LIQUIDITY SERVICES INC 10-K

Item 7A. Quantitative and Qualitative Disclosures about Market Risk. Interest rate sensitivity. Our investment policy requires us to invest funds in excess of current operating requirements. The principal objectives of our investment activities are to preserve principal, provide liquidity, and maximize income consistent with minimizing risk of material loss. As of September 30, 2025, we hold cash and cash equivalents and short-term investments that are subject to varying interest rates based upon their maturities. A hypothetical 100 basis point decline in interest rates would impact our pre-tax earnings by less than $1.0 million on an annualized basis. As of September 30, 2025, we do not have any debt; however, should the Company draw on our Letter of Credit in the future, such draw would incur interest as determined by the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25% to 1.75%. Exchange rate sensitivity. Because of the number of countries and currencies we operate in, movements in currency exchange rates may affect our results. We report our operating results and financial condition in U.S. dollars. Our U.S. operations earn revenues and incur expenses primarily in U.S. dollars. Outside the United States, we generate revenues and incur expenses in both U.S. dollars and local currencies. Our primary foreign exchange exposures include British Pounds, Canadian Dollars, Chinese Yuan, Euros, and Hong Kong Dollars. When we translate the results and net assets of our international operations into U.S. dollars for financial reporting purposes, movements in exchange rates will affect our reported results. Volatile market conditions arising from ongoing macroeconomic conditions such as rising interest rates at federal banks and armed conflicts around the world, may result in significant changes in exchange rates, which could affect our results of operations expressed in U.S. dollars. A hypothetical 10% decrease in foreign exchange rates reduce our total expected revenues by approximately 1%. The potential impact on pre-tax earnings would be less as total expected expenses would also decrease. Item 8. Financial Statem ents and Supplementary Data. The consolidated financial statements and accompanying notes are included in Part IV, Item 15(a)(1) of this Annual Report on Form 10-K. Item 9. Changes in and Disagreement with Accountants on Accounting and Financial Disclosure. None. Item 9A. Contr ols and Procedures. Attached as exhibits to this Form 10-K are certifications of our Chief Executive Officer and Chief Financial Officer, which are required in accordance with Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the Exchange Act). This "Controls and Procedures" section includes information concerning the controls and controls evaluation referred to in the certifications. The report of Deloitte & Touche LLP, our independent registered public accounting firm, regarding its audit of our internal control over financial reporting is set forth below in this section. This section should be read in conjunction with the certifications and the Deloitte & Touche LLP report for a more complete understanding of the topics presented. Evaluation of Disclosure Controls and Procedures Management conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures and our internal control over financial reporting as of the end of the period covered by this Form 10-K. The controls evaluation was conducted under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Disclosure controls and procedures are controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this Form 10-K, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures are also designed to reasonably assure that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our quarterly evaluation of disclosure controls includes an evaluation of some components of our internal control over financial reporting. Internal control over financial reporting is also separately evaluated on an annual basis for purposes of providing the management report which is set forth below. 59 The evaluation of our disclosure controls included a review of the controls' objectives and design, our implementation of the controls and their effect on the information generated for use in this Form 10-K. In the course of the controls evaluation, we reviewed identified data errors, control deficiencies and, where appropriate, sought to confirm that appropriate corrective actions, including process improvements, were being undertaken. This type of evaluation is performed on a quarterly basis so that the conclusions of management, including the Chief Executive Officer and Chief Financial Officer, concerning the effectiveness of the disclosure controls can be reported in our periodic reports on Form 10-Q and Form 10-K. Many of the components of our disclosure controls are also evaluated on an ongoing basis by our finance organization. The overall goals of these various evaluation activities are to monitor our disclosure controls, and to modify them as necessary. Our intent is to maintain the disclosure controls as dynamic systems that change as conditions warrant. Based upon the controls evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Form 10-K, our disclosure controls were effective to ensure assurance that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified by the SEC, and that material information related to Liquidity Services and our consolidated subsidiaries is made known to management, including the Chief Executive Officer and Chief Financial Officer, particularly during the period when our periodic reports are being prepared. We reviewed the results of management's evaluation with the Audit Committee of our Board of Directors. Management Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining effective internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Internal control over financial reporting includes those policies and procedures that (a) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (b) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP; and (c) provide reasonable assurance regarding authorization to effect the acquisition, use, or disposition of Company assets, as well as the prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements. Management assessed our internal control over financial reporting as of September 30, 2025, the end of our fiscal year. Management based its assessment on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies and our overall control environment. This assessment is supported by testing and monitoring performed by our finance organization. As permitted by SEC guidance with respect to newly acquired entities, management excluded Auction Software, which was acquired on January 31, 2025, from its assessment of internal control over financial reporting. The financial statements of Auction Software, constitute less than 1% of revenues and total assets (excluding goodwill and intangible assets which were integrated into the Company’s systems and control environment), in the consolidated financial statement amounts as of and for the year ended September 30, 2025. We are in the process of evaluating Auction Software's existing controls and procedures and integrating Auction Software into our internal control over financial reporting. See Note 3 - Acquisitions , in the Notes to the Consolidated Financial Statements for further discussion on the Auction Software acquisition and its impact on our consolidated financial statements. Based on this assessment, management has concluded that our internal control over financial reporting was effective as of the end of the fiscal year to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. Our independent registered public accounting firm, Deloitte & Touche LLP, independently assessed the effectiveness of the Company's internal control over financial reporting. Deloitte & Touche LLP has issued an attestation report, which is included at the end of this section. Inherent Limitations on Effectiveness of Controls A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits 60 of controls must be considered relative to their costs. Other inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Changes in Internal Control over Financial Reporting During the three months ended September 30, 2025, no change occurred in our internal controls over financial reporting that materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting. 61 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Liquidity Services, Inc. Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of Liquidity Services, Inc. and subsidiaries (the "Company") as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended September 30, 2025, of the Company and our report dated November 20, 2025, expressed an unqualified opinion on those financial statements. As described in the Management Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial reporting at Auction Software, which was acquired on January 31, 2025, and whose financial statements constitute less than 1% of revenues and total assets (excluding goodwill and intangible assets which were integrated into the Company’s systems and control environment), in the consolidated financial statement amounts as of and for the year ended September 30, 2025. Accordingly, our audit did not include the internal control over financial reporting at Auction Software. Basis for Opinion The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Deloitte and Touche LLP McLean, Virginia November 20, 2025 62 Item 9B. Other Information. On November 17, 2025, the Company's Board of Directors authorized the repurchase of up to $15.0 million of the Company's outstanding shares of common stock through December 31, 2027. This authorization follows the complete utilization of our previous December 9, 2024, authorization to repurchase up to $10.0 million in shares through December 31, 2026. The timing and actual number of shares repurchased will depend on a variety of factors, including price, general business and market conditions, and the existence of alternative investment opportunities. The repurchase program will be executed consistent with the Company's capital allocation strategy of prioritizing investment to grow the business over the long term. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. 63 PA RT III Item 10. Directors, Exec utive Officers and Corporate Governance. The information required by Items 401(a), 401(b) 401(c), 401(d), 401(e)(1), 401(e)(2), 401(f), 401(g), 405(a), 407(c)(3), 407(d)(4), 407(d)(5), and 408(b) of Regulation S-K is incorporated by reference from the Company's Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after September 30, 2025. Code of Ethics, Governance Guidelines and Committee Charters We have adopted a Code of Conduct that applies to all of our directors, officers and employees, including our principal executive, principal financial and principal accounting officers, or persons performing similar functions. The Code of Conduct is available on our website at http://investors.liquidityservices.com . We intend to disclose future amendments to certain provisions of the Code of Conduct, and waivers of the Code of Conduct granted to executive officers and directors, on the website within four business days following the date of the amendment or waiver. Insider Trading Policy We have adopted an Insider Trading Policy to assist the Company's employees and directors in complying with insider trading laws and protect the Company from legal liability and promote its business interest in maintaining its reputation for integrity. A copy of the policy is filed as Exhibit 19.1 to this Form 10-K. Under this policy, employees, officers and directors of the Company, as well as other persons who may have access to material nonpublic information, are prohibited from engaging in certain transactions relating to Company securities held by them. Item 11. Executive Compensation. The information required by Items 402(b), 402(c), 402(d), 402(e), 402(f), 402(g), 402(h), 402(i), 402(j), 402(k), 402(s), 402(t), 402(u), 402(v), 402(w), 402(x), 407(e)(4), and 407(e)(5) of Regulation S-K is incorporated by reference from the Company's Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after September 30, 2025. Item 12. Security Owners hip of Certain Beneficial Owners and Management and Related Stockholders Matters. The information required by Items 201(d), 403(a), and 403(b) of Regulation S-K is incorporated by reference from the Company's Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after September 30, 2025. Item 13. Certain Relations hips and Related Transactions, and Director Independence. The information required by Items 404(a), 404(b), 407(a)(1), 407(a)(2) and 407(a)(3) of Regulation S-K is incorporated by reference from the Company's Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after September 30, 2025. Item 14. Principal Account ant Fees and Services. The information required by Items 9(e)(1)-(4), 9(e)(5) and 9(e)(6) of Schedule 14A is incorporated by reference from the Company's Proxy Statement relating to its 2026 Annual Meeting of Stockholders to be filed with the SEC within 120 days after September 30, 2025. 64 PART IV Item 15. Exhibits and Fi nancial Statement Schedules. (a) Page (1) The following documents related to the financial statements are filed as part of this report: Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34 ) 66 Consolidated Balance Sheets as of September 30, 2025, and 2024 68 Consolidated Statements of Operations for the years ended September 30, 2025, 2024, and 2023 69 Consolidated Statements of Comprehensive Income for the years ended September 30, 2025, 2024, and 2023 70 Consolidated Statements of Stockholders' Equity for the years ended September 30, 2025, 2024, and 2023 71 Consolidated Statements of Cash Flows for the years ended September 30, 2025, 2024, and 2023 72 Notes to the Consolidated Financial Statements 73 (2) The following financial statement schedule is filed as part of this report: Schedules for the three years ended September 30, 2025, 2024, and 2023: II—Valuation and Qualifying Accounts 102 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required or are inapplicable and therefore have been omitted. (3) The documents required to be filed as exhibits to this report under Item 601 of Regulation S-K are listed in the Exhibit Index included elsewhere in this report, which list is incorporated herein by reference. 65 Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Liquidity Services, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Liquidity Services, Inc. and subsidiaries (the "Company") as of September 30, 2025 and 2024, the related consolidated statements of operations, comprehensive income, stockholders' equity, and cash flows, for each of the three years in the period ended September 30, 2025, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of September 30, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2025, in conformity with accounting principles generally accepted in the United States of America. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of September 30, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated November 20, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matter The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Revenue - Refer to Note 2 to the financial statements Critical Audit Matter Description The Company earns revenue (1) on transactions where they resell inventory that they purchase from sellers, (2) from the sale of inventory that is sold on a consignment basis, and (3) from other non-consignment fee transactions. When acting as a principal, the Company purchases an asset or assets from a seller and then seeks to sell the asset or assets to a buyer. The Company then recognizes as purchase revenue the gross proceeds from the sale, including buyer's premiums. When the Company is acting as an agent, its performance obligation is to arrange for the seller to sell an asset or assets to the buyer directly. The Company recognizes consignment and other fee revenues based on the sales commissions that are paid to the Company by the sellers for utilizing the Company's services. Consideration 66 is variable based on units, final auction prices, or other factors, until the buyer’s purchase of the asset or assets is complete, or the service has been provided. We identified a critical audit matter related to revenue transactions recorded, which required an increased extent of effort, including the need for us to involve professionals with expertise in information technology (“IT”), to identify, test, and evaluate the Company’s systems, applications, and automated controls. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the Company’s revenue transactions included the following, among others: • With the assistance of our IT specialists, we: o Identified the significant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls. o Performed testing of system interface controls and automated controls relevant to the revenue processes. • We tested internal controls within the relevant revenue processes, including those in place to reconcile the various systems to the Company’s general ledger. • We either developed an independent expectation of revenue and compared such expectation to the amounts recorded by the Company, or performed detailed transaction testing for a sample of revenue transactions, which included the following: o Agreeing the selected revenue transactions recognized to underlying source documents o Testing the classification of each transaction as either purchase revenue, where the Company acts as a principal and records revenue based on the gross value of the asset sale, or commission and other fee revenue, where the Company acts as an agent and records only the fee earned net of the sale transaction value. /s/ Deloitte and Touche LLP McLean, Virginia November 20, 2025 We have served as the Company’s auditor since 2021. 67 Liquidity Services, Inc. and Subsidiaries Consolidated Balance Sheets (Dollars in Thousands, Except Par Value) September 30, 2025 2024 Assets Current assets: Cash and cash equivalents $ 174,607 $ 153,226 Short-term investments 11,212 2,310 Accounts receivable, net of allowance for doubtful accounts of $ 777 and $ 1,680 11,176 11,467 Inventory, net 14,180 17,099 Prepaid taxes and tax refund receivable 1,757 1,519 Prepaid expenses and other current assets 11,857 13,614 Total current assets 224,789 199,235 Property and equipment, net 18,259 17,961 Operating lease assets 11,499 12,005 Intangible assets, net 13,340 13,912 Goodwill 102,875 97,792 Deferred tax assets 567 1,728 Other assets 3,772 4,255 Total assets $ 375,101 $ 346,888 Liabilities and stockholders’ equity Current liabilities: Accounts payable $ 61,454 $ 58,693 Accrued expenses and other current liabilities 30,575 28,261 Current portion of operating lease liabilities 5,071 5,185 Deferred revenue 5,093 4,788 Payables to sellers 59,432 58,226 Total current liabilities 161,625 155,153 Operating lease liabilities 8,723 9,060 Other long-term liabilities 1,511 115 Total liabilities 171,859 164,328 Commitments and contingencies (Note 15) Stockholders’ equity: Common stock, $ 0.001 par value; 120,000,000 shares authorized; 37,317,175 shares issued and outstanding at September 30, 2025; 36,707,840 shares issued and outstanding at September 30, 2024 37 37 Additional paid-in capital 285,721 275,771 Treasury stock, at cost; 6,640,580 shares at September 30, 2025, and 6,015,496 shares at September 30, 2024 ( 110,002 ) ( 93,854 ) Accumulated other comprehensive loss ( 10,640 ) ( 9,427 ) Retained earnings 38,126 10,033 Total stockholders’ equity 203,242 182,560 Total liabilities and stockholders’ equity $ 375,101 $ 346,888 See accompanying notes to the consolidated financial statements. 68 Liquidity Services, Inc. and Subsidiaries Consolidated Statemen ts of Operations (Dollars in Thousands, Except Per Share Data) Year Ended September 30, 2025 2024 2023 Purchase revenues $ 310,538 $ 209,800 $ 172,089 Consignment and other fee revenues 166,131 153,518 $ 142,373 Total revenue 476,669 363,318 314,462 Costs and expenses from operations: Cost of goods sold (excludes depreciation and amortization) 267,854 178,152 142,322 Technology and operations 68,542 61,377 57,078 Sales and marketing 60,964 54,832 49,443 General and administrative 32,774 31,962 28,074 Depreciation and amortization 10,409 12,120 11,255 Other operating expenses, net 1,060 1,471 186 Total costs and expenses 441,603 339,914 288,358 Income from operations 35,066 23,404 26,105 Interest and other income, net ( 4,375 ) ( 3,854 ) ( 2,912 ) Income before provision for income taxes 39,441 27,260 29,016 Provision for income taxes 11,348 7,269 8,039 Net income $ 28,093 $ 19,991 $ 20,978 Basic income per common share $ 0.91 $ 0.66 $ 0.68 Diluted income per common share $ 0.87 $ 0.63 $ 0.65 Basic weighted average shares outstanding 30,932,459 30,496,306 31,075,648 Diluted weighted average shares outstanding 32,411,075 31,634,192 32,074,561 See accompanying notes to the consolidated financial statements. 69 Liquidity Services, Inc. and Subsidiaries Consolidated Statements of Comp rehensive Income (Dollars In Thousands) Year Ended September 30, 2025 2024 2023 Net income $ 28,093 $ 19,991 $ 20,978 Other comprehensive income (loss): Defined benefit pension plan—unrecognized amounts ( 922 ) ( 485 ) ( 1,411 ) Foreign currency translation and other ( 291 ) 1,516 1,238 Other comprehensive income (loss) ( 1,213 ) 1,031 ( 173 ) Comprehensive income $ 26,880 $ 21,022 $ 20,805 See accompanying notes to the consolidated financial statements. 70 Liquidity Services, Inc. and Subsidiaries Consolidated State ments of Stockholders' Equity (Dollars In Thousands) Common Stock Treasury Stock Shares Amount Additional Paid-in Capital Shares Amount Accumulated Other Comprehensive Income (Loss) Retained Earnings (Accumulated Loss) Total Balance at September 30, 2022 35,724,057 $ 36 $ 258,275 ( 3,813,199 ) $ ( 62,554 ) $ ( 10,285 ) $ ( 30,936 ) $ 154,536 Net income — — — — — — 20,978 20,978 Exercise of common stock options, grants of restricted stock awards, and vesting of restricted stock units 500,540 — 495 — — — — 495 Taxes paid associated with net settlement of stock compensation awards ( 82,252 ) — ( 1,261 ) — — — — ( 1,261 ) Common stock repurchases — — — ( 1,607,141 ) ( 21,277 ) — — ( 21,277 ) Common stock surrendered in the exercise of stock options — — 200 ( 12,705 ) ( 200 ) — — — Forfeiture of restricted stock awards — — — — — — — — Stock compensation expense 0 — 8,235 — — — — 8,235 Defined benefit pension plan—unrecognized amounts, net of taxes — — — — — ( 1,411 ) — ( 1,411 ) Foreign currency translation — — — — — 1,238 1 1,239 Balance at September 30, 2023 36,142,345 $ 36 $ 265,945 ( 5,433,045 ) $ ( 84,031 ) $ ( 10,458 ) $ ( 9,958 ) $ 161,533 Net income — — — — — — 19,991 19,991 Exercise of common stock options, grants of restricted stock awards, and vesting of restricted stock units 684,745 1 597 — — — — 598 Taxes paid associated with net settlement of stock compensation awards ( 119,250 ) — ( 2,254 ) — — — — ( 2,254 ) Common stock repurchases — — — ( 564,887 ) ( 9,426 ) — — ( 9,426 ) Common stock surrendered in the exercise of stock options — — 397 ( 17,564 ) ( 397 ) — — — Stock compensation expense — — 11,087 — — — — 11,087 Defined benefit pension plan—unrecognized amounts, net of taxes — — — — — ( 485 ) — ( 485 ) Foreign currency translation — — — — — 1,516 — 1,516 Balance at September 30, 2024 36,707,840 $ 37 $ 275,771 ( 6,015,496 ) $ ( 93,854 ) $ ( 9,427 ) $ 10,033 $ 182,560 Net income — — — — — — 28,093 28,093 Exercise of common stock options, grants of restricted stock awards, and vesting of restricted stock units 788,108 — 211 — — — — 211 Taxes paid associated with net settlement of stock compensation awards ( 183,533 ) — ( 5,743 ) — — — — ( 5,743 ) Acquisition consideration paid in common stock (Note 3) 27,260 — 945 — — — — 945 Common stock repurchases — — — ( 623,687 ) ( 16,101 ) — — ( 16,101 ) Common stock surrendered in the exercise of stock options — — 47 ( 1,397 ) ( 47 ) — — — Forfeiture of restricted stock awards ( 22,500 ) — — — — — — — Stock compensation expense — — 14,490 — — — — 14,490 Defined benefit pension plan—unrecognized amounts, net of taxes — — — — — ( 922 ) — ( 922 ) Foreign currency translation and other — — — — — ( 291 ) — ( 291 ) Balance at September 30, 2025 37,317,175 $ 37 $ 285,721 ( 6,640,580 ) $ ( 110,002 ) $ ( 10,640 ) $ 38,126 $ 203,242 See accompanying notes to the consolidated financial statements. 71 Liquidity Services, Inc. and Subsidiaries Consolidated Statem ents of Cash Flows (Dollars In Thousands) Year Ended September 30, 2025 2024 2023 Operating activities Net income $ 28,093 $ 19,991 $ 20,978 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 10,409 12,120 11,255 Stock compensation expense 14,490 11,087 8,191 Inventory adjustment to net realizable value 539 163 1,048 Provision for doubtful accounts 356 839 1,390 Deferred tax expense 2,396 5,323 6,578 Impairment of long-lived and other non-current assets 459 — — (Gain) loss on disposal of property and equipment 36 ( 14 ) ( 36 ) Changes in operating assets and liabilities: Accounts receivable 233 ( 4,269 ) 2,725 Inventory 5,241 4,949 ( 479 ) Prepaid taxes and tax refund receivable ( 239 ) 264 ( 152 ) Prepaid expenses and other assets 1,452 ( 3,036 ) ( 1,166 ) Operating lease assets and liabilities ( 345 ) 1,447 ( 228 ) Accounts payable ( 68 ) 8,374 ( 2,889 ) Accrued expenses and other current liabilities 2,519 4,212 277 Deferred revenue ( 204 ) 87 262 Payables to sellers 1,337 8,684 ( 581 ) Other liabilities 54 — ( 157 ) Net cash provided by operating activities 66,758 70,221 47,016 Investing activities Purchases of property and equipment, including capitalized software ( 7,800 ) ( 8,907 ) ( 5,386 ) Purchase of short-term investments ( 19,020 ) ( 2,264 ) ( 8,037 ) Maturities of short-term investments 10,142 8,161 1,923 Cash paid for business acquisition, net of cash acquired ( 6,496 ) ( 13,157 ) — Other investing activities, net 190 54 68 Net cash used in investing activities ( 22,984 ) ( 16,113 ) ( 11,432 ) Financing activities Payments of the principal portion of finance lease liabilities ( 102 ) ( 89 ) ( 101 ) Proceeds from exercise of common stock options, net of tax 212 598 496 Taxes paid associated with net settlement of stock compensation awards ( 5,743 ) ( 2,254 ) ( 1,262 ) Common stock repurchases ( 16,180 ) ( 9,426 ) ( 21,198 ) Net cash used in financing activities ( 21,813 ) ( 11,171 ) ( 22,065 ) Effect of exchange rate differences on cash and cash equivalents ( 580 ) 8 640 Net increase (decrease) in cash and cash equivalents 21,381 42,945 14,159 Cash and cash equivalents at beginning of year 153,226 110,281 96,122 Cash and cash equivalents at end of year $ 174,607 $ 153,226 $ 110,281 Supplemental disclosure of cash flow information Cash paid for income taxes, net $ 9,201 $ 1,710 $ 1,590 Non-cash: Common stock surrendered in the exercise of stock options $ 47 $ 397 $ 200 Non-cash: Acquisition consideration paid in common stock $ 945 $ — $ — See accompanying notes to the consolidated financial statements. 72 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements 1. Organ ization Liquidity Services, Inc. (Liquidity Services, the Company) is the leading global provider of e-commerce marketplaces and software solutions powering the circular economy. We create a better future for organizations, individuals, and the planet by using technology to capture and unleash the intrinsic value of surplus. We connect millions of buyers and thousands of sellers through our leading e-commerce auction marketplaces, search engines, asset management and auction software, and related services. Our comprehensive solutions enable the transparent, efficient, sustainable recovery of value from excess items owned by business and government sellers. Our business delivers value to shareholders by unleashing the intrinsic value of surplus through our online marketplace platforms. These platforms ignite and enable a self-reinforcing cycle of value creation where buyers and sellers attract one another in greater numbers. The result of this cycle is a continuous flow of goods that becomes increasingly valuable as more participants join the platforms, thereby creating positive network effects that benefit sellers, buyers, and shareholders. Incorporated in Delaware as Liquidation.com in November 1999, Liquidity Services has over 25 years of industry experience. Reportable Segments The Company has five operating segments and three reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSC G), and Capital Assets Group (CAG). Our separate Machinio and Software Solutions operating segments, which do not individually meet the quantitative thresholds to be reportable segments, are combined and presented together as Machinio & Software Solutions for segment reporting purposes. Further information and operating results of our reportable segments can be found in Note 16 - Segment Information . • GovDeals. The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through its GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 - Acquisitions . • RSCG . The RSCG reportable segment consists of marketplaces that enable corporations located in the United States and Canada to sell excess, returned, and overstocked consumer goods. RSCG also offers a suite of services that includes returns management, asset recovery, and e-commerce solutions. This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment primarily conducts its business-to-business sales on its Liquidation.com marketplace and through Direct Sales, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces and other third-party sales channels. • CAG . The CAG reportable segment enables commercial businesses to sell surplus assets on our AllSurplus and GovDeals marketplace, specializing in asset categories such as heavy equipment, industrial manufacturing, oil and gas, biopharma, fast-moving consumer goods and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing. CAG clients benefit from its global base of buyers and sellers, enabling the sale and redeployment of assets wherever they generate the best value and highest use across the world. • Machinio & Software Solutions . The Machinio operating segment operates the Machinio marketplace, a global search engine platform for listing equipment for sale in the construction, machine tool, processing, transportation, printing, agriculture, and laboratory/medical sectors, and the Machinio System platform that provides equipment sellers with a suite of software tools including website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business. The Software Solutions operating segment separately serves as the Company's private-label auction and software-as-a-service (SaaS) arm, offering scalable auction platform services to entrepreneurs and businesses. 73 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The Company's operations are subject to certain risks and uncertainties, many of which are associated with technology-oriented companies, including, but not limited to, the Company's dependence on use of the Internet; the effect of general business and economic trends including inflationary pressures and impacts from interest rate changes; tariffs and other trade barriers; ongoing international armed and geopolitical conflicts; susceptibility to rapid technological change; actual and potential competition by entities with greater financial and other resources; collectability of payment from our buyers; and the potential for the commercial sellers from which the Company derives a significant portion of its inventory to change the way they conduct their disposition of surplus assets or to otherwise terminate or not renew their contracts with the Company. 