an unfavorable foreign currency impact of approximately 4%.

Comparison of the three and nine months ended September 30, 2025 and 2024

Consolidated revenue increased $162.1 million, or 70%, for the three months ended September 30, 2025, compared to the three months ended September 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 120%, partially offset by a 44% decline in STI revenue.

Revenue from Array Legacy Operations, inclusive of incremental contributions from APA, increased by $193.1 million, or 120%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily driven by an increase of approximately 122% in volume.

Revenue from STI Operations decreased by $31.0 million, or 44% for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease was primarily driven by a decrease of approximately 61% in volume and an increase of approximately 39% in ASPs, with a favorable foreign currency impact of approximately 5%.

Consolidated revenue increased $417.5 million, or 65%, for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, primarily driven by higher revenue from Array Legacy Operations of 87% and STI Operations of 10%.

Revenue from Array Legacy Operations, inclusive of incremental contributions from APA, increased by $398.7 million, or 87%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 primarily driven by an increase of approximately 104% in volume, partially offset by a decrease of approximately 19% in ASPs, reflecting the commodity price decrease at the time when revenue contracts were executed.

Revenue from STI Operations increased by $18.9 million, or 10% for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The increase was primarily driven by an increase of approximately 12% in volume.

Cost of Revenue and Gross Profit

Consolidated cost of revenue increased by $95.3 million, or 57%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Consolidated cost of revenue increased by $134.7 million, or 88%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

This increase was in line with higher revenues, partially offset by higher 45X benefits during the quarter.

Consolidated gross profit increased by $11.2 million, or 13%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Gross margin decreased to 26.8% for the three months ended June 30, 2025, as compared to 33.6% during the same period in the prior year.

Array Legacy Operations gross profit increased by $6.7 million, or 9%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

However, gross margin decreased to 28.8% from 41.8% for the three months ended June 30, 2025 and 2024, respectively.

The decrease in gross margin was driven by a 13% decrease in average selling prices, reflecting the commodity price decrease at the time when revenue contracts were executed, and a 7% increase in cost per watt, attributable to higher tariffs and one-time inventory-related charges.

STI Operations gross profit increased by $4.5 million, or 52%, for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

Gross margin for STI Operations increased to 18.6% from 12.2% for the three months ended June 30, 2025 and 2024, respectively, driven primarily by a 5% increase in average selling prices and a 3% reduction in cost per watt.

Consolidated cost of revenue increased by $222.9 million, or 83%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024, in line with higher volume.

Consolidated gross profit increased by $32.5 million, or 23%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Gross margin decreased to 26.1% for the six months ended June 30, 2025, as compared to 34.5% during the same period in the prior year.

Array Legacy Operations gross profit increased by $23.3 million, or 18%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

However, gross margin decreased to 29.6% from 42.2% for the six months ended June 30, 2025 and 2024, respectively.

In addition, gross margin during the six months ended June 30, 2024, included a one-time benefit of $4.0 million related to a settlement with a supplier, which was recorded as a reduction to Cost of product and service revenue.

STI Operations gross profit increased by $9.2 million, or 63%, for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

Gross margin for STI Operations increased to 15.0% from 13.4% for the six months ended June 30, 2025 and 2024, respectively, driven primarily by a 7% reduction in ASPs, offset by a 8% reduction in cost per watt.

Consolidated gross profit increased by $27.4 million, or 35%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Gross margin decreased to 26.9% for the three months ended September 30, 2025, as compared to 33.8% during the same period in the prior year.

Array Legacy Operations gross profit, inclusive of incremental contributions from APA, increased by $36.4 million, or 55%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

However, gross margin decreased to 28.9% from 41.0% for the three months ended September 30, 2025 and 2024, respectively.

The decrease in gross margin was primarily driven by a 19% increase in cost per watt, attributable to 6% higher tariffs and 13% rising commodities.

STI Operations gross profit decreased by $9.0 million, or 72%, for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

Gross margin for STI Operations decreased to 8.8% from 17.7% for the three months ended September 30, 2025 and 2024, respectively, driven primarily by a 39% increase in average selling prices and a 54% increase in cost per watt, driven by the mix of services and product sales, net of foreign currency impact.

Consolidated cost of revenue increased by $357.7 million, or 85%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, in line with higher volume.

Consolidated gross profit increased by $59.9 million, or 27%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Gross margin decreased to 26.4% for the nine months ended September 30, 2025, as compared to 34.2% during the same period in the prior year.

