Item 7. Management’s Discussion and Analysis
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Introduction
The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and notes thereto included herein as Item 8. This discussion contains forward-looking statements. Refer to Part I, “Forward-Looking Statements” on page 2 and Item 1A, “Risk Factors” beginning on page 14, for a discussion of the uncertainties, risks and assumptions associated with these statements.
Overview
We are a defense technology provider delivering integrated capabilities across air, land, sea, space, and cyber. We develop and deploy autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities. We operate an international manufacturing footprint, delivering proven systems and capabilities to markets that offer the potential for significant long-term growth. In addition, we believe that some of the innovative potential products, services and technologies in our R&D pipeline will emerge as new growth platforms in the future, creating additional market opportunities.
The success of our current product and service offerings stems from our investments in R&D to invent and deliver advanced solutions, utilizing proprietary and commercially available technologies, and in acquiring leading businesses that help our customers achieve their desired outcomes. We develop and acquire these highly innovative solutions by working closely with our key customers to solve their most important challenges related to our areas of expertise. Our core technological capabilities, developed by more than 50 years of innovation, include robotics and robotics systems autonomy; modular open systems architecture; sensor design, development, miniaturization and integration; embedded software and firmware; miniature, low power, secure wireless digital communications and networks; lightweight aerostructures; high-altitude systems design, integration and operations; machine vision, machine learning, AI and autonomy; land, maritime and air deployment of munitions and aircraft systems; design and qualification for robotics in extreme terrestrial and space environments; low SWaP (Size, Weight and Power) system design and integration; collaborative multi-robotic crewed and uncrewed mission operation; power electronics and electric propulsion systems; efficient electric power conversion, storage systems and high density energy packaging; controls and systems integration; vertical takeoff and landing for fixed wing and hybrid aircraft and rotocraft systems; image stabilization and target tracking; advanced flight control systems; fluid dynamics; human-machine interface development; modular dismounted, networked multi-domain robotic control interfaces and analytic processing architecture; and integrated mission solutions for austere environments.
The BlueHalo acquisition significantly enhanced our core technological capabilities, which now include advanced RF system design and development, software defined digital phased array antennas and radars, space qualified electronics, laser communication technologies, software defined radios, electronic warfare technology, target acquisition and tracking, directed energy-based weapons systems for counter uncrewed systems, RF-based systems for counter uncrewed, next generation counter uncrewed system missile technology, extended reality and virtual reality systems for training, modeling and simulation, hardware in the loop simulations, C2 sensing and tracking, uncrewed maritime platforms, uncrewed aerial platforms, full spectrum cyber operations, tactical mission networks, multi-int data analytics and threat intelligence, tools and analytics for GEOINT, SIGNINT, MASINT and OSINT, aerospace power and propulsion, material and processes, directed energy, photonics and electronics, biological and nanoscale technology, and health and human performance.
Our business focuses primarily on the design, development, production, marketing, support and operation of innovative autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed
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energy systems and the provision of services for advanced cyber, intel, defense operations, solutions that deliver mission-critical expertise and prototype development.
Revenue
We generate our revenue primarily from the sale, support, design and operation of our UAS, PSDS, UUV, UGV, Space and Directed Energy products. Support for our products includes training, spare parts, product repair and product replacement. We refer to these support activities, in conjunction with customer-funded R&D and services provided for our Cyber and Mission Solutions customers, as our services operation. We derive most of our revenue from fixed-price and cost-plus-fee contracts with the majority from U.S. government and allied foreign governments.
Cost of Sales
Cost of sales consists of direct costs and allocated indirect costs. Direct costs include labor, materials, travel, subcontracts and other costs directly related to the execution of a specific contract. Indirect costs include overhead expenses, fringe benefits, depreciation of in-service ISR assets, inventory reserve for excess and obsolescence charges, amortization of acquired intangible assets and other costs that are not directly charged to a specific contract.
Gross Margin
Gross margin is equal to revenue minus cost of sales. We use gross margin as a financial metric to help us understand trends in our direct costs and allocated indirect costs when compared to the revenue we generate.
Selling, General and Administrative
Our selling, general and administrative expenses (“SG&A”), include salaries, fringe benefits, and other expenses related to selling, marketing and proposal activities, and other administrative costs and amortization of acquired intangible assets. Some SG&A expenses relate to marketing, commissions on certain direct commercial sales to international customers and business development activities that support both ongoing business areas as well as new and emerging market areas. These activities can be directly associated with developing requirements for and applications of capabilities created in our R&D activities. SG&A is an important financial metric that we analyze to help us evaluate the contribution of our selling, marketing and proposal activities to revenue generation.
Research and Development Expense
R&D is an integral part of our business model. We normally conduct significant internally funded R&D. Our R&D activities focus specifically on creating capabilities that support our existing product portfolio as well as new solutions.
Impairment of Goodwill
In January 2026, a stop-work order was received on an OTA for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program. Additionally, in March 2026, the customer terminated the agreement for convenience. We concluded that the stop-work order represented a trigger event that indicated the carrying value of the Space reporting unit exceeded its fair value. As a result, we updated the estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order and termination for convenience as well as an increase in expected research and development and capital investments to achieve product commercialization, which is expected to result in expanded opportunities and improve long term product margins. The changes in estimates resulted in the recognition of a goodwill impairment charge of approximately $241 million in the Space reporting unit.
As part of our annual goodwill impairment and identifiable asset test during the fiscal quarter ended April 30, 2025, we determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well
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as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025. These changes in estimates resulted in the recognition of a goodwill impairment charge of $18.4 million during the three months ended April 30, 2025 in the UGV reporting unit.
For the fiscal year ended April 30, 2026, we determined that it was more likely than not that the fair value of each of the remaining reporting units were more than their carrying values as of the annual goodwill impairment test date.
Other (Loss) Income, net
Other (loss) income, net includes unrealized gains and losses associated with changes in the fair market value for equity security investments, realized gains and losses for the disposition of available-for-sale debt securities, interest income, and interest expense.