2. Summary of Significant Accounting Policies Use of Estimates 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 that affect amounts in the consolidated financial statements and accompanying notes. Actual results could differ significantly from those estimates. Principles of Consolidation and Basis of Presentation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. In addition, in the opinion of management, all adjustments (consisting of normal, recurring accruals) considered necessary for a fair presentation of the results for the periods presented have been included. Business Combinations The Company recognizes all of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair value on the acquisition date. Acquisition-related costs are recognized separately from the acquisition and expensed as incurred. Restructuring costs incurred in periods subsequent to the acquisition date are expensed when incurred. Subsequent changes to the purchase price (i.e., working capital adjustments) or other fair value adjustments determined during the measurement period are recorded as an adjustment to goodwill, with the exception of contingent consideration, which is recognized in the Consolidated Stateme nts of Operations in the period it is modified. All subsequent changes to a valuation allowance or uncertain tax position that relate to the acquired company and existed at the acquisition date that occur both within the measurement period and as a result of facts and circumstances that existed at the acquisition date, are recognized as an adjustment to goodwill. All other changes in valuation allowances are recognized as a reduction or increase to income tax expense or as a direct adjustment to additional paid-in capital as required. Cash and Cash Equivalents The Company considers all highly liquid securities purchased with an initial maturity of three months or less to be cash equivalents and are included as a current asset in the line-item Cash and cash equivalents within our Consolidated Balance Sheets. Interest income earned through our cash and cash equivalents are recorded to Interest and other income, net within the Consolidated Statements of Operations. Short-term Investments The Company's short-term investments are designated as held-to-maturity investment securities, recorded at amortized cost, and are included as a current asset in the line-item Short-term investments within our Consolidated Balance Sheets as their maturity is less than one year fr om the balance sheet date. Interest income earned through our short-term investments are recorded to Interest and other income, net within the Consolidated Statements of Operations. 74 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Accounts Receivable Accounts receivable are recorded at the invoiced amount and are non-interest-bearing. The Company maintains an allowance for doubtful accounts to reserve for potentially uncollectible receivables. Changes in allowances, which are included in Sales and marketing within the Consolidated Statements of Operations, are based on management’s judgment, which considers historical bad debt experience, a specific review of all significant outstanding invoices, customer-specific information and relevant conditions, and an assessment of general economic conditions. As of September 30, 2025 , the Company's allowance for doubtful accounts was $ 0.8 million. Inventory Inventory consists of property obtained for resale, generally through the online auction process, and is stated at the lower of cost or net realizable value in the line-item Inventory, net on the Consolidated Balance Sheets. Cost is generally determined using the specific identification method. Costs associated with our warehouse operations are expensed as incurred and included within Technology and operations expenses in the Consolidated Statements of Operations. Charges for unsellable inventory, as well as for inventory written down to net realizable value, are included in Cost of goods sold in the period in which they have been determined to occur. As of September 30, 2025 and 2024 , the Company's Inventory, net on its Consolidated Balance Sheet is stated at net realizable value. Prepaid expenses and other current assets Prepaid expenses and other current assets include the short-term portion of contract assets (described in "Contract Assets and Liabilities"), capitalized sales commissions paid (described in "Contract Costs"), recoverable value-added tax, as well as other misc ellaneous prepaid expenses. Property and Equipment Property and equipment are recorded at cost, and depreciated or amortized on a straight-line basis over the following estimated useful lives: Computers and purchased software One to five years Equipment Two to five years Furniture and fixtures Five to seven years Internally developed software for internal-use Two to five years Leasehold improvements Shorter of lease term or useful life Buildings Thirty-nine years Vehicles Five years Land Not depreciated Leases The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract provides the right to control the use of an identified asset for a period of time. Lease assets and liabilities are recognized at the lease commencement date at an amount equal to the present value of the lease payments to be made over the lease term. The lease payments represent the combination of lease and nonlease components. The discount rate used to determine the present value is the Company’s incremental borrowing rate for a duration that is consistent with the lease term, as the rates implicit in the Company’s leases are generally not determinable. The Company’s incremental borrowing rate is estimated using publicly available information for companies with comparable financial profiles, adjusted for the impact of collateralization. The lease term includes the impacts of options to extend or terminate the lease only if it is reasonably certain that the option will be exercised. Lease expense related to operating lease assets and liabilities is recognized on a straight-line basis over the lease term. Lease expense related to finance lease assets is recognized on a straight-line basis over the shorter of the useful life of the asset or the lease term, while 75 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) lease expense related to finance lease liabilities is recognized using the interest method. Lease-related payments not included in the determination of the lease assets and liabilities, such as variable lease payments, are expensed as incurred. Lease assets and liabilities are not recognized when the lease term is 12 months or less; however, short-term lease expense is still recognized on a straight-line basis over the lease term. Balances related to the Company's operating leases are included within Operating lease assets, Current portion of operating lease liabilities, and Operating lease liabilities (non-current portion of operating lease liabilities) on the Consolidated Balance Sheets. Balances related to the Company's finance leases are included within Other assets (finance lease assets), Accrued expenses and other current liabilities (current portion of finance lease liabilities), and Other long-term liabilities (non-current portion of finance lease liabilities) on the Consolidated Balance Sheets. Lease assets are assessed for impairment in accordance with the Company’s accounting policy for the impairment of long-lived assets. Intangible Assets Intangible assets consist of customer and supplier relationships, technology, trade names, and other intangibles (comprised of patents and related assets). Intangible assets are amortized using the straight-line method over their estimated useful lives. Impairment of Long-Lived Assets Long-lived assets, including definite-lived intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If an impairment indicator is present, the Company evaluates recoverability by comparing the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. If the assets are impaired, the impairment recognized is measured by the amount by which the carrying amount exceeds the es timated fair value of the assets. Goodwill Goodwill represents the costs in excess of the fair value of net assets acquired through acquisitions by the Company. The Company reviews goodwill for impairment annually on July 1, or more frequently if events or circumstances indicate impairment may exist. Examples of such events or circumstances could include a significant change in business climate or the loss of a significant contract. In evaluating goodwill for impairment, the Company may first assess qualitative factors to determine whether it is more likely than not (that is, a likelihood of more than 50 percent) that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is not more likely than not that the fair value of the reporting unit is less than its carrying value, no further testing of goodwill assigned to the reporting unit is required. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company applies a fair value-based test. In applying a fair value-based test, the Company determines the fair value of each of its reporting units and compares that amount to the carrying amount of the respective reporting units, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, no impairment loss is recognized. If, instead, the carrying value of the reporting unit exceeds its fair value, an impairment loss is recognized in the amount of the excess carrying value. 76 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Net Investment Hedges The Company may designate certain derivative instruments (e.g., foreign‑currency forwards or cross‑currency swaps) as hedges of the foreign‑currency exposure of its net investments in foreign operations in accordance with ASC 815 and ASC 830. At hedge inception, management prepares contemporaneous documentation that identifies the hedged net investment, the hedging instrument, the risk being hedged, and the method used to assess hedge effectiveness. The Company applies the spot method to assess effectiveness and expects relationships to be highly effective when the derivative’s currency pair and notional amount match the portion of the net investment designated as hedged; changes in fair value attributable to spot‑rate movements are recorded in accumulated other comprehensive income (loss) within the cumulative translation adjustment (CTA) to the extent the hedge is effective. Under the Company’s policy, forward points (the excluded component) are recognized in current‑period earnings on a rational, systematic straight‑line basis over the hedge term; any difference between the change in fair value of the excluded component and the straight‑line recognition is recorded in CTA. The Company monitors hedge ratios each reporting period and will rebalance or prospectively dedesignate a portion of a hedge if the notional of the hedged net investment decreases below the derivative notional; amounts previously recognized in CTA are not reclassified to earnings solely due to such dedesignations. As of September 30, 2025 , the Company had one outstanding net investment hedge applied to its Canadian subsidiary, however, such hedge was not material to its consolidated financial statements. Deferred Revenue Deferred revenue is primarily derived from subscriptions from our Machinio & Software Solutions segment that range primarily from one to twenty-four months. Subscription fees are recognized ratably over the term of the agreements. Revenue Recognition In the Consolidated Statements of Operations, revenue from the resale of inventory that the Company purchases from sellers is recognized within Purchase revenues. Revenue from the sale of inventory that the Company sells on a consignment basis, and other non-consignment fee revenue, which includes subscription services from our Machinio & Software Solutions segment, is recognized within Consignment and other fee revenues. The Company recognizes revenue when or as performance obligations are satisfied and control is transferred to the customer. Revenue is recognized in the amount that reflects the consideration to which the Company expects to be entitled. Revenue is also evaluated to determine whether the Company should report the gross proceeds as revenue, when the Company acts as the principal in the arrangement, or the Company should report its revenue on a net basis, when the Company acts as an agent. Specifically, when other parties are involved in providing goods or services to a customer, the Company must determine whether the nature of its promise is a performance obligation to provide the specified goods or services itself, or to arrange for another party to provide them. The Company evaluates the following factors to determine if it is acting as a principal: (a) whether the Company is primarily responsible for fulfilling the promise to provide the asset or assets; (b) whether the Company has inventory risk of the asset or assets before they are transferred to the buyer; and (c) whether the Company has discretion in establishing the price for the asset or assets. The Company enters into contracts with buyers and sellers. The Company has master agreements with some sellers pertaining to the sale of a flow of surplus assets over the term of the master agreement; however, a revenue contract for accounting purposes exists when the Company agrees to sell a specific asset or assets. When acting as a principal (a “purchase” arrangement), the Company purchases an asset or assets from a seller and then the Company seeks to sell the asset or assets to a buyer. The Company recognizes as Purchase revenues the gross proceeds from the sale, including buyer's premiums. In purchase arrangements, the contract with the seller is not a revenue contract in the scope of the revenue recognition guidance; rather, it is a purchase of inventory. When the Company is acting as an agent (a “consignment” arrangement), its performance obligation is to arrange for the seller to sell an asset or assets to the buyer directly. The Company recognizes Consignment revenues, which are composed of buyer's premiums 77 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) and/or sales commissions, based on the amounts that are paid to the Company by the buyers and sellers for utilizing the Company's services, which represent a percentage of the gross transaction proceeds. For the Company’s CAG segment, certain transactions may involve cooperation with third parties to satisfy the performance obligation of arranging for the sale of assets to a buyer, with proceeds shared among the parties. When a seller requests multiple parties to fulfill its performance obligation, the Company recognizes revenue in the amount of the portion of purchase or consignment proceeds to be retained by the Company. When the Company controls whether to use third parties to fulfill its performance obligation, it is considered the principal and revenue is recognized on a gross basis, with amounts due to third parties recognized as an expense. In both purchase and consignment arrangements, the Company sometimes provides varying levels of services to the seller, such as returns management, refurbishment of assets, or valuation services. These services are considered integrated with the broader performance obligation to sell the seller’s assets to a buyer. Other services provided to sellers are not capable of being distinct, like providing access to the Company’s e-commerce marketplaces or promoting the asset or assets for sale, because they could not benefit the seller separately from the sale of their assets. The consideration received from buyers and sellers includes (a) buyer’s premiums, (b) seller’s commissions, and (c) fees for services, including reimbursed expenses. Consideration is variable based on units, final auction prices, or other factors, until the buyer’s purchase of the asset or assets is complete, or the service has been provided. Recognition of variable consideration that is based on the results of auctions or purchases by buyers is constrained until those transactions have been finalized. The Company estimates and recognizes amounts related to sales returns, discounts, or rebates promised to customers, and reimbursed expenses; however, those estimates are not significant relative to the Company's consolidated revenues. Revenue is recognized when or as the performance obligation is satisfied. Variable consideration is allocated to individual performance obligations when the variable consideration is related to satisfying that performance obligation. The Company's revenue is generally recorded subsequent to receipt of payment authorization, utilizing credit cards, wire transfers and other methods of payments. Goods are generally not shipped before payment is received. For certain transactions, payment is due upon invoice and the payment terms vary depending on the segments. The Company collects and remits sales taxes on merchandise that it purchases and