What changed in this filing

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Item 1. Financial Statements

2025-09-10 compared with 2025-03-05 · 305 added, 432 removed, 386 unchanged (66% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance for doubtful accounts of $ 94 at January 25, 2025 and $ 159 at April 30, 2024

Accounts receivable, net of allowance for credit losses of $ 773 at August 2, 2025 and $ 203 at April 30, 2025

Unbilled receivables and retentions

13 unchanged sentences

Customer advances

Current portion of long-term debt

Current operating lease liabilities

2 unchanged sentences

Total current liabilities

Long-term debt, net of current portion

Long-term debt

Non-current operating lease liabilities

6 unchanged sentences

Authorized shares— 10,000,000 ;

none issued or outstanding at January 25, 2025 and April 30, 2024

none issued or outstanding at August 2, 2025 and April 30,2025

Common stock, $ 0.0001 par value:

Authorized shares— 100,000,000

Issued and outstanding shares— 28,219,440 shares at January 25, 2025 and 28,134,438 shares at April 30, 2024

Issued and outstanding shares— 49,932,300 shares at August 2, 2025 and 28,267,517 shares at April 30, 2025

Additional paid-in capital

8 unchanged sentences

Three Months Ended

Nine Months Ended

Product sales

9 unchanged sentences

(Loss) income from operations

Other income (loss):

Other (loss) income:

Interest expense, net

2 unchanged sentences

(Benefit from) provision for income taxes

Equity method investment (loss) income, net of tax

Equity method investment income, net of tax

Net (loss) income

6 unchanged sentences

Three Months Ended

Nine Months Ended

Net (loss) income

Other comprehensive (loss) income:

Other comprehensive income:

Change in foreign currency translation adjustments

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the three months ended January 25, 2025 and January 27, 2024 (Unaudited)

(In thousands except share data)

Comprehensive

Balance at October 26, 2024

Foreign currency translation

Stock options exercised

Restricted stock awards

Restricted stock awards forfeited

Tax withholding payment related to net share settlement of equity awards

Stock based compensation

Balance at January 25, 2025

Comprehensive

Balance at October 28, 2023

Foreign currency translation

Restricted stock awards

Restricted stock awards forfeited

Stock based compensation

Balance at January 27, 2024

AeroVironment, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

For the nine months ended January 25, 2025 and January 27, 2024 (Unaudited)

For the three months ended August 2, 2025 and July 27, 2024 (Unaudited)

(In thousands except share data)

2 unchanged sentences

Foreign currency translation

Stock options exercised

Employee stock purchase plan contributions

Restricted stock awards

1 unchanged sentence

Tax withholding payment related to net share settlement of equity awards

Issuance of common stock for business acquisition

Shares issued, net of issuance costs

Stock based compensation

Balance at January 25, 2025

Balance at August 2, 2025

Comprehensive

1 unchanged sentence

Foreign currency translation

Stock options exercised

Restricted stock awards

1 unchanged sentence

Tax withholding payment related to net share settlement of equity awards

Shares issued, net of issuance costs

Issuance of common stock for business acquisition

Stock based compensation

Balance at January 27, 2024

Balance at July 27, 2024

AeroVironment, Inc.

1 unchanged sentence

(In thousands)

Nine Months Ended

Three Months Ended

Operating activities

Adjustments to reconcile net income to cash (used in) provided by operating activities:

Net (loss) income

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

Depreciation and amortization

(Gain) loss from equity method investments

(Gain) from equity method investments

Amortization of debt issuance costs

Provision for doubtful accounts

Provision for credit losses

Reserve for inventory excess and obsolescence

1 unchanged sentence

Non-cash lease expense

(Gain) loss on foreign currency transactions

Loss on foreign currency transactions

Unrealized (gain) loss on available-for-sale equity securities, net

13 unchanged sentences

Contributions in equity method investments

Acquisition of intangibles

Acquisition of capitalized software to be sold

Business acquisitions, net of cash acquired

2 unchanged sentences

Principal payments of term loan

Holdback and retention payments for business acquisition

Payment of contingent consideration

Proceeds from shares issued, net of issuance costs

Proceeds from revolving credit facility

Proceeds from term loan

Principal payments of revolver

Proceeds from revolver, net of creditor costs

Proceeds from shares issued, net of underwriter costs

Proceeds from convertible debt, net of underwriter costs

Payment of debt issuance costs

1 unchanged sentence

Tax withholding payment related to net settlement of equity awards

Employee stock purchase plan contributions

Exercise of stock options

Net cash used in financing activities

Net cash provided by (used in) financing activities

Effects of currency translation on cash and cash equivalents

Net decrease in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

10 unchanged sentences

Organization and Significant Accounting Policies

AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, delivery and support of a technologically advanced portfolio of intelligent, multi-domain robotic systems and related services for government agencies and businesses.

AeroVironment, Inc.

supplies uncrewed aircraft and ground robot systems, loitering munitions systems and related services primarily to organizations within or supplying the U.S.

Department of Defense (“D.o.D.”), other federal agencies and international allied governments.

(“AeroVironment”, “AV” or “the Company”), a Delaware corporation, is a defense technology provider delivering integrated capabilities across air, land, sea, space, and cyber.

AV develops and deploys autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities.

AV operates a national manufacturing footprint to deliver proven systems and capabilities whose markets offer the potential for significant long-term growth.

In addition, the Company believes that some of the innovative potential products, services and technologies in its research and development (“R&D”) pipeline will emerge as new growth platforms in the future, creating additional market opportunities.

Effective May 1, 2025, the Company reorganized its segments.

Due to the Company’s growth as an organization, the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their product lines.

In connection with the Company’s acquisition of BlueHalo Financing Topco, LLC (“BlueHalo”), the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their product lines.

The Company’s reportable segments are as follows:

Loitering Munitions Systems (“LMS”) —The LMS segment, which consists of the former Tactical Missile Systems segment, focuses primarily on tube-launched aircraft that deploy with the push of a button, fly at higher speeds than small UAS products, and perform either effects delivery or reconnaissance missions, and related support services including training, spare parts, product repair, and product replacement.

The LMS segment also includes customer-funded research and development (“R&D”)programs.

Uncrewed Systems (“UxS”) —The UxS segment, which consists of the former small uncrewed aircraft systems (“SUAS”), medium uncrewed aircraft systems (“MUAS”) and uncrewed ground vehicles (“UGV”) segments and Tomahawk Robotics, Inc.

(“Tomahawk”), which was acquired on September 15, 2023, focuses primarily on (i) small UAS products designed to operate reliably at lower altitudes in a wide range of environmental conditions, providing a vantage point from which to collect and deliver valuable information as well as related support including training, spare and accessory parts, product repair, product replacement, maintenance and upgrades;

(ii) medium UAS products designed to operate reliably at medium altitudes with longer range while carrying larger payloads including airborne platforms, (iii) payloads and payload integration, ground support equipment and other items and services related generally to uncrewed aircraft systems historically including intelligence, surveillance, and reconnaissance (“ISR”) services;

(iv) UGV products designed to help responders remove, contain or neutralize hazards in situations where improvised explosive devices, caustic chemicals, nuclear, radiological or biological hazards or violent individuals represent significant danger to humans;

and (v) AI-enabled common control and communication solutions that allow any uncrewed system to be controlled from a common user interface while aggregating data from multiple platforms to provide real time intelligence.

MacCready Works (“MW”) —The MW segment, which consists of the former MacCready Works and High Altitude Pseudo-Satellite systems (“HAPS”) segments, focuses on customer-funded R&D in the areas of HAPS, robotics, sensors, software analytics, data intelligence and connectivity.

This segment contains the Company’s center of excellence for the development of machine learning, object identification and autonomy solutions and also seeks to identify new products, services and businesses for the Company.

Autonomous Systems (“AxS”) — The AxS segment focuses on the design, development, production, delivery, and support of intelligent, multi-domain robotic systems, including uncrewed aircraft systems (“UAS”) and ground robot systems.

The segment includes the Company’s former Uncrewed Systems, Loitering Munitions Systems, and MacCready Works segments as well as Radio Frequency (“RF”) and Kinetic Counter-UAS (“C-UAS”), Electronic Warfare Systems (“EW”) and Unmanned Maritime products and services from the BlueHalo acquisition.

It primarily serves organizations within or supplying the U.S.

Department of Defense (“DoD”), other federal agencies, and international allied governments.

This segment encompasses the Company’s core autonomous platforms, such as drones and robotic systems, tailored for mission-critical applications across air and ground domains.

Space, Cyber, and Directed Energy (“SCDE”) — The SCDE segment focuses on advanced technologies in the space domain providing space-based and ground-based platforms, cyber capabilities, and directed energy systems.

This segment positions the Company in high-growth areas of next-generation defense technology, addressing emerging threats and mission requirements in space, cyber warfare, and directed energy applications (e.g., high-energy lasers).

It also primarily serves organizations within or supplying the U.S.

Department of Defense (“DoD”), other federal agencies, and international allied governments.

Basis of Presentation

4 unchanged sentences

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included.

The results of operations for the three and nine months ended January 25, 2025 are not necessarily indicative of the results for the full year ending April 30, 2025.

For further information, refer to the

consolidated financial statements and footnotes thereto for the year ended April 30, 2024, included in the Company’s Annual Report on Form 10-K.

The results of operations for the three months ended August 2, 2025 are not necessarily indicative of the results for the full year ending April 30, 2026.

For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2025, included in the Company’s Annual Report on Form 10-K.

The preparation of financial statements in conformity with U.S.

