DAKTRONICS INC /SD/ 10-Q

Item 1. FINANCIAL STATEMENTS DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data) (unaudited) August 2, 2025 April 26, 2025 ASSETS CURRENT ASSETS: Cash and cash equivalents $ 136,856 $ 127,507 Accounts receivable, net 124,254 92,762 Inventories 109,455 105,839 Contract assets 41,879 41,169 Current maturities of long-term receivables 2,988 2,437 Prepaid expenses and other current assets 13,500 8,520 Income tax receivables 452 3,217 Total current assets 429,384 381,451 Property and equipment, net 66,080 73,884 Long-term receivables, less current maturities 278 1,030 Goodwill 3,193 3,188 Intangibles, net 499 568 Debt issuance costs, net 979 1,289 Right of use, investment in affiliates, and other assets 13,101 9,378 Deferred income taxes 32,077 32,104 TOTAL ASSETS $ 545,591 $ 502,892 1 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (continued) (in thousands, except per share data) (unaudited) August 2, 2025 April 26, 2025 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current portion of long-term debt $ 1,500 $ 1,500 Accounts payable 64,950 46,669 Contract liabilities 83,408 69,050 Accrued expenses 44,755 41,705 Warranty obligations 12,449 12,706 Income taxes payable 489 375 Total current liabilities 207,551 172,005 Long-term warranty obligations 23,814 23,124 Long-term contract liabilities 18,497 18,421 Other long-term obligations 5,812 6,839 Long-term debt, net 10,081 10,487 Deferred income taxes 85 85 Total long-term liabilities 58,289 58,956 STOCKHOLDERS' EQUITY: Preferred Shares, $ 0.00001 par value, authorized 5,000 shares; no shares issued and outstanding — — 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, 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 STOCKHOLDERS' EQUITY 279,751 271,931 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 545,591 $ 502,892 See notes to Condensed Consolidated Financial Statements. 2 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited) Three Months Ended August 2, 2025 July 27, 2024 Net sales $ 218,972 $ 226,088 Cost of sales 153,900 166,390 Gross profit 65,072 59,698 Operating expenses: Selling 16,834 15,636 General and administrative 14,295 11,723 Product design and development 10,671 9,623 41,800 36,982 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, 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: Basic 48,902 46,311 Diluted 49,736 46,311 Earnings (loss) per share: Basic $ 0.34 $ ( 0.11 ) Diluted $ 0.33 $ ( 0.11 ) See notes to Condensed Consolidated Financial Statements. 3 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (in thousands) (unaudited) Three Months Ended August 2, 2025 July 27, 2024 Net income (loss) $ 16,470 $ ( 4,946 ) Other comprehensive income: Cumulative translation adjustments 279 128 Total other comprehensive income, net of tax 279 128 Comprehensive income (loss) $ 16,749 $ ( 4,818 ) See notes to Condensed Consolidated Financial Statements. 4 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (in thousands) (unaudited) Common Stock Treasury Stock Number Amount Additional Paid-In Capital Retained Earnings Number Amount Accumulated Other Comprehensive Loss Total Balance as of April 26, 2025 53,030 $ — $ 189,940 $ 127,910 ( 3,979 ) $ ( 39,759 ) $ ( 6,160 ) $ 271,931 Net income — — — 16,470 — — — 16,470 Cumulative translation adjustments — — — — — — 279 279 Share-based compensation — — 947 — — — — 947 Exercise of stock options 18 — 128 — — — — 128 Employee savings plan activity 60 — 648 — — — — 648 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. 5 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (continued) (in thousands) (unaudited) Common Stock Treasury Stock Number Amount Additional Paid-In Capital Retained Earnings Number Amount Accumulated Other Comprehensive Loss Total Balance as of April 27, 2024 48,121 $ 65,525 $ 52,046 $ 138,031 ( 1,907 ) $ ( 10,285 ) $ ( 6,525 ) $ 238,792 Net income — — — ( 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 See notes to Condensed Consolidated Financial Statements. 6 Table of Contents DAKTRONICS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited) Three Months Ended August 2, 2025 July 27, 2024 CASH FLOWS FROM 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 on sale of property, equipment and other assets ( 38 ) ( 20 ) Share-based compensation 947 520 Equity in loss of affiliates 805 931 Allowance for credit losses on affiliate loan 795 — Provision for doubtful accounts, net 594 265 Deferred income taxes, net 32 13 Change in fair value of convertible note — 21,590 Change in operating assets and liabilities 1,688 ( 3,765 ) Net cash provided by operating activities 26,097 19,481 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment ( 4,291 ) ( 5,081 ) Proceeds from sales of property, equipment and other assets 218 45 Loans to equity investees ( 1,547 ) ( 933 ) Net cash used in investing activities ( 5,620 ) ( 5,969 ) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable ( 500 ) ( 983 ) Principal payments on long-term obligations ( 104 ) ( 103 ) Payments for common shares repurchased ( 10,652 ) — Proceeds from exercise of stock options 128 3,148 Net cash (used in) provided by financing activities ( 11,128 ) 2,062 EFFECT OF EXCHANGE RATE CHANGES ON CASH — ( 64 ) NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH 9,349 15,510 CASH, CASH EQUIVALENTS AND RESTRICTED CASH: Beginning of period 127,507 81,678 End of period $ 136,856 $ 97,188 Supplemental disclosures of cash flow information: Cash paid for: Interest $ 382 $ 889 Income taxes, net of refunds 2,724 9,081 Supplemental schedule of non-cash investing and financing activities: Purchases of property and equipment included in accounts payable 532 2,909 Contributions of common stock under the employee stock purchase plan 648 569 See notes to Condensed Consolidated Financial Statements. 