UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 2, 2025 or o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___ to ___. Commission File Number: 001-38747 Daktronics, Inc. (Exact Name of Registrant as Specified in its Charter) Delaware 46-0306862 (State or Other Juri ...

Exhibit 99.1 VINCE HOLDING CORP. REPORTS SECOND QUARTER 2025 RESULTS Net Sales of $73.2 Million Net Income of $12.1 Million; Adjusted Net Income of $4.9 Million Adjusted EBITDA of $6.7 Million, an increase of $4.0 Million vs. Q2 FY2024 NEW YORK, New York – September 10, 2025 – Vince Holding Corp. (NYSE: VNCE) ("VNCE" or the "Company"), a global contemporary retailer, today reported its financial results for the second quarter ended August 2, 2025. Brendan Hoffman, Chief Executive Officer of VNCE said, "We a ...

[Fiscal 2025 Fourth Quarter and Twelve Months Financial Results Overview](index=1&type=section&id=Fiscal%202025%20Fourth%20Quarter%20and%20Twelve%20Months%20Financial%20Results%20Overview) This section provides an overview of Aviat Networks' financial performance for the fourth quarter and full fiscal year 2025, highlighting key revenue, income, and EBITDA figures [Fourth Quarter Highlights](index=1&type=section&id=Fourth%20Quarter%20Highlights) Aviat Networks reported a strong fiscal 2025 fourth quarter, achieving significant GAAP net income growth and a third consecutive record for quarterly Adjusted EBITDA, despite a slight decrease in total revenue - Grew quarterly GAAP Net Income to **$5.2 million**, an increase of **$3.6 million** or **236%** versus the same period a year ago[9](index=9&type=chunk) - Achieved the third consecutive record for quarterly Adjusted EBITDA with **$15.1 million** at **13.0%** margin[9](index=9&type=chunk) Fiscal 2025 Fourth Quarter Key Financials (in millions) | Metric | GAAP Result | Non-GAAP Result | | :-------------------------- | :---------- | :-------------- | | Total Revenues | $115.3 million | N/A | | Gross Margin | 34.2% | 34.7% | | Operating Expenses | $30.6 million | $27.1 million | | Operating Income | $8.9 million | $12.9 million | | Net Income | $5.2 million | $10.7 million | | Net Income per diluted share | $0.40 | $0.83 | | Adjusted EBITDA | N/A | $15.1 million | | Cash and Cash Equivalents | $59.7 million | N/A | | Net Debt | $27.9 million | N/A | [Full Year Financial Highlights](index=1&type=section&id=Full%20Year%20Financial%20Highlights) For the full fiscal year 2025, Aviat Networks completed its fifth consecutive year of revenue growth, reaching $434.6 million, although GAAP net income and Adjusted EBITDA saw declines compared to the prior year - Completed fifth consecutive fiscal year of revenue growth[9](index=9&type=chunk) Fiscal 2025 Full Year Key Financials (in millions) | Metric | GAAP Result | Non-GAAP Result | | :-------------------------- | :---------- | :-------------- | | Total Revenues | $434.6 million | N/A | | Gross Margin | 32.1% | 32.8% | | Operating Expenses | $128.9 million | $113.5 million | | Operating Income | $10.6 million | $29.0 million | | Net Income | $1.3 million | $21.4 million | | Net Income per diluted share | $0.10 | $1.67 | | Adjusted EBITDA | N/A | $37.1 million | [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) This section provides an in-depth analysis of Aviat Networks' revenues, gross margins, operating expenses, operating income, income taxes, net income, and Adjusted EBITDA for both the fourth quarter and full fiscal year 2025 [Revenues](index=1&type=section&id=Revenues) Total revenues for Q4 FY25 slightly decreased by 1.1% year-over-year, primarily due to a decline in international revenue, offset by growth in North America's private network business. For the full fiscal year 2025, total revenue increased by 6.5%, driven by strong international growth [Fourth Quarter Revenues](index=1&type=section&id=Fourth%20Quarter%20Revenues) Fourth quarter revenues saw a slight overall decrease, with North America showing growth in private networks while international revenues declined due to project timing Fourth Quarter Revenues (in millions) | Metric | FY25 Q4 | FY24 Q4 | Change (Millions) | Change (%) | | :---------------- | :------ | :------ | :---------------- | :--------- | | Total Revenues | $115.3 | $116.7 | $(1.3) | (1.1)% | | North America | $58.0 | $56.2 | $1.8 | 3.2% | | International | $57.3 | $60.5 | $(3.1) | (5.2)% | - North America revenue growth was due to growth in private network business[4](index=4&type=chunk) - International revenue decrease was due to timing of certain mobile network projects[4](index=4&type=chunk) [Twelve Months Revenues](index=1&type=section&id=Twelve%20Months%20Revenues) Full year revenues increased by 6.5%, primarily driven by strong international growth, with North America also contributing to the overall increase Twelve Months Revenues (in millions) | Metric | FY25 | FY24 | Change (Millions) | Change (%) | | :---------------- | :----- | :----- | :---------------- | :--------- | | Total Revenues | $434.6 | $408.1 | $26.5 | 6.5% | | North America | $207.6 | $206.1 | $1.5 | 0.7% | | International | $227.0 | $202.0 | $25.0 | 12.4% | [Gross Margins](index=1&type=section&id=Gross%20Margins) Both GAAP and non-GAAP gross margins decreased in Q4 FY25 and for the full fiscal year 2025 compared to the prior year, primarily due to fluctuations in project and regional customer mix [Fourth Quarter Gross Margins](index=1&type=section&id=Fourth%20Quarter%20Gross%20Margins) Fourth quarter GAAP and non-GAAP gross margins both declined, influenced by changes in project and regional customer mix Fourth Quarter Gross Margins | Metric | FY25 Q4 | FY24 Q4 | Change (bps) | | :---------------- | :------ | :------ | :----------- | | GAAP Gross Margin | 34.2% | 35.3% | (110) | | Non-GAAP Gross Margin | 34.7% | 35.9% | (120) | - Gross margin fluctuations were driven by project and regional customer mix[6](index=6&type=chunk) [Twelve Months Gross Margins](index=1&type=section&id=Twelve%20Months%20Gross%20Margins) Full year GAAP and non-GAAP gross margins both decreased compared to the prior fiscal year Twelve Months Gross Margins | Metric | FY25 | FY24 | | :---------------- | :----- | :----- | | GAAP Gross Margin | 32.1% | 35.5% | | Non-GAAP Gross Margin | 32.8% | 36.4% | [Operating Expenses](index=2&type=section&id=Operating%20Expenses) Total GAAP and non-GAAP operating expenses decreased significantly in Q4 FY25, reflecting a 14.3% and 13.2% reduction respectively. However, for the full fiscal year 2025, both GAAP and non-GAAP operating expenses increased by 2.8% and 7.7% respectively [Fourth Quarter Operating Expenses](index=2&type=section&id=Fourth%20Quarter%20Operating%20Expenses) Fourth quarter GAAP and non-GAAP operating expenses both saw significant year-over-year decreases Fourth Quarter Operating Expenses (in millions) | Metric | FY25 Q4 | FY24 Q4 | Change (Millions) | Change (%) | | :----------------------- | :------ | :------ | :---------------- | :--------- | | GAAP Operating Expenses | $30.6 | $35.7 | $(5.1) | (14.3)% | | Non-GAAP Operating Expenses | $27.1 | $31.3 | $(4.1) | (13.2)% | [Twelve Months Operating Expenses](index=2&type=section&id=Twelve%20Months%20Operating%20Expenses) Full year GAAP and non-GAAP operating expenses increased compared to the prior fiscal year Twelve Months Operating Expenses (in millions) | Metric | FY25 | FY24 | Change (Millions) | Change (%) | | :----------------------- | :----- | :----- | :---------------- | :--------- | | GAAP Operating Expenses | $128.9 | $125.3 | $3.5 | 2.8% | | Non-GAAP Operating Expenses | $113.5 | $105.4 | $8.1 | 7.7% | [Operating Income](index=2&type=section&id=Operating%20Income) Aviat Networks saw a substantial increase in operating income for Q4 FY25, with GAAP operating income up 62.8% and non-GAAP up 21.9%. Conversely, for the full fiscal year 2025, operating income decreased significantly, primarily due to merger and acquisition related expenses [Fourth Quarter Operating Income](index=2&type=section&id=Fourth%20Quarter%20Operating%20Income) Fourth quarter GAAP and non-GAAP operating income both increased significantly year-over-year Fourth Quarter Operating Income (in millions) | Metric | FY25 Q4 | FY24 Q4 | Change (Millions) | Change (%) | | :------------------- | :------ | :------ | :---------------- | :--------- | | GAAP Operating Income | $8.9 | $5.5 | $3.4 | 62.8% | | Non-GAAP Operating Income | $12.9 | $10.6 | $2.3 | 21.9% | [Twelve Months Operating Income](index=2&type=section&id=Twelve%20Months%20Operating%20Income) Full year GAAP and non-GAAP operating income decreased substantially, primarily due to merger and acquisition related expenses Twelve Months Operating Income (in millions) | Metric | FY25 | FY24 | Change (Millions) | Change (%) | | :------------------- | :----- | :----- | :---------------- | :--------- | | GAAP Operating Income | $10.6 | $19.4 | $(8.8) | (45.5)% | | Non-GAAP Operating Income | $29.0 | $43.1 | $(14.1) | (32.7)% | - Operating income decreased primarily due to merger and acquisition related expenses[13](index=13&type=chunk) [Income Taxes](index=2&type=section&id=Income%20Taxes) GAAP income tax expense increased in Q4 FY25 compared to the prior year, while for the full fiscal year 2025, it decreased significantly [Fourth Quarter Income Taxes](index=2&type=section&id=Fourth%20Quarter%20Income%20Taxes) Fourth quarter GAAP income tax expense increased year-over-year Fourth Quarter Income Tax Expense (in millions) | Metric | FY25 Q4 | FY24 Q4 | | :------------------- | :------ | :------ | | GAAP Income Tax Expense | $5.0 | $3.1 | [Twelve Months Income Taxes](index=2&type=section&id=Twelve%20Months%20Income%20Taxes) Full year GAAP income tax expense decreased significantly compared to the prior fiscal year Twelve Months Income Tax Expense (in millions) | Metric | FY25 | FY24 | | :------------------- | :----- | :----- | | GAAP Income Tax Expense | $2.2 | $6.1 | [Net Income / Net Income Per Share](index=2&type=section&id=Net%20Income%20%2F%20Net%20Income%20Per%20Share) Aviat Networks reported a substantial increase in GAAP net income and EPS for Q4 FY25, alongside growth in non-GAAP net income and EPS. However, for the full fiscal year 2025, both GAAP and non-GAAP net income and EPS saw significant declines compared to the prior year [Fourth Quarter Net Income / Net Income Per Share](index=2&type=section&id=Fourth%20Quarter%20Net%20Income%20%2F%20Net%20Income%20Per%20Share) Fourth quarter GAAP and non-GAAP net income and diluted EPS all increased significantly year-over-year Fourth Quarter Net Income / EPS | Metric | FY25 Q4 | FY24 Q4 | | :----------------------- | :------ | :------ | | GAAP Net Income (Millions) | $5.2 | $1.5 | | GAAP Diluted EPS | $0.40 | $0.12 | | Non-GAAP Net Income (Millions) | $10.7 | $9.2 | | Non-GAAP Diluted EPS | $0.83 | $0.72 | [Twelve Months Net Income / Net Income Per Share](index=2&type=section&id=Twelve%20Months%20Net%20Income%20%2F%20Net%20Income%20Per%20Share) Full year GAAP and non-GAAP net income and diluted EPS decreased substantially compared to the prior fiscal year Twelve Months Net Income / EPS | Metric | FY25 | FY24 | | :----------------------- | :----- | :----- | | GAAP Net Income (Millions) | $1.3 | $10.8 | | GAAP Diluted EPS | $0.10 | $0.86 | | Non-GAAP Net Income (Millions) | $21.4 | $39.2 | | Non-GAAP Diluted EPS | $1.67 | $3.15 | [Adjusted EBITDA](index=2&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased significantly in Q4 FY25, reaching a record high, but decreased for the full fiscal year 2025 compared to the prior year [Fourth Quarter Adjusted EBITDA](index=2&type=section&id=Fourth%20Quarter%20Adjusted%20EBITDA) Fourth quarter Adjusted EBITDA increased significantly year-over-year, setting a new quarterly record Fourth Quarter Adjusted EBITDA (in millions) | Metric | FY25 Q4 | FY24 Q4 | | :-------------- | :------ | :------ | | Adjusted EBITDA | $15.1 | $11.9 | [Twelve Months Adjusted EBITDA](index=2&type=section&id=Twelve%20Months%20Adjusted%20EBITDA) Full year Adjusted EBITDA decreased compared to the prior fiscal year Twelve Months Adjusted EBITDA (in millions) | Metric | FY25 | FY24 | | :-------------- | :----- | :----- | | Adjusted EBITDA | $37.1 | $48.1 | [Balance Sheet Highlights](index=2&type=section&id=Balance%20Sheet%20Highlights) This section summarizes key balance sheet figures, including cash and cash equivalents and total debt, as of the end of fiscal year 2025 [Balance Sheet Summary](index=2&type=section&id=Balance%20Sheet%20Summary) As of June 27, 2025, Aviat Networks reported an increase in cash and cash equivalents compared to the previous quarter, with total debt standing at $87.6 million Balance Sheet Highlights (in millions) | Metric | As of June 27, 2025 | As of March 28, 2025 | | :---------------------- | :------------------ | :------------------- | | Cash and Cash Equivalents | $59.7 | $49.4 | | Total Debt | $87.6 | N/A | [Fiscal 2026 Full Year Guidance](index=2&type=section&id=Fiscal%202026%20Full%20Year%20Guidance) This section provides Aviat Networks' financial outlook and projections for the full fiscal year 2026 [FY26 Guidance Overview](index=2&type=section&id=FY26%20Guidance%20Overview) Aviat Networks provided its full-year guidance for fiscal 2026, projecting revenue between $440 million and $460 million, and Adjusted EBITDA between $45.0 million and $55.0 million Fiscal 2026 Full Year Guidance (in millions) | Metric | Guidance Range | | :---------------- | :------------- | | Full year Revenue | $440 - $460 | | Full year Adjusted EBITDA | $45.0 - $55.0 | [Corporate Information & Events](index=2&type=section&id=Corporate%20Information%20%26%20Events) This section details corporate communications, upcoming investor engagements, company background, and investor relations contact information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) Aviat Networks hosted a conference call to discuss its financial results, with key executives participating and providing access details for investors - Aviat Networks hosted a conference call on September 10, 2025, at 4:15 p.m. ET to discuss its fiscal 2025 fourth quarter financial results[19](index=19&type=chunk) - Participating on the call were Peter Smith (President and CEO), Michael Connaway (Sr. Vice President and CFO), and Andrew Fredrickson (Vice President, Corporate Finance and Interim CFO)[19](index=19&type=chunk) - Interested parties could access the call live via webcast through Aviat Network's Investor Relations website or participate via telephone by registering online[20](index=20&type=chunk) [Upcoming Events](index=2&type=section&id=Upcoming%20Events) Aviat Networks announced its participation in an upcoming investor conference - Aviat will participate in the 9th Annual Lake Street Capital Markets Best Ideas Growth Conference on September 11, 2025, in New York, NY[21](index=21&type=chunk) [About Aviat Networks](index=3&type=section&id=About%20Aviat%20Networks) Aviat Networks is a leading global provider of wireless transport and access solutions, serving a diverse customer base with over 70 years of innovation and comprehensive support services - Aviat Networks, Inc. is the leading expert in wireless transport and access solutions[23](index=23&type=chunk) - The company has sold over **one million** systems into **170 countries** worldwide, serving communications service providers and private network operators (state/local government, utility, federal government, and defense organizations)[23](index=23&type=chunk) - Aviat provides a comprehensive suite of localized professional and support services and is headquartered in Austin, Texas[23](index=23&type=chunk) [Investor Relations Contact](index=3&type=section&id=Investor%20Relations%20Contact) Contact information for investor relations inquiries is provided - Investor Relations contact: Andrew Fredrickson, Email: investorinfo@aviatnet.com[27](index=27&type=chunk) [Forward-Looking Statements and Risk Factors](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risk%20Factors) This section provides a disclaimer regarding forward-looking statements and outlines key risk factors that could materially impact future financial results [Forward-Looking Statements Disclaimer](index=3&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section outlines the nature of forward-looking statements within the report, emphasizing that actual results may differ materially due to various important factors and risks, including those detailed in the company's Form 10-K - The report includes forward-looking statements regarding Aviat's outlook, business conditions, new product solutions, future orders, profitability, acquisitions, and financial projections[24](index=24&type=chunk) - Forward-looking statements are based on current beliefs, expectations, and assumptions of senior management, but involve risks and uncertainties that could cause actual results to differ materially[24](index=24&type=chunk) - Important factors include disruptions from acquisitions (4RF and NEC), integration challenges, geopolitical conflicts, price and margin erosion, supply chain constraints, inflation, and global economic weakness. Investors should refer to the 'Risk Factors' section in Aviat's Form 10-K for more information[25](index=25&type=chunk)[26](index=26&type=chunk) [Condensed Consolidated Financial Statements (GAAP)](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(GAAP)) This section presents the unaudited GAAP condensed consolidated statements of operations and balance sheets for the specified periods [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section presents the unaudited GAAP condensed consolidated statements of operations for the three and twelve months ended June 27, 2025, and June 28, 2024 Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | Product sales | $67,405 | $78,795 | $287,657 | $274,205 | | Services | $47,935 | $37,865 | $146,949 | $133,878 | | **Total revenues** | **$115,340** | **$116,660** | **$434,606** | **$408,083** | | Total cost of revenues | $75,874 | $75,521 | $295,170 | $263,351 | | **Gross margin** | **$39,466** | **$41,139** | **$139,436** | **$144,732** | | Total operating expenses | $30,587 | $35,684 | $128,861 | $125,331 | | **Operating income** | **$8,879** | **$5,455** | **$10,575** | **$19,401** | | Income before income taxes | $10,179 | $4,609 | $3,576 | $16,906 | | Provision for income taxes | $4,982 | $3,060 | $2,235 | $6,146 | | **Net income** | **$5,197** | **$1,549** | **$1,341** | **$10,760** | | Diluted Net income per share | $0.40 | $0.12 | $0.10 | $0.86 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the unaudited GAAP condensed consolidated balance sheets as of June 27, 2025, and June 28, 2024 Condensed