sells and has elected the practical expedient to exclude such sales tax amounts from the transaction price. The Company also provides shipping and handling services in some arrangements and has elected the practical expedient to treat those activities as fulfillment costs and will recognize the costs of these services at the time revenue is recognized for the related assets sold. If the Company is acting as a principal for the combined obligation, amounts received from customers for shipping are recognized as Revenue, and amounts paid for shipping are recognized as Costs of goods sold. If the Company is acting as an agent for the combined obligation, shipping revenue and costs will be netted and recognized within Costs of goods sold. The Company’s purchase and consignment performance obligations are satisfied at the point in time when control of the asset is transferred to the buyer or when the service is completed. The Company determines when control has transferred by evaluating the following five indicators: (a) whether the Company has a present right to payment for the asset or assets; (b) whether the buyer has legal title to the asset; (c) whether the buyer has physical possession of the asset or assets; (d) whether the buyer has the significant risks and rewards of ownership; and (e) whether the buyer has accepted the asset or assets. For the Company's Machinio & Software Solutions segment, the performance obligation has been identified as the stand ready obligation to provide access to subscription services offered by our Machinio and Software Solutions businesses, which are satisfied over time and recognized as other fee revenues in the line-item Consignment and other fee revenues on the Consolidated Statements of Operations. As of September 30, 2025 , the Machinio & Software Solutions segment had a remaining performance obligation of $ 5.1 million; the Company expects to recognize the substantial majority of that amount as Fee Revenue over the next 12 months. Cost of Goods Sold Cost of goods sold includes direct and incremental costs of purchasing inventory, transporting property for auction, shipping and handling costs, and credit card and other transaction fees. For transactions where the Company resells inventory that was purchased 78 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) from sellers, the cost of goods sold includes the cost of that inventory, generally using specific identification. There are no inventory costs associated with consignment sales. Contract Assets and Liabilities Contract assets reflect an estimate of expenses that will be reimbursed upon settlement with a seller. The contract asset balance was $ 1.3 million and $ 1.5 million as of September 30, 2025 and 2024, respectively, and is included in the line-item Prepaid expenses and other current assets on the Consolidated Balance Sheets. Contract liabilities reflect obligations to provide services for which the Company has already received consideration, and generally arise from up-front payments received in connection with our Machinio and Software Solutions subscription services. The co ntract liability balance was $ 5.1 million and $ 4.8 million as of September 30, 2025 and 2024, respectively, and is included in the line-item Deferred revenue on the Consolidated Balance Sheet. Of the September 30, 2024 contract liability balance, $ 4.7 million was earned as Fee Revenue during the year ended September 30, 2025. Contract Costs Contract costs relate to sales commissions paid on subscription contracts that are capitalized within our Machinio and Software Solutions businesses. Contract costs are amortized on a straight-line basis over the expected life of the customer contract. The contract cost balance was $ 2.3 million and $ 2.3 million as of September 30, 2025 and 2024, respectively, and is included in the line-item Prepaid expenses and other current assets and Other assets on the Consolidated Balance Sheets. Amortization expense was $ 1.6 million and $ 1.6 million during the year ended September 30, 2025 and 2024, respectively. Income Taxes The Company accounts for income taxes using an asset and liability approach for measuring deferred taxes based on temporary differences between the financial statement and income tax bases of assets and liabilities existing at each balance sheet date using enacted tax rates for the years in which the taxes are expected to be paid or recovered. The Company recognizes deferred tax assets to the extent that it believes that these assets are more likely than not to be realized. In making such determination, the Company considers all available positive and negative evidence to estimate whether future taxable income will be generated to permit use of the existing deferred tax asset. The resulting net tax asset reflects management's estimate of the amount that will be realized. The Company applies the authoritative guidance related to uncertainty in income taxes. Accounting Standards Codification (ASC) 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of technical merits. The Company’s policy is to recognize interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions, and in foreign jurisdictions including, among others, Canada and the U.K. Stock-Based Compensation The Company has incentive plans under which stock options, restricted stock units, restricted stock awards, and stock appreciation rights are issued. The awards issued can contain service conditions, performance conditions based upon Company financial results, and/or market conditions based upon changes in the Company's stock price. 79 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Service- and performance-based stock awards are measured at fair value on their grant date. Stock options and stock appreciation rights are measured at fair value using the Black-Scholes option-pricing model; however, because the stock appreciation rights are cash settled, they are also measured at fair value in each reporting period. The Black-Scholes option-pricing model includes assumptions for the expected term, volatility, and dividend yield, each of which are determined in reference to the Company's historical results. Where applicable, the expected term assumption is derived separately for homogenous groups within the overall award population. Restricted stock units and restricted stock awards are measured at fair value using the closing price of the Company's stock on the grant date. For service-based stock awards, the Company recognizes expense on a straight-line basis over the service period, which is generally a period of one to four years . For performance-based stock awards, the Company recognizes expense on a straight-line basis over the derived service period expected to be required to achieve the performance condition. The Company records a cumulative adjustment to compensation expense for performance-based awards if there is a change in determination of whether it is probable that the performance condition will be achieved. Market-based stock awards are measured at fair value on their grant date using a Monte Carlo simulation. The Monte Carlo simulation includes assumptions for the expected term, volatility, and dividend yield, each of which are determined in reference to the Company's historical results. For market-based stock option and restricted stock awards, the Company recognizes expense on a straight-line basis over the derived service period determined by the Monte Carlo simulation, for each stock price target within the award. The Company accelerates expense when a stock price target is achieved prior to the derived service period. The Company, however, does not reverse expense recognized if the stock price target(s) are not ultimately achieved, as required by equity accounting for market-based awards. For market-based stock appreciation rights, because they are cash settled, they are measured at fair value in each reporting period. The Company recognized expense on a straight-line basis over the derived service period determined by the Monte Carlo simulation in each reporting period, for each stock price target within the award. The Company accelerates expense when a stock price target is achieved prior to the derived service period, and reverses expense recognized if the stock price target(s) are not ultimately achieved, as required by liability accounting for market-based awards. The Company recognizes the impact of forfeitures in the period they occur. Compensation expense from the stock awards is included in the same lines on the Consolidated Statements of Operations as the cash compensation to the employees receiving the stock awards. Excess tax benefits realized from stock awards are reported as cash flows from operating activities on the Consolidated Statements of Cash Flows. Advertising Costs Advertising expenditures are expensed as incurred. Advertising costs charged to expense were $ 3.9 million, $ 5.2 million, and $ 4.5 million for the years ended September 30, 2025, 2024, and 2023 , respectively. Treasury Stock Treasury stock is presented at cost, including any applicable excise taxes, commissions and fees, as a reduction of stockholders’ equity in the Consolidated Balance Sheets and Consolidated Statement of Stockholders' Equity. Treasury stock held by us may be retired or reissued in the future. 80 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Foreign Currency Translation The functional currency of the Company's foreign subsidiaries is primarily the local currency. The translation of the subsidiary's financial statements into U.S. dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate during the period. The resulting translation adjustments are recognized in Accumulated other comprehensive loss, a separate component of stockholders' equity. Realized and unrealized foreign currency transaction gains and losses are included in Interest and other income, net in the Consolidated Statements of Operations. Accumulated Other Comprehensive Loss The following table shows the chang es in accumulated other comprehensive loss, net of taxes (in thousands): Foreign Currency Translation Adjustments and Other Net Change Pension and Other Postretirement Benefit Plans Accumulated Other Comprehensive (Loss) Income Balance at September 30, 2022 $ ( 10,594 ) $ 309 $ ( 10,285 ) Current-period other comprehensive income (loss) 1,238 ( 1,411 ) ( 173 ) Balance at September 30, 2023 ( 9,356 ) ( 1,102 ) ( 10,458 ) Current-period other comprehensive (loss) 1,516 ( 485 ) 1,031 Balance at September 30, 2024 ( 7,840 ) ( 1,587 ) ( 9,427 ) Current-period other comprehensive (loss) ( 291 ) ( 922 ) ( 1,213 ) Balance at September 30, 2025 $ ( 8,131 ) $ ( 2,509 ) $ ( 10,640 ) Risk Associated with Certain Concentrations For the majority of buyers that receive goods before payment to the Company is made, credit evaluations are performed; however, for the remaining buyers, goods are not shipped before payment is made, and as a result the Company is not subject to significant collection risk from those buyers. However, for a limited number of financially qualified buyers, which can include re-sellers, we may from time-to-time extend credit for certain large purchases with negotiated payment periods. Credit terms commonly require payment to be made within 30 days, but where commercial terms or market conditions warrant these payment terms may be extended for up to six months. As a result, our consolidated accounts receivable balances are typically a small component of our overall financial position but may, at times, be concentrated among a limited, small number of such buyers. Collection risk from and credit exposure to these financially qualified buyers is regularly reviewed by management and adjusted as needed. For consignment sales transactions, funds are typically collected from buyers and are held by the Company on the sellers' behalf. The funds are included in Cash and cash equivalents on the Consolidated Balance Sheets. The Company releases the funds to the seller, less the Company's commission and other fees due, through Accounts payable after the buyer has accepted the goods or within 30 days, depending on the state where the buyer and seller conduct business. Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash in banks within non-interest bearing, interest-bearing, and earnings allowance checking accounts, as well as cash equivalent money market funds, all of which exceed the applicable U.S. federal (FDIC and/or SIPC), local jurisdiction (foreign banking institutions) insurance limits, and Accounts receivable. The Company deposits its cash in interest bearing checking accounts, acquires cash equivalent money market funds, and holds short-term investments designated as held-to-maturity investment securities, each with financial institutions that the Company considers to be of high credit quality. Management continually monitors the financial institutions with whom we conduct business and responds appropriately, when necessary, to manage potential risk exposure to our cash balances above the insurance limits. 81 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The Company has multiple vendor contracts with Amazon.com, Inc. under which it acquires and sells commercial merchandise. While purchase model transactions account for less than 20 % of our to tal GMV, the cost of inventory for purchase model transactions is the most significant component of our consolidated Costs of goods sold. $ 10.1 million and $ 12.2 million of inventory purchased under such contracts with Amazon.com, Inc. is included in our Consolidated Inventory balanc es as of September 30, 2025 and 2024 , respectively. The Company's vendor contracts with respect to sourcing or consigning merchandise for its RSCG segment generally reflect the concentration dynamics inherent to the retail industry. 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. It will require organizations to provide enhanced disclosures primarily regarding significant segment expenses. The Company adopted the new standard effective herein with our Annual Report on Form 10-K for the fiscal year ended September 30, 2025. In accordance with the ASU, we have disclosed on a retrospective basis the significant expense, by segment, in deriving our segment profit (loss) measure; see Note 16 - Segment Information for further information. In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments (Topic 326) . The majority of the Company’s sales require payment in advance of the sale, but a limited number of buyers are approved to conduct sales on credit. Accounts receivables related to those sales are generally short-term in nature and do not require the posting of collateral. The Company estimates its allowances for expected credit loss based on historical collection trends, the age of outstanding receivables, existing economic conditions, and the specific facts and circumstances of individual customers. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due account balances are written off when the Company’s internal collection efforts have been unsuccessful in collecting the amounts due. The Company adopted the new standard effective October 1, 2023. The adoption of ASU 2016-13 did not have a material impact on our consolidated financial statements. Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures . This ASU will require organizations to disclose specific categories in their tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The guidance will be effective for the Company beginning with its Annual Report on Form 10-K for the fiscal year ending September 30, 2026. The guidance is required to be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements. In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses . This ASU will require organizations to disaggregate certain expense captions an entity presents on the face of the income statement into specific categories in disclosures within the footnotes to the financial statements. This guidance will be effective for the Company beginning with its Annual Report on Form 10-K for the fiscal year ending September 30, 2028. The guidance is required to be applied on a prospective basis; however, retrospective application is permitted. The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements. In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software . This ASU modernizes the accounting for internal-use software, removing for all references to software development stages and instead, requires capitalization of software costs when management has committed to the software project and it is probable the software will be completed and perform its intended use. This guidance will be effective for the Company beginning with its Annual Report on Form 10-K for the fiscal year ended September 30, 2029. Early adoption is permitted. The Company is currently evaluating the effect that the adoption of this ASU may have on its consolidated financial statements. 