Array Legacy Operations gross profit, inclusive of incremental contributions from APA, increased by $59.7 million, or 31%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

However, gross margin decreased to 29.3% from 41.8% for the nine months ended September 30, 2025 and 2024, respectively.

The decrease in gross margin was driven by a 19% decrease in average selling prices, reflecting the commodity price at the time when revenue contracts were executed, and an 11% increase in cost per watt, attributable to 3% higher tariffs and 8% rising commodities.

In addition, gross margin during the nine months ended September 30, 2024, included a one-time benefit of $4.0 million related to a settlement with a supplier, which was recorded as a reduction to Cost of product and service revenue.

STI Operations gross profit increased by $0.2 million, or 1%, for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

Gross margin for STI Operations decreased to 13.7% from 15.1% for the nine months ended September 30, 2025 and 2024, respectively, driven primarily by a nominal increase in cost per watt.

Operating Expenses

Consolidated general and administrative expenses for the three and six months ended June 30, 2025 increased by $8.0 million, or 22% and increased by $14.1 million, or 19%, respectively, compared to the three and six months ended June 30, 2024.

The increase during the three months ended June 30, 2025 compared to the three months ended June 30, 2024 was primarily due to an increase of $5.4 million in personnel-related expenses including favorable one-time adjustments in variable compensation during the three months ended June 30, 2024, $3.1 million in acquisition-related expenses, and decrease of $0.5 million in facility,

infrastructure and other costs.

The increase during the six months ended June 30, 2025 compared to the six months ended June 30, 2024 was primarily due an increase of $8.7 million from personnel-related expenses including favorable one-time adjustments in variable compensation during the six months ended June 30, 2024, $3.3 million in acquisition-related expenses, and increase of $2.1 million in facility, infrastructure and other costs.

Change in the fair value of contingent consideration for the three and six months ended June 30, 2025 resulted in a loss of $0.4 million and a gain of $0.2 million, respectively, compared to the three and six months ended June 30, 2024, due to the fair value remeasurement of the TRA liability.

Consolidated depreciation and amortization expense for the three and six months ended June 30, 2025 decreased by $3.2 million and $7.5 million, or 36% and 41%, respectively, compared to the three and six months ended June 30, 2024.

The decrease was primarily due to certain assets acquired becoming fully amortized or fully impaired at December 31, 2024.

Other Expense, Net

Other expense, net totaled $0.1 million and $1.8 million for the three months ended June 30, 2025 and 2024, respectively, and $0.1 million and $1.0 million for the six months ended June 30, 2025 and 2024, respectively.

The decrease in both periods was primarily driven by fluctuations in other non-income taxes and miscellaneous income and expense items.

Consolidated general and administrative expenses, inclusive of APA, for the three and nine months ended September 30, 2025 increased by $12.1 million, or 30% and increased by $26.2 million, or 23%, respectively, compared to the three and nine months ended September 30, 2024.

The increase during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was primarily due to an increase of $6.8 million in personnel-related expenses, $8.5 million in acquisition-related expenses and deferred compensation, and decrease of $3.2 million in other costs.

The increase during the nine months

ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due an increase of $12.5 million from personnel-related expenses, $3.0 million from favorable one-time adjustments in variable compensation during the nine months ended September 30, 2024, $11.6 million in acquisition-related expenses and deferred compensation, and a decrease of $0.9 million in other costs.

Change in the fair value of contingent consideration for the three and nine months ended September 30, 2025 resulted in a loss of $1.1 million and a loss of $1.3 million, respectively, compared to the three and nine months ended September 30, 2024.

The loss during the three months ended September 30, 2025 compared to the three months ended September 30, 2024 was driven by a $0.7 million change in the fair value of the TRA liability and a $0.4 million change in the fair value of the APA Earnout Consideration.

The loss during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 driven by a $0.9 million change in the fair value of the TRA liability and a $0.4 million change in the fair value of the APA Earnout Consideration.

Consolidated depreciation and amortization expense, inclusive of APA, for the three and nine months ended September 30, 2025 decreased by $1.9 million and $9.4 million, or 22% and 34%, respectively, compared to the three and nine months ended September 30, 2024.

The decrease was primarily due to certain assets acquired becoming fully amortized or fully impaired at December 31, 2024, partially offset by $1.1 million of incremental depreciation and amortization contributed by APA for the three and nine months ended September 30, 2025.

Other Income (Expense), Net

Other income (expense), net for the three months ended September 30, 2025 and 2024 increased by $0.8 million, or 110%, and $1.7 million, or 101%, respectively, compared to the nine months ended September 30, 2025 and 2024, respectively.