Provision for (Benefit from) Income Taxes
Our effective tax rates for fiscal years 2026 and 2025 were lower than the U.S. federal statutory rate of 21% primarily due to tax benefits from the U.S. federal research tax credit, excess benefits from stock-based compensation, and Foreign Derived Intangible Income deduction (“FDII”).
Equity Method Investment (Loss) Income, Net of Tax
Equity method investment (loss) income, net of tax, includes equity method income or loss related to our investment in limited partnership funds for which we have concluded we have influence for holding more than a minor interest.
Critical Accounting Policies and Estimates
This Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical estimates include those related to revenue recognition, inventory reserves for excess and obsolescence, intangible assets acquired in a business combination, goodwill, and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.
We believe the following critical accounting estimates affect our more significant judgments and estimates used in preparing our consolidated financial statements. Refer to Note 1 to our consolidated financial statements entitled “Organization and Significant Accounting Policies,” which is included in Part II, Item 8 “Financial Statements and Supplementary Data” of this Annual Report. There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements.
Revenue Recognition
Significant management judgments and estimates must be made and used in connection with the recognition of revenue in any accounting period. Material differences in the amount of revenue in any given period may result if these judgments or estimates prove to be incorrect or if management’s estimates change on the basis of development of the business or market conditions. Management judgments and estimates have been applied consistently and have been reliable historically. We believe that there are two key factors which impact the reliability of management’s estimates.
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The first of those key factors is that a significant number of our contracts are typically less than six months. The short-term nature of such contracts reduces the risk that material changes in accounting estimates will occur on the basis of market conditions or other factors. The second key factor is that we have hundreds of contracts in any given accounting period, which reduces the risk that any one change in an accounting estimate on one or several contracts would have a material impact on our consolidated financial statements.
The substantial majority of our revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to customer specifications. These contracts may be fixed price, cost-reimbursable, or time and materials. We account for all revenue contracts in accordance with ASC 606. A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied. For contracts with multiple performance obligations, we allocate the contract’s transaction price to each performance obligation using observable standalone selling prices for similar products and services. When the standalone selling price is not directly observable, we use our best estimate of the standalone selling price of each distinct good or service in the contract using the cost plus reasonable margin approach.
Our performance obligations are satisfied over time or at a point in time. Product revenue for certain Precision Strike products including LMS, Space, Directed Energy and Cyber and Mission Solution product deliveries and customization of UGV transport vehicles is recognized over time as costs are incurred. Contract services revenue is recognized over time and composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, technical support services, ISR services, and customer-funded R&D contracts. For performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with, and thereby best depict, transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts. We elected the right to invoice practical expedient in which if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. Certain training services are recognized over time using an output method based on days of training completed. Warranty agreements which meet the definition of a performance obligation are recognized straight line over the warranty period. LMS product revenue is currently recognized over time as the product is considered to not have alternative use as the U.S. government is the only current customer including FMS sales. Once LMS products receive a DCS contract, which is expected during fiscal year 2027, the products are considered to have alternative use and revenue will be recognized at a point in time.
For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is recognized at the point in time in which each performance obligation is fully satisfied. Our product sales revenue is primarily composed of revenue recognized on contracts for the delivery of UAS, UGV, UUV, IAMD, and EW systems and spare parts, respectively. Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.
We review cost performance, estimates to complete and variable consideration at least quarterly and in many cases more frequently. Adjustments to original estimates for a contract’s revenue, estimated costs at completion and estimated profit or loss are often required as work progresses under a contract, as experience is gained and as more information is obtained, even though the scope of work required under the contract may not change, or if contract modifications, including the finalization of undefinitized contract actions, occur. The impact of revisions in estimate of completion and variable consideration for all types of contracts are recognized on a cumulative catch-up basis in the period in which the revisions are made. Changes in variable consideration associated with the finalization of undefinitized contract actions or unpriced change orders could result in cumulative catch up adjustments to revenue that could be material. During the fiscal years ended April 30, 2026, 2025 and 2024, changes in accounting estimates on contracts recognized using the over time method are presented below. Amounts representing contract change orders or claims are included in revenue if the order or claim meets the criteria of a contract or contract modification in accordance with ASC 606. Incentives or penalties and awards applicable to performance on contracts are considered in
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estimating revenue and profit rates, and are recorded when there is sufficient information to assess anticipated contract performance.
For the years ended April 30, 2026, 2025 and 2024, favorable and unfavorable cumulative catch-up adjustments included in revenue were as follows (in thousands):
Year Ended April 30,
2026
2025
2024
Gross favorable adjustments
$
14,339
$
11,106
$
7,359
Gross unfavorable adjustments
(16,896)
(5,104)
(1,951)
Net adjustments
$
(2,557)
$
6,002
$
5,408
For the year ended April 30, 2026, favorable cumulative catch up adjustments of $14.3 million were primarily due to favorable adjustments on 18 contracts, of which one contract had individually material adjustments. A Space and Directed Energy contract had a favorable adjustment due to lower expected costs and an increase in profitability which increased revenue by approximately $6.7 million. For the same period, unfavorable cumulative catch up adjustments of $16.9 million were primarily related to unfavorable adjustments on 25 contracts, of which one contract had individually material adjustments. A Cyber and Mission Solutions contract had an adjustment due to revised estimates of the total expected costs to complete the contracts, which decreased revenue by approximately $(3.1) million.
For the year ended April 30, 2025, favorable cumulative catch up adjustments of $11.1 million were primarily due to favorable adjustments on eight contracts, of which four LMS undefinitized contract actions were definitized during the year ended April 30, 2025, which resulted in cumulative catch-up revenue adjustments that increased revenue by approximately $9.9 million. The remaining adjustments individually were not material. For the same period, unfavorable cumulative catch up adjustments of $5.1 million were primarily related to unfavorable adjustments on 17 contracts for higher revised estimates of the total expected costs to complete the contract, including one LMS contract, which decreased revenue by approximately $2.9 million. The remaining adjustments individually were not material.
For the year ended April 30, 2024, favorable cumulative catch up adjustments of $7.4 million were primarily due to final cost adjustments on 17 contracts, of which we revised our estimates of the total expected costs to complete two LMS contracts during the year ended April 30, 2024. The aggregate impact of these adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was an increase to revenue of approximately $2.7 million. For the same period, unfavorable cumulative catch up adjustments of $2.0 million were primarily related to higher than expected costs on 11 contracts, which individually were not material.