82 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) 3. Acquisitions Auction Software On January 31, 2025, the Company acquired Auction Software, a private-label marketplace and SaaS solutions provider offering scalable auction platform services to entrepreneurs and businesses, for $ 6.5 million in cash paid and $ 0.9 million in stock issuance at closing, for a total preliminary purchase price of $ 7.4 million. As of September 30, 2025, the Company's purchase price allocation related to this acquisition is preliminary and subject to revision as additional information is obtained about the facts and circumstances that existed as of the acquisition date. During the three months ended June 30, 2025, the Company recorded a measurement period adjustment of $ 0.3 million for the acquired intangible assets’ fair value with a corresponding increase to goodwill. In connection with its acquisition of Auction Software, the Company preliminarily allocated the fair value to acquired intangible assets totaling $ 2.6 million, and goodwill of $ 5.1 million. The total goodwill arising from the acquisition is included in the Software Solutions operating segment and is deductible for tax purposes. Auction Software's financial results are reported within the Software Solutions operating segment. Revenue, net income (loss), and pro forma information related to the Auction Software acquisition was immaterial to the consolidated financial statements and its related notes for the twelve months ended September 30, 2025. Sierra Auction Management, Inc. On January 1, 2024, the Company acquired all the issued and outstanding equity securities associated with Sierra Auction Management, Inc. (Sierra), a full-service auction company specializing in the sale of vehicles, equipment and surplus assets for government agencies, commercial businesses, and charities. Total purchase consideration was approximately $ 13.7 million, paid in cash. In connection with its acquisition of Sierra, the Company recorded the fair value of acquired supplier relationships and trade name assets for $ 5.1 million and $ 0.3 million, respectively, and goodwill of $ 7.9 million. The supplier relationships and trade name shall be amortized on a straight-line basis over a useful life of six and three years, respectively. The total goodwill arising from the acquisition is included in the GovDeals reportable segment and is deductible for tax purposes. Sierra's financial results are reported within the GovDeals reportable segment. Revenue, net income (loss), and pro forma information related to the Sierra acquisition was immaterial to the consolidated financial statements and its related notes for the twelve months ended September 30, 2025 and 2024. 4. Earnings Per Share The Company calculates basic EPS by dividing net income by the weighted-average number of common shares outstanding during the reporting period, excluding unvested restricted stock awards. The Company calculates diluted EPS by dividing net income by the weighted-average number of common shares and potentially dilutive common shares outstanding during the reporting period using the treasury stock method. The Company's potentially dilutive common shares include stock options, restricted stock units, and restricted stock awards. For such awards that have performance- or market-conditions, they are considered dilutive only when those performance- or market-conditions have been satisfied as of the reporting date; however, in periods of a net loss, the Company's diluted EPS will equal its basic EPS, as all its potential common shares are anti-dilutive in that case. In periods of net income, the calculation of diluted net income per share will exclude all anti-dilutive common shares. The computation of basic and diluted net income per share is as follows: 83 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Year Ended September 30, 2025 2024 2023 Numerator: Net income $ 28,093 $ 19,991 $ 20,978 Denominator: Basic weighted average shares outstanding 30,932,459 30,496,306 31,075,648 Dilutive impact of stock options, RSUs and RSAs 1,478,616 1,137,886 998,913 Diluted weighted average shares outstanding 32,411,075 31,634,192 32,074,561 Basic income per common share $ 0.91 $ 0.66 $ 0.68 Diluted income per common share $ 0.87 $ 0.63 $ 0.65 Stock options, RSUs and RSAs excluded from income per diluted share because their effect would have been anti-dilutive 401,418 1,286,030 1,808,606 5. Property and Equipment Property and equipment, including equipment under capital lease obligations, consists of the following: September 30, 2025 2024 (in thousands) Computers and purchased software $ 2,504 $ 2,351 Developed software for internal-use 37,169 30,341 Equipment 9,383 10,177 Leasehold improvements 4,470 4,182 Building 2,213 2,203 Furniture and fixtures 515 391 Vehicles 1,687 1,536 Land 753 754 Construction in progress 2,441 3,030 Total property and equipment 61,135 54,965 Less: Accumulated depreciation and amortization ( 42,876 ) ( 37,004 ) Total property and equipment, net $ 18,259 $ 17,961 Depreciation and amortization expense related to property and equipment for the years ended September 30, 2025, 2024, and 2023, was $ 7.1 million, $ 8.1 million, and $ 7.4 million, respectively. Included in those amounts is amortization of internally developed software for internal use of $ 4.8 million, $ 6.0 million, and $ 5.6 million, respectively. The Company did no t record impairment charges on material property and equipment during the years ended September 30, 2025, 2024, and 2023 . 6. Leases The Company has operating leases for its corporate offices, warehouses, vehicles and equipment. The operating leases have remaining terms of up t o 5.3 years. Some of the leases have options to extend or terminate the leases. The exercise of such options is generally at the Company’s discretion. The lease agreements do not contain any significant residual value guarantees or restrictive covenants. The Company also subleases excess office and warehouse space, when applicable. The Company's finance leases and related balances are not significant. The components of lease expense are: 84 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) September 30, 2025 2024 Finance lease – lease asset amortization $ 69 $ 70 Finance lease – interest on lease liabilities 20 11 Operating lease cost 5,928 5,457 Operating lease impairment expense (1) 459 — Short-term lease cost 460 318 Variable lease cost (2) 1,319 1,458 Sublease income ( 84 ) ( 19 ) Total net lease cost $ 8,171 $ 7,295 (1) During the twelve months ended September 30, 2025, the Company exited from a RSCG warehouse in an effort to consolidate its warehouse operations and incurred $ 0.5 million of impairment expense. (2) Variable lease costs primarily relate to the Company's election to combine non-lease components such as common area maintenance, insurance and taxes related to its real estate leases. To a lesser extent, the Company's equipment leases have variable costs associated with usage and subsequent changes to costs based upon an index. Maturities of lease liabilities are: September 30, 2025 Operating Leases Finance Leases 2026 $ 5,676 $ 123 2027 3,369 73 2028 2,990 51 2029 2,163 47 2030 930 50 Thereafter 79 30 Total lease payments (1) 15,207 374 Less: imputed interest (2) $ ( 1,412 ) $ ( 44 ) Total lease liabilities $ 13,795 $ 330 (1) The weighted average remaining lease term is 3.4 years for operating leases and 4.2 years for finance leases as of September 30, 2025 , and 3.3 years for operating leases and 2.4 years for finance leases as of September 30, 2024. (2) The weighted average discount rate is 5.9 % for operating leases and 5.8 % for finance leases as of September 30, 2025 , and 6.1 % for operating leases and 5.6 % for finance leases as of September 30, 2024 . Supplemental disclosures of cash flow information related to leases are: Years Ended September 30, 2025 2024 Cash paid for amounts included in operating lease liabilities $ 5,581 $ 4,667 Cash paid for amounts included in finance lease liabilities $ 102 $ 100 Non-cash: lease liabilities arising from new operating lease assets obtained $ 2,209 $ 5,695 Non-cash: lease liabilities arising from new finance lease assets obtained $ 240 $ 57 Non-cash: adjustments to lease assets and liabilities (1) $ 2,944 $ 395 (1) These include adjustments due to lease modifications, renewals, and other related adjustments. The increase in adjustments to lease assets and liabilities during the year ended September 30, 2025, is due to execution of renewal of an existing warehouse lease in Brampton, Ontario (Canada) associated with our RSCG reportable segment. The increase in lease liabilities arising from new operating lease assets obtained during the year ended September 30, 2025, was primarily driven by our new Retail Rush store in Columbus, Ohio, and auction staging lot in Montclair, California for our GovDeals reportable segment. Lease liabilities increased during the year ended September 30, 2024, due to the commencement of a lease for new warehouse space in Brownsburg, Indiana during the period, as well as new leases relating to the Sierra acquisitions; see Note 3 - Acquisitions for further information. 85 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) 7. Goodwill The carrying value and changes in the carrying value of goodwill attributable to each reportable segment were as follows: Goodwill (in thousands) GovDeals CAG Machinio & Software Solutions Total Balance at September 30, 2022 $ 53,814 $ 20,538 $ 14,558 $ 88,910 Translation adjustments — 478 — 478 Balance at September 30, 2023 $ 53,814 $ 21,016 $ 14,558 $ 89,388 Sierra acquisition (see Note 3) 7,869 — — 7,869 Translation adjustments — 535 — 535 Balance at September 30, 2024 $ 61,683 $ 21,551 $ 14,558 $ 97,792 Translation adjustments — 17 — 17 Auction Software acquisition (see Note 3) — — 5,066 5,066 Balance at September 30, 2025 $ 61,683 $ 21,568 $ 19,624 $ 102,875 The increase in the goodwill balance of approximately $ 5.1 million at the Software Solutions business during the twelve months ended September 30, 2025, is due to the Auction Software acquisition; see Note 3 - Acquisitions for further information. The increase in the goodwill balance of approximately $ 7.9 million at the GovDeals reportable segment and reporting unit during the year ended September 30, 2024, is due to the Sierra acquisition; see Note 3 - Acquisitions for further information. Our RSCG reportable segment did not maintain a goodwill balance during any of the fiscal year ends presented above. Accumulated goodwill impairment losses as of September 30, 2025 and 2024 were $ 168.6 million. Impairment Analysis Goodwill is test ed for impairment at the beginning of the fourth quarter and during interim periods whenever events or circumstances indicate that the carrying value may not be recoverable. As of July 1, 2025, the Company performed its annual impairment test on a qualitative basis and concluded that it was more likely than not that the fair value of each reporting unit exceeded their carrying amounts. The Company did no t record impairment charges on goodwill during the years ended September 30, 2025, 2024, and 2023. The Company did not identify any indicators of impairment that required an interim goodwill impairment test during the three months ended September 30, 2025 . 8. Intangible Assets Intangible assets consist of the following: September 30, 2025 September 30, 2024 (in thousands) Useful Life (in years) Weighted average useful Life (in years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount Customer and supplier relationships 6 - 8 7 $ 23,600 $ ( 11,518 ) $ 12,082 $ 22,100 $ ( 8,805 ) $ 13,295 Technology 3 - 5 4 5,800 ( 5,020 ) 780 4,900 ( 4,839 ) 61 Trade names 3 - 7 5 2,412 ( 2,100 ) 312 2,200 ( 1,803 ) 397 Other intangibles 10 10 949 ( 784 ) 165 897 ( 738 ) 159 Total intangible assets, net $ 32,761 $ ( 19,421 ) $ 13,340 $ 30,097 $ ( 16,185 ) $ 13,912 The gross carrying amount of total intangible assets increased by $ 2.7 million during the twelve months ended September 30, 2025, due to the Auction Software acquisition; see Note 3 - Acquisitions for further information. Future expected amortization of intangible assets at September 30, 2025, is as follows: 86 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Year Ending September 30, Amortization (in thousands) 2026 $ 3,131 2027 3,048 2028 3,012 2029 3,007 2030 665 Thereafter 477 Total $ 13,340 Amortization expense related to intangible assets for the years ended September 30, 2025, 2024, and 2023 was $ 3.2 million, $ 4.0 million, and $ 3.8 million, respectively. The decrease in intangible amortization expense during the year ended September 30, 2025, was due to the completion of previously acquired intangible assets in the normal course. The Company did no t record impairment charges on any intangible assets during the years ended September 30, 2025, 2024, and 2023. The Company did not identify any indicators of impairment requiring an interim impairment test on material long-lived assets during the year ended September 30, 2025 . 9. 401(k) Benefit Plan The Company has a retirement plan (the Plan), which is intended to be a qualified plan under Section 401(k) of the Internal Revenue Code of 1986, as amended. The Plan is a defined contribution plan available to all eligible employees and allows participants to contribute up to the legal maximum of their eligible compensation, not to exceed the maximum tax-deferred amount allowed by the Internal Revenue Service. The Plan also allows the Company to make discretionary matching contributions. During the fiscal year ended September 30, 2023, the Company stopped accepting investments in the Company’s stock fund under the Plan and all shares of the Company and other Plan interests held in the stock fund under the Plan were reinvested into non-Company investment vehicles. On March 28, 2023, the Company filed a post-effective amendment on Form S-8 with the SEC to deregister all of the previously registered shares and other Plan interests that remained unissued and unsold under the Plan. As a result, interests in the Plan no longer require registration under the Securities Exchange Act of 1934, as amended. On October 2, 2023, the Company filed a Form 15 to suspend the duty of the Plan to file reports under Section 15(d) of the Securities Exchange Act of 1934, as amended. For the years ended September 30, 2025, 2024, and 2023 , the Company recorded expenses of $ 1.6 million, $ 1.5 million, and $ 1.4 million, respectively, related to its contributions to the Plan. 10. Income Taxes The components of the provision for income taxes of continuing operations are as follows: Year Ended September 30, 2025 2024 2023 (in thousands) Current tax provision (benefit): U.S. Federal $ 7,411 $ 710 $ — State 1,559 1,105 1,179 Foreign ( 18 ) 131 282 8,952 1,946 1,461 Deferred tax provision (benefit): U.S. Federal 633 3,811 5,251 State 1,721 1,468 1,280 Foreign 42 44 47 2,396 5,323 6,578 Total provision (benefit) $ 11,348 $ 7,269 $ 8,039 87 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Deferred taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities are as follows: September 30, 2025 2024 (in thousands) Deferred tax assets: Net operating losses—Foreign $ 17,444 $ 17,605 Net operating losses—U.S. 2,770 5,974 Accrued vacation and bonus 920 862 Inventory capitalization 271 543 Inventory reserves 22 1 Allowance for doubtful accounts 168 422 Stock compensation expense 4,968 4,354 Operating lease liabilities 2,059 3,488 Other 195 488 Total deferred tax assets before valuation allowance 28,817 33,737 Less: valuation