The increase in both periods was primarily driven by fluctuations in other non-income taxes and miscellaneous income and expense items.

Interest Income

Consolidated interest income for the three and six months ended June 30, 2025 decreased by $1.0 million, or 21%, and $1.3 million, or 16%, respectively, compared to the three and six months ended June 30, 2024, primarily as a result of lower yields on our cash management program.

Consolidated interest income for the three and nine months ended September 30, 2025 decreased by $1.2 million, or 30%, and $2.6 million, or 20%, respectively, compared to the three and nine months ended September 30, 2024, primarily as a result of lower yields on our cash management program.

Interest Expense

Consolidated interest expense for the three and six months ended June 30, 2025 increased by $0.2 million, or 2%, and decreased by $0.8 million, or 4%, respectively, compared to the three and six months ended June 30, 2024, primarily due to changes in interest rates on our variable rate obligations.

Consolidated interest expense for the three and nine months ended September 30, 2025 decreased by $3.2 million, or 39%, and decreased by $4.0 million, or 15%, respectively, compared to the three and nine months ended September 30, 2024, primarily due to reduction of the Company’s outstanding debt and changes in interest rates on our variable rate obligations.

Income Tax Expense

Consolidated income tax expense for the three and six months ended June 30, 2025 increased by $5.8 million, or 74%, and $11.0 million, or 121%, respectively, compared to the three and six months ended June 30, 2024.

The Company recorded Income tax expense of $13.6 million and $7.8 million for the three months ended June 30, 2025 and 2024, respectively, and $20.2 million and $9.1 million for the six months ended June 30, 2025 and 2024, respectively.

Our effective tax rate was 23.9% and 25.1% for the three and six months ended June 30, 2025, respectively, and 23.3% and 24.6% for the three and six months ended June 30, 2024, respectively.

The income tax expense for the three and six months ended June 30, 2025 was favorably impacted by additional tax credits recorded during the periods.

Additionally, tax expense of $0.1 million and $1.2 million related to equity-based compensation was recorded discretely for the three and six months ended June 30, 2025, respectively.

The income tax expense for the three and six months ended June 30, 2024 was impacted by higher profits in non-US jurisdictions.

Additionally, tax expense of $0.1 million and $0.5 million related to equity-based compensation was recorded discretely for the three and six months ended June 30, 2024.

Consolidated income tax expense for the three and nine months ended September 30, 2025 increased by $6.1 million, or 158%, and $17.1 million, or 132%, respectively, compared to the three and nine months ended September 30, 2024.

The Company recorded Income tax expense of $9.9 million and $3.9 million for the three months ended September 30, 2025 and 2024, respectively, and $30.1 million and $13.0 million for the nine months ended September 30, 2025 and 2024, respectively.

Our effective tax rate was 22.9% and 24.3% for the three and nine months ended September 30, 2025, respectively, and (2.8)% and (12.9)% for the three and nine months ended September 30, 2024, respectively.

No tax benefit was recorded from the goodwill impairment recorded for the three months ended September 30, 2024, as the goodwill is non-deductible for income tax purposes.

Our effective tax rate, excluding the impact of the goodwill impairment was 15.7% and 21.1% for the three and nine months ended September 30, 2024.

The income tax expense for the three and nine months ended September 30, 2025 was favorably impacted by tax credits recorded during the periods.

Additionally, tax expense of zero and $1.2 million related to equity-based compensation was recorded discretely for the three and nine months ended September 30, 2025, respectively.

The income tax expense for the three and nine months ended September 30, 2024 was favorably impacted by lower profits in non-US jurisdictions and additional tax credits reported during the periods.

Additionally, tax expense of zero and $0.5 million related to equity-based compensation was recorded discretely for the three and nine months ended September 30, 2024.

Liquidity and Capital Resources

Cash Flows (in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Net cash provided by operating activities $ 58,145 $ 96,394

$ 30,782 $ 51,459

Net cash used in investing activities (8,983) (4,488)

Net cash (used in) provided by investing activities (179,412) 6,409

Net cash used in financing activities (25,518) (12,241)

(12,776) (4,144)

Effect of exchange rate changes on cash and cash equivalents 5,606 (9,587)

Net change in cash and cash equivalents $ 14,629 $ 33,240

Effect of exchange rate changes on cash and cash equivalent balances 5,747 (7,270)

Net change in cash and cash equivalents and restricted cash $ (141,038) $ 83,292

Historically, we have financed our operations with the proceeds from operating cash flows, capital contributions and short and long-term borrowings.