Consolidated Balance Sheets (in thousands) | Metric | As of June 27, 2025 | As of June 28, 2024 | | :-------------------------- | :------------------ | :------------------ | | Cash and cash equivalents | $59,690 | $64,622 | | Accounts receivable, net | $180,321 | $158,013 | | Inventories | $83,979 | $62,267 | | **Total current assets** | **$463,575** | **$405,223** | | Goodwill | $19,655 | $8,217 | | **Total assets** | **$633,296** | **$535,223** | | Accounts payable | $148,093 | $92,854 | | Current portion of long-term debt | $18,624 | $2,396 | | **Total current liabilities** | **$282,196** | **$218,857** | | Long-term debt | $68,966 | $45,954 | | **Total liabilities** | **$370,113** | **$279,338** | | **Total stockholders' equity** | **$263,183** | **$255,885** | | **Total liabilities and stockholders' equity** | **$633,296** | **$535,223** | [Reconciliation of Non-GAAP Financial Measures](index=6&type=section&id=Reconciliation%20of%20Non-GAAP%20Financial%20Measures) This section provides detailed reconciliations of non-GAAP financial measures to their most comparable GAAP equivalents, offering additional insights into operational performance [Non-GAAP Measures Overview](index=6&type=section&id=Non-GAAP%20Measures%20Overview) This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures, including gross margin, operating expenses, operating income, net income, and Adjusted EBITDA. These non-GAAP measures are presented to offer investors additional insights into period-over-period operating results, excluding certain non-recurring or non-cash items - Non-GAAP financial measures are provided to supplement GAAP consolidated financial statements, offering information useful to investors in understanding period-over-period operating results separate from items with disproportionate impacts[33](index=33&type=chunk) - Adjustments typically exclude share-based compensation, merger and acquisition related expenses, and restructuring charges[33](index=33&type=chunk)[37](index=37&type=chunk) - Reconciliations of forward-looking Adjusted EBITDA guidance are not provided due to the high variability and difficulty in making accurate forecasts for items like merger and acquisition costs and share-based compensation[34](index=34&type=chunk) [Non-GAAP Gross Margin Reconciliation](index=6&type=section&id=Non-GAAP%20Gross%20Margin%20Reconciliation) Reconciliation of GAAP gross margin to non-GAAP gross margin, adjusting for share-based compensation and merger and acquisition related expenses Non-GAAP Gross Margin Reconciliation (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP gross margin | $39,466 (34.2%) | $41,139 (35.3%) | $139,436 (32.1%) | $144,732 (35.5%) | | Share-based compensation | $19 | $96 | $233 | $406 | | Merger and acquisition related expense | $595 | $650 | $2,890 | $3,409 | | **Non-GAAP gross margin** | **$40,080 (34.7%)** | **$41,885 (35.9%)** | **$142,559 (32.8%)** | **$148,547 (36.4%)** | [Non-GAAP Operating Expenses Reconciliation](index=6&type=section&id=Non-GAAP%20Operating%20Expenses%20Reconciliation) Reconciliation of GAAP operating expenses to non-GAAP operating expenses, adjusting for share-based compensation, merger and acquisition related expenses, and restructuring charges Non-GAAP Operating Expenses Reconciliation (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP operating expense | $30,587 (26.5%) | $35,684 (30.6%) | $128,861 (29.7%) | $125,331 (30.7%) | | Share-based compensation | $(1,422) | $(1,700) | $(6,834) | $(6,935) | | Merger and acquisition and other expenses | $(6) | $(1,070) | $(4,896) | $(9,121) | | Restructuring (charges) recovery | $(2,019) | $(1,640) | $(3,611) | $(3,867) | | **Non-GAAP operating expense** | **$27,140 (23.5%)** | **$31,274 (26.8%)** | **$113,520 (26.1%)** | **$105,408 (25.8%)** | [Non-GAAP Operating Income Reconciliation](index=7&type=section&id=Non-GAAP%20Operating%20Income%20Reconciliation) Reconciliation of GAAP operating income to non-GAAP operating income, adjusting for share-based compensation, merger and acquisition related expenses, and restructuring charges Non-GAAP Operating Income Reconciliation (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP operating income | $8,879 (7.7%) | $5,455 (4.7%) | $10,575 (2.4%) | $19,401 (4.8%) | | Share-based compensation | $1,441 | $1,796 | $7,067 | $7,341 | | Merger and acquisition related expense | $601 | $1,720 | $7,786 | $12,530 | | Restructuring charges | $2,019 | $1,640 | $3,611 | $3,867 | | **Non-GAAP operating income** | **$12,940 (11.2%)** | **$10,611 (9.1%)** | **$29,039 (6.7%)** | **$43,139 (10.6%)** | [Non-GAAP Net Income Reconciliation](index=7&type=section&id=Non-GAAP%20Net%20Income%20Reconciliation) Reconciliation of GAAP net income and diluted EPS to non-GAAP net income and diluted EPS, adjusting for various non-recurring items and pro forma tax rates Non-GAAP Net Income Reconciliation (in thousands, except per share amounts) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP net income | $5,197 (4.5%) | $1,549 (1.3%) | $1,341 (0.3%) | $10,760 (2.6%) | | Share-based compensation | $1,441 | $1,796 | $7,067 | $7,341 | | Merger and acquisition related expense | $601 | $1,720 | $7,786 | $12,530 | | Restructuring charges | $2,019 | $1,640 | $3,611 | $3,867 | | Other (income) expense, net | $(3,106) | $(70) | $941 | $158 | | Adjustment to reflect pro forma tax rate | $4,582 | $2,560 | $635 | $4,546 | | **Non-GAAP net income** | **$10,734 (9.3%)** | **$9,195 (7.9%)** | **$21,381 (4.9%)** | **$39,202 (9.6%)** | | GAAP Diluted EPS | $0.40 | $0.12 | $0.10 | $0.86 | | **Non-GAAP Diluted EPS** | **$0.83** | **$0.72** | **$1.67** | **$3.15** | [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) Reconciliation of GAAP net income to Adjusted EBITDA, by adding back depreciation, amortization, interest, taxes, and non-GAAP pre-tax adjustments Adjusted EBITDA Reconciliation (in thousands) | Metric | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | GAAP net income | $5,197 (4.5%) | $1,549 (1.3%) | $1,341 (0.3%) | $10,760 (2.6%) | | Depreciation and amortization | $2,110 | $1,265 | $8,045 | $4,993 | | Interest expense, net | $1,806 | $916 | $6,058 | $2,337 | | Other (income) expense, net | $(3,106) | $(70) | $941 | $158 | | Share-based compensation | $1,441 | $1,796 | $7,067 | $7,341 | | Merger and acquisition related expense | $601 | $1,720 | $7,786 | $12,530 | | Restructuring charges | $2,019 | $1,640 | $3,611 | $3,867 | | Provision for income taxes | $4,982 | $3,060 | $2,235 | $6,146 | | **Adjusted EBITDA** | **$15,050 (13.0%)** | **$11,876 (10.2%)** | **$37,084 (8.5%)** | **$48,132 (11.8%)** | [Supplemental Schedule of Revenue by Geographical Area](index=8&type=section&id=Supplemental%20Schedule%20of%20Revenue%20by%20Geographical%20Area) This section provides a detailed breakdown of Aviat Networks' revenues segmented by geographical region for both quarterly and annual periods [Revenue by Geographical Area](index=8&type=section&id=Revenue%20by%20Geographical%20Area) This chapter provides a breakdown of Aviat Networks' revenues by geographical area for both the three and twelve months ended June 27, 2025, and June 28, 2024, showing contributions from North America and various international regions Supplemental Schedule of Revenue by Geographical Area (in thousands) | Region | Three Months Ended June 27, 2025 | Three Months Ended June 28, 2024 | Twelve Months Ended June 27, 2025 | Twelve Months Ended June 28, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | North America | $58,017 | $56,194 | $207,606 | $206,073 | | Africa and the Middle East | $11,218 | $13,063 | $49,428 | $48,884 | | Europe | $8,337 | $7,231 | $31,713 | $24,608 | | Latin America and Asia Pacific | $37,768 | $40,172 | $145,859 | $128,518 | | **Total international** | **$57,323** | **$60,466** | **$227,000** | **$202,010** | | **Total revenue** | **$115,340** | **$116,660** | **$434,606** | **$408,083** |

PART I — FINANCIAL INFORMATION This section presents Broadcom's unaudited condensed consolidated financial statements and management's discussion and analysis for the reported periods [Item 1. Condensed Consolidated Financial Statements — Unaudited](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20%E2%80%94%20Unaudited) This section presents Broadcom Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income (loss), cash flows, and stockholders' equity, along with detailed notes explaining accounting policies, revenue recognition, acquisitions, debt, equity, income taxes, segment information, commitments, and restructuring charges for the periods ended August 3, 2025, and August 4, 2024 [Condensed Consolidated Balance Sheets — Unaudited](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%E2%80%94%20Unaudited) Provides a snapshot of Broadcom's financial position, detailing assets, liabilities, and equity at specific fiscal year-end dates | Metric | August 3, 2025 (In millions) | November 3, 2024 (In millions) | | :----------------------------- | :----------------------------- | :----------------------------- | | Cash and cash equivalents | $10,718 | $9,348 | | Total current assets | $24,998 | $19,595 | | Total assets | $165,621 | $165,645 | | Total current liabilities | $16,704 | $16,697 | | Total liabilities | $92,344 | $97,967 | | Total stockholders' equity | $73,277 | $67,678 | [Condensed Consolidated Statements of Operations — Unaudited](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20%E2%80%94%20Unaudited) Presents Broadcom's financial performance over specific fiscal periods, including net revenue, gross margin, operating income, and net income | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net revenue | $15,952 | $13,072 | $45,872 | $37,520 | | Gross margin | $10,703 | $8,356 | $31,045 | $23,507 | | Operating income | $5,887 | $3,788 | $17,976 | $8,836 | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Diluted net income (loss) per share | $0.85 | $(0.40) | $3.02 | $0.33 | [Condensed Consolidated Statements of Comprehensive Income (Loss) — Unaudited](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)%20%E2%80%94%20Unaudited) Details Broadcom's net income or loss and other comprehensive income components for the reported fiscal periods | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Other comprehensive income, net of tax | $15 | $1 | $14 | $1 | | Comprehensive income (loss) | $4,155 | $(1,874) | $14,622 | $1,572 | [Condensed Consolidated Statements of Cash Flows — Unaudited](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20%E2%80%94%20Unaudited) Summarizes Broadcom's cash inflows and outflows from operating, investing, and financing activities for the reported fiscal periods | Metric (In millions) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $19,834 | $14,358 | | Net cash used in investing activities | $(213) | $(22,938) |\ | Net cash provided by (used in) financing activities | $(18,251) | $4,343 | | Net change in cash and cash equivalents | $1,370 | $(4,237) | [Condensed Consolidated Statements of Stockholders' Equity — Unaudited](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity%20%E2%80%94%20Unaudited) Outlines changes in Broadcom's stockholders' equity, including net income, dividends, and stock-based compensation, over specific fiscal periods | Metric (In millions) | Balance as of Nov 3, 2024 | Balance as of Aug 3, 2025 | | :------------------- | :------------------------ | :------------------------ | | Total Stockholders' Equity | $67,678 | $73,277 | | Net income | $14,608 | - | | Dividends to common stockholders | $(8,345) | - | | Stock-based compensation | $5,375 | - | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, revenue, acquisitions, and other financial items [1. Overview, Basis of Presentation and Significant Accounting Policies](index=10&type=section&id=1.%20Overview,%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Describes Broadcom's business, its operational segments, and the foundational accounting principles applied in the financial statements - Broadcom Inc. is a global technology leader in semiconductor and infrastructure software solutions, operating with two reportable segments: semiconductor solutions and infrastructure software[22](index=22&type=chunk) [2. Revenue from Contracts with Customers](index=10&type=section&id=2.%20Revenue%20from%20Contracts%20with%20Customers) Details Broadcom's revenue recognition policies, disaggregating revenue by type and presenting contract balances | Revenue Type (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Products | $9,257 | $7,439 | $25,934 | $22,043 | | Subscriptions and services | $6,695 | $5,633 | $19,938 | $15,477 | | Total | $15,952 | $13,072 | $45,872 | $37,520 | | Contract Balances (In millions) | August 3, 2025 | November 3, 2024 | | :------------------------------ | :------------- | :--------------- | | Contract Assets | $7,575 | $4,402 | | Contract Liabilities | $14,336 | $14,495 | - Remaining performance obligations under firmly committed multi-year contracts were approximately **$27.5 billion** as of August 3, 2025, with about **34%** expected to be recognized as revenue over the next 12 months[33](index=33&type=chunk) [3. Acquisitions](index=12&type=section&id=3.%20Acquisitions) Provides information on Broadcom's recent acquisition activities, including the financial impact and pro forma data - Broadcom completed the acquisition of VMware, Inc. on November 22, 2023, for approximately **$30,788 million** in cash and **544 million** shares of common stock (fair value **$53,398 million**) to enhance infrastructure software capabilities[34](index=34&type=chunk) | Pro Forma Information (In millions) | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 4, 2024 | | :---------------------------------- | :------------------------------- | :-------------------------------------- | | Pro forma net revenue | $13,088 | $38,118 | | Pro forma net income (loss) | $(1,819) | $2,057 | [4. Supplemental Financial Information](index=13&type=section&id=4.%20Supplemental%20Financial%20Information) Presents additional financial details, including inventory, other current assets and liabilities, and discontinued operations - Trade accounts receivable sold under factoring arrangements totaled **$1,700 million** for the fiscal quarter and **$5,651 million** for the three fiscal quarters ended August 3, 2025[38](index=38&type=chunk) | Inventory (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------- | :------------- | :--------------- | | Finished goods | $477 | $504 | | Work-in-process | $1,349 | $970 | | Raw materials | $354 | $286 | | Total inventory | $2,180 | $1,760 | | Other Current Assets (In millions) | August 3, 2025 | November 3, 2024 | | :--------------------------------- | :------------- | :--------------- | | Current portion of contract assets | $4,157 | $1,916 | | Prepaid expenses | $793 | $1,391 | | Other | $656 | $764 | | Total other current assets | $5,606 | $4,071 | | Other Current Liabilities (In millions) | August 3, 2025 | November 3, 2024 | | :------------------------------------ | :------------- | :--------------- | | Contract liabilities | $10,305 | $9,395 | | Interest payable | $644 | $535 | | Tax liabilities | $410 | $720 | | Other | $795 | $1,143 | | Total other current liabilities | $12,154 | $11,793 | | Other Long-Term Liabilities (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------------------------- | :------------- | :--------------- | | Contract liabilities | $4,031 | $5,100 | | Unrecognized tax benefits | $3,817 | $3,669 | | Deferred tax liabilities | $3,552 | $4,703 | | Other | $1,410 | $1,503 | | Total other long-term liabilities | $12,810 | $14,975 | | Discontinued Operations (In millions) | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :------------------------------- | :-------------------------------------- | | Net revenue | $178 | $858 | | Loss from discontinued operations, net of income taxes | $(443) | $(392) | [5. Intangible Assets](index=14&type=section&id=5.%20Intangible%20Assets) Details Broadcom's intangible assets, their gross carrying amounts, accumulated amortization, and expected future amortization expenses | Intangible Assets (In millions) | Gross Carrying Amount (Aug 3, 2025) | Accumulated Amortization (Aug 3, 2025) | Net Book Value (Aug 3, 2025) | | :------------------------------ | :---------------------------------- | :------------------------------------- | :--------------------------- | | Purchased technology | $36,957 | $(17,034) | $19,923 | | Customer contracts and related relationships | $16,043 | $(3,757) | $12,286 | | Trade names | $1,685 | $(446) | $1,239 | | Other | $191 | $(115) | $76 | | Intangible assets subject to amortization | $54,876 | $(21,352) | $33,524 | | In-process research and development | $820 | — | $820 | | Total | $55,696 | $(21,352) | $34,344 | | Fiscal Year | Expected Amortization Expense (In millions) | | :---------- | :---------------------------------------- | | 2025 (remainder) | $2,072 | | 2026 | $7,880 | | 2027 | $6,805 | | 2028 | $5,673 | | 2029 | $4,547 | | Thereafter | $6,547 | | Total | $33,524 | [6. Net Income (Loss) Per Share](index=15&type=section&id=6.%20Net%20Income%20(Loss)%20Per%20Share) Presents the calculation of basic and diluted net income (loss) per share, including weighted-average shares outstanding | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Net income (loss) | $4,140 | $(1,875) | $14,608 | $1,571 | | Weighted-average shares outstanding - basic | 4,714 | 4,663 | 4,705 | 4,606 | | Weighted-average shares outstanding - diluted | 4,860 | 4,663 | 4,841 | 4,762 | | Basic net income (loss) per share | $0.88 | $(0.40) | $3.10 | $0.34 | | Diluted net income (loss) per share | $0.85 | $(0.40) | $3.02 | $0.33 | [7. Borrowings](index=17&type=section&id=7.%20Borrowings) Details Broadcom's debt structure, including principal outstanding, short-term and long-term debt, and future scheduled principal payments | Debt Type (In millions) | August 3, 2025 | November 3, 2024 | | :---------------------- | :------------- | :--------------- | | Total debt principal outstanding | $66,257 | $69,847 | | Short-term debt | $1,399 | $1,271 | | Long-term debt | $62,830 | $66,295 | - In July 2025, Broadcom issued **$6,000 million** in senior unsecured notes and used the proceeds to repay the remaining **$6,000 million** of its unsecured term facility due November 2028[59](index=59&type=chunk)[60](index=60&type=chunk) - In January 2025, **$3,000 million** in senior unsecured notes were issued, contributing to the repayment of **$5,595 million** of the unsecured term facility due November 2026 and **$2,000 million** of the unsecured term facility due November 2028[59](index=59&type=chunk)[60](index=60&type=chunk) - Broadcom entered into a new **$7.5 billion** unsecured revolving credit facility in January 2025, replacing a previous facility, with no outstanding borrowings as of August 3, 2025[64](index=64&type=chunk) | Fiscal Year | Future Scheduled Principal Payments (In millions) | | :---------- | :---------------------------------------------- | | 2025 (remainder) | $— | | 2026 | $3,152 | | 2027 | $6,137 | | 2028 | $7,120 | | 2029 | $4,655 | | Thereafter | $44,693 | | Total | $65,757 | [8. Stockholders' Equity](index=21&type=section&id=8.