allowance ( 17,050 ) ( 17,193 ) Net deferred tax assets 11,767 16,544 Deferred tax liabilities: Amortization of intangibles 1,163 1,835 Amortization of goodwill 8,597 8,203 Depreciation 737 1,050 Capitalized costs — 141 Operating/right of use assets 1,543 2,933 Pension liability 394 654 Total deferred tax liabilities $ 12,434 $ 14,816 Net deferred taxes $ ( 667 ) $ 1,728 88 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The reconciliation of the U.S. federal statutory rate to the effective rate for continuing operations is as follows: Year Ended September 30, 2025 2024 2023 U.S. statutory rate 21.0 % 21.0 % 21.0 % Stock-based stock compensation expense ( 5.2 )% ( 3.2 )% ( 1.3 )% Nondeductible compensation expense 4.1 % 1.2 % 0.5 % Other permanent items 0.3 % 0.4 % 0.1 % State taxes 7.5 % 7.9 % 7.8 % Net foreign rate differential ( 0.1 )% 0.2 % 0.0 % Unrecognized tax benefits 0.0 % 0.0 % ( 0.5 )% Change in valuation allowance 0.2 % 4.3 % 1.4 % Write-down of deferred tax assets on share-based stock compensation 0.4 % 0.9 % 0.2 % Write-down of deferred tax assets on net operating loss 0.2 % ( 4.1 )% ( 0.8 )% Other 0.4 % ( 1.9 )% ( 0.7 )% Effective rate 28.8 % 26.7 % 27.7 % As of September 30, 2025 and 2024, the Company had federal and state deferred tax (liabilities) and assets of $( 1.2 ) million and $ 1.4 million, respectively, related to available federal and state net operating loss (NOL) carryforwards, foreign tax credit carryforwards, and other U.S. temporary differences. The federal NOL carryforward from fiscal year 2024 is fully utilized as of September 30, 2025. The state NOL carryforwards expire beginning in 2026. The Company's ability to use these various carryforwards to offset any taxable income generated in future taxable periods may be limited under Section 382 and state tax provisions. The foreign tax credit carryforwards expire beginning in 2031. At September 30, 2025 and 2024, the Company had deferred tax assets related to available foreign NOL carryforwards of $ 17.4 million and $ 17.6 million, respectively. All but $ 0.3 million of our foreign NOLs maintain an indefinite carry forward life. The NOLs with limited carryforward periods will expire beginning in 2027. The Company evaluates the recoverability of its deferred tax assets on a jurisdictional basis by considering whether deferred tax assets will be realized on a more likely than not basis. To the extent a portion or all of the applicable deferred tax assets do not meet the more likely than not threshold, a valuation allowance is recorded. Consideration was given to the tax planning strategies and, when applicable, future taxable income as to how much of the relevant deferred tax asset could be realized on a more likely than not basis. The Company has recorded a valuation allowance of $ 17.1 million and $ 17.2 million against its gross deferred tax asset balance at September 30, 2025 and 2024, respectively. At each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2025, the Company determined that there was sufficient positive evidence to conclude that it is more likely than not that all of its U.S. deferred tax assets are realizable. The Tax Act and Jobs Act of 2017 (the Tax Act) subjects a U.S. shareholder to a minimum tax on "global intangible low-taxed income" (GILTI) earned by certain foreign subsidiaries. The FASB Staff Q&A Topic 740 No. 5. Accounting for Global Intangible Low-Taxed Income states that an entity can make an accounting policy election to either recognize deferred taxes for temporary differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI resulting from those items in the year the tax is incurred. The Company has elected to recognize the resulting tax on GILTI as an expense in the period the tax is incurred. The Inflation Reduction Act (IRA) was enacted on August 16, 2022. The IRA includes provisions imposing a 1 % excise tax on share repurchases that occur after December 31, 2022, and introduces a 15 % corporate alternative minimum tax (CAMT) on adjusted financial statement income. The CAMT became effective for us in fiscal year 2024 and has not had a material adverse impact on our financial statements. 89 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) On July 4th, 2025, the One Big Beautiful Bill Act (OBBBA) was signed into law in the U.S., which contains a broad range of tax reform provisions affecting businesses. The OBBBA allows 100 % bonus depreciation for property acquired and placed in service on or after January 19, 2025 and permits companies to expense, rather than amortize over a five-year period, domestic research and development costs paid or incurred in tax years beginning after December 31. 2024. This rule is effective for the Company beginning with its tax return for the fiscal year ending September 30, 2026. We have evaluated the effects of the legislation on our effective tax rate and cash tax position and the impact to our financial statements is not material. On January 1, 2024, the Company acquired all the issued and outstanding equity securities associated with Sierra Auction Management, Inc. (Sierra) for $ 13.7 million paid in cash. The purchase of the equity securities of Sierra was treated as at purchase of assets of Sierra for tax purposes. The total goodwill arising from the acquisition is deductible for tax purposes. On January 31, 2025, the Company acquired Auction Software, a private-label marketplace and SaaS solutions provider offering scalable auction platform services to entrepreneurs and businesses, for $ 6.5 million in cash paid and $ 0.9 million in stock issuance at closing, for a total preliminary purchase price of $ 7.4 million. The total goodwill arising from the acquisition is deductible for tax purposes. The Company has not recorded a provision for deferred U.S. tax expense on the undistributed earnings of foreign subsidiaries since the Company intends to indefinitely reinvest the earnings of these foreign subsidiaries outside the U.S. The amount of such undistributed foreign earnings was $ 9.1 million as of September 30, 2025. As of September 30, 2025 and 2024, $ 22.5 million and $ 25.7 million, respectively, of cash and cash equivalents was held overseas and not available to fund domestic operations without incurring taxes upon repatriation. The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in thousands): Year Ended September 30, 2025 2024 2023 Beginning balance at October 1 — — $ 143 Additions based on positions related to the current year — — — Additions for tax positions of prior years — — — Reductions for tax positions of prior years — — ( 143 ) Settlements — — — Balance at September 30 — — — The Company applies the authoritative guidance related to uncertainty in income taxes. ASC 740 states that a benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, on the basis of the technical merits. During 2025, the Company did not identify any new uncertain tax positions. The Company recognizes interest and penalties in the period in which they occur in the income tax provision. The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, various state and local jurisdictions and in foreign jurisdictions, primarily Canada and the U.K. In July 2024, the state of California opened an income tax examination for tax years 2020 and 2021. The examination was closed in January, 2025, with no material adjustments. The Company has no open income tax examinations in the U.S. and the statute of limitations for years prior to fiscal year 2022 is now closed; however, certain tax attribute carryforwards that were generated prior to fiscal year 2022 may be adjusted upon examination by tax authorities if they are utilized. 11. Debt On February 10, 2022, the Company entered into a revolving credit facility with Wells Fargo Bank, National Association (as amended, the Credit Agreement). Terms of the Credit Agreement provide for revolving loans (the Line of Credit) up to a maximum aggregate borrowing amount of $ 25.0 million with a $ 10.0 million sublimit for standby letters of credit. On March 31, 2023, the Credit Agreement was amended to extend the maturity date by 12 months to March 31, 2025 (the First Amendment). 90 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) On March 27, 2024, the Credit Agreement was amended to extend the maturity date by an additional 12 months to March 31, 2026 (the Second Amendment). No other changes, including regarding the borrowing terms or capacities, were made to the Credit Agreement as a result of the First Amendment or the Second Amendment. On May 7, 2025, the Company entered into a Third Amendment to the Credit Agreement (the Third Amendment) that extended the maturity date of the Credit Agreement to March 31, 2027 , increased the maximum aggregate borrowing amount from $ 25.0 million to $ 35.0 million, and increased the sublimit for standby letters of credit from $ 10.0 million to $ 35.0 million. The applicable interest rate on any draws under the Credit Agreement is a variable rate per annum equal to the Daily Simple Secured Overnight Financing Rate (SOFR) in effect plus a margin ranging from 1.25 % to 1.75 %. Interest is payable monthly. The Company pays an Unused Commitment Fee (as defined in the Credit Agreement), on a quarterly basis, equal to 0.05 % per annum on the daily amount of the available, but unused, balance on the Credit Agreement. The Company also pays a Line of Credit Fee (as defined in the Credit Agreement), on a quarterly basis, equal to 1.25 % on the daily amount available to be drawn for standby letters of credit. Interest incurred on any draws under the Credit Agreement, as well as the Unused Commitment Fee and Line of Credit Fee, are included within Interest and other income, net in the Consolidated Statements of Operations. The Company may draw upon the Credit Agreement for general corporate purposes. Repayments of any borrowings under the Credit Agreement shall become available for redraw at any time by the Company. The Credit Agreement contains certain financial and non-financial restrictive covenants including, among others, the requirement to maintain a minimum level of earnings before interest, income taxes, depreciation and amortization (EBITDA). The Credit Agreement contains affirmative and restrictive covenants including covenants placing limitations on mergers, consolidations and dissolutions, investments and acquisitions, indebtedness and liens, and dividends and other restricted payments. As of September 30, 2025, the Company was in full compliance with the terms and conditions of the Credit Agreement. During the year ended September 30, 2025 , the Company did not make any draws under the Credit Agreement and issued $ 9.0 million of standby letters of credit. During the fiscal year ended September 30, 2025 , the Company did not make any draws under the Credit Agreement, had no outstanding borrowings under the Credit Agreement and had $ 9.0 million of standby letters of credit outstanding. The amount of standby letters of credit are reserved against the Credit Agreement and are not available for borrowing, resulting in $ 26.0 million of remaining borrowing capacity under the Credit Agreement as of September 30, 2025. During the year ended September 30, 2025 , interest expense incurred by the Company under the Credit Agreement was immaterial to the consolidated financial statements. 12. Equity Transactions Stock Compensation Incentive Plans The Company has several incentive plans under which stock options, restricted stock units (RSUs), restricted stock awards (RSAs), and cash-settled stock appreciation rights (SARs) have been issued, including the Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan (as amended, the LTIP) and a plan and private placement issuances related to the Company’s acquisition of Machinio and Bid4Assets. As of September 30, 2025, the Company has reserved a total of 22,800,000 shares of its common stock for exercises of stock options, vesting of RSUs, and grants of RSAs under the LTIP. Vesting of RSUs and grants of RSAs count as 1.5x shares against the plan reserves. As of September 30, 2025, 1,325,740 shares of common stock remained available for use. Stock Compensation Expense The table below presents the components of share-based compensation expense (in thousands): 91 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Year Ended September 30, 2025 2024 2023 Equity-classified awards: Stock options $ 2,445 $ 2,329 $ 2,002 RSUs & RSAs 12,045 8,758 6,233 Total Equity-classified award 14,490 11,087 8,235 Liability-classified awards: SARs — — ( 44 ) Total stock compensation expense: $ 14,490 $ 11,087 $ 8,191 The Company had no liabilities for liability-classified stock compensation awards as of September 30, 2025 and 2024, respectively. The table below presents the components of share-based compensation expense by line item within our Consolidated Statements of Operations (in thousands): Year Ended September 30, 2025 2024 2023 Stock Compensation Expense by Line Item Technology and operations $ 2,292 $ 1,698 $ 1,226 Sales and marketing 4,646 2,989 2,363 General and administrative 7,552 6,400 4,602 Total stock compensation expense: $ 14,490 $ 11,087 $ 8,191 Share-Based Award Activity Stock Options The table below presents stock option activity (aggregate intrinsic value in thousands): Stock Options Weighted- Average Exercise Price Weighted- Average Remaining Contractual Term (years) Aggregate Intrinsic Value Outstanding as of September 30, 2024 2,188,418 $ 12.25 5.22 $ 23,269 Granted 250,000 $ 22.55 $ — Exercised ( 235,897 ) $ 14.43 $ 4,062 Forfeited ( 30,596 ) $ 17.25 $ ( 180 ) Expired — $ — $ — Outstanding as of September 30, 2025 2,171,925 $ 13.13 4.87 $ 31,061 Vested and expected to vest as of September 30, 2025 2,171,925 $ 13.13 4.87 $ 31,061 Exercisable as of September 30, 2025 1,539,713 $ 10.44 3.69 $ 26,154 Of the 632,274 stock options not yet exercisable as of September 30, 2025 , 262,627 can become exercisable by satisfying service conditions only, and 369,647 can become exercisable by satisfying service and performance or market conditions. Stock options containing only service conditions generally vest over periods of one to four years and expire five to ten years from the date of grant. Stock compensation cost is expensed ratably over the entire service period. As of September 30, 2025 , there was $ 2.1 million of unrecognized compensation cost related to stock options containing only service conditions, which is expected to be recognized over a weighted-average period of 2.3 years. 