Inventories Reserves for Excess and Obsolescence
Our policy for valuation of inventory, including the determination of obsolete or excess inventory, requires us to perform a detailed assessment of inventory at each balance sheet date, which includes a review of, among other factors, an estimate of future demand for products within specific time horizons, valuation of existing inventory, as well as product lifecycle and product development plans. Inventory reserves are also provided to cover risks arising from slow-moving items. We write down our inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated net realizable value based on assumptions about future demand and market conditions and record to cost of sales. We may be required to record additional inventory write-downs if actual market conditions are less favorable than those projected by our management.
Goodwill
Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. We test goodwill for impairment annually during the fourth quarter of our fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business or political climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in
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the manner of our use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.
Our evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. For the impairment test, we first assess qualitative factors, macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, we may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test we estimate the fair value by weighting the results from the income approach and the market approach. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in our industry and require us to make certain assumptions and estimates regarding industry economic factors and future profitability of its business.
In January 2026, a stop-work order was received on an OTA for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program. Additionally, in March 2026, the customer terminated the agreement for convenience. We concluded that the stop-work order represented a trigger event that indicated the carrying value of the Space reporting unit exceeded its fair value. As a result, we updated our estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order and termination for convenience as well as an increase in expected research and development and capital investments to achieve product commercialization, which is expected to result in expanded opportunities and improve long term product margins. The changes in estimates resulted in the recognition of a goodwill impairment charge of approximately $241 million in the Space reporting unit. Due to the trigger event, we also performed a recoverability test on the long-lived assets, inclusive of the intangibles, of the Space reporting unit for impairment in accordance with ASC 360. The undiscounted cash flows exceeded the carrying value and no impairment was recorded.
As part of our annual goodwill impairment and identifiable asset test during the fiscal quarter ended April 30, 2025, we determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025. These changes in estimates resulted in the recognition of a full goodwill impairment charge of $18.4 million during the three months ended April 30, 2025 in the UGV reporting unit.
As of April 30, 2026, our Space reporting unit has a goodwill balance of approximately $291 million. During the most recent annual impairment test during the fourth quarter of fiscal year 2026, the estimated fair value of all reporting units with goodwill from acquisitions in previous years substantially exceeded their carrying value. The reporting units from the BlueHalo and ESAero acquisitions were recently recorded at estimated fair value during the fiscal year ended April 30, 2026 and, other than the Space unit, no triggering event for goodwill impairment was since identified.
The estimates and assumptions used to determine the fair value of our reporting units are highly subjective in nature. Actual results can be materially different from the estimates and assumptions. If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the carrying amounts, we could recognize future impairment charges, the amount of which could be material.
Intangible Assets – Acquired in Business Combinations
We perform valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocate the purchase price of each acquired business to our respective net tangible and intangible assets. Acquired intangible assets include technology, backlog, in-process research and development, customer relationships, licenses, trademarks and tradenames, and non-compete agreements. We use valuation techniques to value these intangibles assets, with the primary technique being a discounted cash flow analysis. A discounted cash
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flow analysis requires us to make various assumptions and estimates including projected revenue, gross margins, operating costs, growth rates, useful lives and discount rates. Intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits of such assets are consumed. As part of our annual goodwill impairment and identifiable asset test, performed during the quarter ended April 30, 2025, a decrease in forecasted results for the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025 was concluded to be a triggering event for impairment assessment and resulted in accelerated intangible amortization expenses of $4.3 million which were recorded during the three months ended April 30, 2025. Due to the trigger event, the Company performed a recoverability test on the long-lived assets of the Space reporting unit, inclusive of the intangibles, for impairment in accordance with ASC 360. The undiscounted cash flows exceeded the carrying value and no impairment was recorded for long-lived assets. Due to the SCAR trigger event in January 2026, the Company performed a recoverability test on the long-lived assets of the Space reporting unit, inclusive of the intangibles, for impairment in accordance with ASC 360. The undiscounted cash flows exceeded the carrying value and no impairment was recorded for long-lived assets.
Income Taxes
Our income tax provision and related income tax assets and liabilities are based on actual and expected future income, U.S. and foreign statutory income tax rates, and tax regulations and planning opportunities in the various jurisdictions in which it operates. Significant judgment is required in interpreting tax regulations in the United States and in foreign jurisdictions, evaluating our worldwide uncertain tax positions, and assessing the likelihood of realizing certain tax benefits. Actual results could differ materially from those judgments, and changes in judgments could materially affect our consolidated financial statements.
We are required to estimate our income taxes, which includes estimating our current income taxes as well as measuring the temporary differences resulting from different treatment of items for tax and accounting purposes. We currently have significant deferred tax assets, which are subject to periodic recoverability assessments. Realizing our deferred tax assets principally depends on our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors, which may result in recording a valuation allowance against those deferred tax assets. We record a valuation allowance to reduce our deferred tax assets if, based on the weight of available evidence, we believe expected future taxable income is not likely to support the use of a deduction or credit in that jurisdiction. We evaluate the level of our valuation allowances during the interim and annually.
We record unrecognized tax benefits for U.S. federal, state, local, and foreign tax positions related primarily to tax credits claimed and tax nexus. For each reporting period, we apply a consistent methodology to measure unrecognized tax benefits and all unrecognized tax benefits are reviewed periodically and adjusted as circumstances warrant. Our measurement of our unrecognized tax benefits is based on our assessment of all relevant information, including prior audit experience, the status of audits, conclusions of tax audits, lapsing of applicable statutes of limitations, identification of new issues, and any administrative guidance or developments. We recognize unrecognized tax benefits in the first financial reporting period in which information becomes available indicating that such benefits will more likely than not (a greater than 50% likelihood) be realized.
We have various foreign subsidiaries to conduct or support our business outside the United States. We do not provide for U.S. income taxes on undistributed earnings for our foreign subsidiaries as we expect the foreign earnings will be indefinitely reinvested in such foreign jurisdictions.