3 unchanged sentences

All intercompany accounts and transactions have been eliminated.

Recent and Pending Acquisitions

On September 15, 2023, the Company closed its acquisition of Tomahawk pursuant to a merger agreement, and post-acquisition, Tomahawk has been incorporated into the UxS segment.

The assets, liabilities and operating results of Tomahawk have been included in the Company’s unaudited condensed consolidated financial statements.

Recent Acquisitions

On May 1, 2025, the Company closed its acquisition of BlueHalo, a Delaware limited liability company, pursuant to the Agreement and Plan of Merger, dated as of November 18, 2024 (the “Merger Agreement”) by and among AV, Archangel Merger Sub LLC, a Delaware limited liability company (“Merger Sub”), BlueHalo, and BlueHalo Holdings Parent, LLC, a Delaware limited liability company and sole member of BlueHalo (“Seller”).

Refer to Note 17—Business Acquisitions for further details.

On November 13, 2024, the Company formed Archangel Merger Sub LLC, a Delaware limited liability company and a direct wholly owned subsidiary of the Company (“Merger Sub”), for the purpose of the announced acquisition of BlueHalo Financing Topco, LLC (“BlueHalo”).

On November 19, 2024, the Company announced the execution of a definitive agreement under which the Company will acquire BlueHalo in an all-stock transaction.

The Company, Merger Sub, BlueHalo, and BlueHalo Holdings Parent, LLC, a Delaware limited liability company and sole member of BlueHalo Financing Topco, LLC (“Seller”), entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, Merger Sub will merge with and into BlueHalo, with BlueHalo continuing as a wholly owned subsidiary of the Company and the surviving company of the merger (the “Merger” and together with the other transactions contemplated by the Merger Agreement, the “Transactions”).

Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger (the “Effective Time”), all of the equity interests of BlueHalo issued and outstanding immediately prior to the Effective Time shall be automatically converted into the right to receive a number of shares of the Company’s common stock (“Company Common Stock”) equal to 18,548,698 shares (the “Transaction Consideration”), which will represent approximately 39.5 % of the fully diluted shares outstanding of the pro forma combined company immediately prior to the execution and delivery of the Merger Agreement.

The Transaction Consideration is subject to downwards adjustments, which shall be determined prior to the consummation of the Transactions (the “Closing”), for certain items of leakage, distribution or payment of cash or other property up to the Closing, incurred by BlueHalo and its subsidiaries since June 30, 2024 as set forth in the Merger Agreement.

The Merger Agreement further provides that the Company may be required to pay a termination fee of $ 200,000,000 to Seller upon termination of the Merger Agreement under specified circumstances, including (i) termination by the Company to accept an Alternative Sale Transaction, (ii) termination by Seller due to the occurrence of a Company Board Adverse Recommendation Change or (iii) if the Company consummates an Alternative Sale Transaction within 9 months of termination of the Merger Agreement, subject to certain conditions as set forth in the Merger Agreement.

Concurrently with the execution and delivery of the Merger Agreement, Arlington Capital Partners V, L.P.

and Arlington Capital Partners VI, L.P., the equityholders of the Key Seller Member (collectively, the “Sponsor Members”) have entered into a shareholder’s agreement (the “Shareholder’s Agreement”) with the Company pursuant to which the Sponsor Members have, among other things, agreed to abide by customary standstill covenants, obligations to vote consistent with the recommendation of the Company Board, and customary employee non-solicit restrictions with respect to the employees of the Company and its subsidiaries (including BlueHalo and its subsidiaries after the Closing).

The Company has, among other things, agreed to provide the Sponsor Members with certain board designation rights and customary registration rights, including customary demand and piggyback rights.

The Sponsor Members will have

such designation rights to designate two directors until it and its affiliates cease to collectively hold and own, directly or indirectly, at least 20 % of the issued and outstanding Company Common Stock and the Sponsor Members will have such designation rights to designate one director until they and their affiliates cease to collectively hold and own, directly or indirectly, at least 15 % but less than 20 % of the issued and outstanding Company Common Stock.

The Sponsor Members are expected to beneficially own approximately 26.2 % of the Company Common Stock at Closing (assuming no adjustments under the Merger Agreement).

At the Effective Time, the Board of Directors of the Company (the “New Company Board”) is expected to consist of ten members, two of whom may be designated by the Sponsor Members for approval by the stockholders of the Company for appointment to the New Company Board, subject to certain conditions and qualifications as set forth in the Shareholder’s Agreement.

In connection with the Merger Agreement, the Company entered into a commitment letter (the “Debt Commitment Letter”) with Bank of America, N.A.

(“BofA NA”) and BofA Securities, Inc.

( “BofA Securities”) and JPMorgan Chase Bank, N.A.

(“JPM”) on November 18, 2024 and amended and restated on December 30, 2024 to include U.S.

Bank National Association (“U.S.

Bank”), Citibank, N.A.

(“Citi”), BMO Bank, N.A.

(“BMO Bank”), Citizens Bank, N.A.

(“Citizens”), and Royal Bank of Canada (“RBC”;

RBC, together with BofA, JPM, U.S.

Bank, Citi, BMO Bank, and Citizens, the “Commitment Parties,” and BofA Securities, JPM and U.S.

Bank, collectively, the “Joint Lead Arrangers”), pursuant to which the Joint Lead Arrangers have committed to amend the Existing Credit Agreement (such amendment, the “Credit Agreement Amendment”) to provide a new Term Loan A facility (the “Acquisition Financing Facility”).

The initial principal amount of the Acquisition Financing Facility will be $ 700,000,000 , and the Acquisition Financing Facility will have a maturity date of two years from effective date of the Credit Agreement Amendment.

The proceeds of the Acquisition Financing Facility will be used to refinance a portion of BlueHalo’s debt and pay fees, costs and expenses incurred in connection with the Transactions.

The definitive documentation governing the Financing has not been finalized, and accordingly, the actual terms may differ from the description of such terms in the Debt Commitment Letter.

The consummation of the Transactions is not conditioned upon receipt of the proceeds from the Acquisition Financing Facility or any replacement financing.

Recently Adopted Accounting Standards

The Company did not adopt any accounting standards during the nine months ended January 25, 2025.

The Company did not adopt any accounting standards during the three months ended August 2, 2025.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Specifically, the Company’s revenue disclosure of revenue by segment and the segment disclosures for prior periods have been recast to conform to the new segments and new measure of profitability.

Revenue Recognition

The Company’s 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 the specifications of its customers.

These contracts may be firm fixed price (“FFP”), cost plus fixed fee (“CPFF”), or time and materials (“T&M”).

These contracts may be firm fixed price (“FFP”), cost plus award fee, and cost plus incentive fee (collectively “Cost Plus”), or time and materials (“T&M”).

The Company considers all such contracts to be within the scope of ASU 2014-09, Revenue from Contracts with Customers (“ASC 606”).

Performance Obligations

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.

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services.

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its observable standalone selling price for products and services.

When the standalone selling price is not directly observable, the Company uses its best estimate of the standalone selling price of each distinct good or service in the contract using the cost plus margin approach.

This approach estimates the Company’s expected costs of satisfying the performance obligation and then adds an appropriate margin for that distinct good or service.

Contract modifications are routine in the performance of the Company’s contracts.

In most instances, contract modifications are for additional goods and/or services that are distinct and, therefore, accounted for as new contracts.

The Company’s performance obligations are satisfied over time or at a point in time.

Performance obligations are satisfied over time if the customer receives the benefits as the Company performs, if the customer controls the asset as it is being developed or produced, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for the Company’s costs incurred to date plus a reasonable margin.

The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process.

Revenue for LMS product deliveries, certain Tomahawk product deliveries and customer-funded R&D contracts is recognized over time as costs are incurred.

Contract services revenue is composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, and technical support services.

Contract services revenue is recognized over time as services are rendered.

Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress.

Contract services revenue includes revenue from ISR services in which the Company operates its MUAS in overseas locations to support U.S.

military operations under ISR services contracts under a contractor-owned, contractor-operated (“COCO”) arrangement.

In accordance with ASC 606, the Company 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, such as flight hours for ISR services, the entity may recognize revenue in the amount to which the entity has a right to invoice.

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.

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.

The Company’s UxS product sales revenue is composed of revenue recognized on contracts for the delivery of UxS 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.

On January 25, 2025, the Company had approximately $ 763,549,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

On August 2, 2025, the Company had approximately $ 1,066,423,000 of remaining performance obligations under fully funded contracts with its customers, which the Company also refers to as funded backlog.

The Company currently expects to recognize approximately 80 % of the remaining performance obligations as revenue in fiscal 2026 and the remaining 20 % in fiscal 2027 or beyond.

The Company collects sales, value added, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer.

Contract Estimates

Accounting for contracts and programs primarily with a duration of less than six months involves the use of various techniques to estimate total contract revenue and costs.

For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end.

Typically, revenue is recognized over time using costs incurred to date relative to total estimated costs at completion to measure progress toward satisfying the Company’s performance obligations.

Incurred costs represent work performed, which corresponds with, and thereby best depicts, the 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.

Contract estimates are based on various assumptions to project the outcome of future events that may span several years.

These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer.

The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively.

The Company generally estimates such variable consideration as the most likely amount.

In addition, the Company includes the estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved.

These estimates are based on historical award experience, anticipated performance and the Company’s best judgment at the time.

Based on experience in estimating these amounts, they are included in the transaction price of the Company’s contracts and the associated remaining performance obligations.