7 Table of Contents NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (dollar and share amounts in thousands, except per share data) (unaudited) Note 1. Basis of Presentation Daktronics, Inc. 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. 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 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. August 2, 2025 July 27, 2024 April 26, 2025 Cash and cash equivalents $ 136,856 $ 96,809 $ 127,507 Restricted cash — 379 — Total cash, cash equivalents, and restricted cash shown in the Condensed Consolidated Statements of Cash Flows $ 136,856 $ 97,188 $ 127,507 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. dollars. 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. 8 Table of Contents Recent Accounting Pronouncements Accounting Standards Adopted 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. 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"). ASU 2023-09 requires the disclosure of specified additional information in its income tax rate reconciliation and to provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 will also require the disaggregation of the disclosures of income taxes paid by federal, state, and foreign taxes, with further disaggregation required for significant individual jurisdictions. The Company is required to adopt this guidance for its annual reporting in fiscal year 2026 on a prospective basis. Early adoption and retroactive application are permitted. 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 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; however, early adoption is permitted and can be applied either prospectively or retrospectively. 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. Note 2. Investments in Affiliates 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. 9 Table of Contents 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. Note 3. Earnings Per Share 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 August 2, 2025 July 27, 2024 Earnings per share - basic Net income (loss) $ 16,470 $ ( 4,946 ) Weighted average shares outstanding 48,902 46,311 Basic earnings per share $ 0.34 $ ( 0.11 ) Earnings per share - diluted Net income (loss) $ 16,470 $ ( 4,946 ) Diluted net income $ 16,470 $ ( 4,946 ) Weighted average common shares outstanding 48,902 46,311 Dilution associated with stock compensation plans 834 — Weighted average common shares outstanding, assuming dilution 49,736 46,311 Diluted earnings per share $ 0.33 $ ( 0.11 ) 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 . 10 Table of Contents 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. Note 4. Revenue Recognition Disaggregation of revenue 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 Park and Recreation Transportation International Total Type of performance obligation Unique configuration $ 8,914 $ 63,263 $ 14,897 $ 9,498 $ 6,608 $ 103,180 Limited configuration 31,242 9,394 41,911 4,390 8,058 94,995 Service and other 6,011 7,143 2,539 2,687 2,417 20,798 $ 46,167 $ 79,800 $ 59,347 $ 16,575 $ 17,083 $ 218,972 Timing of revenue recognition Goods/services transferred at a point in time $ 34,069 $ 11,680 $ 41,794 $ 6,141 $ 8,903 $ 102,588 Goods/services transferred over time 12,098 68,120 17,553 10,434 8,180 116,385 $ 46,167 $ 79,800 $ 59,347 $ 16,575 $ 17,083 $ 218,972 11 Table of Contents Three Months Ended July 27, 2024 Commercial Live Events High School Park and Recreation Transportation International Total Type of performance obligation Unique configuration $ 2,262 $ 94,318 $ 10,634 $ 14,536 $ 2,614 $ 124,364 Limited configuration 26,300 8,294 35,148 6,609 8,072 84,423 Service and other 5,637 5,996 2,224 1,345 2,099 17,301 $ 34,199 $ 108,608 $ 48,006 $ 22,490 $ 12,785 $ 226,088 Timing of revenue recognition Goods/services transferred at a point in time $ 29,513 $ 10,750 $ 35,379 $ 7,561 $ 9,141 $ 92,344 Goods/services transferred over time 4,686 97,858 12,627 14,929 3,644 133,744 $ 34,199 $ 108,608 $ 48,006 $ 22,490 $ 12,785 $ 226,088 See "Note 5. Segment Reporting" for a disaggregation of revenue by geography. Contract balances 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: August 2, 2025 April 26, 2025 Dollar Change Percent Change Contract assets $ 41,879 $ 41,169 $ 710 1.7 % Contract liabilities - current 83,408 69,050 14,358 20.8 Contract liabilities - noncurrent 18,497 18,421 76 0.4 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: 12 Table of Contents August 2, 2025 Balance as of April 26, 2025 $ 35,129 New contracts sold 14,020 