Fiscal Periods
Our fiscal year ends on April 30. Due to our fixed year end date of April 30, our first and fourth quarters each consist of approximately 13 weeks. The second and third quarters each consist of exactly 13 weeks. Our first three quarters end on a Saturday.
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Results of Operations
The following table sets forth certain historical consolidated income statement data expressed in dollars (in thousands) and as a percentage of revenue for the periods indicated. Certain amounts may not sum due to rounding.
Fiscal Year Ended April 30,
2026
2025
2024
Revenue
$
1,976,845
100
%
$
820,627
100
%
$
716,720
100
%
Cost of sales
1,476,203
75
%
501,991
61
%
432,789
60
%
Gross margin
500,642
25
%
318,636
39
%
283,931
40
%
Selling, general and administrative
443,251
22
%
158,753
19
%
114,420
16
%
Research and development
127,678
6
%
100,729
12
%
97,687
14
%
Impairment of goodwill
240,708
12
%
18,359
2
%
—
—
%
(Loss) income from operations
(310,995)
(16)
%
40,795
5
%
71,824
10
%
Interest expense, net
(5,613)
—
%
(2,188)
—
%
(4,220)
(1)
%
Other income (expense), net
10,986
1
%
1,057
—
%
(4,373)
(1)
%
(Loss) income before income taxes
(305,622)
(15)
%
39,664
5
%
63,231
9
%
Provision for (benefit from) income taxes
(23,059)
(1)
%
882
—
%
1,891
—
%
Equity method investment income (loss), net of tax
17,441
1
%
4,837
1
%
(1,674)
—
%
Net (loss) income
(265,122)
(13)
%
43,619
5
%
59,666
8
%
Effective May 1, 2025, we reorganized our segments in connection with our acquisition of BlueHalo. The reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their business units. Our reportable segments are AxS and SCDE. AxS includes the historical AeroVironment businesses UxS, LMS and MW as well as IAMD, EW, UUV, and Autonomous R&D from the BlueHalo acquisition. SCDE includes the Space, Cyber and Mission Solutions, and Directed Energy businesses from the BlueHalo acquisition. Effective May 1, 2026 Autonomous R&D is included in the SCDE segment.
Also effective May 1, 2025, due to the increased size and complexity of the businesses, the significant amount of debt to finance the acquisition and the related debt covenants, the Chief Operating Decision Maker’s (“CODM”) measure of profitability is Segment Adjusted EBITDA, defined as segment income (loss) from operations before depreciation and amortization and adjusted for the impact of certain other non-cash items, including goodwill impairment, amortization of implementation of cloud computing arrangements, stock-based compensation, other purchase accounting adjustments, and cash items including acquisition related expenses and certain one-time non-operating expense or income such as legal expense. The following table (in thousands) sets forth our revenue and segment adjusted EBITDA generated by each reporting segment for the periods indicated. Prior period segment information has been revised to align with the new segment measure of profitability and the new reportable segments.
Year Ended April 30, 2026
AxS
SCDE
Total
Revenue
$
1,358,077
$
618,768
$
1,976,845
Segment adjusted EBITDA
$
288,652
$
(2,596)
$
286,056
Year Ended April 30, 2025
AxS
SCDE
Total
Revenue
$
820,627
$
—
$
820,627
Segment adjusted EBITDA
$
146,424
$
—
$
146,424
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Year Ended April 30, 2024
AxS
SCDE
Total
Revenue
$
716,720
$
—
$
716,720
Segment adjusted EBITDA
$
127,753
$
—
$
127,753
We recorded intangible amortization expense and other purchase accounting adjustments in the following categories on the accompanying consolidated statements of income (loss):
Year Ended April 30,
2026
2025
2024
Cost of sales:
Product sales
$
81,220
$
15,018
$
8,214
Contract services
11,489
4,387
5,334
Selling, general and administrative
130,431
4,001
5,010
Total
$
223,140
$
23,406
$
18,558
Fiscal Year Ended April 30, 2026 Compared to Fiscal Year Ended April 30, 2025
Revenue. Revenue for the fiscal year ended April 30, 2026 was $1,976.8 million, as compared to $820.6 million for the fiscal year ended April 30, 2025, representing an increase of $1,156.2 million, or 141%. The increase in revenue was due to an increase in product revenue of $722.6 million, and an increase in service revenue of $433.6 million. The increase in product revenue was primarily due to an increase of $526.0 million related to the acquisitions of BlueHalo and ESAero. Legacy AV product revenue included in the AxS segment increased by $196.6 million driven by an increase in LMS, MacCready Works, and MUAS products due to increase in domestic and international demand, partially offset by a decrease in SUAS due to a decrease in international sales. The increase in service revenue was primarily due to the $413.2 million service revenue resulting from our acquisition of BlueHalo. Legacy AV service revenue, included in the AxS segment, increased by $20.4 million driven by an increase in customer funded R&D and engineering services of $22.6 million, partially offset by a decrease training and repair services primarily due to the decrease in SUAS product revenue. The proportion of service revenue to product revenue is expected to remain higher following the acquisition of BlueHalo.
Cost of Sales. Cost of sales for the fiscal year ended April 30, 2026 was $1,476.2 million, as compared to $502.0 million for the fiscal year ended April 30, 2025, representing an increase of $974.2 million, or 194%. The increase in cost of sales was a result of an increase in product cost of sales of $554.9 million and an increase in service costs of sales of $419.3 million. The increase in product costs of sales was primarily due to an increase of $345.0 million related to the acquisitions of BlueHalo and ESAero and an increase of $66.2 million intangible amortization related to the BlueHalo and ESAero acquisitions. Legacy AV product cost of sales increased $143.7 million. The increase in legacy product costs of sales was primarily due to an increase of approximately $111 million due to the increase in sales volume and approximately $34 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production. The increase in service cost of sales was primarily due to an increase of $398.8 million associated with the BlueHalo acquisition and an increase of $7.1 million intangible amortization related to the BlueHalo acquisition. Legacy AV service cost of sales increased $13.4 million primarily due to an increase of approximately $15 million related to service volume. Cost of sales for the fiscal year ended April 30, 2026 included $92.7 million of intangible amortization and other related non-cash purchase accounting expenses as compared to $19.4 million for the fiscal year ended April 30, 2025. As a percentage of revenue, cost of sales increased from 61% to 75% primarily due to increased amortization and other non-cash purchase accounting expenses and an increase in the proportion of service revenue resulting from the effect of the BlueHalo acquisition, resulting in gross margin decreasing from 39% to 25%.