As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company regularly reviews and updates its contract-related estimates.

Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates, are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations recognized over time.

Changes in cumulative revenue estimates due to changes in the estimated transaction price are recorded using a cumulative catch-up adjustment in the period identified for contracts with performance obligations at a point in time, including undefinitized contract actions.

In the period undefinitized contract actions become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact.

If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities.

The balance of forward loss reserves as of January 25, 2025 and April 30, 2024 was $ 230,000 and $ 374,000 , respectively.

The Company recorded the forward loss reserves as the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts.

No adjustment on the forward loss reserve for any one contract was material to the Company’s unaudited condensed consolidated financial statements for the three and nine months ended January 25, 2025 or January 27, 2024, respectively.

The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses, or revenue.

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was $ 9,150,000 and $ 9,515,000 for the three and nine month periods ended January 25, 2025, respectively.

During the three months ended January 25, 2025, the majority of the adjustments relate to the Company revising its estimates of the total expected costs to complete three LMS contracts.

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 $ 9,629,000 .

During the nine months ended January 25, 2025, the Company definitized certain LMS undefinitized contract actions.

The aggregate impact of these cumulative catch-up revenue adjustments for the contract definitization was an increase to revenue of approximately $ 9,870,000 .

The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was $ 4,398,000 and $ 5,087,000 for the three and nine month periods ended January 27, 2024, respectively.

During the three months ended January 27, 2024, the Company revised its estimates to reflect a favorable definitization of an LMS contract.

During the nine months ended January 27, 2024, the Company revised its estimates of the total expected costs to complete a different LMS contract.

Revenue by Category

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Three Months Ended

Nine Months Ended

Revenue by segment

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Three Months Ended

Nine Months Ended

Revenue by contract type

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However, these types of contracts generally offer additional profits when the Company completes the work for less than originally estimated.

CPFF contracts generally subject the Company to lower risk.

Cost Plus contracts generally subject the Company to lower risk.

Accordingly, the associated base fees are usually lower than fees on FFP contracts.

1 unchanged sentence

Three Months Ended

Nine Months Ended

Revenue by customer category

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Three Months Ended

Nine Months Ended

Revenue by geographic location

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Three Months Ended

Nine Months Ended

Revenue percentage by recognition method

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Contract Balances

The timing of revenue recognition, billings, and cash collections results in billed accounts receivable, unbilled receivables, and customer advances and deposits on the condensed consolidated balance sheet.

In the Company’s services contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, which is generally monthly, or upon the achievement of contractual milestones.

Generally, billing

occurs subsequent to revenue recognition, resulting in contract assets recorded in unbilled receivables and retentions on the condensed consolidated balance sheet.

However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities recorded in customer advances on the condensed consolidated balance sheet.

Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements.

These assets and liabilities are reported on the condensed consolidated balance sheet on a contract-by-contract basis at the end of each reporting period.

For the Company’s product revenue, the Company generally receives cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable.

Changes in the contract asset and liability balances during the three and nine month periods ended January 25, 2025 were not materially impacted by any other factors.

Changes in the contract asset and liability balances during the three month period ended August 2, 2025 were not materially impacted by factors other than billings, cash collections, and timing of revenue recognition.

For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

Revenue recognized for the three and nine month periods ended January 25, 2025 that was included in customer advances balances as of April 30, 2024 was $ 1,701,000 and $ 9,662,000 .

Revenue recognized for the three and nine month periods ended January 27, 2024 that was included in customer advances balances as of April 30, 2023 was $ 610,000 and $ 3,026,000 .

Cost to Fulfill a Contract with a Customer

The Company recognizes assets for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered in accordance with ASC 340-40 Other Assets and Deferred Costs:

Contracts with Customers.

The assets related to costs to fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied.

As of January 25, 2025, the Company had no costs to fulfill and as of April 30, 2024, the Company’s costs to fulfill were not material.

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and assess performance.

As of January 25, 2025, the Company’s CODM, the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the allocation for R&D.

Accordingly, the Company identifies three reportable segments.

Refer to Note 18—Segments for further details.

Revenue recognized for the three month period ended August 2, 2025 that was included in customer advances balances as of April 30, 2025 was $ 11,358,000 .

Revenue recognized for the three month period ended July 27, 2024 that was included in customer advances balances as of April 30, 2024 was $ 5,486,000 .

The Company’s investments are accounted for as available-for-sale and are reported at fair value.

6 unchanged sentences

Government Contracts

Payments to the Company on government CPFF or T&M contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”).

Payments to the Company on government Cost Plus or T&M contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”).

The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited.

final rates, if different from the provisional rates, may create an additional receivable or liability for the Company for CPFF and T&M contracts.

The final rates, if different from the provisional rates, may create an additional receivable or liability for the Company for Cost Plus and T&M contracts.

For example, during the course of its audits, the DCAA may question the Company’s incurred costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs.

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The Company’s revenue recognition policy calls for revenue recognized on all cost reimbursable government contracts to be recorded at estimated full year rates unless collectability is not reasonably assured.

At January 25, 2025 and April 30, 2024, the Company had no reserve for incurred cost claim audits.

At August 2, 2025 and April 30, 2025, the Company had no reserve for incurred cost claim audits.

(Loss) Earnings Per Share

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Three Months Ended

Nine Months Ended

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

August 2, 2025

July 27, 2024

Net (loss) income

Denominator for basic earnings per share:

Denominator for basic (loss) earnings per share:

Weighted average common shares

1 unchanged sentence

Denominator for diluted (loss) earnings per share

Due to the net loss for the three months ended January 25, 2025, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 200,667 for the three months ended January 25, 2025.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 265 for the nine months ended January 25, 2025.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 72 and 606 for the three and nine months ended January 27, 2024.

Due to the net loss for the three months ended August 2 , 2025, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 168,254 for the three months ended August 2 , 2025.

Potentially dilutive shares not included in the computation of diluted weighted-average common shares because their effect would have been anti-dilutive were 72 for the three months ended July 27, 2024.

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses reported to the CODM.

ASU 2023-07 also requires all segment profit or loss and assets disclosures to be provided on an annual and interim basis.

The new standard is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 is adopted retrospectively.

The Company will include the required enhanced disclosures in its Annual Report on Form 10-K for the fiscal year ending April 30, 2025.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures (“ASU 2023-09”).

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The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

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, and 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.

The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

Investments consist of the following (in thousands):

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Three Months Ended

Nine Months Ended

January 25, 2025

January 27, 2024

January 25, 2025

January 27, 2024

August 2, 2025

July 27, 2024

Net gain (loss) recognized during the period on equity securities

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● Level 3—Inputs to the valuation that are unobservable inputs for the asset or liability.

The Company’s financial assets measured at fair value on a recurring basis at January 25, 2025 , were as follows (in thousands):

The Company’s financial assets measured at fair value on a recurring basis at August 2 , 2025 , were as follows (in thousands):

Fair Value Measurement Using

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Equity securities

The Company had no financial liabilities measured at fair value on a recurring basis at January 25, 2025 .

The Company had no financial liabilities measured at fair value on a recurring basis at August 2 , 2025 .

The Company’s financial assets measured at fair value on a recurring basis at April 30, 2025, were as follows (in thousands):

19 unchanged sentences

In July 2019, the Company made its initial capital contribution to a limited partnership fund focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

Under the terms of the limited partnership

agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

Under the terms of the limited partnership agreement, the Company contributed a total of $ 10,000,000 during the fiscal years ended April 30, 2021 and 2022, and there were no further contribution commitments to this fund as of April 30, 2022.

In March 2022, the Company entered into a limited partnership agreement with a second limited partnership fund also focusing on highly relevant technologies and start-up companies serving defense and industrial markets.

Under the terms of the limited partnership agreement, the Company is committed to contributions totaling $ 20,000,000 over an expected five year period.

During the fiscal year ended April 30, 2024 and 2023, the Company made total contributions of $ 3,074,000 and $ 5,778,000 , respectively.

During the three and nine months ended January 25, 2025, the Company made contributions of $ 1,126,000 and $ 2,309,000 , respectively.

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 8,839,000 to the fund expected to be paid over the next three fiscal years.

During the fiscal years ended April 30, 2025 and 2024, the Company made total contributions of $ 5,674,000 and $ 3,074,000 , respectively.

During the three months ended August 2, 2025, the Company made no contributions.

Under the terms of the limited partnership agreement, the Company has committed to make additional capital contributions of $ 5,474,000 to the fund, which are expected to be made over the next two fiscal years.

The Company accounts for investments in limited partnerships as equity method investments as the Company is deemed to have significant influence when it holds more than a minor interest.

For the three and nine months ended January 25, 2025 , the Company recorded its ownership percentage of the net gain of the limited partnerships, or $ 0 and $ 1,066,000 , respectively, in equity method investment (loss) income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

For the three and nine months ended January 27, 2024, the Company recorded its ownership percentage of the net loss of the limited partnerships, or $( 80,000 ) and $( 1,494,000 ), respectively, in equity method investment (loss) income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At January 25, 2025 and April 30, 2024, the carrying value of the investments in the limited partnership funds of $ 23,308,000 and $ 19,933,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Investment in Altoy

On September 15, 2021, the Company entered into a Share Sale and Purchase Agreement with Toygun whereby the Company sold 35 % of the common shares of Altoy to Toygun.

On October 14, 2022, the Company sold an additional 35 % of the common shares of Altoy to Toygun.

As a result of the sales, the Company decreased its interest in Altoy from 85 % to 15 %.