%20Stockholders'%20Equity) Provides details on dividends, stock repurchase programs, and stock-based compensation expense and unrecognized costs | Metric (In millions, except per share data) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Dividends per share to common stockholders | $0.590 | $0.525 | $1.770 | $1.575 | | Dividends to common stockholders | $2,786 | $2,452 | $8,345 | $7,330 | - In April 2025, the Board authorized a new **$10 billion** stock repurchase program through December 31, 2025[69](index=69&type=chunk) - During the fiscal quarter ended May 4, 2025, **16 million** shares were repurchased for **$2,450 million**, leaving **$7,550 million** available[69](index=69&type=chunk) | Stock-Based Compensation Expense (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Total stock-based compensation expense | $2,322 | $1,381 | $5,373 | $4,356 | - As of August 3, 2025, total unrecognized compensation cost related to unvested stock-based awards was **$25,057 million**, expected to be recognized over a weighted-average service period of **3.6 years**[73](index=73&type=chunk) [9. Income Taxes](index=22&type=section&id=9.%20Income%20Taxes) Discusses Broadcom's income tax provision, the impact of new tax legislation, and unrecognized tax benefits - The 'One Big Beautiful Bill Act' enacted on July 4, 2025, led to a **$1,058 million** valuation allowance against CAMT credits due to immediate expensing of R&D and capital expenditures[76](index=76&type=chunk) | Provision for Income Taxes (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Provision for income taxes | $1,145 | $4,238 | $1,252 | $4,190 | - Unrecognized tax benefits and accrued interest/penalties totaled **$6,930 million** as of August 3, 2025, with an estimated reduction of **$3.1 billion** in Q4 2025 and up to **$3.5 billion** within 12 months due to lapsed statutes of limitations, potentially leading to a **$2.1 billion** discrete tax benefit in Q4 2025[79](index=79&type=chunk) [10. Segment Information](index=22&type=section&id=10.%20Segment%20Information) Presents financial data disaggregated by Broadcom's two reportable segments: semiconductor solutions and infrastructure software - Broadcom operates two reportable segments: semiconductor solutions (AI and enterprise data centers, networking, connectivity, storage, etc., including IP licensing) and infrastructure software (IT environment simplification, private/hybrid cloud, application management, security, FC SAN products)[81](index=81&type=chunk)[82](index=82&type=chunk) | Net Revenue by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Semiconductor solutions | $9,166 | $7,274 | $25,786 | $21,866 | | Infrastructure software | $6,786 | $5,798 | $20,086 | $15,654 | | Total net revenue | $15,952 | $13,072 | $45,872 | $37,520 | | Operating Income by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :---------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Semiconductor solutions | $5,217 | $4,042 | $14,729 | $12,136 | | Infrastructure software | $5,238 | $3,906 | $15,347 | $9,789 | | Unallocated expenses | $(4,568) | $(4,160) | $(12,100) | $(13,089) | | Total operating income | $5,887 | $3,788 | $17,976 | $8,836 | [11. Commitments and Contingencies](index=24&type=section&id=11.%20Commitments%20and%20Contingencies) Details Broadcom's contractual commitments, legal proceedings, and potential contingent liabilities | Fiscal Year | Purchase Commitments (In millions) | Other Contractual Commitments (In millions) | | :---------- | :------------------------------- | :------------------------------------------ | | 2025 (remainder) | $106 | $264 | | 2026 | $103 | $634 | | 2027 | $12 | $604 | | 2028 | $10 | $530 | | 2029 | $4 | $718 | | Thereafter | $— | $1,027 | | Total | $235 | $3,777 | - Broadcom does not believe any pending legal proceedings, regulatory investigations, or tax disputes will have a material adverse effect on its condensed consolidated financial statements, though outcomes are inherently uncertain[93](index=93&type=chunk) - A securities class action lawsuit against VMware and former officers regarding backlog statements was settled and approved by the California Court in March 2025[91](index=91&type=chunk) [12. Restructuring and Other Charges](index=25&type=section&id=12.%20Restructuring%20and%20Other%20Charges) Provides information on restructuring activities, including employee termination costs and lease impairments, primarily related to acquisitions | Restructuring Liabilities (In millions) | Balance as of Nov 3, 2024 | Restructuring Charges | Utilization | Balance as of Aug 3, 2025 | | :------------------------------------ | :------------------------ | :-------------------- | :---------- | :------------------------ | | Employee Termination Costs | $119 | $302 | $(389) | $32 | | Lease and Impairment Costs | $— | $141 | $(141) | $— | | Total | $119 | $443 | $(530) | $32 | - Restructuring activities, primarily related to the VMware acquisition, are expected to be substantially completed by the end of fiscal year 2025[97](index=97&type=chunk) [13. Subsequent Events](index=26&type=section&id=13.%20Subsequent%20Events) Discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On September 3, 2025, the Board of Directors declared a quarterly cash dividend of **$0.59 per share**, payable on September 30, 2025[99](index=99&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Broadcom's financial condition and results of operations for the fiscal quarter and three fiscal quarters ended August 3, 2025, compared to the prior year. It covers an overview of the business, quarterly highlights, critical accounting estimates, macroeconomic factors, and a detailed analysis of net revenue, gross margin, operating expenses, segment performance, non-operating items, liquidity, capital resources, and capital returns [Overview](index=27&type=section&id=Overview) Describes Broadcom's core business as a global technology leader in semiconductor and infrastructure software solutions - Broadcom is a global technology leader designing, developing, and supplying semiconductor and infrastructure software solutions, with two reportable segments: semiconductor solutions and infrastructure software[102](index=102&type=chunk)[103](index=103&type=chunk) [Quarterly Highlights](index=27&type=section&id=Quarterly%20Highlights) Summarizes key financial achievements and corporate actions during the most recent fiscal quarter - Generated **$7,166 million** of cash from operations during the fiscal quarter ended August 3, 2025[104](index=104&type=chunk) - Paid **$2,786 million** in cash dividends during the fiscal quarter ended August 3, 2025[104](index=104&type=chunk) - Issued **$6,000 million** of senior unsecured notes and used proceeds to repay outstanding floating rate unsecured term loan[104](index=104&type=chunk) [Critical Accounting Estimates](index=28&type=section&id=Critical%20Accounting%20Estimates) Confirms the consistency of critical accounting estimates with prior disclosures, indicating no significant changes - No significant changes in critical accounting estimates during the three fiscal quarters ended August 3, 2025, compared to those previously disclosed in the 2024 Annual Report on Form 10-K[106](index=106&type=chunk) [Macroeconomic Factors](index=28&type=section&id=Macroeconomic%20Factors) Discusses the potential impact of global economic conditions, trade tensions, and market volatility on Broadcom's business - Broadcom is subject to risks from the evolving macroeconomic environment, including financial market uncertainty, trade tensions, and economic volatility, which can impact net revenue and supply chain operations[107](index=107&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Analyzes Broadcom's financial performance, covering net revenue, gross margin, operating expenses, and segment results [Net Revenue](index=30&type=section&id=Net%20Revenue) Details Broadcom's revenue breakdown by product and subscription/services, highlighting customer concentration | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Products | $9,257 | $7,439 | $25,934 | $22,043 | | Subscriptions and services | $6,695 | $5,633 | $19,938 | $15,477 | | Total net revenue | $15,952 | $13,072 | $45,872 | $37,520 | - Direct sales to one semiconductor solutions customer (a distributor) accounted for **32%** of net revenue for the fiscal quarter and **30%** for the three fiscal quarters ended August 3, 2025[111](index=111&type=chunk)[112](index=112&type=chunk) - Aggregate sales to the top five end customers accounted for approximately **40%** of net revenue for both periods[111](index=111&type=chunk)[112](index=112&type=chunk) [Net Revenue by Segment](index=31&type=section&id=Net%20Revenue%20by%20Segment) Analyzes revenue performance across Broadcom's semiconductor solutions and infrastructure software segments | Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | $ Change | % Change | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | $ Change | % Change | | :-------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :-------------------------------------- | :-------------------------------------- | :------- | :------- | | Semiconductor solutions | $9,166 | $7,274 | $1,892 | 26% | $25,786 | $21,866 | $3,920 | 18% | | Infrastructure software | $6,786 | $5,798 | $988 | 17% | $20,086 | $15,654 | $4,432 | 28% | | Total net revenue | $15,952 | $13,072 | $2,880 | 22% | $45,872 | $37,520 | $8,352 | 22% | - Semiconductor solutions revenue increased due to strong demand for networking products, primarily custom AI accelerators and AI networking solutions[115](index=115&type=chunk) - Infrastructure software revenue increased primarily due to strong demand for VMware Cloud Foundation (VCF) products and the transition to a subscription license model[116](index=116&type=chunk) [Gross Margin](index=31&type=section&id=Gross%20Margin) Explains the factors influencing Broadcom's gross margin, including revenue mix and amortization | Metric (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Gross margin | $10,703 | $8,356 | $31,045 | $23,507 | | Gross margin as % of net revenue | 67% | 64% | 68% | 63% | - Gross margin increases were primarily driven by higher software revenue and strong product demand for AI-related semiconductor solutions, along with a higher software revenue mix and lower amortization of acquisition-related intangible assets as a percentage of revenue[117](index=117&type=chunk)[118](index=118&type=chunk) [Research and Development Expense](index=31&type=section&id=Research%20and%20Development%20Expense) Discusses changes in research and development expenditures, primarily driven by compensation - Research and development expense increased by **$697 million (30%)** for the fiscal quarter and **$920 million (13%)** for the three fiscal quarters ended August 3, 2025, primarily due to higher stock-based compensation[119](index=119&type=chunk) [Selling, General and Administrative Expense](index=31&type=section&id=Selling,%20General%20and%20Administrative%20Expense) Analyzes fluctuations in selling, general, and administrative costs, including impacts from headcount and acquisition-related expenses - Selling, general and administrative expense decreased by **$28 million (3%)** for the fiscal quarter and **$845 million (21%)** for the three fiscal quarters ended August 3, 2025, primarily due to lower compensation from headcount reduction and reduced VMware acquisition-related costs, partially offset by higher stock-based compensation in the fiscal quarter[120](index=120&type=chunk) [Amortization of Acquisition-Related Intangible Assets](index=32&type=section&id=Amortization%20of%20Acquisition-Related%20Intangible%20Assets) Explains the decrease in amortization expense due to the full amortization of certain intangible assets - Amortization of acquisition-related intangible assets in operating expenses decreased by **$305 million (38%)** for the fiscal quarter and **$907 million (37%)** for the three fiscal quarters ended August 3, 2025, mainly due to the full amortization of customer-related intangible assets from prior software acquisitions (excluding VMware)[122](index=122&type=chunk) [Restructuring and Other Charges](index=32&type=section&id=Restructuring%20and%20Other%20Charges) Details the reduction in restructuring charges, mainly from lower employee termination costs related to integration - Restructuring and other charges in operating expenses decreased by **$116 million (38%)** for the fiscal quarter and **$770 million (63%)** for the three fiscal quarters ended August 3, 2025, primarily due to lower employee termination costs from VMware integration[123](index=123&type=chunk) [Stock-Based Compensation Expense](index=32&type=section&id=Stock-Based%20Compensation%20Expense) Discusses the drivers behind changes in stock-based compensation, including equity awards and vesting | Stock-Based Compensation Expense (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------------- | :-------------------------------------- | | Total stock-based compensation expense | $2,322 | $1,381 | $5,373 | $4,356 | - The increase in stock-based compensation was due to Two-Year Equity Awards granted at higher grant-date fair values, partially offset by the full vesting and forfeitures of certain equity awards assumed in the VMware acquisition[125](index=125&type=chunk) | Fiscal Year | Unrecognized Compensation Cost, Net of Expected Forfeitures (In millions) | | :---------- | :---------------------------------------------------------------------- | | 2025 (remainder) | $2,172 | | 2026 | $8,104 | | 2027 | $6,925 | | 2028 | $4,772 | | 2029 | $2,487 | | Thereafter | $597 | | Total | $25,057 | [Segment Operating Results](index=32&type=section&id=Segment%20Operating%20Results) Presents and analyzes the operating income performance of Broadcom's semiconductor solutions and infrastructure software segments | Operating Income by Segment (In millions) | Fiscal Quarter Ended Aug 3, 2025 | Fiscal Quarter Ended Aug 4, 2024 | $ Change | % Change | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | $ Change | % Change | | :---------------------------------------- | :------------------------------- | :------------------------------- | :------- | :------- | :-------------------------------------- | :-------------------------------------- | :------- | :------- | | Semiconductor solutions | $5,217 | $4,042 | $1,175 | 29% | $14,729 | $12,136 | $2,593 | 21% | | Infrastructure software | $5,238 | $3,906 | $1,332 | 34% | $15,347 | $9,789 | $5,558 | 57% | | Unallocated expenses | $(4,568) | $(4,160) | $(408) | 10% | $(12,100) | $(13,089) | $989 | (8)% | | Total operating income | $5,887 | $3,788 | $2,099 | 55% | $17,976 | $8,836 | $9,140 | 103% | - Semiconductor solutions operating income increased due to strong demand for networking products, primarily custom AI accelerators and AI networking solutions[128](index=128&type=chunk) - Infrastructure software operating income increased primarily due to strong demand for VCF products and the transition to a subscription license model[129](index=129&type=chunk) [Non-Operating Income and Expenses](index=33&type=section&id=Non-Operating%20Income%20and%20Expenses) Reviews changes in interest expense, other income, and the provision for income taxes - Interest expense decreased due to an overall reduction in outstanding debt balances and debt refinancing activities[131](index=131&type=chunk) - Other income, net, increased in the fiscal quarter ended August 3, 2025, primarily due to a gain on the sale of a business, but decreased for the three fiscal quarters ended August 3, 2025, due to lower interest income[132](index=132&type=chunk) - The provision for income taxes for the fiscal quarter and three fiscal quarters ended August 3, 2025, was primarily due to a valuation allowance against CAMT credits, income before income taxes, and jurisdictional mix[134](index=134&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses Broadcom's ability to meet its financial obligations, detailing cash sources, working capital, and cash flow activities - Primary liquidity sources as of August 3, 2025, included **$10,718 million** in cash and cash equivalents, expected cash from operations, and available capacity under a **$7.5 billion** unsecured revolving credit facility[137](index=137&type=chunk) - Working capital increased to **$8,294 million** at August 3, 2025, from **$2,898 million** at November 3, 2024, primarily due to increased cash and cash equivalents, trade accounts receivable, and software contract assets[142](index=142&type=chunk)[146](index=146&type=chunk) | Cash Flows (In millions) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Net cash provided by operating activities | $19,834 | $14,358 | | Net cash used in investing activities | $(213) | $(22,938) |\n| Net cash provided by (used in) financing activities | $(18,251) | $4,343 |\n| Net change in cash and cash equivalents | $1,370 | $(4,237) | - The **$5,476 million** increase in cash from operations was primarily due to **$13,037 million** higher net income, partially offset by lower non-cash adjustments for deferred taxes and changes in operating assets and liabilities[148](index=148&type=chunk) - Cash used in investing activities decreased by **$22,725 million**, primarily due to the VMware acquisition in the prior year fiscal period[149](index=149&type=chunk) - Cash flows from financing activities decreased by **$22,594 million**, mainly due to prior year VMware acquisition financing, debt repayments, and higher dividend payments, partially offset by decreased stock repurchases[150](index=150&type=chunk) [Capital Returns](index=34&type=section&id=Capital%20Returns) Outlines Broadcom's strategies for returning capital to shareholders, including dividends and stock repurchase programs | Metric (In millions, except per share data) | Three Fiscal Quarters Ended Aug 3, 2025 | Three Fiscal Quarters Ended Aug 4, 2024 | | :------------------------------------------ | :-------------------------------------- | :-------------------------------------- | | Dividends per share to common stockholders | $1.770 | $1.575 |\n| Dividends