Gross Margin. Gross margin is equal to revenue minus cost of sales.
Selling, General and Administrative. SG&A expense for the fiscal year ended April 30, 2026 was $443.0 million, or 22% of revenue, as compared to SG&A expense of $158.8 million, or 19% of revenue, for the fiscal year
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ended April 30, 2025. The increase in SG&A expense was primarily due to an increase of $126.4 million of intangible amortization expense primarily related to the BlueHalo acquisition, an increase of approximately $48 million of employee related expenses related to the increase in headcount, and an increase of $26.4 million of acquisition related expenses related to the BlueHalo and ESAero acquisitions.
Research and Development. R&D expense for the fiscal year ended April 30, 2026 was $127.7 million, or 6% of revenue, as compared to R&D expense of $100.7 million, or 12% of revenue, for the fiscal year ended April 30, 2025. R&D expense increased by $27 million, or 27%, for the fiscal year ended April 30, 2026, primarily due to an increase in development activities regarding enhanced capabilities for our products, development of new product lines and to support our acquired businesses.
Impairment of Goodwill. During the fiscal year ended April 30, 2026, a goodwill impairment charge of $240.7 million was recorded resulting from a decrease in forecasted results of the Space reporting unit due to the Space Force’s decision to cancel the contract related to the delivery of BADGER phased array antenna systems to support the SCAR program. During the fiscal year ended April 30, 2025, a goodwill impairment charge of $18.4 million was recorded resulting from a decrease in forecasted results of the UGV reporting unit.
Interest Expense, net. Interest expense, net for the fiscal year ended April 30, 2026 was $5.6 million, as compared to interest expense net of $2.2 million for the fiscal year ended April 30, 2025. The increase was driven by the interest expense related to the Term Loan and Revolver Facility obtained on May 1, 2025 in conjunction with the BlueHalo acquisition and the unamortized debt issuance costs allocated to the Term Loan Facility of $6.7 million, which were expensed upon repayment of the Term Loan Facility in July 2025 using the proceeds from the convertible notes and common stock issuances in July 2025. The increase in interest expense was partially offset by an increase in interest income due to a combination of higher cash and investment balances and lower interest bearing debt balances.
Other Income, net. Other income, net for the fiscal year ended April 30, 2026 was $11.0 million, as compared to $1.1 million for the fiscal year ended April 30, 2025. The increase in other income, net is primarily due to realized gains associated with the sale of equity security investments of $11.7 million.
Income Taxes. Our effective income tax rate was 7.5% for the fiscal year ended April 30, 2026 as compared to 2.2% for the fiscal year ended April 30, 2025. The change in our effective income tax rate was primarily attributable to the increase in net loss before income taxes, inclusive of the goodwill impairment loss which is non-deductible, combined with a decrease in FDII deductions. The effective income tax rate for the fiscal year ended April 30, 2026, was primarily attributable to the goodwill impairment loss, which is non-deductible, partially offset by R&D tax credits.
Equity method investment income, net of tax. Equity method investment income, net of tax for the fiscal year ended April 30, 2026 was $17.4 million, as compared to $4.8 million for the fiscal year ended April 30, 2025.
Business Segment Results of Operations
AxS
Year Ended
April 30,
April 30,
2026
2025
Revenue:
$
1,358,077
$
820,627
Segment adjusted EBITDA
$
288,652
$
146,424
AxS Segment Revenue. AxS revenue for the year ended April 30, 2026 was $1,358.1 million, as compared to $820.6 million for the year ended April 30, 2025, representing an increase of $537.5 million, or 65%. The increase in revenue was due to an increase in product and service revenues of $450.1 million and $87.4 million, respectively. The increase in product revenue was primarily due to the $253.5 million of product revenue resulting from our acquisitions of BlueHalo and ESAero. Legacy AV product revenue included in the AxS segment increased by $196.6 million driven by an increase in LMS, MacCready Works, and MUAS products due to increase in domestic and international demand,
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partially offset by a decrease in SUAS due to a decrease in international sales. The increase in service revenue was primarily due to the $67.0 million of service revenue resulting from our acquisition of BlueHalo. Legacy AV service revenue, included in the AxS segment, increased by $20.4 million driven by an increase in customer funded R&D and engineering services of $22.6 million, partially offset by a decrease training and repair services primarily due to the decrease in SUAS product revenue. Proportion of service revenue to product revenue is expected to remain higher following the acquisition of BlueHalo.
AxS Segment Adjusted EBITDA. AxS segment adjusted EBITDA for the year ended April 30, 2026 was $288.7 million, as compared to $146.4 million for the year ended April 30, 2025, representing an increase of $142.3 million, or 97%. The increase in AxS segment adjusted EBITDA was primarily due to an increase in revenue of $537.5 million. The increase in revenue was partially offset by an increase in adjusted cost of sales of $340.8 million, adjusted SG&A of $36.7 million primarily due employee related costs driven by the increased headcount, and R&D of $12.3 million. The increase in adjusted cost of sales was primarily due to an increase of approximately $197.7 million associated with the BlueHalo and ESAero acquisitions. Legacy AV adjusted cost of sales increased $157.8 million driven by approximately $127 million due to the increase in sales volume and approximately $30 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production, partially offset by $14 million of stock-based compensation and depreciation not included in adjusted cost of sales.
SCDE
Year Ended
April 30,
April 30,
2026
2025
Revenue:
$
618,768
$
—
Segment adjusted EBITDA
$
(2,596)
$
—
Revenue. SCDE revenue for the year ended April 30, 2026 was $618.8 million, as compared to $0 for the year ended April 30, 2025. The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in revenue is a result of the acquisition.