The Company no longer controls Altoy, and therefore, has deconsolidated Altoy in the Company’s unaudited condensed consolidated financial statements.

The Company maintains significant influence, accounts for its investment in Altoy as an equity method investment and records its proportion of any gains or losses of Altoy in equity method investment loss, net of tax.

For the three and nine months ended January 25, 2025, the Company recorded $ 0 and $( 11,000 ) for its ownership percentage of the net activity of Altoy in equity method investment (loss) income, net of tax in the unaudited condensed consolidated statements of operations.

For the three and nine months ended January 27, 2024 , the Company recorded $ 0 for its ownership percentage of the net activity of Altoy in equity method investment (loss) income, net of tax in the unaudited condensed consolidated statements of operations.

At January 25, 2025 and April 30, 2024, the carrying value of the investment in Altoy of $ 141,000 and $ 152,000 , respectively, was recorded in other assets on the unaudited condensed consolidated balance sheet.

For the three months ended August 2 , 2025 and July 27, 2024 , the Company recorded its ownership percentage of the net gain of equity method investments, of $ 1,787,000 and $ 65,000 , respectively, in equity method investment income, net of $ 0 tax in the unaudited condensed consolidated statements of operations, respectively.

At August 2 , 2025 and April 30, 2025, the carrying value of the equity method investments of $ 32,362,000 and $ 30,423,000 , respectively, was recorded in long-term investments on the unaudited condensed consolidated balance sheet.

Warranty Reserves

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The related expense is included in cost of sales.

Warranty reserve activity is summarized as follows for the three and nine months ended January 25, 2025 and January 27, 2024 , respectively (in thousands):

Warranty reserve activity is summarized as follows for the three months ended August 2 , 2025 and July 27, 2024 , respectively (in thousands):

Three Months Ended

Nine Months Ended

Beginning balance

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Intangibles, net

The weighted average amortization period as of January 25, 2025 and April 30, 2024 was three years , respectively.

Amortization expense for the three and nine months ended January 25, 2025 was $ 4,778,000 and $ 14,348,000 respectively.

Amortization expense for the three and nine months ended January 27, 2024 was $ 5,445,000 and $ 12,721,000 , respectively.

Estimated amortization expense for the next five years is as follows (in thousands):

Technology, backlog and customer relationships intangibles were recognized in conjunction with the Company’s acquisition of Blue Halo on May 1 2025.

Refer to Note 17—Business Acquisitions for further details.

The weighted average amortization period as of August 2 , 2025 and April 30, 2025 was seven and three years , respectively.

Amortization expense for the three months ended August 2 , 2025 and July 27, 2024 was $ 58,161,000 and $ 4,774,000 , respectively.

Estimated remaining amortization expense for the next five years is as follows (in thousands):

The following table presents the changes in the Company’s goodwill balance by segment (in thousands):

Accumulated impairment losses

Balance at April 30, 2025

Change to goodwill

Balance at January 25, 2025

The UxS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc.

(“Arcturus”), Telerob, Planck and Tomahawk acquisitions.

The goodwill change to UxS is attributable to the Telerob acquisition recorded in Euros and translated to U.S.

dollars at each reporting date.

The MW segment includes goodwill from the purchase of certain assets of Intelligent Systems Group business segment (“ISG”) of Progeny Systems Corporation.

The estimated fair value of the MUAS reporting unit, the renamed Arcturus acquisition included in the UxS reportable segment, does not substantially exceed its carrying value due to the impairment recorded during the fourth quarter ended April 30, 2023.

The fair value of the MUAS reporting unit exceeded its carrying value by 10 % as of January 28, 2024, the date of the most recent annual goodwill impairment test.

Fair value determinations utilized in the quantitative goodwill impairment test require considerable judgment and are sensitive to changes in underlying assumptions,

estimates, and market factors.

Estimating the fair value of individual reporting units requires the Company to make assumptions and estimates regarding future plans, as well as industry, economic, and regulatory conditions.

These assumptions and estimates include estimated future annual net cash flows, income tax rates, discount rates, growth rates, and other market factors.

Estimated future annual net cash flows based in part upon the Company’s ability to obtain contracts from the U.S.

Department of Defense and foreign allied nations and negotiate the estimated pricing are considered the most significant, sensitive assumptions.

If current expectations of future growth rates and margins are not met, if market factors outside of the Company’s control, such as discount rates, income tax rates, or inflation, change, or if management’s expectations or plans otherwise change, including updates to long-term operating plans, then the MUAS reporting unit goodwill may become impaired in the future.

Accordingly, the MUAS reporting unit is considered at an increased risk of failing future quantitative goodwill impairment tests.

The MUAS reporting unit has a goodwill balance of $ 135,774,000 as of January 25, 2025 .

During the most recent annual impairment test during the fourth quarter of fiscal year 2024, the estimated fair value of all reporting units, other than MUAS, substantially exceeded their carrying value.

As of January 25, 2025 , the company has not identified any events or circumstances that could trigger an impairment review prior to the Company’s annual impairment test.

The annual impairment test for the fiscal year ending April 30, 2025 will be performed during the fourth quarter.

The intangibles included in the MUAS reporting unit of $ 10,923,000 as of January 25, 2025 will also be evaluated for potential impairment during the fourth quarter.

In connection with the consummation of the acquisition of Arcturus, a California corporation, pursuant to a Stock Purchase Agreement with Arcturus and each of the shareholders and other equity interest holders of Arcturus, to purchase 100 % of the issued and outstanding equity of Arcturus (the “Arcturus Acquisition”) on February 19, 2021, the Company, as borrower, and Arcturus, as guarantor, entered into a Credit Agreement with certain lenders, letter of credit issuers, BofA, N.A., as the administrative agent and the swingline lender, and BofA Securities, JPM., and U.S.

Bank, as joint lead arrangers and joint bookrunners (the “Credit Agreement”).

The Credit Agreement and its associated Security and Pledge Agreement set forth the terms and conditions for (i) a five-year $ 100,000,000 revolving credit facility, which includes a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit (the “Revolving Facility”), and (ii) a five-year amortized $ 200,000,000 term A loan (the “Term Loan Facility”, and together with the Revolving Facility, the “Credit Facilities”).

Certain existing letters of credit issued by JPM were reserved for under the Revolving Facility at closing and remain outstanding under the terms thereof.

Upon execution of the Credit Agreement, the Company drew the full principal of the Term Loan Facility for use in the acquisition of Arcturus.

The Term Loan Facility requires payment of 5 % of the outstanding obligations in each of the first four loan years, with the remaining 80 % payable in loan year five, consisting of three quarterly payments of 1.25 % each, with the remaining outstanding principal amount of the Term Loan Facility due and payable on the final maturity date.

Proceeds from the Term Loan Facility were used in part to finance a portion of the cash consideration for the Arcturus Acquisition.

Any borrowing under the Credit Agreement may be repaid, in whole or in part, at any time and from time to time without premium or penalty other than customary breakage costs, and any amounts repaid under the Revolving Facility may be reborrowed.

Mandatory prepayments are required under the revolving loans when borrowings and letter of credit usage exceed the aggregate revolving commitments of all lenders.

Mandatory prepayments are also required in connection with the disposition of assets to the extent not reinvested and unpermitted debt transactions.

In support of its obligations pursuant to the Credit Facilities, the Company has granted security interests in substantially all of the personal property of the Company and its domestic subsidiaries, including a pledge of the equity interests in its subsidiaries (limited to 65 % of outstanding equity interests in the case of foreign subsidiaries), and the proceeds thereof, with customary exclusions and exceptions.

The Company’s existing and future domestic subsidiaries, including Arcturus, are guarantors for the Credit Facilities.

The Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, including certain restrictions on the ability of the Company and its subsidiaries (as defined in the Credit Agreement) to

incur any additional indebtedness or guarantee indebtedness of others, to create liens on properties or assets, or to enter into certain asset and stock-based transactions.

On February 4, 2022, the Company entered into a First Amendment to Credit Agreement and Waiver relating to its existing Credit Agreement (the “First Amendment to Credit Agreement”).

The First Amendment to Credit Agreement waives any event of default that may have occurred as a result of the potential failure by the Company to comply with the consolidated leverage ratio covenant set forth in the Credit Agreement for the fiscal quarter ended January 29, 2022.

In addition, the parties amended the maximum permitted Consolidated Leverage Ratio, such that such ratio may not exceed 4.00 to 1.00 for the Company’s fiscal quarters ended January 29, 2022 and April 30, 2022;

3.50 to 1.00 for any of the Company’s fiscal quarters ending during the period from May 1, 2022 to October 31, 2022;

and 3.00 to 1.00 for any fiscal quarter ending thereafter.

On June 6, 2023, the Company entered into a Second Amendment to Credit Agreement relating to its existing Credit Agreement which increased the sublimit from $ 10,000,000 to $ 25,000,000 .

The Credit Agreement, as amended by the First Amendment to Credit Agreement and Second Amendment to the Credit Agreement, contains certain customary events of default, which include failure to make payments when due thereunder, the material inaccuracy of representations or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain judgments, certain ERISA-related events, invalidity of loan documents, or a Change of Control (as defined in the Credit Agreement).

Upon the occurrence and continuation of an event of default, the Lenders may cease making future loans under the Credit Agreement and may declare all amounts owing under the Credit Agreement to be immediately due and payable.

The First Amendment to Credit Agreement also implemented certain secured overnight financing rate (“SOFR”) interest rate mechanics and interest rate reference benchmark replacement provisions in order to effectuate the transition from LIBOR as a reference interest rate.