92 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The range of assumptions used to determine the fair value of stock options using the Black-Scholes option-pricing model during the years ended September 30, 2025, 2024, and 2023 were as follows: Year Ended September 30, 2025 2024 2023 Dividend yield — — — Expected volatility 56.1 % - 58.0 % 59.1 % - 60.8 % 56.9 % - 62.2 % Risk-free interest rate 4.1 % - 4.1 % 3.8 % - 3.9 % 3.4 % - 3.9 % Expected term 4.4 - 5 years 4.5 - 5 years 4.5 - 7.6 years The weighted-average grant date fair value of options granted during the year-ended September 30, 2025, 2024, and 2023 was $ 11.14 , $ 8.96 , and $ 7.49 , respectively. The total intrinsic value of options exercised during 2025, 2024, and 2023 was $ 4.1 million, $ 6.6 million, and $ 3.0 million, respectively. Stock options containing performance conditions are discussed separately in the section below. RSUs & RSAs The table below presents RSU & RSA activity (aggregate fair value in thousands): RSU & RSA Weighted- Average Grant Date Fair Value Weighted- Average Remaining Contractual Term (years) Aggregate Fair Value Outstanding as of September 30, 2024 1,775,627 $ 18.38 2.24 $ 40,484 Granted 658,464 $ 24.16 $ 15,907 Vested ( 652,678 ) $ 18.07 $ 20,234 Forfeited ( 104,242 ) $ 19.40 $ 2,405 Outstanding as of September 30, 2025 1,677,171 $ 20.70 2.08 $ 46,005 Expected to vest as of September 30, 2025 1,676,541 $ 20.70 2.08 $ 45,988 Of the outstanding RSUs & RSAs as of September 30, 2025 , 845,755 can vest by satisfying service conditions only, and 831,416 can vest by satisfying service and performance or market conditions. RSUs containing only service conditions vest ratably each year over periods of one to four years . Stock compensation cost is expensed ratably over the entire service period. As of September 30, 2025 , there was $ 12.1 million of unrecognized compensation cost related to RSUs containing only service conditions, which is expected to be recognized over a weighted-average period of 2.5 years. RSUs and RSAs containing performance conditions and market conditions are discussed separately in the section below. SARs The Company made cash payments of $ 0 million, $ 0 million and $ 0.2 million to settle SARs exercised during the years ended September 30, 2025, 2024, and 2023, respectively. As of September 30, 2025 , there were no SARs outstanding. No new SARs were awarded during the year ended September 30, 2025. Stock Awards Containing Performance and Market Conditions Stock awards containing performance conditions vest upon the achievement of specified financial targets of the Company or its business units. Vesting is generally measured on the first day of each fiscal quarter over the four-year terms of the awards, starting with the first fiscal quarter after the first anniversary of the grant date, based upon the trailing twelve months performance of the Company or its business units. When it is probable that the performance targets will be achieved, stock compensation expense is recognized ratably over the derived service period. If the Company determines that achievement of the performance targets is no longer probable, the Company no longer records expense and reverses all previously recognized expense. As of September 30, 2025, there was $ 3.7 million of unrecognized compensation costs related to stock options and RSUs & RSAs, containing performance conditions that are considered probable of being met, which is expected to be recognized over a weighted-average period of approximately 1 year. 93 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Stock awards containing market conditions vest upon the achievement of specified increases in the Company’s share price. Vesting is measured the first day of each fiscal quarter over the four-year terms of the award, starting with the first fiscal quarter after the first anniversary of the grant date, based upon the trailing 20 -days average of the Company’s share price. Stock compensation cost is expensed on a straight-line basis over the derived service period for each stock price target within the award. The Company accelerates expense when a stock price target is achieved prior to the derived service period. For equity-classified awards, the Company does not reverse expense recognized if the stock price target(s) are not ultimately achieved, but expense is reversed when such situations occur for liability classified awards. As of September 30, 2025 , there was $ 0.1 million of unrecognized compensation costs related to stock options and RSUs containing market conditions, which is expected to be recognized over a weighted-average period of three months . There were no awards containing market conditions for which to determine their fair value during the year ended September 30, 2025. Share Repurchase Program From time to time, we may be authorized to repurchase issued and outstanding shares of our common stock under a share repurchase program approved by our Board of Directors. Share repurchases may be made through open market purchases, privately negotiated transactions, or otherwise, at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements and other market conditions. The repurchase program may be discontinued or suspended at any time and will be funded using our available cash. On December 6, 2022, March 13, 2023, and September 8, 2023, the Company's Board of Directors authorized new stock repurchase plans of up to $ 8.4 million, $ 8.0 million and $ 15.2 million, respectively. The Company repurchased 1,607,141 shares for $ 21.2 million during the year ended September 30, 2023. As of September 30, 2023, the Company had $ 17.0 million of remaining share repurchase authorization through December 31, 2025. The Company repurchased 564,887 shares for $ 9.4 million during the year ended September 30, 2024. As of September 30, 2024, the Company had $ 7.6 million of remaining authorization to repurchase sh ares through December 31, 2025. On December 9, 2024, the C ompany's Board of Directors authorized the repurchase of up to an additional $ 10.0 million of the Company's outstanding shares of common stock through December 31, 2026. The Company repurchased 623,687 shares for $ 16.1 million during the year ended September 30, 2025. As of September 30, 2025, the Company had $ 1.5 million of remaining authorization to repurchase shares through December 31, 2026. On November 17, 2025, the Company's Board of Directors authorized the repurchase of up to $ 15.0 million of the Company's outstanding shares of common stock through December 31, 2027. Other Share Repurchases Separate from the share repurchase program, our stock incentive plans allow for participants to exercise stock options by surrendering shares of common stock equivalent in value to the exercise price due. During the years ended September 30, 2025 , 2024, and 2023, participants surrendered 1,397 , 17,564 , and 12,705 shares of common stock in the exercise of stock options, respectively. Any shares surrendered to the Company in this manner are not available for future grant. 13. Fair Value Measurement The Company measures and records in the accompanying consolidated financial statements certain assets and liabilities at fair value on a recurring basis. Authoritative guidance issued by the FASB establishes a fair value hierarchy for those instruments measured at fair value that distinguishes between assumptions based on market data (observable inputs) and the Company's assumptions (unobservable inputs). The hierarchy consists of three levels: Level 1 Quoted market prices in active markets for identical assets or liabilities; 94 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Level 2 Inputs other than Level 1 inputs that are either directly or indirectly observable; and Level 3 Unobservable inputs developed using estimates and assumptions developed by the Company, which reflect those that a market participant would use. Cash and cash equivalents . The Com pany had $ 79.3 million and $ 67.2 million of money market funds considered cash equivalents as of September 30, 2025 and 2024, respectively. These assets were measured at fair value as of September 30, 2025, and 2024, and were classified as Level 1 assets within the fair value hierarchy. There were no transfers between levels during the periods presented. Short-term investments . The Company had $ 11.2 million and $ 2.3 million of guaranteed investment certificates considered investments as of September 30, 2025 and 2024, respectively. As these investments have maturity dates of 12 months or less from the balance sheet date, they have been classified as short-term in nature. These assets were measured at fair value as of September 30, 2025, and 2024, and were classified as Level 1 assets within the fair value hierarchy. There were no transfers between levels during the periods presented. Other Current Assets and Liabilities . The Company had a short-term foreign exchange derivative instrument that had an immaterial fair value as of September 30, 2025, using Level 2 in the fair value hierarchy. The Company’s financial assets and liabilities not measured at fair value are cash, accounts receivable, accounts payable, and payables to sellers. The Company believes the carrying values of these instruments approximate fair value. As of September 30, 2025, 2024, and 2023 , the Company did no t have any material assets or liabilities measured at fair value on a non-recurring basis. 14. Defined Benefit Pension Plan Certain employees of Liquidity Services UK Limited (GoIndustry), which the Company acquired in July 2012, are covered by the Henry Butcher Pension Fund and Life Assurance Scheme (the Scheme), a qualified defined benefit pension plan. The Company guarantees GoIndustry's performance on all present and future obligations to make payments to the Scheme for up to a maximum of £ 10 million British pounds. The Scheme was closed to new members on January 1, 2002. The Company recognizes the funded status of its postretirement benefit plans, with a corresponding noncash adjustment to accumulated other comprehensive loss, net of tax, in stockholders' equity. The funded status is measured as the difference between the fair value of the Scheme's assets and the benefit obligation of the Scheme. The net periodic pension cost (benefit) is recognized within Interest and other income , net in the C onsolidated Statements of Operations, and for the years ended September 30, 2025, 2024, and 2023, included the following components: Year Ended September 30, 2025 2024 2023 (in thousands) Interest cost $ 761 $ 796 $ 794 Expected return on plan assets ( 589 ) ( 600 ) ( 876 ) Amortization of prior service cost 28 27 26 Total net periodic pension cost (benefit) $ 200 $ 223 $ ( 56 ) 95 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The following table provides a reconciliation of benefit obligations, plan assets, and funded status related to the Company's qualified defined benefit pension plan for the years ended September 30, 2025 and 2024: Year Ended September 30, 2025 2024 (in thousands) Change in benefit obligation Beginning balance $ 16,027 $ 13,847 Interest cost 761 796 Benefits paid ( 1,063 ) ( 1,003 ) Actuarial gain ( 1,464 ) 993 Foreign currency exchange rate changes 64 1,394 Ending balance $ 14,325 $ 16,027 Year Ended September 30, 2025 2024 (in thousands) Change in plan assets Beginning balance at fair value $ 18,382 $ 16,332 Actual return on plan assets ( 1,793 ) 1,131 Benefits paid ( 1,063 ) ( 1,003 ) Employer's contributions 322 321 Foreign currency exchange rate changes 54 1,601 Ending balance at fair value $ 15,902 $ 18,382 Overfunded status of the Scheme $ 1,577 $ 2,355 The pension asset of $ 1.6 million is recorded in Other long-term assets in the Consolidated Balance Sheets. Because the Scheme is closed to new participants, the accumulated benefit obligation is equal to the projected benefit obligation, which was $ 14.3 million an d $ 16.0 million at September 30, 2025 and 2024, respectively. The amounts recognized in Other comprehensive income (loss) related to the Company's qualified defined benefit pension plan, net of taxes, and the related foreign currency translation adjustments, for the years ended September 30, 2025 and 2024, is shown in the following table: Year Ended September 30, 2025 2024 (in thousands) Accumulated other comprehensive (loss) income at beginning of year $ ( 1,662 ) $ ( 1,094 ) Net actuarial loss ( 312 ) ( 339 ) Foreign currency translation adjustments ( 596 ) ( 230 ) Accumulated other comprehensive (loss) at end of year $ ( 2,570 ) $ ( 1,662 ) The plan complies with the funding provisions of the U.K. Pensions Act 2004 and the Occupational Pension Schemes Regulations Act 2005. The Company does not plan to make contributions to the plan in the near future. 96 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Actuarial Assumptions The actuarial assumptions used to determine the benefit obligations at September 30, 2025 and 2024, and to determine the net periodic (benefit) cost for the year were as follows: September 30, 2025 September 30, 2024 Discount rate to determine net periodic (benefit) cost 5.00 % 5.70 % Expected return on plan assets 3.59 % 4.82 % Discount rate to determine benefit obligations 5.80 % 5.00 % Rate of increases to deferred CPI linked benefits 2.70 % 2.90 % Rate of increases to deferred RPI linked benefits 3.20 % 3.40 % Mortality— 100 % for males and 99 % for females of S3PMA mortality tables, projected in line with the 2023 Continuous Mortality Investigation projection model and a 1.3 % per annum long-term rate of improvement. Estimated Future Benefit Payments The Company's pension plan expects to make the following benefit payments to participants over the next 10 years: Pension Benefits (in thousands) Year ending September 30, 2025 $ 946 2026 935 2027 902 2028 975 2029 1,091 2030 through 2034 5,241 Total $ 10,090 Fair Value Measurements The investment policy and strategy of the plan assets, as established by the Trustees (the "Trustees") of the plan, strive to maximize the likelihood of achieving primary objectives of the investment policy established for the plan, which are: • Funding—to ensure that the Plan is fully funded using assumptions that contain a modest margin for prudence. Where an actuarial valuation reveals a deficit, a recovery plan will be put in place which will take into account the financial covenant of the employer; • Stability—to have due regard to the likely level and volatility of required contributions when setting the Plan's investment strategy; and • Security—to ensure that the solvency position of the Scheme is expected to improve. The Trustees will take into account the strength of employer's covenant when determining the expected improvement in the solvency position of the Plan. 97 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The assets are allocated among government bonds, corporate bonds, and diversified funds. The assets are not rebalanced, but the allocation is reviewed on a periodic basis to ensure that the investments are appropriate to the Scheme's circumstances. The Trustees review the investment policy on an ongoing basis, to determine whether a change in the policy or asset allocation targets is necessary. The basis of the Trustees’ strategy is to divide the Scheme’s assets between a “growth” portfolio, comprising assets such as multi-asset / diversified growth funds, and a “stabilizing” portfolio, comprising assets such as government bonds (both fixed and inflation-linked) and corporate bonds. The Trustees recognize the benefits of diversification across asset classes, as well as within them, in reducing the risk that results from investing in any one particular market. The Company has elected to use a bid value of Scheme assets to calculate the expected return on assets in the net periodic benefit cost. The assets consisted of the following as of September 30, 2025 and 2024: September 30, 2025 September 30, 2024 Government bonds 58.4 % 59.7 % Equity securities 0.0 % 0.0 % Corporate bonds 29.0 % 29.7 % Diversified fund 9.7 % 10.0 % Cash 2.9 % 0.6 % Total 100.0 % 100.0 % The expected long-term rate of return for the plan's total assets is based on the expected returns of each of the above categories, weighted based on the current target allocation for each class. The Trustees evaluate whether adjustments are needed based on historical returns to more accurately reflect expectations of future returns. The Company is required to present certain fair value disclosures related to its postretirement benefit plan assets, even though those assets are not included in the Company's Consolidated Balance Sheets. The following table presents the fair value of the assets of the Company's qualified defined benefit pension plan by asset category and their level within the fair value hierarchy. Balance as of September 30, 2025 Level 1 Level 2 Level 3 Total (in thousands) Government bonds $ — $ 9,280 $ — $ 9,280 Corporate bonds — 4,611 — 4,611 Diversified fund — 1,542 — 1,542 Cash 469 — — 469 Total $ 469 $ 15,433 $ — $ 15,902 Balance as of September 30, 2024 Level 1 Level 2 Level 3 Total (in thousands) Equity securities $ — $ 10,977 $ — $ 10,977 Corporate bonds — 5,453 — 5,453 Diversified fund — 1,830 — 1,830 Cash 122 — — 122 Total $ 122 $ 18,260 $ — $ 18,382 Valuation Techniques The Company relies on pricing inputs from investment fund managers to value investments. The fund manager prices the underlying securities using independent external pricing sources. 15. Legal Proceedings The Company reserves for contingent liabilities based on ASC 450, Contingencies, when it determines that a liability is probable and reasonably estimable. From time to time, the Company may become involved in litigation relating to claims arising in the ordinary course of the business; however, unless otherwise noted, there are no claims or actions pending or threatened against the Company that, if adversely determined, would in the Company's management's judgment have a material adverse effect on the Company. 