to common stockholders | $8,345 | $7,330 | - A new **$10 billion** stock repurchase program was authorized in April 2025, with **$2,450 million** repurchased and **$7,550 million** remaining as of August 3, 2025[142](index=142&type=chunk) - Employee withholding taxes on equity awards, totaling **$3,860 million** for the three fiscal quarters ended August 3, 2025, are now settled by selling a portion of vested shares, eliminating cash outflow[145](index=145&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses Broadcom's exposure to market risks, specifically focusing on interest rate risk and its potential impact on the fair value of fixed-rate borrowings and interest expense on floating-rate debt - As of August 3, 2025, fixed-rate borrowings had a principal amount of **$65.8 billion** and an estimated fair value of **$62.5 billion**[152](index=152&type=chunk) - A hypothetical **50 basis point** change in market interest rates would alter the fair value by approximately **$1.8 billion**[152](index=152&type=chunk) - Broadcom had no floating-rate term loans outstanding as of August 3, 2025[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of the effectiveness of Broadcom's disclosure controls and procedures and confirms no material changes in internal control over financial reporting during the reported period - Broadcom's CEO and CFO concluded that disclosure controls and procedures were effective at a reasonable assurance level as of August 3, 2025[154](index=154&type=chunk) - There were no material changes in internal control over financial reporting during the period covered by the report[156](index=156&type=chunk) PART II — OTHER INFORMATION Presents additional non-financial information, including legal proceedings, risk factors, and other required disclosures [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11, 'Commitments and Contingencies,' for detailed information on legal proceedings and associated risks - Information on legal proceedings is incorporated by reference from Note 11, 'Commitments and Contingencies,' in Part I, Item 1 of this Form 10-Q[158](index=158&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various material risks that could adversely affect Broadcom's business, operations, financial condition, and stock price, categorized into risks related to business, taxes, indebtedness, and common stock ownership - Broadcom's business, operations, and financial results are subject to risks related to its business, taxes, indebtedness, and owning its common stock[159](index=159&type=chunk)[160](index=160&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Risks Related to Our Business](index=36&type=section&id=Risks%20Related%20to%20Our%20Business) Identifies various operational and external risks that could negatively impact Broadcom's business and financial performance - Adverse global economic conditions, governmental regulations, and geopolitical factors, particularly trade tensions with U.S. trading partners like China, could negatively impact Broadcom's business, supply chain, and financial results[166](index=166&type=chunk)[168](index=168&type=chunk)[171](index=171&type=chunk) - Significant customer concentration, with sales to distributors accounting for **47%** of net revenue and top five end customers for approximately **40%** in the three fiscal quarters ended August 3, 2025, poses a risk of revenue fluctuation and adverse impact from customer demand reduction or loss[174](index=174&type=chunk) - Failure to successfully integrate the VMware acquisition, including customer acceptance of the transition to a subscription licensing model and simplified product portfolio, could adversely affect Broadcom's business and stock value[184](index=184&type=chunk)[185](index=185&type=chunk) - Dependence on contract manufacturing (e.g., TSMC for **95%** of wafers) and a limited number of materials suppliers creates supply chain risks, including capacity allocation, quality issues, and price increases, which could hinder product delivery and impact financial performance[201](index=201&type=chunk)[203](index=203&type=chunk)[206](index=206&type=chunk) - Cybersecurity threats, security breaches, and vulnerabilities in IT systems or products could lead to information loss, business disruption, reputational damage, and significant financial liabilities[194](index=194&type=chunk)[197](index=197&type=chunk)[214](index=214&type=chunk)[217](index=217&type=chunk) [Risks Related to Our Taxes](index=37&type=section&id=Risks%20Related%20to%20Our%20Taxes) Discusses potential tax liabilities and the impact of tax law changes on Broadcom's financial condition - Broadcom's income taxes are subject to volatility due to business reorganizations, tax structure changes, and new legislation like the 'One Big Beautiful Bill Act' and global minimum tax provisions, which may increase effective tax rates and cash tax costs[246](index=246&type=chunk)[247](index=247&type=chunk) - There are potential tax liabilities from VMware's former controlling ownership by Dell, including indemnification obligations if the spin-off is deemed not tax-free, which could materially affect financial condition[249](index=249&type=chunk)[253](index=253&type=chunk) - Changes or termination of tax incentives or tax holiday arrangements could significantly increase corporate income taxes and reduce profitability, as these incentives decreased the provision for income taxes by approximately **$2,261 million** in fiscal year 2024[250](index=250&type=chunk)[251](index=251&type=chunk) [Risks Related to Our Indebtedness](index=37&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) Highlights the financial implications and constraints associated with Broadcom's substantial debt levels - Broadcom's substantial indebtedness of **$66,257 million** as of August 3, 2025, could adversely affect its financial health by increasing vulnerability to economic conditions, limiting flexibility, creating a competitive disadvantage, and dedicating a significant portion of cash flow to debt payments[254](index=254&type=chunk) [Risks Related to Owning Our Common Stock](index=37&type=section&id=Risks%20Related%20to%20Owning%20Our%20Common%20Stock) Addresses factors that could influence the volatility of Broadcom's stock price and shareholder returns - Broadcom's stock price may be volatile due to factors such as analyst reports, demand for AI-related products, market fluctuations, acquisition announcements, and significant sales by large investors[256](index=256&type=chunk)[257](index=257&type=chunk) - The amount and frequency of stock repurchases may fluctuate based on cash priorities, and there is no assurance that cash dividends will continue to be declared[259](index=259&type=chunk)[260](index=260&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=56&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[262](index=262&type=chunk) [Item 3. Defaults Upon Senior Securities](index=56&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section confirms that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities to report[263](index=263&type=chunk) [Item 4. Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that there are no mine safety disclosures to report - No mine safety disclosures to report[264](index=264&type=chunk) [Item 5. Other Information](index=56&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information to report[265](index=265&type=chunk) [Item 6. Exhibits](index=57&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive index of exhibits filed with the Form 10-Q, including merger agreements, certificates of incorporation, bylaws, various senior notes indentures, and certifications - The report includes an exhibit index listing various documents such as merger agreements, corporate governance documents, debt instruments, and certifications[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk) SIGNATURES Confirms the official submission of the report through the signature of a principal officer [SIGNATURES](index=60&type=section&id=SIGNATURES) This section contains the signature of Broadcom Inc.'s Chief Financial Officer, Kirsten M. Spears, certifying the filing of the report - The report is signed by Kirsten M. Spears, Chief Financial Officer of Broadcom Inc., on September 10, 2025[272](index=272&type=chunk)

[PART I - FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial information for Citi Trends, Inc., including financial statements, management's discussion, market risk, and controls and procedures [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(unaudited)) This section presents the unaudited condensed consolidated financial statements of Citi Trends, Inc. for the period ended August 2, 2025, including balance sheets, statements of operations, cash flows, and stockholders' equity, along with accompanying notes detailing significant accounting policies, financial instruments, and operational aspects [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This table presents the condensed consolidated balance sheets, detailing assets, liabilities, and stockholders' equity as of August 2, 2025, and February 1, 2025 | Metric | August 2, 2025 (in thousands) | February 1, 2025 (in thousands) | Change (in thousands) | | :-------------------------- | :----------------------------- | :------------------------------ | :-------------------- | | Cash and cash equivalents | $50,397 | $61,085 | $(10,688) | | Inventory | $117,566 | $122,640 | $(5,074) | | Total current assets | $189,204 | $197,060 | $(7,856) | | Total assets | $457,408 | $462,769 | $(5,361) | | Total current liabilities | $167,376 | $174,391 | $(7,015) | | Total liabilities | $344,168 | $349,593 | $(5,425) | | Total stockholders' equity | $113,240 | $113,176 | $64 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This section provides the condensed consolidated statements of operations, outlining net sales, income (loss) from operations, and net income (loss) for the thirteen and twenty-six weeks ended August 2, 2025, and August 3, 2024 Thirteen Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------- | :--------- | | Net sales | $190,750 | $176,552 | $14,198 | 8.0% | | Income (loss) from operations | $3,517 | $(24,895) | $28,412 | N/A | | Net income (loss) | $3,818 | $(18,413) | $22,231 | N/A | | Basic net earnings (loss) per common share | $0.48 | $(2.21) | $2.69 | N/A | | Diluted net earnings (loss) per common share | $0.46 | $(2.21) | $2.67 | N/A | Twenty-Six Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change ($ in thousands) | Change (%) | | :-------------------------- | :----------------------------- | :----------------------------- | :---------------------- | :--------- | | Net sales | $392,478 | $362,841 | $29,637 | 8.2% | | Income (loss) from operations | $4,006 | $(31,865) | $35,871 | N/A | | Net income (loss) | $4,689 | $(21,839) | $26,528 | N/A | | Basic net earnings (loss) per common share | $0.58 | $(2.63) | $3.21 | N/A | | Diluted net earnings (loss) per common share | $0.57 | $(2.63) | $3.20 | N/A | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This table summarizes the condensed consolidated statements of cash flows, detailing cash activities from operations, investing, and financing for the twenty-six weeks ended August 2, 2025, and August 3, 2024 Twenty-Six Weeks Ended Cash Flow Summary | Activity | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :----------------------------- | :----------------------------- | :-------------------- | | Net cash used in operating activities | $(7,114) | $(13,996) | $6,882 (less used) | | Net cash provided by (used in) investing activities | $3,501 | $(5,552) | $9,053 (swing to provided) | | Net cash used in financing activities | $(7,075) | $(856) | $(6,219) (more used) | | Net decrease in cash and cash equivalents | $(10,688) | $(20,404) | $9,716 (smaller decrease) | | Cash and cash equivalents, End of period | $50,397 | $59,302 | $(8,905) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including retained earnings and treasury stock, for the periods presented - Total stockholders' equity increased slightly from **$113,176 thousand** at February 1, 2025, to **$113,240 thousand** at August 2, 2025[10](index=10&type=chunk)[18](index=18&type=chunk) - Retained earnings increased from **$275,901 thousand** to **$280,590 thousand** during the period[10](index=10&type=chunk)[18](index=18&type=chunk) - Treasury stock increased from **$(270,988) thousand** to **$(277,303) thousand**, reflecting share repurchases[10](index=10&type=chunk)[18](index=18&type=chunk) [Notes to the Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes accompanying the financial statements, explaining significant accounting policies, financial instruments, and other relevant disclosures [1. Significant Accounting Policies](index=7&type=section&id=1.%20Significant%20Accounting%20Policies) This note describes the company's business, store count, and the basis of preparation for the unaudited interim financial statements - Citi Trends, Inc. is a leading off-price value retailer of apparel, accessories, and home trends, primarily for African American families in the United States[20](index=20&type=chunk) - As of August 2, 2025, the Company operated **590 stores** across 33 states[20](index=20&type=chunk) - The condensed consolidated financial statements are unaudited and prepared in accordance with U.S. GAAP for interim reporting[21](index=21&type=chunk) [2. Cash and Cash Equivalents/Concentration of Credit Risk](index=7&type=section&id=2.%20Cash%20and%20Cash%20Equivalents/Concentration%20of%20Credit%20Risk) This note defines cash equivalents and discusses the company's policies for managing cash and credit risk concentrations - Cash equivalents are defined as highly liquid investments with maturities of **three months or less** at the date of purchase[23](index=23&type=chunk) - The Company places its cash and cash equivalents in high credit quality banks and institutional money market funds, with some accounts exceeding federally insured limits[23](index=23&type=chunk) [3. Earnings per Share](index=7&type=section&id=3.%20Earnings%20per%20Share) This note details the calculation of basic and diluted earnings per common share, including the treatment of potentially dilutive securities - Basic earnings per common share are calculated using the weighted average number of common shares outstanding[24](index=24&type=chunk) - Diluted earnings per common share include the dilutive effect of potentially dilutive securities, such as nonvested restricted stock, unless antidilutive during loss periods[24](index=24&type=chunk) Weighted Average Shares Outstanding (Diluted) | Period | August 2, 2025 | August 3, 2024 | | :--------------------- | :------------- | :------------- | | Thirteen Weeks Ended | 8,313,841 | 8,336,629 | | Twenty-Six Weeks Ended | 8,242,148 | 8,294,593 | [4. Revolving Credit Facility](index=8&type=section&id=4.%20Revolving%20Credit%20Facility) This note provides information on the company's revolving credit facility, including its amendment, commitment, and current utilization - The revolving credit facility was amended on April 10, 2025, extending its maturity date to **April 10, 2030**[27](index=27&type=chunk) - The facility provides a **$75 million** credit commitment and a **$25 million** uncommitted 'accordion' feature[27](index=27&type=chunk) - As of August 2, 2025, the Company had **no borrowings** under the credit facility and **$2.2 million** of letters of credit outstanding[30](index=30&type=chunk) [5. Impairment of Assets](index=8&type=section&id=5.%20Impairment%20of%20Assets) This note details non-cash impairment expenses related to underperforming stores, specifying the affected asset categories - Non-cash impairment expense related to underperforming stores totaled **$0.3 million** in the first half of 2025, a decrease from **$1.3 million** in the first half of 2024[31](index=31&type=chunk) - The 2025 impairment consisted of **$0.2 million** for leasehold improvements and fixtures and equipment, and **$0.1 million** for operating lease right-of-use assets[31](index=31&type=chunk) [6. Income Taxes](index=8&type=section&id=6.%20Income%20Taxes) This note explains the company's income tax accounting, deferred tax assets, valuation allowance, and the impact of recent tax law changes - Income taxes are accounted for under the asset and liability method, recognizing deferred tax assets and liabilities for future tax consequences[32](index=32&type=chunk) - A valuation allowance is maintained due to sufficient negative evidence regarding the realizability of deferred tax assets[35](index=35&type=chunk) - The 'One Big Beautiful Bill Act,' signed July 4, 2025, includes changes to federal tax law allowing more favorable deductibility of certain business expenses starting in 2025, which the Company expects to utilize[36](index=36&type=chunk) [7. Commitments and Contingencies](index=10&type=section&id=7.%20Commitments%20and%20Contingencies) This note addresses the company's involvement in legal proceedings and management's assessment of their potential financial impact - The Company is from time to time involved in various legal proceedings incidental to the conduct of its business[37](index=37&type=chunk) - Management is not aware of any legal proceedings pending or threatened that are expected to have a material adverse effect on the Company's financial condition, results of operations, or liquidity[38](index=38&type=chunk) [8. Stock Repurchases](index=10&type=section&id=8.%20Stock%20Repurchases) This note provides details on stock repurchase activities and the remaining authorization under the company's repurchase program Stock Repurchases (Twenty-Six Weeks Ended) | Metric | August 2, 2025 | August 3, 2024 | | :-------------------------- | :------------- | :------------- | | Total number of shares purchased | 251 | — | | Total investment (in thousands) | $6,315 | — | - As of August 2, 2025, **$40.0 million** remained available under the Company's stock repurchase authorization[40](index=40&type=chunk) [9. Recent Accounting Pronouncements](index=10&type=section&id=9.%20Recent%20Accounting%20Pronouncements) This note discusses recently issued accounting standards and the company's ongoing evaluation of their potential impact on financial reporting - ASU 2023-09, 'Improvement to Income Tax Disclosures,' effective for annual periods beginning after December 15, 2024, requires additional income tax rate reconciliations and taxes paid disclosures[41](index=41&type=chunk) - ASU 2024-03, 'Expense Disaggregation Disclosures,' effective for fiscal years beginning after December 15, 2026, requires disaggregation of certain income statement expenses[42](index=42&type=chunk) - The Company is currently evaluating the impact of both new standards on its consolidated financial statements and related disclosures[41](index=41&type=chunk)[42](index=42&type=chunk) [10. Revenue](index=12&type=section&id=10.