Following the First Amendment to Credit Agreement, the Company has a choice of interest rates between (a) Term SOFR (with a 0 % floor) plus the Applicable Margin;

or (b) Base Rate (defined as the highest of (a) the Federal Funds Rate plus one-half percent ( 0.50 %), (b) the Bank of America prime rate, and (c) the one (1) month SOFR plus one percent ( 1.00 %)) plus the Applicable Margin.

The Applicable Margin is based upon the Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects SOFR (ranging from 1.50 - 2.50 %) or Base Rate (ranging from 0.50 - 1.50 %).

The Company may choose interest periods of one, three or six months with respect to Term SOFR and all such rates will include a 0.10 % SOFR adjustment.

The Company also remains responsible for certain commitment fees from 0.20 - 0.35 % depending on the Consolidated Leverage Ratio, and administrative agent expenses incurred in relation to the Credit Facilities.

In the event of a default, an additional 2 % default interest rate in addition to the applicable rate if specified or the Base Rate plus Applicable Margin if an applicable rate is not specified.

On October 4, 2024, the Company entered into a Third Amendment to Credit Agreement with the existing lenders, BofA NA, the administrative agent and the swingline lender, JPM, and U.S.

Bank, and Citibank (the “New Lender”) (the “Third Amendment to Credit Agreement” and the existing Credit Agreement as amended thereby, the “Amended Credit Agreement”).

The Amended Credit Agreement now provides for an aggregate $ 200,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, and extends the maturity date for obligations pursuant to the Amended Credit Agreement to October 4, 2029.

Upon effectiveness of the Amended Credit Agreement, the Company drew $ 15,000,000 from the amended Revolving Facility and repaid in full all outstanding amounts owed pursuant to the prior Term Loan Facility.

The Amended Credit Agreement reflects the removal of the Term Loan Facility.

The unamortized debt issuance costs allocated to the Term Loan Facility of $ 590,000 were expensed upon repayment of the Term Loan Facility and recorded in interest expense.

In addition to adding the New Lender and adjusting certain fee schedules, the Amended Credit Agreement also allows the Company to incur additional forms of secured and unsecured permitted indebtedness without separate consent of the Administrative Agent and make certain payments related thereto, including certain bilateral letters of credit, supply chain financing transactions, securitization transactions pertaining to its accounts receivable, and issuance of unsecured convertible debt pertaining to its Common Stock (and certain call spread transactions related thereto), subject in each

instance to further specified parameters, including aggregate dollar limits on certain activities and satisfaction of ongoing and pro forma financial covenants.

The Amended Credit Agreement substitutes a Consolidated Senior Secured Leverage Ratio for the Consolidated Leverage Ratio required to be maintained under the existing Credit Agreement.

The Consolidated Leverage Ratio is now an incurrence test, used to determine whether or not the Company may take certain actions, such as borrowing under the Amended Credit Agreement, making acquisitions, incurring certain unsecured debt, or making payments on junior debt.

In order to take such actions, the Consolidated Leverage Ratio may not exceed 4.00 to 1.0 .

However, the ratio increases to 4.50 to 1.0 during a Leverage Increase Period, covering each of the four fiscal quarters of the Company immediately following the consummation of any qualified acquisition.

The newly added Consolidated Senior Secured Leverage Ratio, measuring the Consolidated Senior Secured Funded Indebtedness, as of a date of determination, to Consolidated EBITDA for the applicable measurement period, shall not exceed 3.00 to 1.0 at the end of any fiscal quarter of the Company, increasing to 3.50 to 1.0 in a Leverage Increase Period.

In each case, no more than one Leverage Increase Period shall be in effect at any time, and the basic ratio levels must be achieved and maintained for at least two fiscal quarters immediately following each Leverage Increase Period prior to giving effect to another Leverage Increase Period.

The requirement for the Consolidated Fixed Charge Coverage Ratio to be no less than 1.25 to 1.0 at the end of any fiscal quarter of the Company remains unchanged in the Amended Credit Agreement.

The Amended Credit Agreement removes the requirement that the Company prepay the loans with the proceeds of dispositions of assets or newly incurred debt.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit of $ 9,489,000 as of January 25, 2025.

As of January 25, 2025, approximately $ 165,511,000 was available under the Revolving Facility.

Additions to goodwill

Accumulated impairment losses

Balance at August 2, 2025

The AxS segment includes goodwill from the acquisitions of Pulse Aerospace, LLC (“Pulse”), Arcturus UAV, Inc.

(“Arcturus”), Telerob Gesellschaft für Fernhantierungstechnik mbH (“Telerob”), Planck Aerosystems, Inc., Tomahawk Robotics, Inc.

and certain BlueHalo reporting units and includes goodwill from the purchase of certain assets of Intelligent Systems Group business segment of Progeny Systems Corporation.

The SCDE segment includes goodwill from certain BlueHalo reporting units.

On October 4, 2024, the Company entered into a Third Amendment to Credit Agreement with the existing lenders, Bank of America, N.A.

(“BofA NA”), the administrative agent and the swingline lender, JPMorgan Chase Bank, N.A.

(“JPM”), U.S.

Bank National Association (“U.S.

Bank”), and Citibank, N.A.

(“Citibank”) (the “Third Amendment to Credit Agreement”).

The Third Amendment to Credit Agreement provided for an aggregate $ 200,000,000 revolving credit facility (the “Revolving Facility”), including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Company’s domestic subsidiaries (the “Guarantors”), and extends the maturity date for obligations pursuant to the Credit Agreement to October 4, 2029.

Upon effectiveness of the Third Amendment to Credit Agreement, the Company drew $ 15,000,000 from the amended Revolving Facility and repaid in full all outstanding amounts owed pursuant to the prior Term Loan Facility.

The unamortized debt issuance costs allocated to the prior Term Loan Facility of $ 590,000 were expensed upon repayment of the Term Loan Facility and recorded in interest expense.

On May 1, 2025 (the “Closing Date”), 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 Bank N.A.

(“BMO”), Citizens Banks, N.A.

(“Citizens”) and Royal Bank of Canada (“RBC”) (the “Fourth Amendment to Credit Agreement” and the existing Credit Agreement as amended thereby, the “Amended Credit Agreement”).

The Amended Credit Agreement now provides for an aggregate $ 700,000,000 term loan (the “Term Loan Facility” and, together with the Revolving Facility, the “Credit Facilities”) and an aggregate

$ 350,000,000 revolving credit facility, including a $ 25,000,000 sublimit for the issuance of standby and commercial letters of credit, and a $ 10,000,000 sublimit for swingline loans, secured by all assets of the Company and the Guarantors, maintains the maturity date for obligations pursuant to the prior Amended Credit Agreement to October 4, 2029.

Upon effectiveness of the Amended Credit Agreement, the Company drew $ 225,000,000 from the amended Revolving Facility and the full $ 700,000,000 of the Term Loan Facility.

In June 2025, the Company drew an additional $ 10,000,000 under the Revolving Facility.

The Term A Loan drawn under the Term Loan Facility matures two years after the Closing Date and amortizes at a rate of 5.00 % per annum, with the remaining outstanding principal amount due and payable on the maturity date.

The applicable margin on the Term A Loan is based upon the Company’s Consolidated Leverage Ratio (as defined in the Credit Agreement) and whether the Company elects as its benchmark rate (i) SOFR (in which case, the applicable margin ranges from 1.50 - 2.50 % per annum depending on the Company’s Consolidated Leverage Ratio) plus a credit spread adjustment of 0.10 % or (ii) Base Rate (in which case, the applicable margin ranges from 0.50 - 1.50 % per annum depending on the Company’s Consolidated Leverage Ratio).

Upon the occurrence of an event of default, an additional 2.00 % per annum default interest rate may apply.

Pursuant to the Fourth Amendment to Credit Agreement, the Company is subject to two financial maintenance covenants which require that (i) the Consolidated Senior Secured Leverage Ratio (as defined in the Credit Agreement) not exceed 3.50 to 1.00 as of the end of any fiscal quarter, for the four fiscal quarters following consummation of the BlueHalo acquisition, and thereafter 3.00 to 1.00 as of the end of any fiscal quarter, and (ii) the Consolidated Fixed Charge Coverage Ratio (as defined in the Credit Agreement) not be less than 1.25 to 1.00 as of the end of any fiscal quarter.

The Company’s ability to borrow under the Revolving Facility is reduced by outstanding letters of credit, which as of August 2, 2025 and April 30, 2025 was $ 11,912,000 and $ 9,376,000 , respectively.

As of August 2, 2025, approximately $ 338,088,000 was available under the Revolving Facility.

Borrowings under the Revolving Facility may be used for working capital and other general corporate purposes, including acquisitions that meet certain parameters.

As of January 25, 2025 , the Company is in compliance with all amended covenants.

As of August 2, 2025, the Company was in compliance with all amended covenants.

In July 2025, the Company used the proceeds from the issuance of common stock and the Company’s 0 % Convertible Senior Notes due 2030 (the “Notes”) to fully repay the Term A Loan and outstanding Revolving Facility balance.

The unamortized debt issuance costs allocated to the Term Loan Facility of $ 6,668,000 were expensed upon repayment of the Term Loan Facility and recorded as interest expense in the consolidated statements of operations.

The Revolver Facility remains open and available to the Company.

Please refer to Note 10–Convertible Notes and Note 16–Share Issuances for further details.

Long-term debt and the current period interest rates were as follows:

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Revolving credit facility

Less current portion

Total long-term debt, less current portion

Less unamortized debt issuance costs–term loans

Total long-term debt, net of unamortized debt issuance costs–term loans

Convertible Notes

Total long-term debt

Less unamortized debt issuance costs–convertible notes

Total long-term debt, net of unamortized debt issuance costs–convertible notes

Unamortized debt issuance costs–revolving credit facility

Current period interest rate

Future contractual long-term debt principal payments at January 25, 2025 were as follows:

Future contractual long-term debt principal payments at August 2, 2025 were as follows:

(In thousands)

The Company leases certain buildings, land and equipment.

At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease.

Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities on the unaudited condensed consolidated balance sheet.

The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date.

The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification.

The Company defines the initial lease term to include renewal options determined to be reasonably certain.

The Company’s leases have remaining lease terms of less than one year to seven years , some of which may include options to extend the lease for up to nine years , and some of which may include options to terminate the lease after three years .

If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities.

For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses.

For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records incentive as a reduction to fixed lease payments thereby reducing rent expense.

For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease.

For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease.

Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease.

Convertible Notes

In July 2025, the Company entered into an underwriting agreement (the “Note Underwriting Agreement”) with certain underwriters (the “Note Underwriters”) agreeing, subject to customary conditions, to issue and sell $ 650,000,000 aggregate principal amount of the Notes to the Note Underwriters.

In addition, pursuant to the Note Underwriting Agreement, the Company granted the Note Underwriters an option, which was exercisable within 30 days after entering the Note Underwriting Agreement, to purchase up to an additional $ 97,500,000 aggregate principal amount of Notes solely to cover over-allotments.

The Note Underwriters exercised such option to purchase an additional $ 97,500,000 aggregate principal amount of Notes.

The issuance of $ 747,500,000 aggregate principal amount of Notes was completed in July 2025.

The Notes are the Company’s senior, unsecured obligations and are (i) equal in right of payment with the Company’s existing and future senior, unsecured indebtedness;

(ii) senior in right of payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes;

(iii) effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing that indebtedness, including any borrowings under the Company's revolving credit facility;

and (iv) structurally subordinated to all existing and future indebtedness and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries.

The Notes do not bear regular interest, and the principal amount of the Notes will not accrete.

Special interest will accrue on the Notes upon the occurrence of certain events relating to the Company's failure to file certain SEC reports as provided in the Indenture.

The Notes will mature on July 15, 2030, unless earlier repurchased, redeemed or converted.

Before April 15, 2030, noteholders have the right to convert their Notes only upon the occurrence of certain events.

From and after April 15, 2030, noteholders may convert their Notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date.

The Company will have the right to elect to settle conversions either entirely in cash or in a combination of cash and shares of its common stock.

Upon conversion of any Note, the consideration due upon conversion, which will be determined over an “Observation Period” (as defined in the Indenture) consisting of 60 consecutive trading days, will be paid in cash up to at least the principal amount of the Notes being converted and the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the principal amount of the Notes being converted.

The initial conversion rate is 3.1017 shares of the Company's common stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $ 322.40 per share of the Company's common stock.

The conversion rate and conversion price will be subject to customary adjustments upon the occurrence of certain events.

In addition, if certain corporate events that constitute a “Make-Whole Fundamental Change” (as defined in the Indenture) occur, then the conversion rate will, in certain circumstances, be increased for a specified period of time.

The Notes will be redeemable, in whole or in part (subject to certain limitations described below), at the Company’s option at any time, and from time to time, on or after July 21, 2028 and on or before the 61st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special interest, if any, to, but excluding, the redemption date, but only if the last reported sale price per share of the Company’s common stock exceeds 130 % of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the

trading day immediately before the date the Company sends the related redemption notice;

and (ii) the trading day immediately before the date the Company sends such notice.

However, the Company may not redeem less than all of the outstanding Notes unless at least $ 100.0 million aggregate principal amount of Notes are outstanding and not called for redemption as of the time the Company sends the related redemption notice.

In addition, calling any Note for redemption will constitute a Make-Whole Fundamental Change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption.

If certain events that constitute a “Fundamental Change” (as defined in the Indenture) occur, then, subject to a limited exception for certain cash mergers as provided in the Indenture, noteholders may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special interest, if any, to, but excluding, the fundamental change repurchase date.

The definition in the Indenture of Fundamental Change includes certain business combination transactions involving the Company and certain de-listing events with respect to the Company’s common stock.

The Notes have customary provisions relating to the occurrence of “Events of Default” (as defined in the Indenture), which include the following:

(i) certain payment defaults on the Notes (which, in the case of a default in the payment of special interest on the Notes, will be subject to a 30-day cure period);

(ii) the Company’s failure to send certain notices under the Indenture within specified periods of time;

(iii) the Company's failure to convert a Note in accordance with the Indenture within a specified period of time;

(iv) the Company’s failure to comply with certain covenants in the Indenture relating to the Company’s ability to consolidate with or merge with or into, or sell, lease or otherwise transfer, in one transaction or a series of transactions, all or substantially all of the assets of the Company and its subsidiaries, taken as a whole, to another person;

(v) a default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture;

(vi) certain defaults by the Company or any of its significant subsidiaries with respect to indebtedness for borrowed money of at least $ 55,000,000 ;

and (vii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries.

If an Event of Default involving bankruptcy, insolvency or reorganization events with respect to the Company (and not solely with respect to a significant subsidiary of the Company) occurs, then the principal amount of, and all accrued and unpaid interest, if any, on all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person.

If any other Event of Default occurs and is continuing, then, the Trustee, by notice to the Company, or noteholders of at least 25 % of the aggregate principal amount of Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest, if any, on, all of the Notes then outstanding to become due and payable immediately.

However, notwithstanding the foregoing, the Company may elect, at its option, that the sole remedy for an Event of Default relating to certain failures by the Company to comply with certain reporting covenants in the Indenture consists exclusively of the right of the noteholders to receive special interest on the Notes for up to 365 days, at a rate per annum equal to 0.25 % of the principal amount of the Notes for the first 180 days on which special interest accrues and, thereafter, at a rate per annum equal to 0.50 % of the principal amount thereof.

The components of lease costs recorded in cost of sales and selling, general and administrative (“SG&A”) expense were as follows (in thousands):

Nine Months Ended

Three Months Ended

Operating lease cost

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Supplemental lease information was as follows:

Nine Months Ended

Three Months Ended

(In thousands)

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Weighted average discount rate

Maturities of operating lease liabilities as of January 25, 2025 were as follows (in thousands):

Maturities of operating lease liabilities as of August 2, 2025 were as follows (in thousands):

Total lease payments

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The components of accumulated other comprehensive loss and adjustments are as follows (in thousands):

Nine Months Ended

Three Months Ended

Balance as of April 30, 2025 and April 30, 2024, respectively

Change in foreign currency translation adjustments

Balance as of January 25, 2025 and January 27, 2024, respectively

Balance as of August 2, 2025 and July 27, 2024, respectively

Customer-Funded Research & Development

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Revenue from customer-funded R&D contracts is recognized in accordance with ASC 606 over time as costs are incurred.

Revenue from customer-funded R&D was approximately $ 19,730,000 and $ 58,569,000 for the three and nine months ended January 25, 2025 .

Revenue from customer-funded R&D was approximately $ 17,617,000 and $ 61,078,000 for the three and nine months ended January 27, 2024.

Revenue from customer-funded R&D was approximately $ 60,847,000 for the three months ended August 2 , 2025 .

Revenue from customer-funded R&D was approximately $ 18,559,000 for the three months ended July 27, 2024.

Long-Term Incentive Awards

During the three months ended July 27, 2024, the Company granted awards under its 2021 Equity Incentive Plan (the “2021 Plan”) to key employees (“Fiscal 2025 LTIP”).

During the three months ended August 2, 2025, the Company granted awards under its 2021 Equity Incentive Plan (the “2021 Plan”) to key employees (“Fiscal 2026 LTIP”).

Awards under the Fiscal 2026 LTIP consist of:

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At the award date, target achievement levels for each of the financial performance metrics were established for the PRSUs, at which levels the PRSUs would vest at 100 % for each such metric.

Threshold achievement levels for which the PRSUs would vest at 50 % for each such metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also

Threshold achievement levels for which the PRSUs would vest at 50 % for each such

metric and maximum achievement levels for which such awards would vest at 250 % for each such metric were also established.

The actual payout for the PRSUs at the end of the performance period will be calculated based upon the Company’s achievement of the established revenue and non-GAAP adjusted EBITDA targets for the performance period.

Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 25, 2025 , the Company recorded $ 918,000 and $ 2,192,000 of compensation expense related to the Fiscal 2025 LTIP.

The Company recorded no compensation expense related to the Fiscal 2025 LTIP for the three and nine months ended January 27, 2024.

At January 25, 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 18,979,000 .

During the three months ended July 29, 2023, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2024 LTIP”).

For the three months ended August 2 , 2025 and July 27, 2024 , the Company recorded $ 809,000 of compensation expense and no compensation expense related to the Fiscal 2026 LTIP, respectively.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2026 LTIP is $ 33,249,000 .

During the three months ended July 27, 2024, the Company granted awards under its 2021 Plan to key employees (“Fiscal 2025 LTIP”).

Awards under the Fiscal 2025 LTIP consist of:

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 25, 2025 , the Company recorded $ 938,000 and $ 3,128,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

For the three and nine months ended January 27, 2024, the Company recorded $ 965,000 and $ 2,798,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

At January 25, 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 15,673,000 .

For the three months ended August 2 , 2025 and July 27 , 2024, the Company recorded $ 3,859,000 and $ 306,000 and of compensation expense related to the Fiscal 2025 LTIP.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2025 LTIP is $ 18,288,000 .

During the three months ended July 29, 2023, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2024 LTIP”).

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Settlement of the PRSUs will be made in fully-vested shares of the Company’s common stock.

For the three and nine months ended January 25, 2025 , the Company recorded $ 587,000 , and $ 2,253,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

For the three and nine months ended January 27, 2024, the Company recorded $ 702,000 and $ 2,554,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

At January 25, 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2023 LTIP is $ 11,448,000 .

During the three months ended July 31, 2021, the Company also granted awards under the Restated 2006 Plan to key employees (“Fiscal 2022 LTIP”).

For the three months ended August 2, 2025 and July 27, 2024 the Company recorded $ 3,008,000 and $ 1,112,000 of compensation expense related to the Fiscal 2024 LTIP, respectively.

At August 2 , 2025 , the maximum compensation expense that may be recorded for the performance-based portion of the Fiscal 2024 LTIP is $ 14,942,000 .

During the three months ended July 30, 2022, the Company granted awards under the 2021 Plan to key employees (“Fiscal 2023 LTIP”).

Awards under the Fiscal 2023 LTIP consist of:

(i) time-based restricted stock awards, which vest in equal tranches in July 2022, July 2023 and July 2024, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP operating income targets for the three-year period ending April 30, 2024.

During the three months ended July 27, 2024, the Company issued a total of 15,427 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2022 LTIP.

For the three and nine months ended January 25, 2025 , the Company recorded no compensation expense.

For the three and nine months ended January 27, 2024, the Company recorded $ 125,000 and $ 613,000 of compensation expense related to the Fiscal 2022 LTIP, respectively.

(i) time-based restricted stock awards and time-based restricted stock units, which vest in equal tranches in July 2023, July 2024 and July 2025, and (ii) PRSUs, which vest based on the Company’s achievement of revenue and non-GAAP adjusted EBITDA targets for the three-year period ending April 30, 2025.

During the three months ended August 2 , 2025 , the Company issued a total of 61,605 fully-vested shares of the Company’s common stock to settle the PRSUs in the Fiscal 2023 LTIP.

For the three months ended August 2, 2025 and July 27, 2024, the Company recorded no compensation expense and $ 865,000 of compensation expense related to the Fiscal 2023 LTIP, respectively.

At each reporting period, the Company reassesses the probability of achieving the performance targets for the PRSUs.

1 unchanged sentence

No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

For the three and nine months ended January 25, 2025 , the Company recorded an income tax benefit of $( 605,000 ), and an income tax expense of $ 659,000 yielding an effective tax rate of 25.6 % and 2.5 %, respectively.

For the three and nine months ended January 27, 2024, the Company recorded an income tax expense provision of $ 1,259,000 and $ 3,710,000 , respectively, yielding an effective tax rate of 8.3 % and 6.3 %, respectively.

The variance from statutory rates for the three months ended January 25, 2025 was primarily due to the loss before income taxes for the three months ended January 25, 2025.

The variance from statutory rates for the nine months ended January 25, 2025 was primarily due to the decrease in income before taxes, offset by a decrease in foreign-derived intangible income (“FDII”) deductions and, federal R&D credits.

The variance from statutory rates for the three and nine months ended January 27, 2024 was primarily due to an increase in profit before taxes, foreign derived intangible income deductions and federal R&D credits.

Share Repurchase Plan and Issuances

On September 8, 2022 the Company filed an S-3 shelf registration statement to offer and sell shares of the Company’s common stock, including a prospectus supplement in relation to an Open Market Sale Agreement SM , also dated September 8, 2022, with Jefferies LLC relating to the proposed offer and sale of shares of the Company’s common stock having an aggregate offering price of up to $ 200,000,000 from time to time through Jefferies LLC as the sales agent.

During the six months ended October 28, 2023, the Company completed the Open Market Sale AgreementSM.

During the six months ended October 28, 2023, the Company sold 807,370 shares for total gross proceeds of $ 91,313,000 , total proceeds received of $ 88,574,000 , net of commission expense and $ 88,437,000 net of equity issuance costs.

As of January 27, 2024, the Company completed the Open Market Sale Agreement SM and sold 1,917,100 of its shares for total gross proceeds of $ 200,000,000 , total proceeds received of $ 193,999,000 , net of commission expense and $ 193,086,000 net of equity issuance costs.

For the three months ended August 2 , 2025 , the Company recorded an income tax benefit of $( 15,169,000 ) yielding an effective tax rate of 18.0 %.

For the three months ended July 27, 2024, the Company recorded an income tax expense provision of $ 1,485,000 yielding an effective tax rate of 6.6 %.

The variance from statutory rates for the three months ended August 2 , 2025 was primarily due to the loss before income taxes for the three months ended August 2, 2025.

The variance from statutory rates for the three months ended July 27, 2024 was primarily due to foreign-derived intangible income (“FDII”) deductions, federal R&D credits and excess tax benefits from the exercise of stock options and vesting of equity awards.

On July 4, 2025, the reconciliation bill, commonly known as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law.

The OBBBA, among other things, eliminates the requirement to capitalize U.S.

R&D expenses, permanently extends certain provisions of the Tax Cuts & Jobs Act of 2017 and modifies certain international tax provisions, including changes to the Global Intangible Low-Taxed Income (“GILTI”) and the FDII regimes, with effective dates beginning in calendar year 2025 and extending through calendar year 2027.

As the OBBBA was enacted during the Company’s fiscal quarter ended August 2, 2025, the Company reflected the impacts of the OBBBA on the condensed consolidated financial statements.

The Company is in the process of evaluating the financial statement impact of these provisions to future periods.

Each of these changes may result in accelerated tax deductions during the current and future tax years.

Cash tax payments for the fiscal year ending April 30, 2026 are expected to be significantly reduced as a result of the accelerated tax deductions.

However, the Company's total income tax expense and effective tax rate are not expected to materially change as a result of the new legislation.

Share Issuances

In July 2025, the Company entered into an underwriting agreement (the “Common Stock Underwriting Agreement”) with certain underwriters (the “Common Stock Underwriters”) agreeing, subject to customary conditions, to issue and sell 3,528,226 shares of the Company’s common stock to the Common Stock Underwriters.

In addition, pursuant to the Common Stock Underwriting Agreement, the Company granted the Common Stock Underwriters an option, exercisable within 30 days after entering the Common Stock Underwriting Agreement, to purchase up to an additional 529,234 shares of the Company’s common stock (the “Over-allotment Option”).

The issuance of 3,528,226 shares of common stock was completed in July 2025.

Subsequently, the Company closed the issuance and sale of 529,234 shares of its common stock pursuant to the underwriters’ full exercise of the Over-allotment Option in July 2025 for a total issuance of 4,057,460 shares, generating gross proceeds to the Company of $ 1,006,250,000 , proceeds of $ 968,515,000 , net of underwriting discount and $ 966,846,000 net of underwriting discount and other equity issuance costs.

Business Acquisitions

Tomahawk Acquisition

On September 15, 2023, the Company closed its acquisition of Tomahawk Robotics, Inc., a leader in AI-enabled robotic control systems.

Pursuant to the merger agreement, the Company acquired 100 % of Tomahawk equity for an aggregate purchase price of $ 134,467,000 consisting of 985,999 shares of restricted common stock of the Company valued at $ 109,820,000 and $ 27,205,000 cash-on-hand, net of $ 3,048,000 cash acquired, plus a $ 490,000 holdback.

During the fiscal year ended April 30, 2024, the holdback was decreased $ 100,000 as part of the working capital adjustment, and the total purchase price and goodwill, therefore, decreased by $ 100,000 as well.

The remaining $ 390,000 holdback was paid during the three months ended October 26, 2024 .

The fair value of the shares issued was the closing price on September 15, 2023, the close of the Tomahawk purchase agreement.

Tomahawk is incorporated into AeroVironment’s UxS segment.

The acquisition will enable deeper integration of both companies’ technology, leading to enhanced interoperability and interconnectivity of uncrewed systems through a singular platform with similar control features.

BlueHalo Acquisition

On May 1, 2025, the Company closed its acquisition of BlueHalo LLC for merger consideration, net of cash acquired, of $ 3,484,945,000 .

Through the acquisition, BlueHalo is incorporated into the Company’s AxS and SCDE segments.

The acquisition will help to advance the combined company as a global defense technology leader across air, land, sea, space, and cyber.

The Company accounted for the acquisition under the acquisition method of accounting for business combinations.

The following table summarizes the final allocation of the purchase price over the estimated fair value of the assets and liabilities assumed in the acquisition of Tomahawk (in thousands):

September 15,

(in thousands)

Merger consideration transferred

Settlement of BlueHalo’s transaction expenses

Settlement of BlueHalo’s debt

Merger consideration

Less cash acquired

Fair value of consideration transferred

The fair value of the Company’s common stock issued is based on 17,425,849 shares issued as consideration, per the terms of the Merger Agreement, and the closing share price of $ 151.52 on April 30, 2025.

The following table summarizes the preliminary allocation of the fair value of the merger consideration transferred to assets acquired and liabilities assumed as of the acquisition date.

The allocation of the purchase price is preliminary and subject to change as the Company continues to evaluate the fair values of certain assets and liabilities acquired.

Open items in the purchase price allocation include the valuation of assets acquired and liabilities assumed including, but not limited to technology, backlog and customer relationships intangibles and fair value adjustment to inventory;

property, plant and equipment;

details surrounding tax matters;

and assumptions underlying certain existing or potential reserves, such as those for inventory and legal matters (in thousands):

Fair value of assets acquired:

Accounts receivable

Unbilled receivable

Accounts receivable, net of allowance for credit losses of $ 420 at May 1, 2025

Unbilled receivables and retentions

Inventories, net

Prepaid and other current assets

Property and equipment, net

Operating lease assets

Customer relationship

Deferred tax asset

Total identifiable net assets

Income taxes receivable

Prepaid expenses and other current assets

Long-term investments

Property and equipment

Operating lease right-of-use assets

Total identifiable assets

Fair value of liabilities assumed:

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Non-current operating lease liabilities

Other non-current liabilities

Deferred income taxes

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Total identifiable net assets

Fair value of consideration transferred:

Equity consideration

Cash consideration, net of cash acquired

Total consideration

Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates.

The fair value of the intangible assets was determined using a discounted cash flow analysis, which were based on the Company’s preliminary estimates of future sales, earnings and cash flows after considering such factors as general market conditions, anticipated customer demand, changes in working capital, long term business plans and recent operating performance.

The fair value assigned to intangible assets has been estimated based on third-party preliminary valuation studies utilizing income-based methodologies and corroborated with benchmarks of similar transactions in the industry.

Use of different estimates and judgments could yield materially different results.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing customers, the workforce of Tomahawk and expected future customers in the UxS market.

For income tax purposes the acquisition is treated as a stock acquisition, as such the goodwill associated with this purchase is not deductible.

Tomahawk Supplemental Pro Forma Information (unaudited)

The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business acquisition had occurred on May 1, 2022 (in thousands):

All intangible assets acquired in the BlueHalo acquisition are subject to amortization.

The goodwill is attributable to the differences between the estimated fair value of the consideration transferred and the estimated fair value of the assets acquired, and liabilities assumed.

For income tax purposes the goodwill and intangibles are not deductible for tax purposes.

The following table summarizes the valuation of the fair value of intangible assets acquired (in thousands):

Preliminary Fair Value

Estimated Useful Life

Preliminary fair value of intangible assets acquired:

Customer relationships

Developed technology

Intangible assets acquired

BlueHalo Supplemental Pro Forma Information (unaudited)

BlueHalo revenue and loss from operations for the three months ended August 2, 2025 since its acquisition on May 1, 2025 was $ 235,282,000 and $( 49,451,000 ), respectively.

The pro forma results for the first quarter ended August 2, 2025 were prepared as if the acquisition was completed on the first day of the Company's fiscal year May 1, 2024.

The pro forma amounts include the historical operating results of the Company and BlueHalo prior to the acquisition.

The pro forma results are not necessarily indicative of the Company's results of operations that would have been obtained had the acquisition of BlueHalo been completed for the period presented, or which may be realized in the future (in thousands):

Three Months Ended

Nine Months Ended

The Company did not have any material, nonrecurring pro forma adjustments directly attributable to the business acquisition included in the reported pro forma revenue and earnings.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 30, 2022, reflecting the additional amortization that would have been charged and including the results of Tomahawk prior to acquisition.

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable and are not necessarily indicative of the results that have been realized had the acquisition been consolidated in the tables above as of May 1, 2022, nor are they indicative of results of operations that may occur in the future.

Net loss attributable to AeroVironment, Inc.

The Company recognized a nonrecurring pro forma adjustment to pro forma earnings to amortize an increase in the fair value of inventory acquired during the three months ended August 2, 2025.

In addition, for the three months ended August 2, 2025, the amortization expense associated with the Company's one-year intangible backlog has been eliminated within the pro forma adjustments.

These pro forma amounts have been calculated by applying the Company’s accounting policies, assuming transaction costs had been incurred during the three months ended July 27, 2024, reflecting the additional amortization and depreciation that would have been charged, incremental interest expense associated with the initial financing for the acquisition under the term loan and revolver, and including the results of BlueHalo prior to acquisition.

The Company incurred approximately $ 43,020,000 of BlueHalo acquisition-related expenses.

The Company recognized a nonrecurring pro forma adjustment to the three months ended August 2, 2025 to remove the impact of the transaction costs from the historical balance, while recognizing the $ 43,020,000 of transaction expenses within the three months ended July 27, 2024 to reflect the costs as if the acquisition was completed during the three months ended July 27, 2024.

The unaudited pro forma combined financial information presented above does not give effect to the July 2025 common stock issuance and Notes issuance, as such proceeds were not used to fund the BlueHalo acquisition.

As the Company’s repayment of indebtedness using the proceeds of the common stock issuance and Notes issuance was not directly attributable to the acquisition, the related reduction in interest expense is not reflected in this unaudited pro forma combined financial information.

As part of the Telerob acquisition, the Company acquired a small foreign-based defined benefit pension plan.

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Funded status of the plan

The projected benefit obligation includes assumptions of a discount rate of 3.9 % and pension increase for in-payment benefits of 2.5 % for both January 25, 2025 and April 30, 2024.

The projected benefit obligation includes assumptions of a discount rate of 3.6 % and pension increase for in-payment benefits of 2.5 % for both August 2 , 2025 and April 30, 2025.

The accumulated benefit obligation is approximately equal to the Company’s projected benefit obligation.

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The Company does not expect to make any contributions to the plan in the fiscal year ending April 30, 2026.

The Company assumed expected return on plan assets of 2.9 % for January 25, 2025 and April 30, 2024.

The Company assumed expected return on plan assets of 2.9 % for August 2 , 2025 and April 30, 2025, respectively.

Expected benefit payments as of April 30, 2025 (in thousands):

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Three Months Ended

Nine Months Ended

Expected return on plan assets

2 unchanged sentences

Net periodic benefit cost

The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other.

Effective May 1, 2024, segment adjusted gross margin is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

Segment adjusted gross margin is defined as gross margin before intangible amortization expense including amortization of purchase accounting adjustments.

The Company’s CODM, who is the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the focus of R&D and other significant expenses, leading to decisions related to resource allocations in relation to profit and loss.

Accordingly, the Company identifies two reportable segments.

Effective May 1, 2025, the Company reorganized its segments.

In connection with the Company’s acquisition of BlueHalo, the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their business units.

The Company’s reportable segments are Autonomous Systems and Space, Cyber and Directed Energy.

The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments sales to each other are eliminated.

Effective May 1, 2025, segment adjusted EBITDA is the measure of profitability used by the CODM for purposes of making decisions about allocating resources to the segments and assessing performance.

Segment adjusted EBITDA is defined as segment (loss) income from operations before depreciation and amortization, adjusted for the impact of certain other non-cash items, including amortization of implementation of cloud computing arrangements, stock-based compensation, and acquisition related expenses.

Prior period segment information has been revised to align with the new segment measure of profitability.

Three Months Ended January 25, 2025

Product sales

Contract services

Segment adjusted gross margin

Depreciation and amortization

Three Months Ended January 27, 2024

Product sales

Contract services

Segment adjusted gross margin

Depreciation and amortization

Nine Months Ended January 25, 2025

Three Months Ended August 2, 2025

Product sales

Contract services

Segment adjusted gross margin

Depreciation and amortization

Nine Months Ended January 27, 2024

Cost of sales less intangible amortization and other purchase accounting adjustments

Intangible amortization included in cost of sales

Sales and marketing

General and administrative less intangible amortization

Intangible amortization included in SG&A

Research and development

Acquisition-related expenses

Amortization of cloud computing arrangement implementation

Other income (expense)

Stock-based compensation

Segment adjusted EBITDA

Three Months Ended July 27, 2024

Product sales

Contract services

Segment adjusted gross margin

Depreciation and amortization

The following table (in thousands) provides a reconciliation from segment adjusted gross margin to income before income taxes:

Cost of sales less intangible amortization and other purchase accounting adjustments

Intangible amortization included in cost of sales

Sales and marketing

General and administrative less intangible amortization

Intangible amortization included in SG&A

Research and development

Acquisition-related expenses

Amortization of cloud computing arrangement implementation

Other income (expense)

Stock-based compensation

Segment adjusted EBITDA

The following table (in thousands) provides a reconciliation from segment adjusted EBITDA to income before income taxes:

Three Months Ended

Nine Months Ended

Segment adjusted gross margin

Amortization in cost of sales

Selling, general and administrative

Research and development

Interest expense, net

Other expense, net

Income before income taxes

Segment adjusted EBITDA

Depreciation and amortization

Acquisition-related expenses

Amortization of cloud computing arrangement implementation

Stock-based compensation

Equity securities investments activity, net

Interest expense

(Loss) income before income taxes

Identifiable segment assets are summarized in the table below.

Corporate assets primarily consist of cash and cash equivalents, prepaid expenses and other current assets, long-term investments, property and equipment, net, operating lease right-of-use assets, deferred income taxes and other assets managed centrally on behalf of the business segments.

As of January 25, 2025

As of August 2, 2025

As of April 30, 2025

Subsequent Events

On February 28, 2025, the Department of the Army issued a stop-work order on certain existing U.S.

government contracts, previously awarded to the Company for foreign military sales funded by the U.S.

government via foreign military financing.

As of January 25, 2025, funded backlog included approximately $ 13,000,000 impacted by the stop-work order.

Capital expenditures are summarized in the table below (in thousands):

Three Months Ended August 2, 2025

Three Months Ended July 27, 2024

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 1. Financial Statements