SCDE Segment Adjusted EBITDA. SCDE segment adjusted EBITDA for the year ended April 30, 2026 was $(2.6) million, as compared to $0 for the year ended April 30, 2025. The SCDE segment consists of business units obtained in the BlueHalo acquisition on May 1, 2025, and the increase in segment adjusted EBITDA is a result of the acquisition.
Fiscal Year Ended April 30, 2025 Compared to Fiscal Year Ended April 30, 2024
Revenue. Revenue for the fiscal year ended April 30, 2025 was $820.6 million, as compared to $716.7 million for the fiscal year ended April 30, 2024, representing an increase of $103.9 million, or 14%. The increase in revenue was due to an increase in product revenue of $107.0 million, partially offset by a decrease in service revenue of $3.0 million. The increase in product revenue was primarily due to an increase of $164.7 million from the production of our Switchblade products, driven by increased global demand for our LMS associated with the current global conflicts as well as U.S. DoD. resupply and an increase of $4.4 million from the delivery of MW products driven by demand for new product releases, partially offset by a decrease of $62.1 million of product deliveries of our UxS products, primarily due to a decrease in international sales to Ukraine. Fiscal 2025 also included favorable cumulative catch-up revenue adjustments of $12.0 million due to changes in estimates associated with the definitization of certain LMS contracts. The decrease in service revenue was primarily due to a decrease of $2.8 million in other engineering services and customer-funded R&D activities primarily associated with the shift from development to production of certain LMS products.
Cost of Sales. Cost of sales for the fiscal year ended April 30, 2025 was $502.0 million, as compared to $432.8 million for the fiscal year ended April 30, 2024, representing an increase of $69.2 million, or 16%. The increase in cost of sales was a result of an increase in product cost of sales of $64.2 million and an increase in service costs of sales of $5.0 million. The increase in product cost of sales was primarily due to approximately $62 million associated with the increase in product sales volume, $4.6 million due to the UGV accelerated intangible amortization expenses, partially
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offset by a decrease of approximately $3 million due to product mix shift primarily to the definitization of LMS contracts. The increase of $5.0 million in service costs of sales was primarily due to approximately $7 million increase due to mix shift associated with a higher proportion of engineering services, partially offset by approximately $2 million associated with the decreased service volume. Cost of sales for the fiscal year ended April 30, 2025 included $19.4 million of intangible amortization as compared to $13.5 million of intangible amortization and other related non-cash purchase accounting expenses for the fiscal year ended April 30, 2024. As a percentage of revenue, cost of sales increased from 60% to 61%, primarily due to the accelerated amortization of UGV intangibles of $4.6 million, partially offset by an increase in the proportion of product revenue to total revenue, resulting in a decrease in gross margin from 40% to 39%.
Gross Margin. Gross margin is equal to revenue minus cost of sales.
Selling, General and Administrative. SG&A expense for the fiscal year ended April 30, 2025 was $158.8 million, or 19% of revenue, as compared to SG&A expense of $114.4 million, or 16% of revenue, for the fiscal year ended April 30, 2024. The increase in SG&A expense was primarily due to an increase of $17.2 million in acquisition related expenses related to the BlueHalo acquisition, an increase in employee related expenses of $10.0 million driven by an increase in average headcount and expansion of our global business development team, and an increase in sales and marketing expense of $9.4 million driven by an increase in bid and proposal efforts associated with the higher sales volume.
Research and Development. R&D expense for the fiscal year ended April 30, 2025 was $100.7 million, or 12% of revenue, as compared to R&D expense of $97.7 million, or 14% of revenue, for the fiscal year ended April 30, 2024. R&D expense increased by $3.0 million, or 3%, for the fiscal year ended April 30, 2025, primarily due to an increase in development activities regarding enhanced capabilities for our products, development of new product lines and to support our acquired businesses.
Impairment of Goodwill. A goodwill impairment charge of $18.4 million resulting from a decrease in forecasted results of the UGV reporting unit identified during our annual goodwill impairment test during the three months ended April 30, 2025 in the UGV reporting unit.
Interest Expense, net. Interest expense, net for the fiscal year ended April 30, 2025 was $2.2 million, as compared to interest expense net of $4.2 million for the fiscal year ended April 30, 2024. The decrease in interest expense, net was primarily due to a decrease of $5.0 million in interest expense primarily due to lower average outstanding balances on our debt facility, partially offset by a decrease in interest income of $2.5 million primarily due to lower interest rates and a decrease in our average investment balances. On May 1, 2025, in connection with the closing of the BlueHalo acquisition, we entered into a new Term A Loan and borrowed from our revolving credit facility (the “Revolving Credit Facility,” and together with the Term A Loan, the “Credit Facilities”). As of May 1, 2025, the outstanding balance of the Credit Facilities was $955.0 million, which bears a variable interest rate.
Other Income (Expense), net. Other income, net for the fiscal year ended April 30, 2025 was $1.1 million, as compared to other expense, net of $4.4 million for the fiscal year ended April 30, 2024. The increase in other income, net is primarily due to a decrease in unrealized losses associated with increases in fair market value for equity security investments of $4.1 million.
Income Taxes. Our effective income tax rate was 2.2% for the fiscal year ended April 30, 2025 as compared to 3.0% for the fiscal year ended April 30, 2024. The decrease in our effective tax rate in fiscal 2025 compared with fiscal 2024 was primarily due to a decrease in net income, a decrease in our FDII deduction, offset by non-deductible goodwill impairment expense from our foreign subsidiary.
Equity method investment gain (loss), net of tax. Equity method investment gain, net of tax for the fiscal year ended April 30, 2025 was $4.8 million, as compared to equity method investment loss of $(1.7) million for the fiscal year ended April 30, 2024.