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Based on our past performance and current expectations, we believe that operating cash flows will be sufficient to meet our liquidity needs in the next 12 months and beyond.

As of June 30, 2025, our cash balance was $377.3 million, of which $33.8 million was held outside the U.S., and our net working capital, including cash and cash equivalents, was $570.1 million.

As of September 30, 2025, our cash balance was $221.5 million, of which $34.5 million was held outside the U.S., and our net working capital, including cash and cash equivalents, was $408.1 million.

We had $145.3 million available to us under our $166 million Revolving Credit Facility.

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The proceeds were used to repay in full our Term Loan Facility and to repurchase $100.0 million aggregate principal amount of the 2028 Convertible Notes.

The repurchased 2028 Convertible Notes had a net carrying value of $98.5 million, inclusive of unamortized debt discount, resulting in a gain on extinguishment of debt of approximately $20.1 million.

The repurchased 2028 Convertible Notes

had a net carrying value of $98.5 million, inclusive of unamortized debt discount, resulting in a gain on extinguishment of debt of approximately $20.1 million.

In connection with the issuance of the 2031 Convertible Notes, we also entered into capped call transactions designed to reduce potential dilution to common stockholders upon conversion of the notes (the “2031 Capped Calls”).

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Operating Activities

For the six months ended June 30, 2025, cash provided by operating activities was $30.8 million attributable to net income of $60.0 million and $25.1 million of non-cash adjustments, mainly consisting of depreciation and amortization expense and equity-based compensation, partially offset by a net cash outflow of $54.3 million from changes in our operating assets and liabilities.

For the six months ended June 30, 2024, cash provided by operating activities was $51.5 million, of which 61.7 million was generated from net income as adjusted for the impact of non-cash expenses, consisting primarily of depreciation and amortization, amortization of developed technology, and equity-based compensation.

For the nine months ended September 30, 2025, cash provided by operating activities was $58.1 million, attributable to net income of $93.5 million and $53.6 million of non-cash adjustments, mainly consisting of depreciation and amortization expense, gain on extinguishment of debts, net, and equity-based compensation, partially offset by a net cash outflow of $88.9 million from changes in our operating assets and liabilities.

For the nine months ended September 30, 2024, cash provided by operating activities was $96.4 million, attributable to net loss of $113.5 million and $211.8 million of non-cash adjustments, mainly consisting of goodwill impairment, depreciation and amortization, amortization of developed technology and backlog, and equity-based compensation.

Investing Activities

For the six months ended June 30, 2025 and 2024, net cash used in investing activities was $9.0 million and $4.5 million, respectively, related primarily to the purchase of property, plant and equipment.

For the nine months ended September 30, 2025 and 2024, net cash used in investing activities was $179.4 million and $6.4 million, respectively, primarily due to acquisition-related expenses and the purchase of property, plant and equipment.

Financing Activities

For the six months ended June 30, 2025, cash used in financing activities was $12.8 million.

This was primarily driven by a $233.9 million repayment on our Term Loan Facility, $78.4 million repurchase of 2028 Convertible Notes, and $35.1 million premium paid in connection with the purchase of the 2031 Capped Calls, partially offset by an increase of $334.6 million from net proceeds from the issuance of 2031 Convertible Notes, after deducting initial purchasers’ discounts and offering expenses.

For the six months ended June 30, 2024, cash used in financing activities was $4.1 million, driven primarily by a $12.7 million net reduction of Other Debt and $2.2 million in payments on our Term Loan Facility, as well as $1.4 million in TRA payments issued during the six months ended June 30, 2024.

For the nine months ended September 30, 2025, cash used in financing activities was $25.5 million.

This was primarily driven by a $233.9 million repayment on our Term Loan Facility, $119.2 million repayment of Other Debt, $78.4 million repurchase of 2028 Convertible Notes, and $35.1 million premium paid in connection with the purchase of the 2031 Capped Calls, partially offset by an increase of $334.6 million and $108.7 million from net proceeds from the issuance of 2031 Convertible Notes and proceeds from the issuance of Other Debt, respectively, after deducting initial purchasers’ discounts and offering expenses.

For the nine months ended September 30, 2024, cash used in financing activities was $12.2 million.

This was primarily driven by a $24.9 million net reduction of Other Debt and $3.2 million in payments on our Term Loan Facility, as well as $1.4 million in TRA payments issued, partially offset by $19.0 million in proceeds from the issuance of Other Debt.