98 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) Former Employee Matters On December 28, 2022, the Company’s former Chief Marketing Officer (the “Former CMO”) filed a complaint (the “Original Complaint”) in the United States District Court for the District of Maryland (the “District Court”), alleging wrongful termination on the basis of race and age and that the Company retaliated against him. On April 26, 2023, the Former CMO filed an amended complaint with the District Court, alleging the same claims made in the Original Complaint. The Company's motion to dismiss certain of the claims was denied on March 27, 2024. Discovery has concluded. The Company filed a motion for summary judgment on the retaliation claim in July 2025. The Company is asserting substantial defenses and cannot estimate a range of potential liability, if any, at this time. The Company’s employment practices liability insurance carrier, CNA, has accepted tender of these claims. In May 2021, the Company’s former Vice President, Human Resources filed a complaint against the Company in the United States District Court for the District of Maryland (the “District Court”), alleging wrongful termination on the basis of gender, race, and age. The Company’s employment practices liability insurance carrier, CNA, accepted tender of these claims. In December 2022, the District Court dismissed the plaintiff’s age discrimination claim but the court allowed the race and gender claims to go to trial. Trial on the race and gender claims began late October 2023. The jury was unable to reach a unanimous verdict on either claim, and accordingly, the judge declared a mistrial in November 2023. On August 1, 2024, plaintiff and the Company entered into a settlement agreement under which the Company agreed to pay the plaintiff $ 3.5 million in exchange for a full release and dismissal with prejudice of plaintiff’s claims. The Company entered into the Agreement as a negotiated compromise and settlement of litigation, and not in any way as an admission of liability or fault by the Company. CNA funded $ 3.0 million of the settlement pursuant to the terms of the Company’s insurance policy. As a result of the settlement agreement, the Company recorded a $ 0.5 million litigation settlement expense net of insurance recovery during the year ended September 30, 2024, which is included in General and administrative expenses on the Consolidated Statements of Operations. 16. Segment Information The Company has five operating segments and three reportable segments under which we conduct business: GovDeals, Retail Supply Chain Group (RSC G), and Capital Assets Group (CAG). Our separate Machinio and Software Solutions operating segments, which do not individually meet the quantitative thresholds to be reportable segments, are combined and presented together as Machinio & Software Solutions for segment reporting purposes. • GovDeals. The GovDeals reportable segment provides solutions that enable government entities including city, county, state and federal agencies located in the United States and Canada and related commercial businesses to sell surplus property and real estate assets through its GovDeals, Bid4Assets and Sierra marketplaces; see Note 3 - Acquisitions . • RSCG . The RSCG reportable segment consists of marketplaces that enable corporations located in the United States and Canada to sell excess, returned, and overstocked consumer goods. RSCG also offers a suite of services that includes returns management, asset recovery, and e-commerce solutions. This segment uses multiple selling channels across our network of marketplaces and others to optimize the best combination of velocity, volume, and value. This segment primarily conducts its business-to-business sales on its Liquidation.com marketplace and through Direct Sales, and direct-to-consumer sales on its AllSurplus Deals and Secondipity marketplaces and other third-party sales channels. • CAG . The CAG reportable segment enables commercial businesses to sell surplus assets on our AllSurplus and GovDeals marketplace, specializing in asset categories such as heavy equipment, industrial manufacturing, oil and gas, biopharma, fast-moving consumer goods and electronics. CAG also offers a suite of services that includes surplus management, asset valuation, asset sales and marketing. CAG clients benefit from its global base of buyers and sellers, enabling the sale and redeployment of assets wherever they generate the best value and highest use across the world. 99 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) • Machinio & Software Solutions . The Machinio operating segment operates the Machinio marketplace, a global search engine platform for listing equipment for sale in the construction, machine tool, processing, transportation, printing, agriculture, and laboratory/medical sectors, and the Machinio System platform that provides equipment sellers with a suite of software tools including website hosting, email marketing, and inventory management, to support and enable equipment sellers’ online business. The Software Solutions operating segment separately serves as the Company's private-label auction and software-as-a-service (SaaS) arm, offering scalable auction platform services to entrepreneurs and businesses. Decisions concerning the allocation of the Company’s resources are made by the Company’s Chief Operating Decision Maker (CODM), which is the Company's Chief Executive Officer , with oversight by the Board of Directors. The Company reports reportable segment information based on the internal performance measures used by the CODM to assess the performance of each operating segment in a given period. In connection with that assessment, the CODM uses segment direct profit to evaluate the performance of each segment. Segment direct profit is calculated as total revenue less cost of goods sold (excludes depreciation and amortization). The following table sets forth certain financial information for the Company's reportable segments: Year Ended September 30, (in thousands) 2025 2024 2023 GovDeals: Purchase revenue $ 690 $ 191 $ — Consignment and other fee revenues 86,714 76,366 62,010 Total revenue 87,404 76,557 62,010 Cost of goods sold (excludes depreciation and amortization) ( 6,398 ) ( 4,830 ) ( 3,200 ) Segment direct profit $ 81,006 $ 71,727 $ 58,810 RSCG: Purchase revenue $ 303,854 $ 201,034 $ 161,780 Consignment and other fee revenues 26,437 31,969 38,438 Total revenue 330,291 233,003 200,218 Cost of goods sold (excludes depreciation and amortization) ( 255,544 ) ( 166,130 ) — ( 132,150 ) Segment direct profit $ 74,747 $ 66,873 $ 68,068 CAG: Purchase revenue $ 5,994 $ 8,575 $ 10,309 Consignment and other fee revenues 33,302 29,093 28,167 Total revenue 39,296 37,668 38,476 Cost of goods sold (excludes depreciation and amortization) ( 4,468 ) ( 6,400 ) ( 6,261 ) Segment direct profit $ 34,828 $ 31,268 $ 32,215 Machinio & Software Solutions: Purchase revenue $ — $ — $ — Consignment and other fee revenues 19,746 16,157 13,821 Total revenue 19,746 16,157 13,821 Cost of goods sold (excludes depreciation and amortization) ( 1,444 ) ( 793 ) ( 711 ) Segment direct profit $ 18,302 $ 15,364 $ 13,110 Total segment direct profit $ 208,884 $ 185,232 $ 172,202 Corporate expenses, including elimination adjustments ( 69 ) ( 66 ) ( 62 ) Consolidated direct profit $ 208,815 $ 185,166 $ 172,140 100 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) The following table reconciles segment direct profit used in the reportable segments to the Company's consolidated results:  Year Ended September 30, (in thousands) 2025 2024 2023 Reconciliation: Total segment direct profit $ 208,815 $ 185,166 $ 172,140 Other costs and expenses from operations (1) 172,689 160,290 145,850 Interest and other (income) expense, net ( 3,315 ) ( 2,383 ) ( 2,726 ) Income before provision for income taxes $ 39,441 $ 27,260 $ 29,016 (1) Other costs and expenses from operations is defined as Total costs and expenses from operations per the Consolidated Statements of Operations, less Cost of goods sold (which is included in the calculation of Segment direct profit). Total segment assets reconciled to consolidated amounts are as follows:  September 30, (in thousands) 2025 2024 Segment Assets: GovDeals $ 381,654 $ 324,145 RSCG 141,046 138,082 CAG 100,643 98,716 Machinio & Software Solutions 54,364 41,871 Corporate & Other ( 302,606 ) ( 255,926 ) Total Segment Assets: $ 375,101 $ 346,888 Revenue attributed to countries that represent a significant portion of consolidated revenues are as follows:  Year Ended September 30, (in thousands) 2025 2024 2023 Revenue by geographic area United States $ 433,258 $ 323,303 $ 278,734 Rest of the world 43,411 40,015 35,729 Consolidated $ 476,669 $ 363,318 $ 314,462 Total long-lived assets by geographic areas are as follows:  September 30, (in thousands) 2025 2024 Assets by geographic area United States $ 18,039 $ 17,827 Rest of the world 220 134 Total Long-lived Assets $ 18,259 $ 17,961 For the fiscal years ended September 30, 2025 and 2024, transactions with a single RSCG external customer represented approximately 13 % and 12 % of the Company’s consolidated revenues, respectively. No single external customer exceeded 10% of consolidated revenues for the year ended September 30, 2023. 101 Liquidity Services, Inc. and Subsidiaries Notes to Consolidated Financial Statements (Continued) LIQUIDITY SERVICES, INC. SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS (Dollars in Thousands) Balance at beginning of period Charged (credited) to expense Reductions Balance at end of period Deferred tax valuation allowance (deducted from net deferred tax assets) Year ended September 30, 2023 $ 12,259 3,770 — $ 16,029 Year ended September 30, 2024 16,029 1,164 — 17,193 Year ended September 30, 2025 $ 17,193 ( 143 ) — $ 17,050 Allowance for doubtful accounts (deducted from accounts receivable) Year ended September 30, 2023 $ 449 1,392 ( 417 ) $ 1,424 Year ended September 30, 2024 1,424 839 ( 583 ) 1,680 Year ended September 30, 2025 $ 1,680 395 ( 1,298 ) $ 777 Provision for inventory allowance (deducted from inventory) Year ended September 30, 2023 $ 96 1,048 ( 100 ) $ 1,044 Year ended September 30, 2024 1,044 163 ( 1,204 ) 3 Year ended September 30, 2025 $ 3 540 ( 459 ) $ 84 102 EXHIBIT INDEX Exhibit No. Description 3.1 Fourth Amended and Restated Certificate of Incorporation, incorporated herein by reference to Exhibit 3.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (Registration No. 333-129656), filed with the SEC on January 17, 2006. 3.1.1 Certificate of Amendment to the Company’s Fourth Amended and Restated Certificate of Incorporation, incorporated herein by reference to Appendix A to the Company’s Schedule 14A filed with the SEC on January 24, 2023. 3.2 Amended and Restated Bylaws, incorporated herein by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K, filed with the SEC on August 5, 2022. 4.1 Form of Certificate of Common Stock of the Company, incorporated herein by reference to Exhibit 4.1 to Amendment No. 5 to the Company’s Registration Statement on Form S-1 (Registration No. 333-129656), filed with the SEC on February 21, 2006. 4.2 Description of Securities 10.1 Credit Agreement, dated February 10, 2022, by and between Liquidity Services, Inc., and Wells Fargo Bank, National Association, incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on February 10, 2022. 10.1.1 First Amendment to Credit Agreement, incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on April 4, 2023. 10.1.2 Second Amendment to Credit Agreement, dated March 27, 2024, by and between Liquidity Services, Inc., and Wells Fargo Bank, National Association, incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on March 27, 2024. 10.1.3 Third Amendment to Credit Agreement, dated May 7, 2025, by and between Liquidity Services, Inc., and Wells Fargo Bank, National Association, incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on May 8, 2025. 10.2# Form of Amended and Restated Executive Employment Agreement, incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the SEC on January 20, 2023. 10.3# Form of Change in Control Agreement, incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K, filed with the SEC on January 20, 2023. 10.4# Form of Indemnification Agreement for directors and officers, incorporated herein by reference to Exhibit 10.3 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on February 2, 2023 10.5# Form of Employee Agreement Regarding Confidentiality, Intellectual Property, and Competitive Activities, incorporated herein by reference to Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on February 2, 2023. 103 10.8# Liquidity Services, Inc. Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan, incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, filed with the SEC on January 28, 2020. 10.8.1# 2022 Amendment to the Liquidity Services, Inc. Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan, incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, filed with the SEC on January 24, 2022. 10.8.2# 2024 Amendment to the Liquidity Services, Inc. Third Amended and Restated 2006 Omnibus Long-Term Incentive Plan, incorporated herein by reference to Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on January 19, 2024. 10.9# Form of Notice of Time-Based Stock Option Grant (Officers). 10.10# Form of Notice of Time-Based Restricted Stock Unit Grant (Officers) 10.11# Form of Notice of Time-Based Restricted Stock Unit Grant (Directors). 10.12# Form of Notice of Performance Based Stock Options Grant (Officers). 10.13# Form of Notice of Performance-Based Restricted Stock Unit Grant (Officers). 10.14# Liquidity Services Inc. Annual Incentive Plan, adopted on December 2, 2020, incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K, filed with the SEC on December 11, 2020. 19.1 Liquidity Services, Inc. Insider Trading Policy 21.1 List of Subsidiaries. 23.1 Consent of Deloitte & Touche LLP. 24.1 Power of Attorney (included on signature page). 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 97.1 Revised Liquidity Services, Inc. Clawback Policy, incorporated herein by reference to Exhibit 99.1 to the Company's Quarterly Report on Form 10-Q, filed with the SEC on August 3, 2023. 101 The following materials from the Registrant's Annual Report on Form 10-K for the year ended September 30, 2025, formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of September 30, 2025 and 2024, (ii) Consolidated Statements of Operations for each of the three years in the period ended September 30, 2025, (iii) Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended September 30, 2025, (iv) Consolidated Statements of Stockholders' Equity for each of the three years in the period ended September 30, 2025, (v) Consolidated Statements of Cash Flows for each of the three years in the period ended September 30, 2025, and (vi) Notes to Consolidated Financial Statements. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). # Indicates management contract or compensatory plan. Item 16. F orm 10-K Summary. None. 104 SIG NATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 20, 2025. LIQUIDITY SERVICES, INC. By: /s/ WILLIAM P. ANGRICK, III William P. Angrick, III Chairman of the Board of Directors and Chief Executive Officer We, the undersigned directors and officers of Liquidity Services, Inc., hereby severally constitute William P. Angrick, III, Jorge A. Celaya, and Mark A. Shaffer, and each of them singly, our true and lawful attorneys with full power to them and each of them to sign for us, in our names in the capacities indicated below, any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on November 20, 2025. Signature Title /s/ WILLIAM P. ANGRICK, III William P. Angrick, III Chairman of the Board of Directors and Chief Executive Officer (Principal Executive Officer) /s/ JORGE A. CELAYA Jorge A. Celaya Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) /s/ KATHARIN S. DYER Katharin S. Dyer Director /s/ GEORGE H. ELLIS George H. Ellis Director /s/ THIERNO A. FALL Thierno A. Fall Director /s/ BEATRIZ V. INFANTE Beatriz V. Infante Director /s/ PAUL J. HENNESSY Paul J. Hennessy Director /s/ EDWARD J. KOLODZIESKI Edward J. Kolodzieski Director /s/ JAIME MATEUS-TIQUE Jaime Mateus-Tique Director 105