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Business Segment Results of Operations
AxS
Year Ended
April 30,
April 30,
2025
2024
Revenue:
$
820,627
$
716,720
Segment adjusted EBITDA
$
146,424
$
127,753
AxS Revenue . AxS Revenue for the fiscal year ended April 30, 2025 was $820.6 million, as compared to $716.7 million for the fiscal year ended April 30, 2024, representing an increase of $103.9 million, or 14%. The increase in revenue was due to an increase in product revenue of $107.0 million, partially offset by a decrease in service revenue of $3.0 million. The increase in product revenue was primarily due to an increase of $164.7 million from the production of our Switchblade products, driven by increased global demand for our LMS associated with the current global conflicts as well as U.S. DoD. resupply and an increase of $4.4 million from the delivery of MW products driven by demand for new product releases, partially offset by a decrease of $62.1 million of product deliveries of our UxS products, primarily due to a decrease in international sales to Ukraine. Fiscal 2025 also included favorable cumulative catch-up revenue adjustments of $12.0 million due to changes in estimates associated with the definitization of certain LMS contracts. The decrease in service revenue was primarily due to a decrease of $2.8 million in other engineering services and customer-funded R&D activities primarily associated with the shift from development to production of certain LMS products.
AxS Segment Adjusted EBITDA. AxS segment adjusted EBITDA for the year ended April 30, 2025 was $146.4 million, as compared to $127.8 million for the year ended April 30, 2024, representing an increase of $18.6 million, or 15%. The increase in AxS segment adjusted EBITDA was primarily due to an increase in revenue of $103.9 million. The increase in revenue was partially offset by an increase in adjusted cost of sales of $60.1 million, adjusted SG&A of $25.5 million primarily due employee related costs driven by the increased headcount, and R&D of $3.0 million. The increase in adjusted cost of sales was primarily due to an increase of approximately $58 million due to the increase in sales volume and approximately $2 million due to mix shift to a higher proportion of lower margin products driven by the increase in Switchblade production.
SCDE. SCDE was formed as a segment May 1, 2025 with no results prior to this date.
Liquidity and Capital Resources
In May 2025, in connection with the consummation of the BlueHalo acquisition, the Company entered into a Fourth Amendment to Credit Agreement with BofA NA, the administrative agent and the swingline lender, JPM, U.S. Bank, Citibank, BMO, Citizens and RBC. The Amended Credit Agreement provides for an aggregate $700.0 million term loan and an aggregate $350.0 million revolving credit facility. Upon effectiveness of the Amended Credit Agreement, we drew $225.0 million from the amended Revolving Facility and the full $700.0 million of the Term Loan Facility. The proceeds from the Term Loan Facility and the Revolving Facility were used to repay certain outstanding indebtedness of BlueHalo and to pay for certain related transaction costs. In June 2025, we drew an additional $10.0 million under the Revolving Facility.
In July 2025, we issued 4,057,460 shares of common stock at a public offering price of $248.00 per share (the “Common Stock Offering”) and issued $747,500,000 aggregate principal amount of 0% convertible senior notes due 2030 (the “Notes Offering”). The aggregate net proceeds from the Common Stock Offering and the Notes Offering, after deducting underwriting discounts and debt and equity issuance costs, was approximately $1.70 billion. The Company used approximately $965.3 million of the net proceeds from the Common Stock Offering and the Notes Offering to repay indebtedness under the Term Loan Facility and outstanding borrowings under the Revolving Credit Facility, and the remainder is expected to be used for general corporate purposes, including to increase manufacturing capacity.
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The $700.0 million term loan has been repaid in full and closed; although new term loans can be renegotiated and issued under the Credit Facility. Our ability to borrow under the Revolving Facility is reduced by outstanding letters of credit of $13.2 million as of April 30, 2026. As of April 30, 2026, approximately $336.8 million was available under the Revolving Facility. Refer to Note 10—Debt to our unaudited condensed consolidated financial statements in Part I, Item 1 of this Annual Report on Form 10-K for further details. In addition, Telerob has a line of credit of €9.0 million ($10.5 million) available for borrowing or issuing letters of credit of which €2.2 million ($2.6 million) was outstanding as of April 30, 2026.
We anticipate funding our normal recurring trade payables, accrued expenses, ongoing R&D costs and obligations under the Credit Facilities through our existing working capital and funds provided by operating activities. The majority of our purchase obligations are pursuant to funded contractual arrangements with our customers. We believe that our existing cash, cash equivalents, cash provided by operating activities and other financing sources will be sufficient to meet our anticipated working capital, capital expenditure requirements. There can be no assurance, however, that our business will continue to generate cash flow at current levels. If we are unable to generate sufficient cash flow from operations, then we may be required to sell assets, reduce capital expenditures or draw on our Credit Facilities. We anticipate that existing sources of liquidity, Credit Facilities, and cash flows from operations will be sufficient to satisfy our cash needs for the foreseeable future.
The Company is party to a receivables purchase agreement with Citibank, N.A., with an aggregate capacity of $100 million. As of April 30, 2026, no receivables have been sold, proceeds collected, or purchase discount fees incurred.
Our primary recurring liquidity needs are for financing working capital, investing in capital expenditures, supporting product development efforts, introducing new products and enhancing existing products, marketing acceptance and adoption of our products and services, and possible acquisitions of entities or strategic assets. Our future capital requirements, to a certain extent, are also subject to general conditions in or affecting the defense industry and are subject to general economic, political, financial, competitive, legislative and regulatory factors that are beyond our control. Moreover, to the extent that existing cash, cash equivalents, cash from operations, and cash from our Credit Facilities are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing, subject to the limitations specified in the Amended Credit Agreement. In addition, we may also need to seek additional equity funding or debt financing if we become a party to any agreement or letter of intent for potential investments in, or acquisitions of, businesses, services or technologies.
Our working capital requirements vary by contract type. On Cost Plus and T&M contracts, we typically bill our incurred costs and fees monthly as work progresses, and therefore working capital investment is minimal. On FFP contracts, we typically are paid as we deliver products, and working capital is needed to fund labor and expenses incurred during the lead time from contract award until contract deliveries begin. Certain contracts have negotiated progress payments, which facilitates billing and collection as work is completed.
Due to the July 2025 reconciliation bill, commonly known as the One Big Beautiful Bill Act (“OBBA”), which allows R&D expenditures to be deducted, our cash taxes paid for U.S. federal income taxes are significantly reduced for the fiscal year ending April 30, 2026.