Contractual Obligations and Commitments

Information regarding our debt obligations, lease commitments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2024 Annual Report on form 10-K.

Other than as set forth below, there were no material changes in our contractual obligations and commitments as of June 30, 2025.

Equity Purchase Agreement with APA Solar

The APA Transaction is expected to close in the third quarter of 2025, subject to satisfaction of certain closing conditions customary for a transaction of this nature.

Under the terms of the equity purchase agreement governing the APA Transaction (the “Purchase Agreement”), our wholly-owned subsidiary, STINorland USA, Inc.

(“STI USA”) has agreed to pay a base purchase price of $210,000,000, subject to customary adjustments for cash, net working capital, indebtedness and transaction expenses (the “Purchase Price”).

An amount equal to 80% of the Purchase Price will be paid in cash to SunHoldings on the closing date.

Subject to the terms and conditions set forth in the Purchase Agreement, an amount equal to 20% of the Purchase Price will be payable to SunHoldings in two equal installments (each, a “Deferred Consideration Installment”) on the first and second anniversaries of the closing date (each, a “Deferred Consideration Anniversary”), subject to certain conditions.

Each Deferred Consideration Installment will, at the Company’s election, be paid (i) in cash, (ii) through the issuance of shares of Company common stock, par value $0.001 per share (“common stock”), valued at the closing price on the trading day immediately preceding the applicable Deferred Consideration Anniversary (if any such shares are issued, the “Deferred Consideration Shares”) or (iii) by any combination of the foregoing.

In addition, the Purchase Agreement provides for an earnout pursuant to which SunHoldings may be granted additional shares of the Company’s common stock based upon APA’s achievement of certain financial performance targets during the three-year period ending on the last day of the first fiscal quarter of the Company that ends following the third anniversary of the Closing (the “Earnout Consideration”).

The maximum number of shares payable as Earnout Consideration will be determined by dividing $40,000,000 by the volume weighted average price of our common stock for the 10 trading days immediately following the Closing.

The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90,000,000.

Report on form 10-K.

Other than as set forth below, there were no material changes in our contractual obligations and commitments as of September 30, 2025.

APA Acquisition Earnout Consideration and Deferred Consideration

The Purchase Agreement includes provisions providing for the Earnout Consideration and the payment of the Deferred Consideration of approximately $40.0 million.

Each of the Deferred Consideration and the Earnout Consideration are described in more detail below.

Earnout Consideration

The Purchase Agreement includes an earnout provision pursuant to which Seller may be granted shares of the Company’s common stock, or equivalent cash value at the Buyer’s discretion, based upon APA’s achievement of certain financial performance targets during the three-year period ending September 30, 2028.

The maximum number of shares payable as Earnout Consideration is 4,686,530 shares of common stock, which was determined by dividing $40 million by the volume weighted average price of the Company’s common stock for the 10 trading days immediately following the Closing Date.

The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90 million.

The Purchase Agreement provides that, to the extent the issuance of any Earnout Consideration or Deferred Consideration Shares would require stockholder approval under Nasdaq Listing Rule 5635(a), the Company will pay cash in lieu of issuing such shares, unless such stockholder approval has been obtained.

The parties’ obligation to complete the APA Transaction is subject to certain closing conditions customary for a transaction of this nature, including, among others:

(i) expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) absence of any law or order prohibiting the consummation of the APA Transaction or any proceeding by a governmental authority that could reasonably result in an order prohibiting the APA Transaction, (iii) subject to certain materiality thresholds, the accuracy of the representations and warranties made by STI USA, APA and SunHoldings, (iv) material compliance by STI USA, APA and SunHoldings with each of their respective obligations under the Purchase Agreement, and (v) in the case of STI USA, the absence of a material adverse effect on APA.

The Purchase Agreement may be terminated by either STI USA or SunHoldings if the closing has not been consummated by October 15, 2025.

The Purchase Agreement may also be terminated in certain other circumstances, including (i) by STI USA or APA if there is a final and nonappealable law or order preventing or otherwise making illegal the consummation of the APA Transaction, (ii) by STI USA, subject to certain cure periods, if APA or SunHoldings is in breach of any of its respective representations, warranties, covenants or agreements under the Purchase Agreement that would cause STI USA’s closing conditions with respect to the accuracy of APA’s or SunHoldings’ representations or compliance with covenants not to be satisfied, (iii) by APA, subject to certain cure periods, if STI USA is in breach of any of its respective representations, warranties, covenants or agreements under the Purchase Agreement that would cause APA’s closing conditions with respect to the accuracy of STI USA’s representations or compliance with covenants not to be satisfied, and (iv) by mutual written consent of STI USA and APA.