Less: reductions for revenue recognized ( 13,293 ) Foreign currency translation and other 1,169 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 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. Note 5. Segment Reporting The following table presents selected financial information for each of our five reportable segments for the periods indicated: 13 Table of Contents Three Months Ended August 2, 2025 July 27, 2024 Net sales: Commercial $ 46,167 $ 34,199 Live Events 79,800 108,608 High School Park and Recreation 59,347 48,006 Transportation 16,575 22,490 International 17,083 12,785 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: Commercial 13,650 7,595 Live Events 20,186 26,028 High School Park and Recreation 21,941 17,316 Transportation 5,156 7,749 International 4,139 1,010 Total consolidated gross profit 65,072 59,698 Less: Selling 16,834 15,636 General and administrative 14,295 11,723 Product design and development 10,671 9,623 Interest (income) expense, net ( 893 ) 71 Change in fair value of convertible note — ( 21,590 ) Other expense, net 1,942 835 Income before income taxes $ 22,223 $ 220 Depreciation and amortization: Commercial $ 1,085 $ 1,082 Live Events 1,247 1,429 High School Park and Recreation 661 533 Transportation 199 202 International 447 562 Total depreciation and amortization for reportable segments 3,639 3,808 Unallocated corporate depreciation and amortization 1,165 1,085 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. 14 Table of Contents 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 August 2, 2025 July 27, 2024 Net sales: United States $ 196,588 $ 207,219 Outside United States 22,384 18,869 $ 218,972 $ 226,088 August 2, 2025 April 26, 2025 Property and equipment, net of accumulated depreciation: United States $ 59,130 $ 66,701 Outside United States 6,950 7,183 $ 66,080 $ 73,884 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. Note 6. Goodwill 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 Balance as of April 26, 2025 $ 3,159 $ 29 $ 3,188 Foreign currency translation 4 1 5 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 . Note 7. Financing Agreements The following table summarizes the components of our long-term debt as of the dates indicated: 15 Table of Contents August 2, 2025 April 26, 2025 Mortgage $ 11,875 $ 12,375 Long-term debt, gross 11,875 12,375 Debt issuance costs, net ( 294 ) ( 388 ) Current portion ( 1,500 ) ( 1,500 ) Long-term debt, net $ 10,081 $ 10,487 Credit Agreements 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”); and • 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 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 16 Table of Contents 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 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 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 The following table presents the aggregate contractual maturities of our long-term debt by fiscal year: Fiscal years ending Amount Remainder of 2026 $ 1,000 2027 10,875 2028 — 2029 — 2030 — Total debt $ 11,875 Note 8. Commitments and Contingencies Litigation: 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. 17 Table of Contents 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. Warranties: The following table summarizes changes in our warranty obligations for the three months ended August 2, 2025. August 2, 2025 Balance as of April 26, 2025 $ 35,830 Warranties issued during the period 4,287 Settlements made during the period ( 2,726 ) Changes in accrued warranty obligations for pre-existing warranties during the period, including expirations ( 1,128 ) 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 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. Note 9. Income Taxes 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. 18 Table of Contents Note 10. Fair Value Measurement 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 August 2, 2025 Cash and cash equivalents $ 136,856 $ — $ — $ 136,856 $ 136,856 $ — $ — $ 136,856 Balance as of April 26, 2025 Cash and cash equivalents $ 127,507 $ — $ — $ 127,507 $ 127,507 $ — $ — $ 127,507 Note 11. Share 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. Note 12. Related Party Transactions 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 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 19 Table of Contents 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 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 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; Alta Fox Equity, LLC, as the general partner of Alta Fox GenPar, LP; Alta Fox Capital Management, LLC, as the investment manager of Alta Fox Opportunities Fund, LP; and P. Connor Haley, as the sole owner, member and manager of each of Alta Fox Capital Management, LLC and Alta Fox Equity LLC. In Amendment No. 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. See "Note 2. Investments in Affiliates" for further details of related party transactions with our investments in the Affiliate Notes. Note 13. Subsequent Events 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, 20 Table of Contents 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. 21 Table of Contents