In May 2026, we notified the lessor of our intent to exercise the purchase option in the 100 Quality Circle, Huntsville, Alabama lease agreement and plan to purchase the building for $16.3 million.
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Cash Flows
The following table provides our cash flow data from continuing operations for the periods ended:
Fiscal Year Ended April 30,
2026
2025
2024
(In thousands)
Net cash (used in) provided by operating activities
$
(78,404)
$
(1,318)
$
15,292
Net cash used in investing activities
$
(1,232,671)
$
(28,490)
$
(51,714)
Net cash provided by (used in) financing activities
$
1,647,178
$
(2,856)
$
(22,852)
Cash (Used in) Provided by Operating Activities. Net cash used in operating activities for the fiscal year ended April 30, 2026 increased by $77.1 million to $78.4 million, as compared to net used in operating activities of $1.3 million for the fiscal year ended April 30, 2025. This decrease in net cash provided by operating activities was primarily due to a decrease in changes in operating assets and liabilities of $236.6 million, largely resulting from increases in inventories due to increased demand and accounts receivable and unbilled receivables and retentions due to year over year timing differences, and a decrease in net income of $308.7 million. The decrease in cash provided by operating activities was partially offset by an increase in non-cash expenses of $468.3 million, primarily due to an increase in depreciation and amortization and goodwill impairment charges.
Net cash used in operating activities for the fiscal year ended April 30, 2025 increased by $16.6 million to $1.3 million, as compared to net cash provided by operating activities of $15.3 million for the fiscal year ended April 30, 2024. This decrease in net cash provided by operating activities was primarily due to a decrease in net income of $16.0 million and changes in operating assets and liabilities, largely resulting from increases in accounts receivable and income tax receivable and a decrease in other liabilities, partially offset by a decrease in inventories and an increase in accounts payable due to year over year timing differences. The decrease in cash provided by operating activities was partially offset by an increase in non-cash expenses of $10.9 million, primarily due to a goodwill impairment of $18.4 million in the fiscal year ended April 30, 2025, an increase in stock-based compensation and depreciation and amortization, partially offset by a decrease in stock inventory reserve charges.
Cash Used in Investing Activities. Net cash used in investing activities increased by $1,204.2 million to $1,232.7 million for the fiscal year ended April 30, 2026, compared to $28.5 million for the fiscal year ended April 30, 2025. The increase in net cash used in investing activities was primarily due to business acquisitions, net of cash acquired of $871.5 million related to the BlueHalo and ESAero acquisitions in the fiscal year ended April 30, 2026 and net purchase investments of $283.4 million. During the fiscal years ended April 30, 2026 and 2025, we used cash to purchase property and equipment totaling $62.5 million and $22.8 million, respectively.
Net cash used in investing activities decreased by $23.2 million to $28.5 million for the fiscal year ended April 30, 2025, compared to $51.7 million for the fiscal year ended April 30, 2024. The decrease in net cash used in investing activities was primarily due to a decrease in business acquisitions, net of cash acquired of $24.2 million related to the Tomahawk acquisition in the fiscal year ended April 30, 2024. During the fiscal years ended April 30, 2025 and 2024, we used cash to purchase property and equipment totaling $22.8 million and $23.0 million, respectively.
Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities increased by $1,650.0 million to $1,647.2 million for the fiscal year ended April 30, 2026, compared to net cash used in financing activities of $2.9 million for the fiscal year ended April 30, 2025. The increase in net cash used in financing activities was primarily due to proceeds from shares issued, net of issuance costs of $968.5 million proceeds and proceeds from the convertible notes of $726.9 million, partially offset by net principal payments of the credit facility of $39.9 million.
Net cash used in financing activities decreased by $20.0 million to $2.9 million for the fiscal year ended April 30, 2025, compared to net cash provided by financing activities of $22.9 million for the fiscal year ended April 30, 2024. The decrease in net cash used in financing activities was primarily due to a decrease in the principal payments on the credit facility of $69.0 million and an increase in proceeds from the credit facility of $40.0 million, partially offset by
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a decrease in the proceeds from shares issued, net of issuance costs of $88.4 million in the fiscal year ended April 30, 2024.
Contractual Obligations
The following table describes our commitments to settle contractual obligations as of April 30, 2026:
Payments Due By Period (2)
Less Than
More Than
Total
1 Year
1 to 3 Years
3 to 5 Years
5 Years
(In thousands)
Operating lease obligations
$
134,344
$
23,263
$
47,592
$
29,400
$
34,089
Purchase obligations(1)
680,159
662,673
17,486
—
—
Long-term debt obligations
747,500
—
—
747,500
—
Total
$
1,562,003
$
685,936
$
65,078
$
776,900
$
34,089
(1) Consists of all cancelable and non-cancelable purchase orders as of April 30, 2026.
(2) Not included in the table above is additional capital contributions of $0.9 million committed under the terms of a limited partnership agreement. Additionally, subsequent to the reporting period in May 2026, the Company entered into a new limited partnership and committed to contributions totaling $20.0 million over an expected five year period.
Recently Adopted Accounting Standards
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires updates to the rate reconciliation, income taxes paid and other disclosures. Effective April 30, 2026, we adopted the ASU 2023-09 retrospectively. The Company’s adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements.
New Accounting Standards
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses included in each expense caption on the face of the income statement at interim and annual reporting periods. The new standard is effective for fiscal years beginning after December 15, 2026, interim periods within fiscal years beginning after December 15, 2027, and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. We do not expect this guidance to have a material impact on our financial position or results of operations; however, it will result in additional disclosures in the notes to our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which better aligns the accounting guidance to how software is developed by eliminating project stages from capitalization criteria. The new standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. The standard allows for prospective, modified, or retrospective transition. Early adoption is permitted. We are currently evaluating the impact of adopting this new pronouncement.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting (“ASU 2025-11”), which is intended to improve the navigability of required interim disclosures and clarify when that guidance is applicable, and also to provide additional guidance on what disclosures should be provided in interim reporting periods. The new standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. The standard allows for prospective or retrospective transition. Early adoption is permitted. We do not expect this guidance to have a material impact on our financial position or results of operations.
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