For a discussion of the accounting of the Earnout Consideration, see “Business Combinations” below.

Deferred Consideration

The Deferred Consideration which will be payable to Seller in three installments (each, a “Deferred Consideration Installment”):

(i) within five business days after the first anniversary of the Closing Date, an amount equal to 50% of the Deferred Consideration, (ii) on December 31, 2026, an amount equal to (A) 50% of the Deferred Consideration multiplied by (B) the proportion of the two-year period from the Closing Date to the second anniversary of the Closing Date that has elapsed as of December 31, 2026 and (iii) within five business days after the second anniversary of the Closing Date, an amount equal to the remaining balance of the Deferred Consideration.

As more fully described in the Purchase Agreement, the Deferred Consideration Installments are subject to reduction if certain equity holders of Seller cease to be employees of the Company under certain circumstances.

Each Deferred Consideration Installment will, at the Company’s election, be paid (i) in cash, (ii) through the issuance of shares of Company common stock, par value $0.001 per share, valued at the closing price on the trading day immediately preceding the applicable Deferred Consideration Anniversary (if any such shares are issued, the “Deferred Consideration Shares”) or (iii) by any combination of the foregoing.

As the Deferred Consideration Installments are tied to future service to the Company, they are considered compensatory and not included in purchase consideration.

Series A Redeemable Perpetual Preferred Stock

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For a discussion of our debt obligations see Note 8 – Debt to our condensed consolidated financial statements included in this Quarterly Report.

We are required to provide surety bonds to various parties as required for certain transactions initiated during the ordinary course of business to guarantee our performance in accordance with contractual or legal

As of June 30, 2025, we posted surety bonds in the total amount of approximately $248.5 million.

As of September 30, 2025, we posted surety bonds in the total amount of approximately $227.4 million.

These off-balance sheet arrangements do not adversely impact our liquidity or capital resources.

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For a description of the accounting policies that require the most significant judgment and estimates in the preparation of our condensed consolidated financial statements, refer to our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes to our accounting policies during the three months ended June 30, 2025.

Business Combinations

We completed one business combination for purchase consideration of $186.1 million during the nine months ended September 30, 2025.

In accordance with Topic 805 Business Combinations, total consideration was first allocated to the fair value of assets acquired and liabilities assumed, with the excess being recorded as Goodwill.

We use our best estimates and assumptions to assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date.

Intangible assets have been recognized apart from goodwill whenever an acquired intangible asset arises from contractual or other legal rights, or whenever it is capable of being separated or divided from the acquired entity.

Determining these fair values required us to make significant estimates and assumptions, particularly with respect to acquired intangible assets.

The determination of fair value required considerable judgment and were sensitive to changes in underlying assumptions, estimates and market factors.

The preliminary fair value of the identifiable intangible assets has been estimated using the Multi-Period Excess Earnings Method (Customer relationships and Backlog), Relief from Royalty Method (Trade name), and Replacement Cost Method (Developed technology and Computer software and other).

The significant fair value inputs used to estimate the fair value of the identifiable intangible assets include a discount rate and revenue and expense projections.

As discussed, the Purchase Agreement includes a provision for the Earnout Consideration.

The number of shares payable will be subject to reduction if the cumulative value of the Earnout Consideration earned (measured on each date such shares are issued) exceeds $90 million.

The Purchase Agreement provides that, to the extent the issuance of any

Earnout Consideration or Deferred Consideration Shares would require stockholder approval under Nasdaq Listing Rule 5635(a), the Company will pay cash in lieu of issuing such shares, unless such stockholder approval has been obtained.

The Earnout Consideration is accounted for as contingent consideration, and the fair value is estimated each reporting period.

As of September 30, 2025, the Earnout Consideration was estimated to have a fair value of $20.4 million using a Monte-Carlo simulation method.

Changes in fair value of the contingent liability are recognized in contingent consideration on the condensed consolidated statements of operations.

Estimating the amount of payments that may be made under the Earnout Consideration is by nature imprecise.

The significant fair value inputs used to estimate the future expected Earnout Consideration payments to Seller include a discount rate, earnings forecasts, and actual and estimated future volatility in the Company’s stock price.

Adoption of New and Recently Issued Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis