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Item 1. Financial Statements

2025-09-10 compared with 2025-03-05 · 310 added, 417 removed, 279 unchanged (72% of the section changed)

7 unchanged sentences

Cash and cash equivalents $ 136,856 $ 127,507

Restricted cash — 379

Accounts receivable, net 124,254 92,762

10 unchanged sentences

Debt issuance costs, net 979 1,289

Investment in affiliates and other assets 23,970 21,163

Right of use, investment in affiliates, and other assets 13,101 9,378

Deferred income taxes 32,077 32,104

5 unchanged sentences

2025 April 26,

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

12 unchanged sentences

Total long-term liabilities 58,289 58,956

SHAREHOLDERS' EQUITY:

Preferred Shares, no par value, authorized 50 shares;

STOCKHOLDERS' EQUITY:

Preferred Shares, $ 0.00001 par value, authorized 5,000 shares;

no shares issued and outstanding

Common Stock, no par value, authorized 115,000 shares;

49,006 and 48,121 shares issued as of January 25, 2025 and April 27, 2024, respectively

71,774 65,525

Common stock, $ 0.00001 par value, authorized 115,000 shares;

53,108 and 53,030 shares issued as of August 2, 2025 and April 26, 2025, respectively

Additional paid-in capital 191,663 189,940

Retained earnings 144,380 127,910

Treasury Stock, at cost, 2,443 and 1,907 shares as of January 25, 2025 and April 27, 2024, respectively

Treasury stock, at cost, 4,627 and 3,979 shares as of August 2, 2025 and April 26, 2025, respectively

( 50,411 ) ( 39,759 )

Accumulated other comprehensive loss ( 5,881 ) ( 6,160 )

TOTAL SHAREHOLDERS' EQUITY 272,291 238,792

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 524,156 $ 527,884

TOTAL STOCKHOLDERS' EQUITY 279,751 271,931

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 545,591 $ 502,892

See notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

(in thousands, except per share data)

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Three Months Ended

2025 July 27,

Net sales $ 218,972 $ 226,088

6 unchanged sentences

41,800 36,982

Operating (loss) income ( 3,628 ) 8,036 34,858 67,688

Nonoperating (expense) income:

Operating income 23,272 22,716

Nonoperating income (expense):

Interest income (expense), net 893 ( 71 )

Change in fair value of convertible note — ( 21,590 )

Other expense and debt issuance costs write-off, net ( 613 ) ( 1,000 ) ( 2,612 ) ( 6,282 )

(Loss) income before income taxes ( 17,816 ) 12,631 7,587 46,884

Income tax (benefit) expense ( 660 ) 1,889 8,283 14,781

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Other expense, net ( 1,942 ) ( 835 )

Income before income taxes 22,223 220

Income tax expense 5,753 5,166

Net income (loss) $ 16,470 $ ( 4,946 )

Weighted average shares outstanding:

1 unchanged sentence

Diluted 49,736 46,311

Earnings per share:

Earnings (loss) per share:

Basic $ 0.34 $ ( 0.11 )

3 unchanged sentences

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Other comprehensive income (loss):

Three Months Ended

2025 July 27,

Net income (loss) $ 16,470 $ ( 4,946 )

Other comprehensive income:

Cumulative translation adjustments 279 128

Unrealized (loss) gain on available-for-sale securities, net of tax ( 9 ) 7 11 23

Total other comprehensive (loss) income, net of tax ( 1,329 ) 1,048 ( 867 ) ( 378 )

Comprehensive (loss) income $ ( 18,485 ) $ 11,790 $ ( 1,563 ) $ 31,725

Total other comprehensive income, net of tax 279 128

Comprehensive income (loss) $ 16,749 $ ( 4,818 )

See notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

2 unchanged sentences

Balance as of April 26, 2025 53,030 $ — $ 189,940 $ 127,910 ( 3,979 ) $ ( 39,759 ) $ ( 6,160 ) $ 271,931

Net loss — — — ( 4,946 ) — — — ( 4,946 )

Cumulative translation adjustments — — — — — — 128 128

Share-based compensation — — 520 — — — — 520

Exercise of stock options 331 3,148 — — — — — 3,148

Employee savings plan activity 71 569 — — — — — 569

Balance as of July 27, 2024 48,523 $ 69,242 $ 52,566 $ 133,085 ( 1,907 ) $ ( 10,285 ) $ ( 6,397 ) $ 238,211

Net income — — — 16,470 — — — 16,470

Cumulative translation adjustments — — — — — — 279 279

Unrealized gain on available-for-sale securities, net of tax — — — — — — 20 20

Share-based compensation — — 947 — — — — 947

Common stock issued upon vesting of Restricted Stock Units 141 — — — — — — —

Exercise of stock options 18 — 128 — — — — 128

Shares withheld for taxes on Restricted Stock Unit issuances ( 37 ) — ( 591 ) — — — — ( 591 )

Balance as of October 26, 2024 48,810 $ 70,282 $ 52,505 $ 154,491 ( 1,907 ) $ ( 10,285 ) $ ( 6,063 ) $ 260,930

Net loss — — — ( 17,156 ) — — — ( 17,156 )

Cumulative translation adjustments — — — — — — ( 1,320 ) ( 1,320 )

Unrealized loss on available-for-sale securities, net of tax — — — — — — ( 9 ) ( 9 )

Share-based compensation — — 573 — — — — 573

Exercise of stock options 118 868 — — — — — 868

Employee savings plan activity 60 — 648 — — — — 648

Treasury stock purchase — — — — ( 536 ) ( 9,016 ) — ( 9,016 )

Settlement of convertible note — — 36,797 — — — — 36,797

Balance as of January 25, 2025 49,006 $ 71,774 $ 89,875 $ 137,335 ( 2,443 ) $ ( 19,301 ) $ ( 7,392 ) $ 272,291

Treasury stock purchased — $ — $ — $ — ( 648 ) ( 10,652 ) $ — ( 10,652 )

Balance as of August 2, 2025 53,108 $ — $ 191,663 $ 144,380 ( 4,627 ) $ ( 50,411 ) $ ( 5,881 ) $ 279,751

See notes to Condensed Consolidated Financial Statements.

1 unchanged sentence

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)

4 unchanged sentences

Cumulative translation adjustments — — — — — — 128 128

Unrealized gain on available-for-sale securities, net of tax — — — — — — 7 7

Share-based compensation — — 520 — — — — 520

2 unchanged sentences

Balance as of July 27, 2024 48,523 $ 69,242 $ 52,566 $ 133,085 ( 1,907 ) $ ( 10,285 ) $ ( 6,397 ) $ 238,211

Net income — — — 2,165 — — — 2,165

Cumulative translation adjustments — — — — — — ( 1,190 ) ( 1,190 )

Unrealized gain on available-for-sale securities, net of tax — — — — — — 9 9

Share-based compensation — — 534 — — — — 534

Exercise of stock options 161 959 — — — — — 959

Shares withheld for taxes on Restricted Stock Unit issuances ( 37 ) — ( 303 ) — — — — ( 303 )

Common stock issued upon vesting of Restricted Stock Units 188 — — — — — — —

Balance as of October 28, 2023 47,930 $ 64,643 $ 51,047 $ 124,771 ( 1,907 ) $ ( 10,285 ) $ ( 6,955 ) $ 223,221

Net income — — — 10,742 — — — 10,742

Cumulative translation adjustments — — — — — — 1,041 1,041

Unrealized gain (loss) on available-for-sale securities, net of tax — — — — — — 7 7

Share-based compensation — — 507 — — — — 507

Exercise of stock options 23 142 — — — — — 142

Employee savings plan activity 143 586 — — — — — 586

Balance as of January 27, 2024 48,096 $ 65,371 $ 51,554 $ 135,513 ( 1,907 ) $ ( 10,285 ) $ ( 5,907 ) $ 236,246

See notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

(in thousands)

Nine Months Ended

2025 January 27,

Three Months Ended

2025 July 27,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income $ ( 696 ) $ 32,103

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

Net income (loss) $ 16,470 $ ( 4,946 )

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

Depreciation and amortization 4,804 4,893

(Gain) loss on sale of property, equipment and other assets ( 118 ) 98

Gain on sale of property, equipment and other assets ( 38 ) ( 20 )

Share-based compensation 947 520

Equity in loss of affiliates 805 931

(Recoveries of) provision for doubtful accounts, net ( 481 ) 659

Allowance for credit losses on affiliate loan 795 —

Provision for doubtful accounts, net 594 265

Deferred income taxes, net 32 13

Non-cash impairment charges — 1,091

Change in fair value of convertible note — 21,590

Debt issuance costs write-off — 3,353

Change in operating assets and liabilities 1,688 ( 3,765 )

3 unchanged sentences

Proceeds from sales of property, equipment and other assets 218 45

Proceeds from sales or maturities of marketable securities — 550

Purchases of equity and loans to equity investees ( 3,326 ) ( 4,084 )

Loans to equity investees ( 1,547 ) ( 933 )

Net cash used in investing activities ( 5,620 ) ( 5,969 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings on notes payable — 40,485

Payments on notes payable ( 500 ) ( 983 )

1 unchanged sentence

Payments for common shares repurchased ( 10,652 ) —

Debt issuance costs — ( 6,833 )

Proceeds from exercise of stock options 128 3,148

Tax payments related to RSU issuances ( 591 ) ( 303 )

Net cash (used in) provided by financing activities ( 11,128 ) 2,062

11 unchanged sentences

Contributions of common stock under the employee stock purchase plan 648 569

Settlement of convertible note 36,797 —

See notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

Daktronics, Inc.

and its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) are industry leaders in designing and manufacturing electronic scoreboards, programmable display systems, and large screen video displays for sporting, commercial, and transportation applications.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting of normal recurring adjustments) necessary to fairly present our financial position, results of operations and cash flows for the periods presented.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions affecting the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities.

Estimates used in the preparation of the unaudited consolidated financial statements include, among others, revenue recognition, future warranty expenses, the fair value of long-term debt, the fair value of investments in affiliates, income tax expenses, and stock-based compensation.

Due to the inherent uncertainty involved in making estimates, actual results in future periods may differ from those estimates.

Certain information and disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted.

The balance sheet as of April 27, 2024 has been derived from the audited financial statements at that date, but it does not include all the information and disclosures required by GAAP for complete financial statements.

The financial statements and notes thereto contained in this Quarterly Report on Form 10-Q should be read in conjunction with our financial statements and notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended April 27, 2024, (the "Form 10-K").

The results of operations for the interim periods presented are not necessarily indicative of results that may be expected for any other interim period or for the full fiscal year.

Daktronics, Inc.

operates on a 52- or 53-week fiscal year, with our fiscal year ending on the Saturday closest to April 30 of each year.

and its subsidiaries (the “Company”, “Daktronics”, “we”, “our”, or “us”) are recognized industry leaders in the design and manufacturing of electronic scoreboards, programmable display systems, and large-screen video displays serving sporting, commercial, and transportation markets.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial reporting.

In the opinion of management, these financial statements reflect all adjustments necessary for a fair presentation of the Company’s financial position, results of operations, and cash flows for the periods presented.

All such adjustments are of a normal recurring nature.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent liabilities.

Significant estimates include, but are not limited to, revenue recognition, warranty obligations, the fair value of long-term debt and investments in affiliates, income tax provisions, and stock-based compensation.

Actual results may differ materially from those estimates due to inherent uncertainties.

Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to SEC rules and regulations.

The balance sheet as of April 26, 2025, has been derived from the audited financial statements as of that date but does not include all disclosures required for annual financial statements.

These interim financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the fiscal year ended April 26, 2025 (the “Form 10-K”).

The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to April 30.

When April 30 falls on a Wednesday, the fiscal year ends on the preceding Saturday.

Within each fiscal year, each quarter is comprised of 13-week periods following the beginning of each fiscal year.

In each 53-week fiscal year, an additional week is added to the first quarter, and each of the last three quarters is comprised of a 13-week period.

The nine months ended January 25, 2025 and January 27, 2024 contained operating results for 39 weeks.

There have been no material changes to our significant accounting policies and estimates as described in the Form 10-K.

Each fiscal quarter consists of 13 weeks, except in a 53-week fiscal year, where the first quarter includes 14 weeks.

The three months ended August 2, 2025, and July 27, 2024, included 14 and 13 weeks of operations, respectively.

There have been no material changes to the Company’s significant accounting policies and estimates as disclosed in the Form 10-K.

Cash and cash equivalents and restricted cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the totals of the same amounts shown in the Condensed Consolidated Statements of Cash Flows.

Restricted cash consists of cash and cash equivalents held in bank deposit accounts to secure certain issuances of foreign bank guarantees.

2025 January 27,

The following table reconciles cash, cash equivalents, and restricted cash as presented in the Condensed Consolidated Balance Sheets with the corresponding totals reported in the Condensed Consolidated Statements of Cash Flows.

Restricted cash comprises amounts held in bank deposit accounts to support the issuance of foreign bank guarantees.

2025 July 27,

2024 April 26,

2 unchanged sentences

Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 136,856 $ 97,188 $ 127,507

We have foreign currency cash accounts to operate our global business.

These accounts are impacted by changes in foreign currency rates.

Of our $ 132,169 in cash and cash equivalent balances as of January 25, 2025, $ 117,833 were denominated in United States dollars, of which $ 1,887 were held by our foreign subsidiaries.

As of January 25, 2025, we had an additional $ 14,336 in cash balances denominated in foreign currencies, of which $ 12,386 were maintained in accounts of our foreign subsidiaries.

We maintain foreign currency cash accounts to support our global operations.

These balances are subject to fluctuations in foreign exchange rates, which may impact our consolidated financial position and results of operations.

As of August 2, 2025, our total cash and cash equivalents were $ 136,856 , of which $ 125,616 were denominated in U.S.

Included in the U.S.

dollar-denominated balances were $ 2,147 held by our foreign subsidiaries.

The remaining $ 11,240 were denominated in foreign currencies, with $ 10,000 maintained in accounts held by our foreign subsidiaries.

Recent Accounting Pronouncements

Accounting Standards Adopted

There are no significant Accounting Standard Updates ("ASU") issued that were adopted in the nine months ended January 25, 2025.

Accounting Standards Not Yet Adopted

In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures ("ASU 2023-07").

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures (“ASU 2023-07”).

ASU 2023-07 requires enhanced disclosures about significant segment expenses.

The Company is required to adopt ASU 2023-07 for its annual reporting in fiscal year 2025 and for interim period reporting beginning in the first quarter of fiscal year 2026 on a retrospective basis.

Early adoption is permitted.

We are currently evaluating the impact of ASU 2023-07 on our segment disclosures.

ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

ASU 2023-07 requires the retrospective adoption method.

The Company adopted ASU 2023-07 for annual periods beginning in the fiscal year ending April 26, 2025, noting there were no changes to our reportable segments.

The Company has adopted ASU 2023-07 for interim periods beginning in the fiscal year ending May 2, 2026.

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) Improvements to Income Tax Disclosures ("ASU 2023-09").

4 unchanged sentences

We are currently evaluating the impact of ASU 2023-09 on our income tax disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"), requiring disclosure in the notes to the financial statements for specified information about certain costs and expenses.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) ("ASU 2024-03"), requiring disclosure in the notes to the financial statements of specified information about certain costs and expenses.

ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and for interim periods beginning after December 15, 2027;

1 unchanged sentence

We are currently evaluating the impact of ASU 2024-03 on our expense disaggregation disclosures.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets ("ASU 2025-05").

ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers .

Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets.

ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years.

Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively.

The Company is required to adopt this guidance in fiscal year 2027 on a prospective basis.

We are currently evaluating the impact of ASU 2025-05 on our expense disaggregation disclosures.

Investments in Affiliates

We use the equity method to account for investments in companies if our investment provides us with the ability to exercise significant influence over operating and financial policies of the investee.

Our judgment regarding the level of influence over each equity method investee includes considering key factors such as our ownership interest, representation on the board of directors, participation in policy-making decisions, other commercial arrangements, and material intercompany transactions.

We evaluated the nature of our investment in affiliates of Xdisplay TM ("XDC"), which is developing micro-LED mass transfer expertise and technologies, and Miortech (dba Etulipa) ("Mirotech"), which is developing low power outdoor electrowetting technology.

As of January 25, 2025, our ownership in Miortech and XDC was 55.9 percent and 16.4 percent, respectively.

The aggregate amount of our investments accounted for under the equity method was $ 0 and $ 1,813 as of January 25, 2025 and April 27, 2024, respectively.

We determined both entities are variable interest entities, and, based on management's analysis, we determined that Daktronics is not the primary beneficiary because the power criterion was not met.

Therefore, as Daktronics does not have control, but is able to exercise significant influence, the investments in Miortech and XDC are accounted for under the equity method.

Our proportional share of the respective affiliates' losses is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations.

For the three and nine months ended January 25, 2025, our share of the losses of our affiliates was $ 762 and $ 2,594 as compared to $ 869 and $ 2,330 for the three and nine months ended January 27, 2024.

These losses were first applied to the equity balances, and upon the equity balances being reduced to zero, the losses then reduce the book value of the promissory notes with these entities.

For the three and nine months ended January 25, 2025, the amount of losses reduced the book value of the notes by $ 505 and $ 781 , respectively.

There was no reduction of the book value of the notes during the three and nine months ended January 27, 2024.

We review our investments in affiliates for impairment indicators.

There were no impairments recorded during the three and nine months ended January 25, 2025 compared to impairments of $ 437 and $ 1,091 during the three and nine months ended January 27, 2024.

We purchased services for research and development activities from our equity method investees.

The total of these related party transactions for the nine months ended January 25, 2025 and January 27, 2024 was $ 593 and $ 162 , respectively, which is included in the "Product design and development" line item in our Condensed Consolidated Statements of Operations.

The portions of our activities that remain unpaid were $ 109 and $ 2 as of the nine months ended January 25, 2025 and January 27, 2024, respectively, which are included in the "Accounts payable" line item in our Condensed Consolidated Balance Sheets.

We also have advanced our affiliates funds under convertible and promissory notes (collectively, the "Affiliate Notes").

We advanced $ 3,326 in the nine months ended January 25, 2025, which does not include the foreign currency translation adjustment of $ 97 , and $ 5,050 in fiscal year 2024 under the Affiliate Notes.

We have accrued interest related to the Affiliate Notes of $ 587 and $ 449 as of January 25, 2025 and April 27, 2024, respectively.

The total face value of the outstanding amount of the Affiliate Notes was $ 18,057 and $ 14,241 as of January 25, 2025 and April 27, 2024, respectively.

After equity method losses were recorded, the net balances of the Affiliate Notes were $ 17,276 and $ 14,241 as of January 25, 2025 and April 27, 2024, respectively.

The balances of the Affiliate Notes are included in the "Investments in affiliates and other assets" line item in our Condensed Consolidated Balance Sheets.

We evaluate the Affiliate Notes for impairment and credit losses.

As of January 25, 2025 and April 27, 2024, no provision for losses was recorded, as management's analysis concluded the Affiliate Notes were collectable or realizable based on the rights of these instruments and related valuation of each affiliate.

The Affiliate Notes balance combined with the investment in affiliates balance totaled $ 17,276 and $ 16,054 as of January 25, 2025 and April 27, 2024, respectively.

We account for investments in other entities using the equity method when our ownership interest provides us with the ability to exercise significant influence over the operating and financial policies of the investee.

Our assessment of significant influence considers factors such as ownership percentage, board representation, participation in policy-making decisions, commercial arrangements, and material intercompany transactions.

We evaluated our investments in affiliates of X Display Company Technology Limited (“XDC”), which is developing micro-LED mass transfer technologies, and Miortech Holding B.V.

(dba Etulipa) (“Miortech”), which is focused on low-power outdoor electrowetting technology.

As of August 2, 2025, our ownership interest in Miortech was 55.9 percent, and in XDC was 16.4 percent.

Despite our majority ownership in Miortech, we determined that both entities are variable interest entities (“VIEs”) and, based on management’s analysis, Daktronics is not the primary beneficiary as the power criterion was not met.

Accordingly, we do not consolidate these entities but account for our investments in such entities under the equity method.

As of August 2, 2025 and April 26, 2025, the carrying value of our equity method investments was zero.

Our proportional share of the affiliates’ losses is recorded in “Other expense, net” in our Condensed Consolidated Statements of Operations.

For the three months ended August 2, 2025, our share of losses was $ 805 , compared to $ 931 for the three months ended July 27, 2024.

We also engage in related party transactions with our equity method investees, primarily for research and development services.

For the three months ended August 2, 2025 and July 27, 2024, we recorded expenses of $ 32 and $ 223 , respectively, in “Product design and development.” Unpaid amounts related to these services were $ 109 and $ 123 as of August 2, 2025 and July 27, 2024, respectively, and are included in “Accounts payable.”

Additionally, we have provided funding to certain of our affiliates through convertible and promissory notes (collectively, the “Affiliate Notes”).

During the three months ended August 2, 2025, we advanced $ 1,547 to such affiliates under the Affiliate Notes, as compared to $ 4,565 during fiscal year 2025.

Accrued interest on the Affiliate Notes was $ 228 and $ 838 as of August 2, 2025 and April 26, 2025, respectively.

The total face value of the outstanding Affiliate Notes was $ 21,748 and $ 19,843 as of August 2, 2025 and April 26, 2025, respectively.

These balances are included in “Right of use, investment in affiliates, and other assets” in our Condensed Consolidated Balance Sheets.

We periodically assess the Affiliate Notes for impairment and expected credit losses.

During the fourth quarter of fiscal 2025, we recorded a provision of $ 15,480 related to one note deemed uncollectible.

As of August 2, 2025, an additional provision of $ 795 was recorded for another note expected to be uncollectible.

These provisions are included in “Other expense, net.”

The combined balance of our Affiliate Notes and equity method investments totaled $ 3,427 and $ 3,123 as of August 2, 2025 and April 26, 2025, respectively.

Earnings Per Share

We follow the provisions of Accounting Standards Codification 260, Earnings Per Share ("ASC 260"), where basic earnings per share ("EPS") is computed by dividing income attributable to common shareholders by the weighted average number of common shares outstanding for the period.

Diluted EPS reflects the potential dilution which may occur if securities or other obligations to issue common stock were exercised or converted into shares of common stock or resulted in the issuance of shares of common stock which share in our earnings.

The following is a reconciliation of the net income and common share amounts used in the calculation of basic and diluted EPS for the three and nine months ended January 25, 2025 and January 27, 2024:

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

We compute earnings per share (“EPS”) in accordance with the provisions of Accounting Standards Codification Topic 260, Earnings Per Share.

Basic EPS is calculated by dividing net income attributable to common stockholders by the weighted average number of common shares outstanding during the reporting period.

Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised, converted, or otherwise resulted in the issuance of common shares that participate in our earnings.

The following table presents a reconciliation of net income and the number of common shares used in the calculation of basic and diluted EPS for the three months ended August 2, 2025, and July 27, 2024:

Three Months Ended

2025 July 27,

Earnings per share - basic

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Net income (loss) $ 16,470 $ ( 4,946 )

Weighted average shares outstanding 48,902 46,311

1 unchanged sentence

Earnings per share - diluted

Net (loss) income $ ( 17,156 ) $ 10,742 $ ( 696 ) $ 32,103

Change in fair value of convertible note — ( 6,340 ) — —

Interest expense on convertible note, net of tax — 404 — —

Net income (loss) $ 16,470 $ ( 4,946 )

Diluted net income $ 16,470 $ ( 4,946 )

1 unchanged sentence

Dilution associated with stock compensation plans 834 —

Dilution associated with convertible note — 4,037 — —

Weighted average common shares outstanding, assuming dilution 49,736 46,311

Diluted earnings per share $ 0.33 $ ( 0.11 )

During the three months ended January 25, 2025, a total of 934 shares of potential common stock related to stock compensation plans were excluded from the computation of diluted EPS because the effects would be anti-dilutive.

The excluded shares include options outstanding to purchase 29 shares of common stock with a weighted average exercise price of $ 11.87 .

For the three months ended January 27, 2024, options outstanding to purchase 484 shares of common stock with a weighted average exercise price of $ 10.73 were not included in the computation of diluted EPS because the effects would be anti-dilutive.

During the nine months ended January 25, 2025, a total of 992 shares of potential common stock relating to the stock compensation plan were excluded from the computation of diluted EPS because the effects would be anti-dilutive.

The excluded shares include options outstanding to purchase 51 shares of common stock with a weighted average exercise price of $ 10.43 .

For the nine months ended January 27, 2024, options outstanding to purchase 695 shares of common stock with a weighted average exercise price of $ 10.30 were not included in the computation of diluted EPS because the effects would be anti-dilutive.

During the three months ended January 25, 2025, 3,079 potential shares of common stock issuable upon conversion of the senior secured convertible note dated May 11, 2023 issued to Alta Fox Opportunities Fund, LP (the Holder," and collectively with its affiliates, "Alta Fox") during fiscal 2024 (the "Convertible Note") were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

The 2,218 common shares attributed to settling a portion of the Convertible Note, but not yet been issued, were weighted for the number of days outstanding from the settlement date and included in the weighted average shares outstanding in the computation of diluted EPS.

For the nine months ended January 25, 2025, 3,697 potential common shares issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

During the nine months ended January 27, 2024, 3,875 potential shares of common stock issuable upon conversion of the Convertible Note were not included in the computation of diluted EPS, as the effect would be anti-dilutive.

During the three months ended August 2, 2025, 29 shares of potential common stock related to stock-based compensation plans were excluded from the computation of diluted EPS because their inclusion would have been anti-dilutive.

These excluded shares include options to purchase 24 shares of common stock with a weighted average exercise price of $ 11.87 .

For the three months ended July 27, 2024, options to purchase 161 shares of common stock with a weighted average exercise price of $ 12.52 were excluded from the computation of diluted EPS due to their anti-dilutive effect.

Additionally, 4,037 potential shares of common stock issuable upon conversion of a senior secured convertible promissory note dated as of May 11, 2023 issued by the Company to Alta Fox Opportunities Fund, LP (“Alta Fox Opportunities”) during fiscal 2024 (the “Convertible Note”) in exchange for the payment by Alta Fox Opportunities to the Company of $ 25,000 , which was convertible into shares of the Company’s common stock, were excluded from the diluted EPS calculation for the same period, as their inclusion would have been anti-dilutive.

Revenue Recognition

Disaggregation of revenue

In accordance with ASC 606-10-50, we disaggregate revenue from contracts with customers by the type of performance obligation and the timing of revenue recognition.

We determined that disaggregating revenue in these categories achieves

the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors and to enable users of financial statements to understand the relationship to each reportable segment.

The following table presents our disaggregation of revenue by segments:

Three Months Ended January 25, 2025

Commercial Live Events High School

Park and Recreation

Transportation International Total

Type of performance obligation

Unique configuration $ 7,361 $ 29,934 $ 5,970 $ 11,228 $ 7,494 $ 61,987

Limited configuration 24,997 8,227 20,534 5,974 7,909 67,641

Service and other 5,618 7,911 2,863 1,587 1,900 19,879

$ 37,976 $ 46,072 $ 29,367 $ 18,789 $ 17,303 $ 149,507

Timing of revenue recognition

Goods/services transferred at a point in time $ 27,229 $ 11,184 $ 20,384 $ 6,921 $ 8,599 $ 74,317

Goods/services transferred over time 10,747 34,888 8,983 11,868 8,704 75,190

$ 37,976 $ 46,072 $ 29,367 $ 18,789 $ 17,303 $ 149,507

Nine Months Ended January 25, 2025

Commercial Live Events High School

Park and Recreation

Transportation International Total

Type of performance obligation

Unique configuration $ 19,129 $ 181,541 $ 24,888 $ 38,810 $ 14,500 $ 278,868

Limited configuration 79,135 28,161 91,928 19,507 27,436 246,167

Service and other 17,350 22,185 8,628 4,440 6,288 58,891

$ 115,614 $ 231,887 $ 125,444 $ 62,757 $ 48,224 $ 583,926

Timing of revenue recognition

Goods/services transferred at a point in time $ 87,470 $ 37,101 $ 92,286 $ 22,302 $ 30,659 $ 269,818

Goods/services transferred over time 28,144 194,786 33,158 40,455 17,565 314,108

$ 115,614 $ 231,887 $ 125,444 $ 62,757 $ 48,224 $ 583,926

Three Months Ended January 27, 2024

In accordance with ASC 606-10-50, Revenue from Contracts with Customers, we disaggregate revenue based on the nature of the performance obligations and the timing of revenue recognition.

This approach is intended to meet the disclosure objective of depicting how the nature, amount, timing, and uncertainty of revenue and cash flows are influenced by economic factors.

It also enables users of the financial statements to understand the relationship between revenue streams and each of our reportable segments.

The following table presents our disaggregated revenue by segment:

Three Months Ended August 2, 2025

Commercial Live Events High School

10 unchanged sentences

$ 46,167 $ 79,800 $ 59,347 $ 16,575 $ 17,083 $ 218,972

Nine Months Ended January 27, 2024

Three Months Ended July 27, 2024

Commercial Live Events High School

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Contract balances

Contract assets represent revenue recognized in excess of amounts billed and include unbilled receivables.

Unbilled receivables, which represent an unconditional right to payment subject only to the passage of time, are reclassified to accounts receivable when they are billed according to the contract terms.

Contract liabilities represent amounts billed to customers in excess of revenue recognized to date.

The following table reflects the changes in our contract assets and liabilities:

Contract assets represent revenue recognized for performance obligations satisfied but not yet billed, and include unbilled receivables.

Unbilled receivables reflect an unconditional right to payment that is subject only to the passage of time and are reclassified to accounts receivable once billed in accordance with contractual terms.

Contract liabilities represent amounts billed to customers in excess of revenue recognized to date and are recognized as revenue when the related performance obligations are satisfied.

The following table summarizes the changes in our contract assets and contract liabilities for the periods presented:

2025 April 26,

3 unchanged sentences

Contract liabilities - noncurrent 18,497 18,421 76 0.4

The changes in our contract assets and contract liabilities from April 27, 2024 to January 25, 2025 were due to the timing of billing schedules and revenue recognition, which can vary significantly depending on the contractual payment terms and the seasonality of the sports markets.

We had no significant impairments of contract assets for the nine months ended January 25, 2025.

For service-type warranty contracts, we allocate revenue to this performance obligation, recognize the revenue over time, and recognize costs as incurred.

Earned and unearned revenues for these contracts are included in the "Contract assets" and "Contract liabilities" line items of our Condensed Consolidated Balance Sheets.

Changes in unearned service-type warranty contracts, net for the nine months ended January 25, 2025 were as follows:

The changes in our contract assets and contract liabilities from April 26, 2025 to August 2, 2025 were primarily driven by the timing of billing schedules and revenue recognition.

These fluctuations are influenced by the contractual payment terms and the seasonal nature of the sports markets.

No significant impairments of contract assets were identified during the three months ended August 2, 2025.

For service-type warranty contracts, revenue is allocated to the related performance obligation and recognized over time, while associated costs are recognized as incurred.

Earned and unearned revenues related to these contracts are reported within the “Contract assets” and “Contract liabilities” line items in our Condensed Consolidated Balance Sheets.

The following table summarizes the changes in unearned service-type warranty contracts, net, for the three months ended August 2, 2025:

Balance as of April 26, 2025 $ 35,129

2 unchanged sentences

Foreign currency translation and other 1,169

Balance as of January 25, 2025 $ 35,676

Contracts in progress identified as loss contracts as of January 25, 2025 and April 27, 2024 were immaterial.

Loss provisions are recorded in the "Accrued expenses" line item in our Condensed Consolidated Balance Sheets.

During the nine months ended January 25, 2025, we recognized revenue of $ 58,407 related to our contract liabilities as of April 27, 2024.

Balance as of August 2, 2025 $ 37,025

Contracts in progress identified as loss contracts as of August 2, 2025 and April 26, 2025 were immaterial.

Provisions for such losses are recorded in the “Accrued expenses” line item in our Condensed Consolidated Balance Sheets.

During the three months ended August 2, 2025, we recognized $ 44,800 of revenue that was previously recorded as contract liabilities as of April 26, 2025.

Remaining performance obligations

As of January 25, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 338,339 .

Remaining performance obligations related to product and service agreements as of January 25, 2025 were $ 273,223 and $ 65,116 , respectively.

We expect approximately $ 285,680 of our remaining performance obligations to be recognized over the next 12 months, with the remainder recognized thereafter.

Although remaining performance obligations reflect business that is considered to be legally binding, cancellations, deferrals, or scope adjustments may occur.

Any known project cancellations, revisions to project scope and cost, foreign currency exchange fluctuations, and project deferrals are reflected or excluded in the remaining performance obligation balance, as appropriate.

The amount of revenue recognized associated with performance obligations satisfied in prior years during the nine months ended January 25, 2025 and January 27, 2024 was immaterial.

As of August 2, 2025, the aggregate amount of the transaction price allocated to the remaining performance obligations was $ 426,675 .

This consists of $ 360,275 related to product agreements and $ 66,400 related to service agreements.

We expect approximately $ 369,420 of these obligations to be recognized as revenue within the next 12 months, with the remainder recognized thereafter.

While remaining performance obligations represent legally binding business commitments, they are subject to change due to cancellations, deferrals, or scope adjustments.

Known changes—including project cancellations, scope revisions, foreign currency exchange fluctuations, and deferrals—are reflected or excluded from the reported balance, as appropriate.

Revenue recognized during the three months ended August 2, 2025 and July 27, 2024 related to performance obligations satisfied in prior periods was immaterial.

Segment Reporting

The following table sets forth certain financial information for each of our five reporting segments for the periods indicated:

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

The following table presents selected financial information for each of our five reportable segments for the periods indicated:

Three Months Ended

2025 July 27,

Commercial $ 46,167 $ 34,199

3 unchanged sentences

International 17,083 12,785

149,507 170,303 583,926 602,203

Total consolidated net sales 218,972 226,088

Cost of Sales:

Commercial 32,517 26,604

Live Events 59,614 82,580

High School Park and Recreation 37,406 30,690

Transportation 11,419 14,741

International 12,944 11,775

Gross profit:

4 unchanged sentences

International 4,139 1,010

36,781 41,718 152,342 167,064

Operating expenses:

Total consolidated gross profit 65,072 59,698

Selling 16,834 15,636

1 unchanged sentence

Product design and development 10,671 9,623

40,409 33,682 117,484 99,376

Operating (loss) income ( 3,628 ) 8,036 34,858 67,688

Nonoperating (expense) income:

Interest (income) expense, net ( 893 ) 71

Change in fair value of convertible note — ( 21,590 )

Other expense and debt issuance costs write-off, net ( 613 ) ( 1,000 ) ( 2,612 ) ( 6,282 )

(Loss) Income before income taxes $ ( 17,816 ) $ 12,631 $ 7,587 $ 46,884

Other expense, net 1,942 835

Income before income taxes $ 22,223 $ 220

Depreciation and amortization:

4 unchanged sentences

International 447 562

Total depreciation and amortization for reportable segments 3,639 3,808

Unallocated corporate depreciation and amortization 1,165 1,085

$ 4,913 $ 4,876 $ 14,707 $ 14,370

No single geographic area comprises a material amount of our net sales or property and equipment, net of accumulated depreciation, other than the United States.

The following table presents information about net sales and property and equipment, net of accumulated depreciation, in the United States and elsewhere:

Three Months Ended Nine Months Ended

2025 January 27,

2024 January 25,

2025 January 27,

Total depreciation and amortization $ 4,804 $ 4,893

No single geographic region, other than the United States, represents a material portion of our net sales or our property and equipment, net of accumulated depreciation.

The following table provides a summary of net sales and property and equipment, net of accumulated depreciation, for the United States and all other geographic areas:

Three Months Ended

2025 July 27,

United States $ 196,588 $ 207,219

6 unchanged sentences

$ 66,080 $ 73,884

We have numerous customers worldwide for sales of our products and services, and no customer accounted for 10 percent or more of net sales;

therefore, we are not economically dependent on a limited number of customers for the sale of our products and services.

We have numerous raw material and component suppliers, and no supplier accounts for 10 percent or more of our cost of sales;

however, we have a complex global supply chain subject to geopolitical and transportation risks and a number of single-source suppliers that could limit our supply or cause delays in obtaining raw materials and components needed in manufacturing.

The changes in the carrying amount of goodwill related to each segment with a goodwill balance for the nine months ended January 25, 2025 were as follows:

We serve a diverse customer base across global markets for our products and services.

No individual customer accounted for 10 percent or more of our net sales during the reporting period.

Accordingly, we are not economically dependent on a limited number of customers for the sale of our products and services.

We also source raw materials and components from a broad network of suppliers.

No single supplier represented 10 percent or more of our cost of sales.

However, our global supply chain is complex and subject to geopolitical and transportation risks.

Additionally, we rely on certain single-source suppliers, which may constrain availability or result in delays in obtaining critical materials and components required for manufacturing.

The following table summarizes changes in the carrying amount of goodwill for each reportable segment with a goodwill balance for the three months ended August 2, 2025:

Commercial Transportation Total

1 unchanged sentence

Foreign currency translation 4 1 5

Balance as of January 25, 2025 $ 3,079 $ 7 $ 3,086

We perform an analysis of goodwill on an annual basis, and it is tested for impairment more frequently if events or changes in circumstances indicate that an asset might be impaired.

Our annual analysis is performed during our third quarter of each fiscal year based on the goodwill amount as of the first business day of our third fiscal quarter.

We performed our annual impairment test as of October 27, 2024 and concluded no goodwill impairment existed.

The amount of accumulated impairments to goodwill as of January 25, 2025 and April 27, 2024 was $ 4,576 .

Balance as of August 2, 2025 $ 3,163 $ 30 $ 3,193

Goodwill is evaluated for impairment annually, or more frequently if events or changes in circumstances indicate that the carrying value may not be recoverable.

Our annual impairment assessment is performed during the third quarter of each fiscal year, based on the goodwill balance as of the first business day of that quarter.

We completed our most recent annual goodwill impairment test as of October 27, 2024, and concluded that no impairment existed.

As of August 2, 2025 and April 26, 2025, the total accumulated goodwill impairments were $ 4,576 .

Financing Agreements

Long-term debt consists of the following:

The following table summarizes the components of our long-term debt as of the dates indicated:

2025 April 26,

Mortgage $ 11,875 $ 12,375

Convertible note 11,128 25,000

Long-term debt, gross 11,875 12,375

Debt issuance costs, net ( 294 ) ( 388 )

Change in fair value of convertible note 19,122 16,550

Current portion ( 1,500 ) ( 1,500 )

1 unchanged sentence

Credit Agreements

On May 11, 2023, we closed on a $ 75,000 senior credit facility (the "Credit Facility").

The Credit Facility consists of a $ 60,000 asset-based revolving credit facility maturing on May 11, 2026 (the "ABL"), which is secured by a first priority lien on the Company's assets, and a $ 15,000 delayed draw loan (the "Delayed Draw Loan") secured by a first priority mortgage on our Brookings, South Dakota real estate (the "Mortgage").

Under the ABL, certain factors can impact our borrowing capacity.

As of January 25, 2025, our borrowing capacity was $ 33,397 , there were no borrowings outstanding, and there was $ 3,471 used to secure letters of credit outstanding.

The interest rate on the ABL is set on a sliding scale based on the trailing 12-month fixed charge coverage and ranges from 2.5 to 3.5 percent over the standard overnight financing rate (SOFR).

On May 11, 2023, the Company entered into a $ 75,000 senior credit facility (the “Credit Facility”) pursuant to a Credit Agreement dated as of May 11, 2023 (as amended, restated, modified, or supplemented from time to time, the “Credit Agreement”), between and among the Company, JPMorgan Chase Bank, N.A., as administrative agent (the “Administrative Agent”), the Lenders (as defined in the Credit Agreement), and the other Loan Parties (as defined in the Credit Agreement).

The Credit Facility made pursuant to the Credit Agreement is comprised of:

• a $ 60,000 asset-based revolving credit facility (the “ABL”), maturing on May 11, 2026, secured by a first-priority lien on the Company’s assets pursuant to a Pledge and Security Agreement dated May 11, 2023, between and among the Company, Daktronics Installation, Inc., and the Administrative Agent (the “Pledge and Security Agreement”);

• a $ 15,000 delayed draw term loan (the “Delayed Draw Loan”), also secured by the first priority lien on the Company’s assets pursuant to the Pledge and Security Agreement and a first-priority mortgage on the Company’s real estate located in Brookings, South Dakota.

Under the ABL, borrowing capacity is subject to certain conditions and may fluctuate based on various factors.

As of August 2, 2025, the Company’s borrowing capacity under the ABL was $ 41,539 , with no borrowings outstanding and $ 2,547 utilized for outstanding letters of credit.

No borrowings were made under the ABL during the period ended August 2, 2025.

The interest rate on the ABL is determined on a sliding scale based on the Company’s trailing 12-month fixed charge coverage ratio and ranges from 2.5 to 3.5 percent over the Secured Overnight Financing Rate (“SOFR”).

The $ 15,000 Delayed Draw Loan was funded on July 7, 2023.

It amortizes over 10 years and has monthly payments of $ 125 .

The Delayed Draw Loan is subject to the terms of the Credit Agreement dated as of May 11, 2023 (the "Credit Agreement") and matures on May 11, 2026.

The interest rate on the Delayed Draw Loan is set on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges between 1.0 and 2.0 percent over the Commercial Bank Floating Rate (CBFR).

The interest rate as of January 25, 2025 for the Delayed Draw Loan was 9.5 percent.

It amortizes over a 10-year period with monthly principal payments of $ 125 and matures on May 11, 2026.

The interest rate on the Delayed Draw Loan is also determined on a sliding scale based on the trailing 12-month fixed charge coverage ratio and ranges from 1.0 and 2.0 percent over the Commercial Bank Floating Rate (“CBFR”).

As of August 2, 2025, the interest rate applicable to the Delayed Draw Loan was 8.5 percent.

On June 10, 2025, we entered into a Consent and Amendment No.

4 to the Credit Agreement, effective as of June 6, 2025 (the “ Fourth Amendment”), which, among other changes, amends the Credit Agreement to permit the Company to secure the Letters of Credit (as defined in the Credit Agreement) with terms that expire after the Credit Agreement’s scheduled maturity date of May 11, 2026 under certain conditions (the “Specified Letters of Credit”).

Pursuant to the Fourth Amendment, no later than 91 days before the Maturity Date (as defined below), the Company must deposit an amount of cash equal to 105 % of the LC Exposure (as defined in the Credit Agreement) into one or more accounts (collectively, the “Specified LC Collateral Account”) controlled exclusively by the Administrative Agent.

The Company will grant a security interest in the Specified LC Collateral Account to the Administrative Agent.

The funds in the Specified LC Collateral Account will be used to cover any unreimbursed amounts owed to the issuing Lender, subject to certain exceptions.

The funds in the Specified LC Collateral Account will be returned to the Company and the other Borrowers (as defined in the Credit Agreement) if the scheduled Maturity Date is further extended.

The Fourth Amendment also requires the Borrowers to fully pay any and all outstanding amounts owed under the Delayed Draw Loan on or before the earlier of:

(i) May 11, 2026;

and (ii) any earlier date on which the Commitments (as defined in the Credit Agreement) are reduced to zero or otherwise terminated pursuant to the terms of the Credit Agreement (the “Termination Date”).

The Fourth Amendment also provides that the Borrowers’ repayment obligations under the Credit Agreement will mature on the earliest of:

(A) November 30, 2026;

(B) unless otherwise agreed in writing by the

Administrative Agent (with the consent of all Lenders), the date that is six (6) months prior to the scheduled maturity date of the Term Loan Debt (as defined in the Credit Agreement);

and (C) the Termination Date (such earliest date, the “Maturity Date”).

The Credit Agreement contains covenants that, among other things, restrict our ability to repurchase shares of common stock, pay dividends, incur additional indebtedness, and make certain investments.

As a result, our ability to return capital to stockholders through share repurchases or dividends is limited while the Credit Facility is outstanding.

For more information on the Company’s ability to repurchase shares under the Credit Agreement, please refer to “Note 13.

Subsequent Events” of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and “Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds” and “Item 5.

Other Information” of Part II of this Quarterly Report on Form 10-Q.

Convertible Note

On May 11, 2023, we borrowed $ 25,000 in aggregate principal amount evidenced by the secured Convertible Note.

The Holder has a second priority lien on assets securing the ABL facility and a first priority lien on substantially all of the other assets of the Company, excluding all real property.

Conversion Features

• The Convertible Note allows the Holder and any of the Holder’s permitted transferees, donees, pledgees, assignees, or successors-in-interest (collectively, the “Selling Shareholders”) to convert all or any portion of the principal amount of the Convertible Note, together with any accrued and unpaid interest and any other unpaid amounts, including late charges, if any (together, the “Conversion Amount”), into shares of the Company’s common stock at an initial conversion price of $ 6.31 per share, subject to adjustment in accordance with the terms of the Convertible Note (the “Conversion Price”).

• The Company also has a forced conversion right, which is exercisable on the occurrence of certain conditions set forth in the Convertible Note, pursuant to which it can cause all or any portion of the outstanding and unpaid Conversion Amount to be converted into shares of the Company's common stock at the Conversion Price.

Additionally, if the Company fails other than by reason of a failure by the Holder to comply with its obligations, the Holder is permitted to cash payments from the Company until such conversion failure is cured.

On November 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on December 3, 2024 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "December Conversion").

On December 11, 2024, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on January 3, 2025 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "January Conversion").

On January 27, 2025, in accordance with the terms of the

Convertible Note, the Company settled $ 14,000 of the principal balance and accrued interest of the Convertible Note in exchange for the issuance of 2,218 shares of the Company's common stock (based on the Conversion Price).

On January 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of $ 7,000 of the principal balance and accrued interest of the Convertible Note on February 3, 2025 at the conversion price of $ 6.31 per share into 1,109 shares of the Company's common stock (the "February Conversion").

On February 3, 2025, in accordance with the terms of the Convertible Note, the Company settled the February Conversion.

The obligation to issue a fixed number of shares to the Holder was determined to be an equity contract that met the criteria for equity classification under ASC 815-40.

See "Note 12.

Related Party Transactions" and "Note 13.

Subsequent Events" for further information on the Convertible Note.

Redemption Features

• If the Company were to have an "Event of Default," as defined by the Convertible Note, then the Holder may require the Company to redeem all or any portion of the Convertible Note.

• If the Company has a "Change of Control," as defined by the Convertible Note, then the Holder is entitled to payment of the outstanding amount of the Convertible Note at the "Change in Control Redemption Price," as defined in the Convertible Note.

Interest accruing under the Convertible Note is payable, at the option of the Company, in either (i) cash or (ii) a combination of cash interest and capitalized interest;

provided, however, that at least fifty percent (50%) of the interest paid on each interest date must be paid as cash interest.

The Convertible Note accrues interest quarterly at an annual rate of 9.0 percent when interest is paid in cash or an annual rate of 10.0 percent if interest is paid in kind.

Upon an Event of Default under the Convertible Note, the annual interest rate will increase to 12.0 percent.

The annual rate of 9.0 percent was used to calculate the interest accrued as of January 25, 2025, as interest will be paid in cash.

We elected the fair value option to account for the Convertible Note as described in "Note 10.

Fair Value Measurement" of the Notes to our Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

The financial liability was initially measured at its issue-date fair value and is subsequently remeasured at fair value on a recurring basis at each reporting period date.

We have elected to present the fair value and the accrued interest component separately in the Condensed Consolidated Statements of Operations.

Therefore, interest will be recognized and accrued separately in interest expense, with changes in fair value of the Convertible Note presented in the "Change in fair value of convertible note" line item in our Condensed Consolidated Statements of Operations.

The estimated fair value of the Convertible Note upon its issuance date of May 11, 2023 was computed using the binomial lattice model.

Given the appreciation of the Company’s stock price since inception of the Convertible Note combined with our intent and expectation of settlement as soon as is feasible through exercise of its forced conversion right, we determined that the Monte Carlo simulation ("MCS") model was appropriately suited to determine the fair value of the Convertible Note as of January 25, 2025.

Both models incorporate significant inputs that are not observable in the market and thus represents a Level 3 measurement.

The fair value of the two principal tranches of the Convertible Note that were force converted was $ 18,116 and $ 18,681 , resulting in an additional $ 499 in changes in fair value recognized in earnings for the period ended January 25, 2025.

Upon conversion, the Company extinguished the debt at its then fair value and recorded the related settlement to equity, reflecting the obligation to deliver 2,218 shares of the Company's common stock to the Holder.

The changes in fair value of the Convertible Note during the nine months ended January 25, 2025 are as follows:

Liability Component

(in thousands)

Balance as of April 27, 2024 $ 41,550

Carrying value of note settled through conversion ( 36,797 )

Fair value change recognized 25,497

Balance as of January 25, 2025 $ 30,250

We determined the fair value by using the following key assumptions in the MCS and binomial lattice model as of January 25, 2025 and April 27, 2024, respectively:

2025 April 27,

Risk-Free Rate (Annual) 4.24 % 4.78 %

Yield 15.79 % 16.28 %

Volatility (Annual) 40.00 % 40.00 %

Dividend Yield (Annual) — % — %

The Credit Agreement and the Convertible Note require a fixed charge coverage ratio of greater than 1.1 and include other customary non-financial covenants.

As of January 25, 2025, we were in compliance with our financial covenants under the Credit Agreement and the Convertible Note.

As of August 2, 2025 and April 26, 2025, there was no outstanding balance under the Convertible Note.

During fiscal 2025, the Company fully settled the Convertible Note through a series of forced conversions in accordance with its terms.

These conversions resulted in the issuance of shares of the Company’s common stock to Alta Fox Opportunities and the extinguishment of the debt on the dates of settlement.

Accordingly, there is no remaining principal or accrued interest associated with the Convertible Note, and no further obligations under its terms.

Additional details regarding the Convertible Note activity during fiscal 2025 are included in “Note 17.

Related Party Transactions” of the Form 10-K.

Debt Issuance Costs

Debt issuance costs incurred and capitalized are amortized on a straight-line basis over the term of the associated debt agreement.

If early principal payments or conversions occur, a proportional amount of unamortized debt issuance costs are expensed.

As part of these financings, we capitalized $ 8,195 in debt issuance costs.

During the nine months ended January 27, 2024, due to the Convertible Note being accounted for at fair value, we expensed $ 3,353 of the related debt issuance costs, which is included in the "Other expense and debt issuance costs write-off, net" line item in our Condensed Consolidated Statements of Operations and represented the full amount of such costs related to the Convertible Note.

During the nine months ended January 25, 2025 and January 27, 2024, we amortized $ 1,211 and $ 1,148 , respectively, of debt issuance costs.

The remaining debt issuance costs of $ 2,080 are being amortized over the remaining two-year term of the Credit Facility.

Debt issuance costs incurred and capitalized are amortized on a straight-line basis over the term of the related debt agreement.

In the event of early principal payments or conversions, a proportional amount of unamortized debt issuance costs is expensed.

Amortization of debt issuance costs totaled $ 403 for each of t he three months ended August 2, 2025 and July 27, 2024 .

As of August 2, 2025 , the remaining unamortized debt issuance costs of $ 1,274 are being amortized over the remaining term of the Credit Facility.

Future Maturities

Aggregate contractual maturities of debt in future fiscal years are as follows:

The following table presents the aggregate contractual maturities of our long-term debt by fiscal year:

Fiscal years ending Amount

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Commitments and Contingencies

We are a party to legal proceedings and claims which arise during the ordinary course of business.

We review our legal proceedings and claims, regulatory reviews and inspections, and other legal matters on an ongoing basis and follow appropriate accounting guidance when making accrual and disclosure decisions.

We establish accruals for those contingencies when the incurrence of a loss is probable and can be reasonably estimated, and we disclose the amount accrued and the amount of a reasonably possible loss in excess of the amount accrued if such disclosure is necessary for our financial statements to not be misleading.

We do not record an accrual when the likelihood of loss being incurred is probable, but the amount cannot be reasonably estimated, or when the loss is believed to be only reasonably possible or remote, although disclosures will be made for material matters as required by ASC 450-20, Contingencies - Loss Contingencies .

Our assessment of whether a loss is reasonably possible or probable is based on our assessment and consultation with legal counsel regarding the ultimate outcome of the matter following all appeals.

See also “Note 13.

Subsequent Events” for a description of litigation filed against the Company after the end of our third quarter of fiscal 2025.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that any material loss would be incurred.

Accordingly, no material accrual or disclosure of a potential range of loss has been made related to these matters.

We do not expect the ultimate liability of these unresolved legal proceedings or claims to have a material effect on our financial position, liquidity, or capital resources.

Changes in our warranty obligation for the nine months ended January 25, 2025 consisted of the following:

We are involved in legal proceedings and claims that arise in the ordinary course of business.

We continuously evaluate these matters, including regulatory reviews and inspections, and apply appropriate accounting guidance when determining accruals and disclosures.

Contingency accruals are recorded when a loss is considered probable and the amount can be reasonably estimated.

If a reasonably possible loss exceeds the amount accrued and disclosure is necessary to avoid misleading financial statements, we disclose the estimated range of loss.

No accrual is recorded when a loss is probable but not reasonably estimable, or when a loss is considered reasonably possible or remote;

however, material matters are disclosed as required under ASC 450-20, Contingencies – Loss Contingencies .

Our assessment of whether a loss is reasonably possible or probable is based on management’s evaluation and consultation with legal counsel regarding the ultimate outcome of each matter, including the impact of any appeals.

For other unresolved legal proceedings or claims, we do not believe there is a reasonable probability that a material loss will be incurred.

Accordingly, no material accruals or disclosures of potential loss ranges have been made.

We do not expect the ultimate resolution of these matters to have a material impact on our financial position, liquidity, or capital resources.

The following table summarizes changes in our warranty obligations for the three months ended August 2, 2025.

Balance as of April 26, 2025 $ 35,830

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Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations ( 1,128 )

Balance as of January 25, 2025 $ 36,272

Balance as of August 2, 2025 $ 36,263

Performance guarantees:

We have entered into standby letters of credit, bank guarantees, and surety bonds with financial institutions relating to the guarantee of our future performance on contracts, primarily construction-type contracts.

As of January 25, 2025, we had outstanding letters of credit and surety bonds in the amount of $ 3,471 and $ 20,381 , respectively.

Performance guarantees are issued to certain customers to guarantee the operation and installation of the equipment and our ability to complete a contract.

These performance guarantees have various terms but generally have a term of one year .

We enter into written agreements with our customers, and those agreements often contain indemnification provisions that require us to make the customer whole if certain acts or omissions by us cause the customer financial loss.

We make efforts to negotiate reasonable caps and limitations on the recovery of such damages.

As of January 25, 2025, we were not aware of any material indemnification claims.

Our effective tax rates for the three and nine months ended January 25, 2025 were 3.7 percent and 109.2 percent, respectively.

Income before tax includes the tax impacts of the Convertible Note fair value adjustment, which is not deductible, in proportion to the period's decrease in pre-tax income.

The effective tax rate for the three and nine months ended January 27, 2024 were 15.0 percent and 31.5 percent, respectively, and were driven by the decrease in the fair value adjustment to expense.

We operate both domestically and internationally and, as of January 25, 2025, the undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of January 25, 2025, we had $ 440 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

We have entered into standby letters of credit, bank guarantees, and surety bonds with financial institutions to support our contractual obligations, primarily related to construction-type contracts.

These instruments serve as guarantees of our future performance, including the operation and installation of equipment and the completion of contractual deliverables.

As of August 2, 2025, we had $ 57,846 of bonded work outstanding and $ 2,547 in letters of credit outstanding.

These performance guarantees generally have terms of one year , although specific durations may vary by contract.

We enter into written agreements with customers that may include indemnification provisions requiring us to compensate the customer for financial losses resulting from certain acts or omissions.

We seek to negotiate reasonable limitations and caps on such indemnification obligations.

As of August 2, 2025, we were not aware of any material indemnification claims.

The provision for income taxes during interim reporting periods is calculated by applying an estimate of the annual effective tax rate to “ordinary” income or loss for the reporting period, adjusted for discrete items.

Due to various factors, including our estimate of annual income, our effective tax rate is subject to fluctuation.

Our effective tax rates for the three months ended August 2, 2025 was 25.9 percent.

The tax rate was primarily driven by permanent tax adjustments and valuation allowances in proportion to estimated pre-tax earnings for fiscal 2026.

The effective tax rate for the three months ended July 27, 2024 was skewed due to the impact of the fair value in the Convertible Note in proportion to the period's small pre-tax income.

We operate both domestically and internationally and, as of August 2, 2025, the undistributed earnings of our foreign subsidiaries were considered to be reinvested indefinitely.

Additionally, as of August 2, 2025, we had $ 557 of unrecognized tax benefits which would reduce our effective tax rate if recognized.

On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S.

The OBBBA includes significant tax related provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework, and the restoration of favorable tax treatment for certain business provisions.

The OBBBA has multiple effective dates with the earliest provisions taking effect in fiscal 2026 and others beginning in fiscal 2027 and beyond.

ASC 740, “Income Taxes”, requires the effects of changes in tax rates and laws affecting current taxes to be reflected in the estimated annual effective tax rate going forward, and adjustments to existing deferred taxes to be recognized on deferred tax balances to be recognized in the period in which the legislation is enacted.

We note that as of August 2, 2025 there were no material impacts to the financial statements.

We will continue to evaluate the future tax and other provisions of the OBBBA and the potential effects on our financial position, results of operations, and cash flows.

Fair Value Measurement

The following table sets forth by level within the fair value hierarchy our financial assets and liabilities that were accounted for at fair value on a recurring basis as of January 25, 2025 and April 27, 2024 according to the valuation techniques we used to determine their fair values.

There have been no transfers of assets or liabilities among the fair value hierarchies presented.

The following table presents our financial assets and liabilities measured at fair value on a recurring basis as of August 2, 2025 and April 26, 2025, classified by level within the fair value hierarchy based on the valuation techniques utilized to determine fair value.

There were no transfers between levels of the fair value hierarchy during the periods presented.

Fair Value Measurements

Level 1 Level 2 Level 3 Total

Balance as of January 25, 2025

Balance as of August 2, 2025

Cash and cash equivalents $ 136,856 $ — $ — $ 136,856

Restricted cash — — — —

Convertible note — — ( 30,250 ) ( 30,250 )

$ 136,856 $ — $ — $ 136,856

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Cash and cash equivalents $ 127,507 $ — $ — $ 127,507

Restricted cash 379 — — 379

Convertible note — — ( 41,550 ) ( 41,550 )

$ 127,507 $ — $ — $ 127,507

We elected to value the Convertible Note at fair value in accordance with ASC 825-10-15-4(a) because of the embedded derivatives contained in the Convertible Note.

The fair value of the Convertible Note as of April 27, 2024 was estimated using the binomial lattice model.

The fair value of the Convertible Note as of January 25, 2025 was estimated using the MCS.

Both models allow for the examination of the value to a holder and an understanding of the investment decision that would occur at each node.

The fair value of the Convertible Note entered into during the first quarter of fiscal 2024 was classified as Level 3 because certain inputs for the valuation were not readily determinable or observable.

Financing Agreements" and the Form 10-K for additional information on the methods and assumptions used to estimate the fair value of each class of financial instrument.

Share Repurchase Program

On June 17, 2016, our Board of Directors (the "Board" or "Board of Directors") approved a share repurchase program (the "Repurchase Program") under which we may purchase up to $ 40,000 of the Company's outstanding shares of common stock.

Under the Repurchase Program, we may repurchase shares from time to time in open market transactions and in privately negotiated transactions based on business, market, applicable legal requirements, and other considerations.

The Repurchase Program does not require the repurchase of a specific number of shares and may be terminated at any time.

In April 2020, the Board suspended the Repurchase Program.

On December 2, 2021, the Board voted to reauthorize the Repurchase Program.

During the nine months ended January 25, 2025, we repurchased 536 shares of common stock at a total cost of $ 9,016 .

As of January 25, 2025, we had $ 20,339 of remaining capacity under the Repurchase Program.

On June 17, 2016, our Board of Directors (the “Board” or “Board of Directors”) authorized a share repurchase program (the “Repurchase Program”) under which the Company may repurchase up to $ 40,000 of its outstanding common stock.

On March 4, 2025, the Board approved a $ 10,000 increase in the limit under the Repurchase Program from $ 40,000 to $ 50,000 .

On June 23, 2025, the Board approved an additional $ 10,000 increase from $ 50,000 to $ 60,000 .

Repurchases under the Repurchase Program may be made from time to time in open market transactions or privately negotiated transactions, subject to business and market conditions, applicable legal requirements, and other relevant factors.

The Repurchase Program does not obligate the Company to repurchase any specific number of shares, may be suspended or terminated at any time at the discretion of the Board and has no fixed expiration date.

During the three months ended August 2, 2025, the Company repurchased 648 shares of common stock at a total cost of $ 10,652 .

As of August 2, 2025, $ 9,229 of the $ 60,000 authorized amount remained available for repurchase under the Repurchase Program.

For information on restrictions on the Company’s ability to repurchase shares under the Credit Agreement, please refer to “Note 7.

Financing Agreement” and “Note 13.

Subsequent Events” of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q and “Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds” and “Item 5.

Other Information” of Part II of this Quarterly Report on Form 10-Q.

Related Party Transactions

The Board of Directors has adopted a written policy and procedures with respect to related party transactions, which the Audit Committee of the Board (the "Audit Committee") oversees (the "Policy").

Under the Policy, a "related party transaction" is generally defined as a transaction, arrangement, or relationship in which the Company was, is, or will be a participant;

Daktronics Related Person Transaction Policy:

The Board of Directors has adopted the Daktronics Related Person Transaction Policy, a written policy and procedures with respect to related party transactions (the “Policy”), which the Audit Committee of the Board (the "Audit Committee") oversees.

Under the Policy, a “Related Person Transaction” is generally defined as a transaction, arrangement, or relationship (or any series of similar transactions, arrangements, or relationships) in which the Company was, is, or will be a participant;

the amount involved exceeds $ 120 ;

and in which any "related person" had, has, or will have a direct or indirect material interest.

The Policy generally defines a "related person" as a director, executive officer, or beneficial owner of

more than five percent of any class of our voting securities and any immediate family member of any of the foregoing persons.

The Audit Committee reviews and, if appropriate, approves related party transactions, including certain transactions which are deemed to be pre-approved under the Policy.

On an annual basis, the Audit Committee reviews any previously approved related party transaction that is ongoing.

Related Party Transactions with Alta Fox:

As reported in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Form 10-K, effective May 11, 2023, the Company entered into a Securities Purchase Agreement with the Holder under which the Company sold and issued to the Holder the Convertible Note in exchange for the payment by the Holder to the Company of $ 25,000 (the "Securities Purchase Agreement").

and any “Related Person” had, has, or will have a direct or indirect material interest.

The Policy generally defines a "Related Person" as:

a director, director nominee, executive officer, or executive officer of the Company at any time during the last fiscal year;

a beneficial owner of more than five percent of any class of our voting securities;

or any immediate family member of any of the foregoing persons.

Our Chief Financial Officer is responsible for overseeing the monitoring and identification of Related Person Transactions and the appropriate reporting of any potential Related Person Transactions to the Audit Committee.

The Audit Committee reviews and, if appropriate, approves Related Person Transactions, including certain

transactions which are deemed to be pre-approved under the Policy.

On an annual basis, the Audit Committee reviews any previously approved Related Person Transactions that are ongoing.

Related Party Transactions with Alta Fox Opportunities:

As reported in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Form 10-K, effective May 11, 2023, the Company entered into a Securities Purchase Agreement with Alta Fox Opportunities under which the Company sold and issued to Alta Fox Opportunities the Convertible Note in exchange for the payment by Alta Fox Opportunities to the Company of $ 25,000 (the "Securities Purchase Agreement").

As of May 11, 2023, and based on Amendment No.

2 to the Schedule 13D filed by Alta Fox on May 15, 2023 with the Securities and Exchange Commission ("SEC"), Alta Fox beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing the Holder to be a “related party” of the Company under the Policy and the applicable provisions of the Securities Act of 1933, as amended (the "Securities Act"), and the rules promulgated thereunder.

The Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement dated as of May 11, 2023 by and between the Holder and the Company (the "Pledge and Security Agreement"), and the Registration Rights Agreement dated as of May 11, 2023 (the "Registration Rights Agreement") were approved in advance of their execution by the Strategy and Financing Review Committee of the Board of Directors, the members of which include all members of the Audit Committee.

In addition, the Company was a party to the Standstill and Voting Agreement dated as of March 19, 2023 with Alta Fox Management, LLC and Connor Haley (the “Standstill Agreement”), who are affiliates of the Holder, which expired in accordance with its terms on September 5, 2024.

Since May 11, 2023, the largest aggregate amount outstanding under the Convertible Note was $ 25,563 , consisting of $ 25,000 of principal and $ 563 of interest.

In the first nine months of fiscal 2025, we made interest payments or settlements of interest through conversions of $ 1,816 under the Convertible Note.

The description of the Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement, and the Registration Rights Agreement and their respective terms set forth in Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the section entitled “Liquidity and Capital Resources” of the Form 10-K.

The Standstill Agreement filed as Exhibit 10.13 to the Form 10-K are hereby incorporated by reference into this Quarterly Report on Form 10-Q.

2 to the Schedule 13D filed by Alta Fox Opportunities on May 15, 2023 with the SEC, Alta Fox Capital Management, LLC, Alta Fox Opportunities, Alta Fox GenPar, LP, Alta Fox Equity, LLC, and P.

Connor Haley (collectively with their affiliates and associates, “Alta Fox”) beneficially owned 4,768 shares of common stock of the Company, representing 9.99 percent of the Company’s common stock, causing Alta Fox to be a “Related Person” of the Company under the Policy and the applicable provisions of the Securities Act of 1933, as amended (the "Securities Act"), and the rules promulgated thereunder.

The Securities Purchase Agreement, the Convertible Note, the Pledge and Security Agreement dated as of May 11, 2023 by and between the Company and Alta Fox Opportunities and the Registration Rights Agreement by and between the Company and Alta Fox Opportunities dated as of May 11, 2023 were approved in advance of their execution by the Strategy and Financing Review Committee of the Board of Directors, the members of which were all members of the Audit Committee.

As described in Amendment No.

3 (“Amendment No.

3”) to the Schedule 13D filed by Alta Fox on June 9, 2023 with the SEC, and based on other information provided by the Holder, the following persons may be deemed to be beneficial owners of the shares of the Company’s common stock beneficially owned by the Holder:

3”) to the Schedule 13D filed by Alta Fox on May 30, 2025 with the SEC, and based on other publicly available information provided by Alta Fox in its reports filed with the SEC, the following persons may be deemed to be beneficial owners of the shares of the Company’s common stock that were beneficially owned by Alta Fox:

Alta Fox GenPar, LP, as the general partner of Alta Fox Opportunities Fund, LP;

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Connor Haley, as the sole owner, member and manager of each of Alta Fox Capital Management, LLC and Alta Fox Equity LLC.

On June 7, 2023, the Company received from the Holder a written notice of a decrease in the Percentage Cap from 9.99 percent to 4.99 percent;

on October 21, 2024, the Company received from the Holder a written notice to further decrease the Percentage Cap to 3.00 percent;

and on November 25, 2024, the Company received from the Holder a written notice to increase the Percentage Cap to 14.99 percent.

Each decrease became effective immediately upon the Company’s receipt of such written notice, and each increase became effective 61 days after receipt of such written notice.

The Percentage Cap generally represents the maximum percentage of shares of the Company’s common stock the Holder may own.

In Amendment No.

3, Alta Fox owned 2,293 shares of the Company's common stock on June 9, 2023, representing 4.99 percent of the common stock of the Company, meaning Alta Fox was then no longer a “related party” of the Company under the Policy and the applicable provisions of the Securities Act and the rules promulgated thereunder.

However, according to Schedule 13D filed by Alta Fox on December 11, 2024 with the SEC, Alta Fox owns 1,965 shares of the Company’s common stock.

With these shares, along with the 4,009 shares subject to the Convertible Note and related interest accrual, Alta Fox beneficially owns 11.79 percent of the Company’s common stock.

This percentage assumes all of the shares subject to the Convertible Note are outstanding and thus are added to the denominator in determining the percentage.

Thus, Alta Fox is again subject to the Policy and the applicable provisions of the Securities Act and the rules promulgated thereunder.

As stated in “Note 7.

Financing Agreements,” the Company effected the December Conversion and January Conversion, resulting in settlement of $ 14,000 of the principal balance and accrued interest of the Convertible Note as of January 25, 2025.

Other Related Party Transactions:

During the first nine months of fiscal 2024, the Company and the South Dakota Board of Regents entered into contracts for a video display systems for Dakota State University.

The amount of the contracts was $ 1,178 .

A member of the Board of Directors is the President of Dakota State University.

Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes issued by our affiliates and "Note 13.

Subsequent Events" for a discussion of other related party transactions with Alta Fox.

3, Alta Fox reported that it beneficially owned 4,974 shares of the Company's common stock on May 29, 2025, representing 9.90 percent of the outstanding shares of the Company’s common stock, meaning Alta Fox was then no longer a Related Person of the Company under the Policy and the applicable provisions of the Securities Act and the rules promulgated thereunder.

Effective April 10, 2025, our former President and CEO and current Board member, Reece A.

Kurtenbach, was appointed as Interim Chief Executive Officer of XDC, an entity in which the Company holds a 16.4 percent ownership interest and accounts for under the equity method of accounting.

As previously disclosed in reports filed by the Company with the SEC, Reece A.

Kurtenbach also served as a director and executive officer during the fiscal year ended April 26, 2025 and is the brother of Matthew J.

Kurtenbach and Carla S.

Gatzke, both of whom are executive officers of the Company.

As a result of his appointment as Interim Chief Executive Officer of XDC and the foregoing relationships with the Company and its executive officers, Reece A.

Kurtenbach is considered a Related Person under the Policy and a related party under ASC 850 - Related Party Disclosures.

The Company continues to monitor the foregoing relationships with respect to Reece A.

Kurtenbach to ensure appropriate governance and disclosure in accordance with applicable accounting standards and SEC rules.

In fiscal 2025, the Company entered into a change order to an existing agreement with Milwaukee Bucks Inc.

The total value of the change order was $ 214 .

On April 29, 2025, the Company entered into a contract with Milwaukee Bucks Inc.

The total value of the contract was $ 683 .

The terms of both of the above-referenced arrangements between the Company and Milwaukee Bucks Inc.

were arm’s-length transactions made in the ordinary course of the Company’s business.

Peter Feigin, a member of the Board, is the President of Milwaukee Bucks Inc.

Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes.

Subsequent Events

Convertible Note.

On January 27, 2025, the first trading day after the effective date of the Percentage Cap increase, the Company issued and delivered 2,218 common shares owed under the December Conversion and the January Conversion to the Holder.

Alta Fox certified that the delivery of shares would not cause its ownership to exceed the allowable beneficial ownership of 14.99 percent.

On January 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of the third tranche of $ 7,000 of the principal balance and accrued interest of the Convertible Note on February 3, 2025 at the conversion price of $ 6.31 per share into 1,109 common shares.

Subsequent to the end of the quarter, on February 3, 2025, the 1,109 common shares were issued to the Holder.

On February 10, 2025, the Company issued notice to the Holder that the Company would force the conversion of the fourth and final tranche of $ 4,294 on March 4, 2025, representing the remaining principal and interest balance of the Convertible Note.

We will issue the shares upon the Holder’s indicating the ability to take delivery of the shares under the maximum ownership provisions of the Convertible Note.

See "Note 12.

Related Party Transactions" and "Note 7.

Financing Agreements" for further information of the Convertible Note.

Cooperation Agreement.

On January 21, 2025, Daktronics filed a preliminary proxy statement with the SEC relating to a special meeting of shareholders (the "Special Meeting") to consider and vote on a proposal to change its legal domicile from South Dakota to Delaware (the "Reincorporation Proposal").

On January 31, 2025, the Holder filed a preliminary proxy statement with the SEC disclosing its intention to solicit proxies against the Reincorporation Proposal.

On February 6, 2025, the Holder commenced an action in the United States District Court for the District of South Dakota, Southern Division (the “Court”).

Named as defendants in the complaint filed in the action (the "Complaint") are the Company and Reece Kurtenbach.

The Complaint asserts, among other things, that the defendants breached fiduciary duties in connection with the Reincorporation Proposal and Holder's own claimed intention to call a special meeting of shareholders.

The Complaint seeks to preliminarily and permanently enjoin the Defendants from setting a record date and holding a special meeting to vote on the Reincorporation Proposal and from soliciting votes and proxies in connection with that meeting until after the Holder can call for and conduct a special meeting to consider and vote on de-classifying the Board of Directors and other governance changes, and for certain other declaratory and monetary relief.

On February 25, 2025, the South Dakota District Court issued a memorandum to counsel indicating its intention to deny Alta Fox's preliminary injunction motion in a forthcoming written opinion and order.

On March 3, 2025, the Company entered into a Cooperation Agreement with Alta Fox (the "Cooperation Agreement").

In connection with the Cooperation Agreement, among other things, Alta Fox agreed to dismiss with prejudice all claims against the Company and its directors and/or officers, including its pending litigation against the Company with the Court.

Pursuant to the Cooperation Agreement, Alta Fox also agreed to vote all shares of the Company's common stock that it beneficially owns in favor of the Reincorporation Proposal at the Special Meeting.

For further information on the Cooperation Agreement, please refer to Item 1.01 of the Current Report on Form 8-K filed with the SEC on March 3, 2025, which is incorporated herein by reference.

Expiration of Rights Agreement:

Pursuant to the Cooperation Agreement, the Company agreed to amend that certain Rights Agreement, dated as of November 16, 2018, by and between the Company and Equiniti Trust Company, LLC (the “Rights Agent”), as amended on November 19, 2021 and November 19, 2024 (as amended, the “Rights Agreement”) to accelerate its expiration.

On March 3, 2025, the Company and the Rights Agent entered into the Third Amendment to Rights Agreement (the “Third Amendment”).

The Third Amendment amends the Rights Agreement by accelerating the Final Expiration Date (as defined in the Rights Agreement) of the Company’s Series A Junior Participating Preferred Stock purchase rights (the “Rights”) from the Close of Business (as defined in the Rights Agreement) on November 19, 2025 to the Close of Business on March 3, 2025.

As a result of the Third Amendment, effective as of the Close of Business on

March 3, 2025, all of the Rights, which were previously distributed to holders of the Company’s common stock pursuant to the Rights Agreement, have expired and cease to be outstanding.

For further information on the Third Amendment and the expiration of the Rights Agreement, please refer to Items 1.01 and 3.03 of the Current Report on Form 8-K filed with the SEC on March 3, 2025, which is incorporated herein by reference.

Approval of 2025 Stock Incentive Plan

On July 28, 2025, the Board approved the Daktronics, Inc.

2025 Stock Incentive Plan (the “Plan”).

The Plan, which will supersede and replace the Daktronics, Inc.

2020 Stock Incentive Plan (the “Prior Plan”), was approved by the Company’s stockholders on September 3, 2025 (the “Effective Date”).

As provided in the Plan, the total number of shares of the Company’s common stock, $ 0.00001 par value (the “Common Stock”), that may be issued under the Plan is 3,562 shares,

which is comprised of:

(i) 2,300 shares of Common Stock;

and (ii) 1,262 shares that remained unallocated and available for issuance under the Prior Plan as of the Effective Date.

Fifth Amendment to Credit Agreement

On September 4, 2025, the Company entered into an Amendment to Credit Agreement (the “Fifth Amendment”), effective as of December 1, 2024, by and among the Company, the Administrative Agent, the Lenders, and the other Loan Parties.

Pursuant to the Fifth Amendment, the Credit Agreement was amended to, among other changes:

(i) expressly permit the Company to make share repurchases during the period from December 2024 through December 2025 in an aggregate amount not to exceed $ 50,000 (the “Specified Share Repurchases”);

and (ii) to exclude the Specified Share Repurchases from the definition of Restricted Payments (as defined in the Credit Agreement) for purposes of the calculation of the Company’s Fixed Charge Coverage Ratio (as defined in the Credit Agreement) under the Credit Agreement.

For more information on the Fifth Amendment, please refer to “Item 5.

Other Information” of Part II of this Quarterly Report on Form 10-Q.

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