%20Revenue) This note describes the company's primary revenue sources, recognition policies, and disaggregation of net sales by product division - The Company's primary revenue source is from the sale of clothing and accessories, with performance obligations satisfied immediately upon customer payment and merchandise receipt[44](index=44&type=chunk) - Revenue from layaway sales is recognized when merchandise is paid for and control is transferred to the customer[44](index=44&type=chunk) Revenue Disaggregation by Division (Thirteen Weeks Ended August 2, 2025) | Division | Percentage of Net Sales | | :---------------- | :---------------------- | | Womens | 27 % | | Kids | 22 % | | Mens | 18 % | | Accessories & Beauty | 17 % | | Home & Lifestyle | 9 % | | Footwear | 7 % | [11. Leases](index=12&type=section&id=11.%20Leases) This note details the company's lease arrangements for retail stores, distribution centers, and equipment, including lease costs and liabilities - The Company leases its retail store locations, distribution centers, and certain office space and equipment, typically for **five-year terms** with extension options[49](index=49&type=chunk) Total Lease Cost (Thirteen Weeks Ended) | Lease Cost Type | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | | :---------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $15,219 | $14,400 | | Variable lease cost | $3,205 | $3,541 | | Short term lease cost | $422 | $381 | | **Total lease cost** | **$18,846** | **$18,322** | - Total present value of lease liabilities as of August 2, 2025, was **$217,489 thousand**, with **$36,175 thousand** due in the remainder of 2025[52](index=52&type=chunk) [12. Segment Reporting](index=13&type=section&id=12.%20Segment%20Reporting) This note clarifies that the company operates as a single reportable segment, with the CEO managing resources and assessing performance on a consolidated basis - The Company operates as a single reportable segment, an off-price value retailer of fashion apparel, accessories, and home trends primarily for African American families[54](index=54&type=chunk) - The Chief Executive Officer, as the chief operating decision maker (CODM), manages and allocates resources on a consolidated basis and assesses performance based on consolidated net income (loss)[54](index=54&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=14&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key performance drivers, economic uncertainties, and strategic capital allocation. It details the financial performance for the thirteen and twenty-six weeks ended August 2, 2025, compared to the prior year, and discusses liquidity, capital resources, and critical accounting policies [Forward-Looking Statements](index=14&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding future performance, subject to various risks and uncertainties that may cause actual results to differ - This section contains forward-looking statements regarding future revenues, expenditures, plans, and economic performance, which are subject to risks, uncertainties, and other factors[57](index=57&type=chunk) - Factors that may cause actual results to differ include general economic conditions, inflation, energy and fuel costs, unemployment, tariffs, natural disasters, and supply chain disruptions[58](index=58&type=chunk) [Executive Overview](index=15&type=section&id=Executive%20Overview) This overview describes Citi Trends as an off-price value retailer serving African American families, detailing its product mix and store operations - Citi Trends is an off-price value retailer known for trendy fashions, great brands, and competitive prices, primarily serving African American families in the United States[61](index=61&type=chunk) - The Company curates a three-tiered product mix including well-known brands, core products, and opening price goods, often featuring 'extreme value' deals[61](index=61&type=chunk) - As of August 2, 2025, the Company operated **590 stores** in urban, suburban, and rural markets across 33 states[62](index=62&type=chunk) [Uncertainties and Challenges](index=15&type=section&id=Uncertainties%20and%20Challenges) This section discusses economic conditions, including inflation and tariffs, and the seasonal nature of the business that may impact operations - Operations are expected to continue being influenced by general economic conditions, including ongoing inflationary pressures, new tariff programs, and changes in consumer sentiment[63](index=63&type=chunk) - The business is seasonal, with historically higher sales in the first and fourth quarters, and store traffic is influenced by weather patterns[64](index=64&type=chunk) [Basis of Presentation](index=15&type=section&id=Basis%20of%20Presentation) This section defines key financial statement components, including net sales, cost of sales, and selling, general, and administrative expenses - Net sales consist of store sales and layaway fees, net of customer returns[65](index=65&type=chunk) - Cost of sales includes the cost of products sold and associated freight costs, excluding depreciation[65](index=65&type=chunk) - Selling, general and administrative expenses comprise store costs (payroll, occupancy), corporate and distribution center costs, and advertising[65](index=65&type=chunk) [Results of Operations](index=15&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net sales, cost of sales, and net income (loss), for the reported periods [Thirteen Weeks Ended August 2, 2025 and August 3, 2024](index=17&type=section&id=Thirteen%20Weeks%20Ended%20August%202,%202025%20and%20August%203,%202024) This subsection details the financial performance for the thirteen-week period, highlighting changes in net sales, cost of sales, and net income - Net sales increased by **$14.2 million**, or **8.0%**, to **$190.8 million**, driven by a **9.2% increase** in comparable store sales[72](index=72&type=chunk) - Cost of sales as a percentage of sales decreased by **890 basis points** to **60.0%**, primarily due to a **580 basis points decrease** in markdowns and a **190 basis points decrease** in shrink[73](index=73&type=chunk) - The Company reported a net income of **$3.8 million**, a significant improvement from a net loss of **$18.4 million** in the prior year, partly due to an **$11.0 million gain** on the sale of a corporate office building[77](index=77&type=chunk)[78](index=78&type=chunk) [Twenty-Six Weeks Ended August 2, 2025 and August 3, 2024](index=18&type=section&id=Twenty-Six%20Weeks%20Ended%20August%202,%202025%20and%20August%203,%202024) This subsection details the financial performance for the twenty-six-week period, highlighting changes in net sales, cost of sales, and net income - Net sales increased by **$29.6 million**, or **8.2%**, to **$392.5 million**, with comparable store sales increasing by **9.6%**[79](index=79&type=chunk) - Cost of sales as a percentage of sales decreased by **480 basis points** to **60.2%**, primarily driven by a **250 basis points decrease** in markdowns and a **130 basis points decrease** in shrink[80](index=80&type=chunk) - The Company achieved a net income of **$4.7 million**, a substantial improvement from a net loss of **$21.8 million** in the prior year, benefiting from an **$11.0 million gain** on the sale of a corporate office building[84](index=84&type=chunk)[85](index=85&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's capital allocation strategy, cash position, inventory, capital expenditures, and cash flow activities - The capital allocation strategy prioritizes investments in profitable business growth and current operations, followed by returning excess cash to stockholders through repurchase programs[86](index=86&type=chunk) - Quarter-end cash and cash equivalents were **$50.4 million**, down from **$59.3 million** at the end of the second quarter last year[86](index=86&type=chunk) - Inventory balance was **$117.6 million**, a **12.9% decrease** compared to **$135.0 million** at the end of the second quarter last year[88](index=88&type=chunk) - Capital expenditures in the first twenty-six weeks of 2025 were **$7.7 million**, an increase of **$2.1 million** year-over-year, with fiscal 2025 projected at **$22 million to $25 million** for new stores, remodels, and systems[89](index=89&type=chunk) - Net cash used in operating activities improved to **$7.1 million** in the first twenty-six weeks of 2025 from **$14.0 million** in the same period of 2024[92](index=92&type=chunk) - Cash provided by investing activities was **$3.5 million** in the first twenty-six weeks of 2025, a reversal from cash used of **$5.6 million** in the prior year, primarily due to the sale of a building[94](index=94&type=chunk) - Cash used in financing activities increased to **$7.1 million** in the first twenty-six weeks of 2025, mainly due to **$6.3 million** in share repurchases[95](index=95&type=chunk) [Critical Accounting Policies](index=19&type=section&id=Critical%20Accounting%20Policies) This section addresses the significant estimates and assumptions made in preparing the financial statements and confirms no material changes to prior policies - The preparation of condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses[97](index=97&type=chunk) - There have been no material changes to the Critical Accounting Policies outlined in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025[98](index=98&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes in the Company's market risk during the twenty-six weeks ended August 2, 2025, compared to the disclosures in its previous Annual Report on Form 10-K - No material changes in market risk were reported for the twenty-six weeks ended August 2, 2025, compared to the disclosures in the Annual Report on Form 10-K for the fiscal year ended February 1, 2025[99](index=99&type=chunk) [Item 4. Controls and Procedures](index=21&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the principal executive and financial officers, evaluated the effectiveness of disclosure controls and procedures as of August 2, 2025, concluding they are effective. No material changes to internal control over financial reporting occurred during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of August 2, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[100](index=100&type=chunk) - No changes in internal control over financial reporting occurred during the fiscal quarter ended August 2, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[102](index=102&type=chunk) [PART II - OTHER INFORMATION](index=22&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section provides additional information not covered in Part I, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=22&type=section&id=Item%201.%20Legal%20Proceedings) The Company is periodically involved in legal proceedings incidental to its business but is not aware of any pending or threatened matters expected to have a material adverse effect on its financial condition, results of operations, or liquidity - The Company is from time to time involved in various legal proceedings incidental to the conduct of its business[103](index=103&type=chunk) - Management is not aware of any legal proceedings pending or threatened that are expected to have a material adverse effect on the Company's financial condition, results of operations, or liquidity[103](index=103&type=chunk) [Item 1A. Risk Factors](index=22&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the Risk Factors previously described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025 - There have been no material changes to the Risk Factors described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025[104](index=104&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=22&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Company did not repurchase any shares in the second quarter of 2025, but $40.0 million remained available under its stock repurchase authorization as of August 2, 2025 - The Company did not repurchase any shares in the second quarter of 2025[105](index=105&type=chunk) - As of August 2, 2025, **$40.0 million** remained available under the Company's stock repurchase authorization[105](index=105&type=chunk) [Item 3. Defaults Upon Senior Securities](index=22&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is marked as not applicable, indicating no defaults upon senior securities - This item is marked as 'Not applicable'[106](index=106&type=chunk) [Item 4. Mine Safety Disclosures](index=22&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is marked as not applicable, indicating no mine safety disclosures are required - This item is marked as 'Not applicable'[107](index=107&type=chunk) [Item 5. Other Information](index=22&type=section&id=Item%205.%20Other%20Information) This item is marked as not applicable, indicating no other information to report - This item is marked as 'Not applicable'[108](index=108&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including corporate organizational documents, incentive plans, award agreements, and certifications from executive officers - Exhibits include corporate organizational documents (Certificate of Incorporation, Bylaws), incentive plans (2021 Incentive Plan), and related award agreements[112](index=112&type=chunk) - Certifications of the Principal Executive Officer and Principal Financial Officer, pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, are included[112](index=112&type=chunk) - Inline XBRL Document Sets for the condensed consolidated financial statements and the cover page are also filed[112](index=112&type=chunk) [SIGNATURES](index=24&type=section&id=SIGNATURES) This section contains the official signature of the registrant, Citi Trends, Inc., by its Chief Financial Officer, Heather Plutino, certifying the filing of the report - The report was signed on September 10, 2025, by Heather Plutino, Chief Financial Officer of Citi Trends, Inc[116](index=116&type=chunk)

[Fiscal First Quarter 2026 Highlights](index=1&type=section&id=Fiscal%20First%20Quarter%202026%20Highlights) [Executive Summary](index=1&type=section&id=Executive%20Summary) Daktronics reported a strong start to fiscal 2026, with robust order growth, profit expansion, and significant progress on its transformation roadmap | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Operating Profit | $23.3 million | $22.7 million | +$0.6 million | | Operating Margin | 10.6% | 10.0% | +0.6 pp | | Orders | $238.5 million | $176.2 million | +35.4% YoY | | Operating Cash Flow | $26.1 million | $19.5 million | +34.0% YoY | | Ending Cash Balance | $137 million | N/A | N/A | - Reiterated three-year forward objectives: **7-10% sales growth**, **10-12% operating margin**, **17-20% ROIC**[1](index=1&type=chunk) - Fiscal Q1 2026 included **14 weeks of operating results**, compared to **13 weeks in Q1 FY25**[2](index=2&type=chunk) [Key Financial and Operational Achievements](index=1&type=section&id=Key%20Financial%20and%20Operational%20Achievements) The company achieved a significant turnaround from a net loss to net income, driven by improved gross profit margins and strong order bookings, particularly in Live Events and High School Park and Recreation | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Net Income (Loss) | $16.5 million | $(4.9) million | +$21.4 million | | Sales | $219.0 million | $226.1 million | -3.1% YoY | | Gross Profit as % of Net Sales | 29.7% | 26.4% | +3.3 pp | | Orders for Product and Service | $238.5 million | $176.2 million | +35.4% YoY | | Product Backlog (as of Aug 2, 2025) | $360.3 million | $267.2 million (Q1 FY25) | +35.0% YoY | - Introduced new product enhancements for indoor/outdoor Fascia Ribbon Displays and indoor Narrow Pixel Pitch display offerings for International Markets[6](index=6&type=chunk) - Launched a new Service software system to enhance customer experience and operational agility[6](index=6&type=chunk) [Outlook and Strategic Initiatives](index=2&type=section&id=Outlook) [Business and Digital Transformation](index=2&type=section&id=Business%20and%20Digital%20Transformation) Daktronics is actively pursuing a business and digital transformation to achieve profitable growth and cost reduction, including a tiered product strategy and leveraging data and AI tools - Executing business and digital transformation to drive profitable growth and reduce costs[7](index=7&type=chunk) - Implementing a tiered product strategy and enhancing sales, fulfillment, support, corporate management, and data/AI tools[7](index=7&type=chunk) - Maintaining a global manufacturing footprint and flexible supply chain to mitigate tariff impacts and diversify international growth[8](index=8&type=chunk) [Forward-Looking Strategy](index=2&type=section&id=Forward-Looking%20Strategy) The company is focused on executing its three-year transformation plan, driven by robust backlog and strong customer demand, to enhance customer experience and deliver long-term shareholder value - Entering Q2 with robust backlog, strong customer demand, and improved efficiency[9](index=9&type=chunk) - Continuing to execute the three-year transformation plan with momentum, focusing on enhancing customer experience and driving long-term profitability[9](index=9&type=chunk) - Maintaining differential leadership in innovation by focusing on high-return product development initiatives[9](index=9&type=chunk) [Detailed First Quarter Results](index=2&type=section&id=First%20Quarter%20Results) [Income Statement Analysis](index=2&type=section&id=Income%20Statement%20Analysis) Daktronics reported a significant improvement in net income, primarily due to the absence of a non-operating debt fair value adjustment, with gross profit margin increasing despite a slight decrease in net sales | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Net Income (Loss) | $16.5 million | $(4.9) million | +$21.4 million | | Net Sales | $219.0 million | $226.1 million | -3.1% YoY | | Gross Profit as % of Net Sales | 29.7% | 26.4% | +3.3 pp | | Operating Expenses | $41.8 million | $37.0 million | +$4.8 million | | Operating Margin | 10.6% | 10.0% | +0.6 pp | | Interest Income (Expense), net | $0.9 million | $(0.1) million | +$1.0 million | | Effective Tax Rate | 25.9% | Skewed | N/A | | Diluted EPS | $0.33 | $(0.11) | +$0.44 | - Net sales increased **26.9% sequentially from Q4 FY25**, driven by the Live Events, High School Park and Recreation, Commercial, and International business units[12](index=12&type=chunk) - Operating expenses increased due to investments in information technology, product efficiency, and revenue growth initiatives[14](index=14&type=chunk) [Orders and Sales by Business Unit](index=2&type=section&id=Orders%20and%20Sales%20by%20Business%20Unit) Orders saw significant growth, particularly in Live Events, High School Park and Recreation, and International units, while net sales showed strong sequential growth | Business Unit | Q1 FY26 Orders ($M) | Q1 FY25 Orders ($M) | % Change | Q1 FY26 Net Sales ($M) | Q1 FY25 Net Sales ($M) | % Change | | :------------ | :------------------ | :------------------ | :------- | :--------------------- | :--------------------- | :------- | | Commercial | 44.2 | 42.1 | 5.0% | 46.2 | 34.2 | 35.0% | | Live Events | 92.2 | 50.9 | 81.2% | 79.8 | 108.6 | (26.5)% | | High School Park and Recreation | 63.3 | 46.4 | 36.2% | 59.3 | 48.0 | 23.6% | | Transportation | 21.9 | 22.8 | (3.7)% | 16.6 | 22.5 | (26.3)% | | International | 16.9 | 13.9 | 21.5% | 17.1 | 12.8 | 33.6% | | **Total** | **238.5** | **176.2** | **35.4%** | **219.0** | **226.1** | **(3.1)%** | - Live Events had large order bookings from three major league sports stadiums and multiple college/university projects[11](index=11&type=chunk) - High School Park and Recreation achieved a record quarter for orders due to continued video adoption in schools[11](index=11&type=chunk) [Balance Sheet and Cash Flow](index=3&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) [Financial Position](index=3&type=section&id=Financial%20Position) Daktronics maintained a strong balance sheet with increased cash and marketable securities and a healthy working capital ratio, demonstrating effective capital management | Metric | As of Aug 2, 2025 | As of Apr 26, 2025 | Change | | :----- | :---------------- | :----------------- | :----- | | Cash, Restricted Cash & Marketable Securities | $136.9 million | $127.5 million | +$9.4 million | | Total Current & Long-Term Debt | $11.6 million | $11.9 million | -$0.3 million | | Working Capital Ratio | 2.1 to 1 | N/A | N/A | - No draw-downs on the asset-based revolving credit facility during Q1 FY26, with **$41.5 million available to draw**[18](index=18&type=chunk) [Cash Flow Activities](index=3&type=section&id=Cash%20Flow%20Activities) The company generated substantial cash from operations, which was partially used for capital expenditures and significant share repurchases | Metric | Q1 FY26 | Q1 FY25 | Change | | :----- | :------ | :------ | :----- | | Cash from Operations | $26.1 million | $19.5 million | +$6.6 million | | Purchases of Property and Equipment | $4.3 million | $5.1 million | -$0.8 million | | Share Repurchases | $10.7 million (0.6M shares) | $0 million | +$10.7 million | [Corporate Information](index=3&type=section&id=Corporate%20Information) [Webcast Information](index=3&type=section&id=Webcast%20Information) Daktronics hosted a conference call and webcast on September 10, 2025, to discuss its financial results, with replay available online - Conference call and webcast held on **September 10, 2025**, at **10:00 a.m. (Central Time)**[21](index=21&type=chunk) - Related presentation materials and webcast replay available at http://investor.daktronics.com[21](index=21&type=chunk) [About Daktronics](index=3&type=section&id=About%20Daktronics) Daktronics is a global leader in designing, manufacturing, marketing, and servicing large-screen video displays, electronic scoreboards, and related control systems across various business units - World's largest supplier of large-screen video displays, electronic scoreboards, LED text/graphics displays, and control systems[22](index=22&type=chunk) - Excels in control of display systems requiring integration of multiple complex displays showing real-time information, graphics, animation, and video[22](index=22&type=chunk) - Operates in four domestic business units (Live Events, Commercial, High School Park and Recreation, Transportation) and one International business unit[22](index=22&type=chunk) [Safe Harbor Statement](index=3&type=section&id=Safe%20Harbor%20Statement) This section provides a cautionary notice regarding forward-looking statements, emphasizing that actual results may differ materially due to various risks and uncertainties - Contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[23](index=23&type=chunk)[24](index=24&type=chunk) - Risk factors include changes in economic/market conditions, management of growth, timing of contracts, margin fluctuations, new products, weather, regulation, tariffs, raw material costs, geopolitical actions, and other risks detailed in Form 10-K[24](index=24&type=chunk) - Company undertakes no obligation to update or revise forward-looking statements except as required by applicable law[26](index=26&type=chunk) [Consolidated Financial Statements](index=6&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) The Consolidated Statements of Operations present Daktronics' financial performance, including net sales, cost of sales, gross profit, operating expenses, and net income (loss) for the three months ended August 2, 2025, and July 27, 2024 | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net sales | $218,972 | $226,088 | | Cost of sales | 153,900 | 166,390 | | Gross profit | 65,072 | 59,698 | | Operating expenses: | | | | Selling | 16,834 | 15,636 | | General and administrative | 14,295 | 11,723 | | Product design and development | 10,671 | 9,623 | | Total Operating expenses | 41,800 | 36,982 | | Operating income | 23,272 | 22,716 | | Nonoperating income (expense): | | | | Interest income (expense), net | 893 | (71) | | Change in fair value of convertible note | — | (21,590) | | Other expense, net | (1,942) | (835) | | Income before income taxes | 22,223 | 220 | | Income tax expense | 5,753 | 5,166 | | Net income (loss) | $16,470 | $(4,946) | | Weighted average shares outstanding: | | | | Basic | 48,902 | 46,311 | | Diluted | 49,736 | 46,311 | | Earnings (loss) per share: | | | | Basic | $0.34 | $(0.11) | | Diluted | $0.33 | $(0.11) | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets provide a detailed view of Daktronics' financial position, including assets, liabilities, and stockholders' equity, as of August 2, 2025, and April 26, 2025 | ASSETS | August 2, 2025 ($ thousands) | April 26, 2025 ($ thousands) | | :--- | :--- | :--- | | **CURRENT ASSETS:** | | | | Cash and cash equivalents | $136,856 | $127,507 | | Accounts receivable, net | 124,254 | 92,762 | | Inventories | 109,455 | 105,839 | | Contract assets | 41,879 | 41,169 | | Current maturities of long-term receivables | 2,988 | 2,437 | | Prepaid expenses and other current assets | 13,500 | 8,520 | | Income tax receivables | 452 | 3,217 | | **Total current assets** | **429,384** | **381,451** | | Property and equipment, net | 66,080 | 73,884 | | Long-term receivables, less current maturities | 278 | 1,030 | | Goodwill | 3,193 | 3,188 | | Intangibles, net | 499 | 568 | | Debt issuance costs, net | 979 | 1,289 | | Right of use, investment in affiliates, and other assets | 13,101 | 9,378 | | Deferred income taxes | 32,077 | 32,104 | | **TOTAL ASSETS** | **$545,591** | **$502,892** | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | **CURRENT LIABILITIES:** | | | | Current portion of long-term debt | $1,500 | $1,500 | | Accounts payable | 64,950 | 46,669 | | Contract liabilities | 83,408 | 69,050 | | Accrued expenses | 44,755 | 41,705 | | Warranty obligations | 12,449 | 12,706 | | Income taxes payable | 489 | 375 | | **Total current liabilities** | **207,551** | **172,005** | | Long-term warranty obligations | 23,814 | 23,124 | | Long-term contract liabilities | 18,497 | 18,421 | | Other long-term obligations | 5,812 | 6,839 | | Long-term debt, net | 10,081 | 10,487 | | Deferred income taxes | 85 | 85 | | **Total long-term liabilities** | **58,289** | **58,956** | | **STOCKHOLDERS' EQUITY:** | | | | Preferred Shares | — | — | | Common stock | — | — | | Additional paid-in capital | 191,663 | 189,940 | | Retained earnings | 144,380 | 127,910 | | Treasury stock, at cost | (50,411) | (39,759) | | Accumulated other comprehensive loss | (5,881) | (6,160) | | **TOTAL STOCKHOLDERS' EQUITY** | **279,751** | **271,931** | | **TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY** | **$545,591** | **$502,892** | [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows detail the sources and uses of cash across operating, investing, and financing activities for the three months ended August 2, 2025, and July 27, 2024 | CASH FLOWS FROM OPERATING ACTIVITIES: | August 2, 2025 ($ thousands) | July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net income (loss) | $16,470 | $(4,946) | | Adjustments to reconcile net income (loss) to net cash provided by operating activities: | | | | Depreciation and amortization | 4,804 | 4,893 | | Gain on sale of property, equipment and other assets | (38) | (20) | | Share-based compensation | 947 | 520 | | Equity in loss of affiliates | 805 | 931 | | Allowance for credit losses on affiliate loan | 795 | — | | Provision for doubtful accounts, net | 594 | 265 | | Deferred income taxes, net | 32 | 13 | | Change in fair value of convertible note | — | 21,590 | | Change in operating assets and liabilities | 1,688 | (3,765) | | **Net cash provided by operating activities** | **26,097** | **19,481** | | **CASH FLOWS FROM INVESTING ACTIVITIES:** | | | | Purchases of property and equipment | (4,291) | (5,081) | | Proceeds from sales of property, equipment and other assets | 218 | 45 | | Loans to equity investees | (1,547) | (933) | | **Net cash used in investing activities** | **(5,620)** | **(5,969)** | | **CASH FLOWS FROM FINANCING ACTIVITIES:** | | | | Payments on notes payable | (500) | (983) | | Principal payments on long-term obligations | (104) | (103) | | Payments for common shares repurchased | (10,652) | — | | Proceeds from exercise of stock options | 128 | 3,148 | | **Net cash (used in) provided by financing activities** | **(11,128)** | **2,062** | | **EFFECT OF EXCHANGE RATE CHANGES ON CASH** | **—** | **(64)** | | **NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH** | **9,349** | **15,510** | | **CASH, CASH EQUIVALENTS AND RESTRICTED CASH:** | | | | Beginning of period | 127,507 | 81,678 | | End of period | $136,856 | $97,188 | [Non-GAAP Financial Reconciliations](index=10&type=section&id=Non-GAAP%20Financial%20Reconciliations) [Reconciliation of Free Cash Flow](index=10&type=section&id=Reconciliation%20of%20Free%20Cash%20Flow) This section provides the reconciliation of net cash provided by operating activities to free cash flow, a non-GAAP measure used by management to evaluate operating performance | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $26,097 | $19,481 | | Purchases of property and equipment | (4,291) | (5,081) | | Proceeds from sales of property and equipment | 218 | 45 | | **Free cash flow** | **$22,024** | **$14,445** | - Free cash flow is a non-GAAP measure used to assess period-to-period operating performance[39](index=39&type=chunk) [Reconciliation of Adjusted Net Income](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Net%20Income) This reconciliation adjusts net income (loss) by excluding non-recurring or non-core items, such as the change in fair value of the convertible note, to provide a consistent view of the company's operating performance | | Three Months Ended August 2, 2025 ($ thousands) | Three Months Ended July 27, 2024 ($ thousands) | | :--- | :--- | :--- | | Net income (loss) | $16,470 | $(4,946) | | Change in fair value of convertible note | — | 21,590 | | **Adjusted net income** | **$16,470** | **$16,644** | - Adjusted net income is a non-GAAP financial measurement used to report results exclusive of non-recurring, unique, or non-core operating business items[41](index=41&type=chunk) [Reconciliation of Long-term Debt](index=12&type=section&id=Reconciliation%20of%20Long-term%20Debt) This section details the components of Daktronics' long-term debt, including mortgage, debt issuance costs, and current portion | | August 2, 2025 ($ thousands) | April 26, 2025 ($ thousands) | | :--- | :--- | :--- | | Mortgage | $11,875 | $12,375 | | Long-term debt, gross | 11,875 | 12,375 | | Debt issuance costs, net | (294) | (388) | | Current portion | (1,500) | (1,500) | | **Long-term debt, net** | **$10,081** | **$10,487** |

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 3, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____ to ____ Commission File Number: 001-38936 (786) 320-7111 (Registrant's telephone number, including area code) N/A CHEWY, INC. (Exact name of registrant a ...

```markdown [Executive Summary & Business Overview](index=1&type=section&id=Executive%20Summary%20%26%20Business%20Overview) [Q2 FY2025 Financial Highlights](index=1&type=section&id=Q2%20FY2025%20Financial%20Highlights) Chewy reported strong Q2 FY2025 results, with net sales exceeding guidance and significant growth in Autoship customer sales and active customers. The company also saw improvements in gross margin and adjusted EBITDA margin Key Operating Metrics | Metric | Q2 FY2025 (13 Weeks) | Q2 FY2024 (13 Weeks) | YoY Change | | :-------------------------------- | :------------------- | :------------------- | :--------- | | Net Sales | $3.10 billion | $2.86 billion | +8.6% | | Autoship Customer Net Sales | $2.58 billion | $2.24 billion | +14.9% | | Autoship % of Total Net Sales | 83.0% | 78.4% | +4.6 pp | | Active Customers | 20.91 million | 20.00 million | +4.5% | | Net Sales Per Active Customer (NSPAC) | $591 | $565 | +4.6% | GAAP Profitability Metrics | Metric | Q2 FY2025 (13 Weeks) | Q2 FY2024 (13 Weeks) | YoY Change | | :-------------------------------- | :------------------- | :------------------- | :--------- | | Gross Margin | 30.4% | 29.5% | +90 bps | | Net Income | $62.0 million | $299.1 million | -79.3% | | Net Margin | 2.0% | 10.5% | -850 bps | | Basic EPS | $0.15 | $0.70 | -78.6% | | Diluted EPS | $0.14 | $0.68 | -79.4% | Adjusted Profitability Metrics | Metric | Q2 FY2025 (13 Weeks) | Q2 FY2024 (13 Weeks) | YoY Change | | :-------------------------------- | :------------------- | :------------------- | :--------- | | Adjusted EBITDA | $183.3 million | $144.9 million | +26.5% | | Adjusted EBITDA Margin | 5.9% | 5.1% | +80 bps | | Adjusted Net Income | $141.1 million | $104.7 million | +34.8% | | Adjusted Basic EPS | $0.34 | $0.24 | +41.7% | | Adjusted Diluted EPS | $0.33 | $0.24 | +37.5% | [About Chewy](index=1&type=section&id=About%20Chewy) Chewy's mission is to be the most trusted and convenient destination for pet parents, offering a broad selection of high-quality products and services, including prescriptions, from numerous brands and private labels, delivered with exceptional customer care - Mission: To be the most trusted and convenient destination for pet parents and partners everywhere[5](index=5&type=chunk) - Offerings: Approximately **130,000 products and services** from around **3,200 brands**, including private brands, available through websites and mobile applications[5](index=5&type=chunk) [Forward-Looking Statements & Risks](index=2&type=section&id=Forward-Looking%20Statements%20%26%20Risks) [Forward-Looking Statements Disclaimer](index=2&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section contains a standard disclaimer regarding forward-looking statements, indicating that actual results may differ materially due to substantial risks and uncertainties. Investors are cautioned not to place undue reliance on these statements, which are based on current assumptions and projections - Forward-looking statements are not guarantees of performance or results, and actual outcomes could differ materially due to various factors[10](index=10&type=chunk) - Key risk factors include the ability to sustain growth, manage macroeconomic environments, acquire and retain customers, manage supply chain disruptions, maintain technology infrastructure, ensure cybersecurity, and comply with regulations[9](index=9&type=chunk) [Financial Statements](index=3&type=section&id=Financial%20Statements) [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet provides a snapshot of Chewy's financial position, showing an increase in total assets and stockholders' equity, while total liabilities slightly decreased as of August 3, 2025, compared to February 2, 2025 Summary Balance Sheet | Metric (in millions) | As of August 3, 2025 | As of February 2, 2025 | | :------------------- | :------------------- | :--------------------- | | Total Assets | $3,118.8 | $3,014.5 | | Total Liabilities | $2,728.9 | $2,753.0 | | Total Stockholders' Equity | $389.9 | $261.5 | Current Assets | Current Assets (in millions) | As of August 3, 2025 | As of February 2, 2025 | | :--------------------------- | :------------------- | :--------------------- | | Cash and cash equivalents | $591.8 | $595.8 | | Accounts receivable | $221.2 | $169.0 | | Inventories | $874.6 | $836.7 | | Prepaid expenses and other current assets | $94.3 | $60.9 | | Total current assets | $1,781.9 | $1,662.4 | Current Liabilities | Current Liabilities (in millions) | As of August 3, 2025 | As of February 2, 2025 | | :-------------------------------- | :------------------- | :--------------------- | | Trade accounts payable | $1,226.0 | $1,175.9 | | Accrued expenses and other current liabilities | $967.2 | $1,030.8 | | Total current liabilities | $2,193.2 | $2,206.7 | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Chewy's statements of operations show continued net sales growth for both the 13 and 26-week periods ended August 3, 2025. While gross profit increased, net income significantly decreased year-over-year, primarily due to a large deferred tax benefit in the prior year 13 Weeks Ended Statements of Operations | Metric (in millions) | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | YoY Change | | :------------------- | :------------------------- | :------------------------- | :--------- | | Net sales | $3,104.2 | $2,858.6 | +8.6% | | Cost of goods sold | $2,162.0 | $2,014.8 | +7.3% | | Gross profit | $942.2 | $843.8 | +11.7% | | Income from operations | $69.7 | $32.1 | +117.1% | | Net income | $62.0 | $299.1 | -79.3% | | Basic EPS | $0.15 | $0.70 | -78.6% | | Diluted EPS | $0.14 | $0.68 | -79.4% | 26 Weeks Ended Statements of Operations | Metric (in millions) | 26 Weeks Ended Aug 3, 2025 | 26 Weeks Ended Jul 28, 2024 | YoY Change | | :------------------- | :------------------------- | :------------------------- | :--------- | | Net sales | $6,220.2 | $5,736.3 | +8.4% | | Cost of goods sold | $4,354.2 | $4,038.5 | +7.8% | | Gross profit | $1,866.0 | $1,697.8 | +9.9% | | Income from operations | $146.6 | $96.7 | +51.6% | | Net income | $124.4 | $366.0 | -66.0% | | Basic EPS | $0.30 | $0.85 | -64.7% | | Diluted EPS | $0.29 | $0.84 | -65.5% | - The significant year-over-year decrease in net income and EPS is primarily due to a **$275.7 million tax benefit** from the release of a valuation allowance on deferred tax assets in the prior year (Q2 FY2024)[7](index=7&type=chunk)[14](index=14&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the 26 weeks ended August 3, 2025, Chewy generated increased cash from operating activities, while cash used in investing activities decreased significantly compared to the prior year, which included proceeds from marketable securities. Cash used in financing activities also decreased due to lower common stock repurchases Summary Cash Flow Activities | Cash Flow Activity (in millions) | 26 Weeks Ended Aug 3, 2025 | 26 Weeks Ended Jul 28, 2024 | | :------------------------------- | :------------------------- | :------------------------- | | Net cash provided by operating activities | $220.3 | $205.3 | | Net cash (used in) provided by investing activities | $(70.9) | $477.2 | | Net cash used in financing activities | $(154.0) | $(590.0) | | Net (decrease) increase in cash and cash equivalents | $(4.0) | $92.3 | | Cash and cash equivalents, end of period | $591.8 | $694.5 | - Investing activities in the prior year included **$538.4 million from maturities of marketable securities**, which was not present in the current period[16](index=16&type=chunk) - Repurchases of common stock decreased to **$152.6 million** in the current period from **$532.0 million** in the prior year, contributing to lower cash used in financing activities[16](index=16&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) [Definition and Rationale](index=6&type=section&id=Definition%20and%20Rationale) Chewy utilizes several non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, Adjusted net income, Adjusted basic/diluted EPS, and Free cash flow, to provide additional insights into its operating performance, liquidity, and capital allocation decisions, as these metrics are key for management evaluation - Non-GAAP metrics are used by management and the board of directors to evaluate operating performance, generate future operating plans, assess liquidity, and make strategic capital allocation decisions[17](index=17&type=chunk) - Adjustments typically exclude non-cash items (depreciation, amortization, share-based compensation), non-operating items (interest, income tax), and non-recurring items (transaction costs, severance, fair value changes of equity warrants, deferred tax asset valuation allowance releases)[18](index=18&type=chunk)[20](index=20&type=chunk) [Limitations of Non-GAAP Measures](index=6&type=section&id=Limitations%20of%20Non-GAAP%20Measures) Chewy acknowledges that its non-GAAP financial measures have limitations and should not be considered in isolation or as substitutes for GAAP results. These measures may not fully reflect capital expenditure needs, working capital changes, or recurring share-based compensation, and their comparability across companies may vary - Non-GAAP measures do not reflect capital expenditure requirements for asset replacement, interest income/expense, or changes in working capital[21](index=21&type=chunk) - Adjusted EBITDA and adjusted net income exclude share-based compensation, which is a recurring and important part of the company's compensation strategy[21](index=21&type=chunk) - Other companies may calculate these non-GAAP measures differently, reducing their usefulness for comparative analysis[19](index=19&type=chunk) [Key Financial and Operating Data & Reconciliations](index=7&type=section&id=Key%20Financial%20and%20Operating%20Data%20%26%20Reconciliations) [Financial and Operating Metrics](index=7&type=section&id=Financial%20and%20Operating%20Metrics) This section presents a comprehensive table of key financial and operating metrics, including both GAAP and non-GAAP measures, along with operational indicators like active customers and Autoship sales, for the 13 and 26-week periods, highlighting year-over-year changes Key Financial and Operating Data | Metric (in millions, except percentages) | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | % Change | | :--------------------------------------- | :------------------------- | :------------------------- | :------- | | Net sales | $3,104.2 | $2,858.6 | 8.6% | | Net income | $62.0 | $299.1 | (79.3)% | | Net margin | 2.0% | 10.5% | | | Adjusted EBITDA | $183.3 | $144.9 | 26.5% | | Adjusted EBITDA margin | 5.9% | 5.1% | | | Adjusted net income | $141.1 | $104.7 | 34.8% | | Basic EPS | $0.15 | $0.70 | (78.6)% | | Diluted EPS | $0.14 | $0.68 | (79.4)% | | Adjusted basic EPS | $0.34 | $0.24 | 41.7% | | Adjusted diluted EPS | $0.33 | $0.24 | 37.5% | | Net cash provided by operating activities | $133.9 | $123.4 | 8.5% | | Free cash flow | $105.9 | $91.5 | 15.7% | | Active customers (in thousands) | 20,906 | 20,002 | 4.5% | | Net sales per active customer | $591 | $565 | 4.6% | | Autoship customer sales | $2,576.9 | $2,242.2 | 14.9% | | Autoship customer sales as a percentage of net sales | 83.0% | 78.4% | | [Reconciliation of Non-GAAP Measures](index=7&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP net income and net cash provided by operating activities to their respective non-GAAP counterparts: Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow, for both the 13 and 26-week periods [Adjusted EBITDA Reconciliation](index=7&type=section&id=Adjusted%20EBITDA%20Reconciliation) Adjusted EBITDA Reconciliation (13 Weeks) | (in millions, except percentages) | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | | :-------------------------------- | :------------------------- | :------------------------- | | Net income | $62.0 | $299.1 | | Add (deduct): | | | | Depreciation and amortization | $32.1 | $28.5 | | Share-based compensation expense and related taxes | $79.1 | $82.5 | | Interest income, net | $(3.9) | $(12.9) | | Change in fair value of equity warrants | — | $(1.2) | | Income tax provision (benefit) | $12.0 | $(252.6) | | Severance costs | — | — | | Transaction related costs | $0.6 | $0.5 | | Other | $1.4 | $1.0 | | **Adjusted EBITDA** | **$183.3** | **$144.9** | | Net sales | $3,104.2 | $2,858.6 | | Net margin | 2.0% | 10.5% | | Adjusted EBITDA margin | 5.9% | 5.1% | [Adjusted Net Income and EPS Reconciliation](index=8&type=section&id=Adjusted%20Net%20Income%20and%20EPS%20Reconciliation) Adjusted Net Income and EPS Reconciliation (13 Weeks) | (in millions, except per share data) | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | | :----------------------------------- | :------------------------- | :------------------------- | | Net income | $62.0 | $299.1 | | Add (deduct): | | | | Share-based compensation expense and related taxes | $79.1 | $82.5 | | Change in fair value of unvested equity warrants | — | $(1.2) | | Deferred tax asset valuation allowance release | — | $(275.7) | | Severance costs | — | — | | **Adjusted net income** | **$141.1** | **$104.7** | | Basic EPS | $0.15 | $0.70 | | Diluted EPS | $0.14 | $0.68 | | Adjusted basic EPS | $0.34 | $0.24 | | Adjusted diluted EPS | $0.33 | $0.24 | Weighted-Average Common Shares (13 Weeks) | Weighted-average common shares | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | | :----------------------------- | :------------------------- | :------------------------- | | Basic | 414.2 | 429.4 | | Dilutive share-based awards | 14.2 | 8.5 | | Diluted | 428.4 | 437.9 | [Free Cash Flow Reconciliation](index=8&type=section&id=Free%20Cash%20Flow%20Reconciliation) Free Cash Flow Reconciliation (13 Weeks) | (in millions) | 13 Weeks Ended Aug 3, 2025 | 13 Weeks Ended Jul 28, 2024 | | :------------ | :------------------------- | :------------------------- | | Net cash provided by operating activities | $133.9 | $123.4 | | Deduct: Capital expenditures | $(28.0) | $(31.9) | | **Free Cash Flow** | **$105.9** | **$91.5** | - Free cash flow can be influenced by the timing of capital investments (e.g., new fulfillment centers, veterinary clinics), growth fluctuations affecting working capital, and changes in the cash conversion cycle[26](index=26&type=chunk) [Investor Relations](index=8&type=section&id=Investor%20Relations) [Contact Information](index=8&type=section&id=Contact%20Information) This section provides contact details for investor and media inquiries - Investor Contact: **ir@chewy.com**[27](index=27&type=chunk) - Media Contact: **Diane Pelkey, dpelkey@chewy.com**[27](index=27&type=chunk) ```

[Executive Summary](index=1&type=section&id=Executive%20Summary) Lakeland Fire + Safety reported record fiscal Q2'26 net sales of $52.5 million, a 36% increase YoY, primarily driven by a 113% surge in Fire Services products. The company achieved positive net income of $0.8 million and improved sequential gross margin, despite ongoing global tariff uncertainties [Q2'26 Key Financial Highlights](index=1&type=section&id=Q2%2726%20Key%20Financial%20Highlights) Fiscal Q2'26 saw significant financial improvements, including a 36% increase in net sales to $52.5 million and a return to positive net income of $0.8 million, a 157% improvement YoY. Adjusted EBITDA excluding FX also grew substantially by 89% to $5.1 million Fiscal Q2'26 Key Financial Highlights (YoY Comparison) | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $52.5M | $38.5M | $14.0M | 36% | | Gross Profit | $18.8M | $15.2M | $3.6M | 24% | | Gross Margin | 35.9% | 39.6% | — | (370)BPS | | Net Income (Loss) | $0.8M | ($1.4M) | $2.2M | 157% | | Adjusted EBITDA ex. FX | $5.1M | $2.7M | $2.4M | 89% | [Q2'26 Key Operational Highlights](index=1&type=section&id=Q2%2726%20Key%20Operational%20Highlights) Operational highlights for Q2'26 include robust growth in Fire Services products, strong performances in North America and Europe, and strategic initiatives like a $6.1 million property sale and facility closures aimed at cost reduction and efficiency - Fire Services product line sales increased by **$13.6 million** or **113% YoY**, reaching **$25.6 million** and representing **49% of total revenue**[1](index=1&type=chunk)[13](index=13&type=chunk) - U.S. net sales increased **78% to $22.1 million**, and Europe net sales increased **113% to $15.1 million**[1](index=1&type=chunk)[13](index=13&type=chunk) - Completed a **$6.1 million** sale and partial leaseback of its Decatur, Alabama, warehouse property to strengthen the balance sheet and provide financial flexibility[13](index=13&type=chunk) - Announced closures of its Hull, England warehouse and Veridian manufacturing facility in Quitman, Arkansas, as part of an operational consolidation strategy to enhance efficiency and reduce costs[13](index=13&type=chunk) [Management Commentary & Business Outlook](index=1&type=section&id=Management%20Commentary%20%26%20Business%20Outlook) Management highlighted record Q2'26 net sales driven by Fire Services and strong regional performance, despite global tariff uncertainties. Strategic focus includes expanding sales in key verticals, optimizing inventory, and implementing operational efficiencies. The company updated its FY26 guidance, reflecting continued tariff impacts and order delays [CEO's Strategic Overview](index=1&type=section&id=CEO%27s%20Strategic%20Overview) CEO Jim Jenkins emphasized record Q2'26 net sales, led by Fire Services, and sequential margin improvement. He noted strong performances in North America, Asia, and Europe, offset by softness in Latin America due to tariff and currency issues. Future strategies include expanding Fire Services, optimizing inventory, and enhancing operational efficiencies to achieve higher margins and free cash flow, while capitalizing on long-term industry tailwinds - Record fiscal Q2'26 net sales revenue growth of **36% to $52.5 million**, led by a **113% increase in Fire Services revenue**[5](index=5&type=chunk) - Strong performances in North American Industrial and Fire segments, Asia, and LHD Australia, with rebounds in Europe and Canada, partially offset by softness in Latin America due to tariff uncertainty and currency issues[6](index=6&type=chunk) - Focus on navigating tariff uncertainties, growing top-line revenue in fire services and industrial verticals, and implementing operating and manufacturing efficiencies for higher margins and improved free cash flow[8](index=8&type=chunk) - Initiated targeted actions to optimize inventory levels in U.S. Critical Environment, Jolly, LHD Australia, and Veridian, with further initiatives planned for the second half of FY26[8](index=8&type=chunk) - Expects U.S. and EMEA Fire Services tender cycles to restart in late FY26 and into Q1 FY27, increasing demand and improving performance[9](index=9&type=chunk) [CFO's Financial Review](index=5&type=section&id=CFO%27s%20Financial%20Review) CFO Roger Shannon detailed the 36% revenue growth, driven by U.S. and Canadian Fire Services and Industrial divisions, with organic revenue up 14%. He noted a consolidated gross margin decrease to 35.9% due to tariffs and supply chain costs, but a sequential improvement of 240 basis points. Operating expenses increased due to acquisitions but declined sequentially due to cost reduction initiatives, leading to an 89% increase in Adjusted EBITDA excluding FX. The balance sheet remains strong, supported by $4 million in annual cost reduction initiatives and a property sale - Revenue grew **$14.0 million (36%) YoY**, with organic revenue increasing **14% to $42.0 million**, driven by growth in the U.S., Canada, Europe, and Asia[26](index=26&type=chunk) - Consolidated gross margin decreased to **35.9% YoY** due to increased tariffs and supply chain expenses but improved sequentially by **240 basis points** from 33.5% in Q1'26[27](index=27&type=chunk) - Operating expenses increased by **$2.5 million (15%) YoY** (with **$1.6 million from acquisitions**) but declined sequentially by **$1.0 million (5%) to $19.3 million** due to expense reduction initiatives[28](index=28&type=chunk)[29](index=29&type=chunk) - Adjusted EBITDA excluding FX increased by **$2.4 million (89%) YoY to $5.1 million**, and by **$4.5 million (740%) QoQ**, reaching a margin of **9.6%**[30](index=30&type=chunk) - Balance sheet strengthened by **$4 million in annual cost reduction initiatives**, including facility closures, and a **$6.1 million property sale**[31](index=31&type=chunk) [FY 2026 Guidance Update](index=6&type=section&id=FY%202026%20Guidance%20Update) Lakeland updated its fiscal year 2026 guidance, adjusting revenue expectations to the lower end of the $210-$220 million range and Adjusted EBITDA excluding FX to $20-$24 million. This revision reflects continued uncertainty with the global tariff environment, lower margins, and near-term order delays FY 2026 Guidance Update | Metric | Previous Guidance | Updated Guidance | Reason for Change | | :--- | :--- | :--- | :--- | | Revenue | $210M - $220M | Near lower end of $210M - $220M | Continued uncertainty with global tariff environment | | Adjusted EBITDA ex. FX | (Not specified) | $20M - $24M | Lower margins, near-term order delays, tariff uncertainty, higher operating expenses | - The company is actively assessing the financial impact of tariffs and is committed to protecting margins through pricing adjustments, operational efficiencies, and supply chain diversification[33](index=33&type=chunk) [Fiscal Second Quarter 2026 Detailed Financial & Operational Highlights](index=3&type=section&id=Fiscal%20Second%20Quarter%202026%20Detailed%20Financial%20%26%20Operational%20Highlights) Lakeland's Q2'26 financial results show strong top-line growth driven by acquisitions and Fire Services, alongside challenges in gross margin due to tariffs and supply chain costs. Despite an increase in operating expenses from acquisitions, the company achieved positive net income and significantly improved Adjusted EBITDA, while managing cash and debt [Net Sales Performance](index=3&type=section&id=Net%20Sales%20Performance) Net sales for Q2'26 reached a record $52.5 million, a 36% increase YoY, with acquisitions contributing $9.0 million and organic sales growing 14% to $42.0 million. Fire Services sales surged 113% to $25.6 million, becoming 49% of total revenue. Domestic sales increased to 42% of total revenue, while international sales remained dominant at 58% Q2'26 Net Sales Breakdown | Category | Q2'26 Sales | % Change YoY | Contribution to Total Sales | | :--- | :--- | :--- | :--- | | Total Net Sales | $52.5M | 36% | 100% | | Organic Revenue | $42.0M | 14% | 80% | | Acquisition Revenue | $9.0M | N/A | 17% | | Fire Services Product Line | $25.6M | 113% | 49% | | U.S. Net Sales | $22.1M | 78% | 42% | | Europe Net Sales | $15.1M | 113% | 29% | | LATAM Net Sales | $4.3M | (42%) | 8% | | Asia Net Sales | $3.7M | 6% | 7% | [Gross Profit and Margin Analysis](index=3&type=section&id=Gross%20Profit%20and%20Margin%20Analysis) Gross profit increased 24% to $18.8 million in Q2'26, but the gross margin percentage decreased to 35.9% from 39.6% YoY. This decline was primarily attributed to increased supply chain costs, tariffs, higher inbound freight, and amortization of acquired inventory step-up. Organic gross margin also saw a slight decrease to 38.6% Q2'26 Gross Profit and Margin | Metric | Q2'26 | Q2'25 | % Change YoY | | :--- | :--- | :--- | :--- | | Gross Profit | $18.8M | $15.2M | 24% | | Gross Margin | 35.9% | 39.6% | (370)BPS | | Organic Gross Margin | 38.6% | 41.0% | (240)BPS | - Gross margin percentage decreased due to increased supply chain costs and tariffs, higher inbound freight expenses, and amortization of the step-up in the basis of acquired inventory[16](index=16&type=chunk) [Operating Expenses and Loss](index=4&type=section&id=Operating%20Expenses%20and%20Loss) Operating expenses rose by $2.5 million (15%) to $19.3 million in Q2'26, mainly due to the acquisitions of Veridian and LHD ($1.6 million), higher equity compensation, and depreciation/amortization. These increases were partially offset by reductions in acquisition expenses, restructuring costs, and professional fees. The company reported an operating loss of $4.0 million, exacerbated by a $3.6 million impairment of the Monterrey, Mexico facility lease Q2'26 Operating Expenses and Loss | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Operating Expenses | $19.3M | $16.8M | $2.5M | 15% | | Operating Loss | ($4.0M) | ($1.6M) | ($2.4M) | (150%) | | Operating Margins | (7.6%) | (4.1%) | — | (350)BPS | - Operating expenses increased primarily due to **$1.6 million** from Veridian and LHD acquisitions, higher equity compensation, and depreciation/amortization, partially offset by reductions in acquisition, restructuring, and professional fees[17](index=17&type=chunk) - Operating loss was significantly impacted by a **$3.6 million** impairment of the Monterrey, Mexico facility lease[17](index=17&type=chunk) [Net Income and EPS](index=5&type=section&id=Net%20Income%20and%20EPS) Lakeland achieved a net income of $0.8 million, or $0.08 per diluted share, in Q2'26, a significant turnaround from a net loss of ($1.4) million, or ($0.19) per diluted share, in Q2'25 Q2'26 Net Income and EPS | Metric | Q2'26 | Q2'25 | $ Change YoY | % Change YoY | | :--- | :--- | :--- | :--- | :--- | | Net Income (Loss) | $0.8M | ($1.4M) | $2.2M | 157% | | Diluted EPS | $0.08 | ($0.19) | $0.27 | 142% | [Adjusted EBITDA Performance](index=3&type=section&id=Adjusted%20EBITDA%20Performance) Adjusted EBITDA excluding FX for Q2'26 increased by $2.4 million (89%) to $5.1 million, driven by strong North American performance and reduced operating expenses, despite lower sales in the higher-margin LATAM region. The Adjusted EBITDA excluding FX margin improved significantly to 9.6%, up 270 basis points YoY and 830 basis points QoQ Q2'26 Adjusted EBITDA excluding FX | Metric | Q2'26 | Q2'25 | Q1'26 | $ Change YoY | % Change YoY | BPS Change YoY | BPS Change QoQ | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Adjusted EBITDA ex. FX | $5.1M | $2.7M | $0.6M | $2.4M | 89% | — | — | | Adjusted EBITDA ex. FX Margin | 9.6% | 6.9% | 1.3% | — | — | 270 | 830 | [Balance Sheet and Cash Flow](index=5&type=section&id=Balance%20Sheet%20and%20Cash%20Flow) As of July 31, 2025, cash and cash equivalents totaled $17.7 million, with working capital at $106.9 million, both showing slight increases from January 31, 2025, primarily due to inventory increases. The company had $24.9 million outstanding on its revolving credit facility, which was fully repaid post-quarter-end using proceeds from a $6.1 million property sale. Net cash used in operating activities increased to $9.7 million for the six months ended July 31, 2025. A quarterly dividend of $0.03 per share was paid Key Balance Sheet and Cash Flow Metrics (as of July 31, 2025) | Metric | July 31, 2025 | January 31, 2025 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $17.7M | $17.5M | +$0.2M | | Working Capital | $106.9M | $102.6M | +$4.3M | | Revolving Credit Facility Outstanding | $24.9M | N/A | N/A | - Net cash used in operating activities for the six months ended July 31, 2025, was **$9.7 million**, compared to **$4.1 million** in the prior year, driven by increased net loss and non-cash charges[24](index=24&type=chunk)[59](index=59&type=chunk) - The company paid a quarterly dividend of **$0.03 per share** on August 22, 2025[25](index=25&type=chunk) [Non-GAAP Financial Measures Reconciliation](index=8&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides a detailed reconciliation of GAAP results to various non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and organic revenue/gross margin. It also explains the rationale behind using these non-GAAP measures and the specific adjustments made to provide a clearer view of the company's core operational performance [Reconciliation Tables](index=8&type=section&id=Reconciliation%20Tables) The reconciliation tables present the adjustments made to GAAP net income (loss) to derive EBITDA, Adjusted EBITDA, and Adjusted EBITDA excluding FX, along with the calculation of Adjusted EBITDA margins. It also shows the reconciliation for Adjusted Operating Expenses excluding FX, Organic Revenue, and Organic Gross Margin Reconciliation of GAAP Results to Non-GAAP Results (Three and Six Months Ended July 31, 2025 & 2024) ($000's) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $766 | ($1,376) | ($3,147) | $277 | | **EBITDA** | **$841** | **($281)** | **($2,550)** | **$2,580** | | **Adjusted EBITDA** | **$5,013** | **$1,816** | **$4,836** | **$5,669** | | Adjusted EBITDA Margin | 9.6% | 4.7% | 4.9% | 7.6% | | **Adjusted EBITDA excluding FX** | **$5,056** | **$2,659** | **$5,658** | **$6,519** | | Adjusted EBITDA excluding FX Margin | 9.6% | 6.9% | 4.9% | 7.6% | | Operating Expenses | $19,283 | $16,826 | $39,561 | $30,809 | | **Adjusted Operating Expenses excluding FX** | **$14,574** | **$13,176** | **$30,433** | **$25,685** | | Net Sales | $52,496 | $38,512 | $99,242 | $74,822 | | **Organic Revenue** | **$41,959** | **$36,973** | **$78,743** | **$73,282** | | Gross Profit | $18,818 | $15,235 | $34,462 | $31,420 | | **Organic Gross Profit** | **$16,183** | **$14,612** | **$30,012** | **$30,796** | | Organic Gross Margin | 38.6% | 39.5% | 38.1% | 42.0% | [Explanation of Non-GAAP Measures and Adjustments](index=9&type=section&id=Explanation%20of%20Non-GAAP%20Measures%20and%20Adjustments) Management uses non-GAAP measures like EBITDA, Adjusted EBITDA, and organic revenue/gross margin to provide more meaningful period-to-period comparisons, guide internal decision-making, and offer investors a clearer understanding of core business performance. These measures exclude items not directly related to ongoing core operations, such as interest, taxes, depreciation, amortization, equity compensation, acquisition-related expenses, restructuring costs, and specific litigation/project costs - Non-GAAP measures (EBITDA, Adjusted EBITDA, organic revenue/gross margin) are used to make meaningful period-to-period comparisons, guide management decisions, and provide investors with a better understanding of core business performance[43](index=43&type=chunk) - Exclusions from non-GAAP measures include interest, taxes, depreciation, amortization, equity compensation, acquisition-related expenses, severance and restructuring costs, Mexican operations start-up costs, PFAS litigation expenses, ERP Project costs, and earnout revaluation[42](index=42&type=chunk)[43](index=43&type=chunk) - Organic revenue and organic gross margin exclude the effects of acquisitions completed within the previous fiscal year to understand trends in the legacy business[42](index=42&type=chunk)[43](index=43&type=chunk) [Company Information](index=10&type=section&id=Company%20Information) Lakeland Fire + Safety is a global manufacturer of protective clothing and accessories for industrial and first responder markets, serving diverse industries and governmental agencies across more than 50 countries. The company's press release includes a standard "Safe Harbor" statement regarding forward-looking statements and provides contact information for investor relations [About Lakeland Fire + Safety](index=10&type=section&id=About%20Lakeland%20Fire%20%2B%20Safety) Lakeland Fire + Safety manufactures and sells a comprehensive line of fire services and industrial protective clothing and accessories globally. Its products are distributed to end-users in various industries, including oil, chemical, automotive, healthcare, and governmental agencies, across over 50 countries, with significant presence in China, Europe, Canada, and other emerging markets - Lakeland Fire + Safety manufactures and sells protective clothing and accessories for industrial and first responder markets[49](index=49&type=chunk) - Products are sold globally through in-house sales, customer service, and authorized distributors to diverse industries (e.g., oil, chemical, healthcare) and governmental agencies (e.g., fire, law enforcement, Department of Defense)[49](index=49&type=chunk) - International sales are made into more than **50 foreign countries**, including China, the European Economic Community, Canada, India, and Australia[49](index=49&type=chunk) [Safe Harbor Statement](index=10&type=section&id=Safe%20Harbor%20Statement) The "Safe Harbor" statement clarifies that the press release contains forward-looking statements, including estimates, predictions, and expectations for future financial and operational performance. These statements involve risks, uncertainties, and assumptions, and actual results may differ materially. The company disclaims any obligation to update these statements, except as required by law - The press release contains forward-looking statements regarding future business, financial performance, goals, and strategies, including M&A and tariff mitigation plans[52](index=52&type=chunk) - Forward-looking statements involve risks, uncertainties, and assumptions, and actual results may differ materially from expectations[52](index=52&type=chunk) - The company disclaims any obligation to publicly update or revise these statements, except as required by law[52](index=52&type=chunk) [Contacts](index=11&type=section&id=Contacts) Contact information for Lakeland Fire + Safety's Chief Financial Officer, Roger Shannon, and Investor Relations, Chris Tyson of MZ Group - MZ North America, is provided for inquiries Company Contacts | Role | Name | Contact | | :--- | :--- | :--- | | Chief Financial Officer | Roger Shannon | rdshannon@lakeland.com | | Investor Relations (MZ Group) | Chris Tyson | LAKE@mzgroup.us | [Financial Statements](index=12&type=section&id=Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Lakeland Industries, Inc. and its subsidiaries, including the Statements of Operations, Balance Sheets, and Statements of Cash Flows for the reported periods [Condensed Consolidated Statements of Operations](index=12&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The Condensed Consolidated Statements of Operations provide a summary of the company's revenues, costs, and profitability for the three and six months ended July 31, 2025, and 2024, detailing net sales, gross profit, operating expenses, and net income (loss) Condensed Consolidated Statements of Operations ($000's) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $52,496 | $38,512 | $99,242 | $74,822 | | Cost of goods sold | 33,678 | 23,277 | 64,780 | 43,403 | | Gross profit | 18,818 | 15,235 | 34,462 | 31,419 | | Operating expenses | 19,283 | 16,826 | 39,561 | 30,809 | | Lease impairments | 3,577 | — | 3,577 | — | | Operating (loss) income | (4,042) | (1,591) | (8,676) | 610 | | Other income, net | 38 | 165 | 144 | 177 | | Interest expense | (445) | (370) | (1,028) | (542) | | (Loss) income before taxes | (4,449) | (1,796) | (9,560) | 245 | | Income tax benefit | (5,215) | (420) | (6,413) | (32) | | Net income (loss) | $766 | ($1,376) | ($3,147) | $277 | | Basic EPS | $0.08 | ($0.19) | ($0.33) | $0.04 | | Diluted EPS | $0.08 | ($0.19) | ($0.33) | $0.04 | [Condensed Consolidated Balance Sheets](index=13&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The Condensed Consolidated Balance Sheets present the company's financial position as of July 31, 2025, and January 31, 2025, detailing assets, liabilities, and stockholders' equity Condensed Consolidated Balance Sheets ($000's) | Asset/Liability/Equity | July 31, 2025 | January 31, 2025 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $17,749 | $17,476 | | Accounts receivable, net | 30,931 | 27,607 | | Inventories, net | 90,202 | 82,739 | | Total current assets | 147,064 | 136,531 | | Property and equipment, net | 13,539 | 13,948 | | Operating leases right-of-use assets | 9,031 | 13,917 | | Goodwill | 15,047 | 16,240 | | Intangible assets, net | 26,007 | 25,503 | | **Total assets** | **$226,304** | **$212,531** | | **LIABILITIES** | | | | Accounts payable | $18,116 | $15,742 | | Total current liabilities | 40,221 | 34,907 | | Loans payable – long term | 28,100 | 16,426 | | **Total liabilities** | **$79,042** | **$65,905** | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | 147,262 | 146,626 | | **Total liabilities and stockholders' equity** | **$226,304** | **$212,531** | [Condensed Consolidated Statements of Cash Flows](index=14&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The Condensed Consolidated Statements of Cash Flows detail the cash inflows and outflows from operating, investing, and financing activities for the six months ended July 31, 2025, and 2024, showing the net change in cash and cash equivalents Condensed Consolidated Statements of Cash Flows ($000's) | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :--- | :--- | :--- | | Net (loss) income | ($3,147) | $277 | | Net cash (used in) operating activities | (9,660) | (4,053) | | Net cash (used in) investing activities | (2,130) | (24,431) | | Net cash provided by financing activities | 10,941 | 27,048 | | Effect of exchange rate changes on cash | 1,122 | 1,094 | | Net increase (decrease) in cash | 273 | (342) | | Cash and cash equivalents at beginning of period | 17,476 | 25,222 | | Cash and cash equivalents at end of period | $17,749 | $24,880 | [Conference Call Information](index=7&type=section&id=Conference%20Call%20Information) Lakeland Fire + Safety hosted a conference call on September 9, 2025, to discuss its fiscal Q2'26 financial results, with details provided for accessing the live call and subsequent replay [Call Details](index=7&type=section&id=Call%20Details) The conference call for Q2'26 financial results was held on Tuesday, September 9, 2025, at 4:30 p.m. Eastern Time. Participants could access it via dial-in numbers or webcast, with a replay available until December 9, 2025 Q2 2026 Financial Results Conference Call Details | Detail | Information | | :--- | :--- | | Date | Tuesday, September 9, 2025 | | Time | 4:30 p.m. Eastern Time | | U.S. Dial-in | 1-877-407-9208 | | International Dial-in | 1-201-493-6784 | | Conference Code | 13754808 | | Webcast | Q2 2026 Financial Results Conference Call | | Replay Availability | Through December 9, 2025 | - Lakeland President, CEO, and Executive Chairman Jim Jenkins and CFO Roger Shannon hosted the conference call, accompanied by a presentation accessible via the company's investor relations website[38](index=38&type=chunk)

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) Presents unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) Presents unaudited condensed consolidated financial statements, including balance sheets, income, equity, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific points in time | Metric | August 2, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Cash and cash equivalents | $685,803 | $40,862 | | Accounts receivable, net | $198,293 | $101,967 | | Unbilled receivables and retentions | $463,870 | $290,009 | | Inventories, net | $232,888 | $144,090 | | Total current assets | $1,639,339 | $606,516 | | Property and equipment, net | $148,807 | $50,704 | | Intangibles, net | $1,118,848 | $48,711 | | Goodwill | $2,539,560 | $256,781 | | Total assets | $5,624,037 | $1,120,567 | | Total current liabilities | $274,930 | $172,161 | | Long-term debt | $725,703 | $30,000 | | Total liabilities and stockholders' equity | $5,624,037 | $1,120,567 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income (loss) over a specific period | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | Change (YoY) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :----------- | | Revenue | $454,676 | $189,483 | +140% | | Cost of sales | $359,558 | $108,016 | +233% | | Gross margin | $95,118 | $81,467 | +16.7% | | Selling, general and administrative | $131,276 | $33,795 | +288.5% | | Research and development | $33,114 | $24,613 | +34.5% | | (Loss) income from operations | $(69,272) | $23,059 | -400.4% | | Interest expense, net | $(17,415) | $(239) | +7194.9% | | Net (loss) income | $(67,370) | $21,166 | -418.3% | | Basic Net (loss) income per share | $(1.44) | $0.76 | -289.5% | | Diluted Net (loss) income per share | $(1.44) | $0.75 | -292% | [Condensed Consolidated Statements of Comprehensive (Loss) Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20%28Loss%29%20Income) Presents net income (loss) and other comprehensive income (loss) components for the period | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net (loss) income | $(67,370) | $21,166 | | Change in foreign currency translation adjustments | $639 | $538 | | Total comprehensive (loss) income | $(66,731) | $21,704 | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Shows changes in equity accounts, including common stock, additional paid-in capital, and retained earnings | Metric | August 2, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Common Stock Shares | 49,932,300 | 28,267,517 | | Common Stock Amount | $6 | $4 | | Additional Paid-In Capital | $4,226,012 | $618,711 | | Retained Earnings | $206,936 | $274,306 | | Accumulated Other Comprehensive Loss | $(5,875) | $(6,514) | | Total Stockholders' Equity | $4,427,079 | $886,507 | - The company issued 17,425,849 shares of common stock for an acquisition, contributing **$2.64 billion** to total stockholders' equity[19](index=19&type=chunk) - Shares issued, net of issuance costs, contributed **$966.85 million** to additional paid-in capital[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities | Metric | Three Months Ended August 2, 2025 (in thousands) | Three Months Ended July 27, 2024 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :-------------------------------------------- | | Net cash (used in) provided by operating activities | $(123,726) | $28,351 | | Net cash used in investing activities | $(876,648) | $(6,613) | | Net cash provided by (used in) financing activities | $1,645,443 | $(13,954) | | Net increase in cash and cash equivalents | $644,941 | $7,861 | | Cash and cash equivalents at end of period | $685,803 | $81,162 | - Cash used in investing activities significantly increased due to the BlueHalo acquisition, net of cash acquired, totaling **$844.58 million**[21](index=21&type=chunk) - Financing activities provided substantial cash, primarily from proceeds of common stock issuance (**$968.52 million**) and convertible debt (**$726.94 million**)[21](index=21&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations of the accounting policies, significant transactions, and financial statement line items [1. Organization and Significant Accounting Policies](index=9&type=section&id=1.%20Organization%20and%20Significant%20Accounting%20Policies) The company reorganized into AxS and SCDE segments following the BlueHalo acquisition - The company reorganized its segments effective May 1, 2025, into Autonomous Systems (AxS) and Space, Cyber, and Directed Energy (SCDE) following the BlueHalo acquisition[23](index=23&type=chunk)[108](index=108&type=chunk) - As of August 2, 2025, the company had approximately **$1.07 billion** in funded backlog, with 80% expected in fiscal 2026[32](index=32&type=chunk) Revenue by Segment (in thousands) | Segment | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :------ | :-------------------------------- | :-------------------------------- | | AxS | $285,324 | $189,483 | | SCDE | $169,352 | — | | Total | $454,676 | $189,483 | Revenue by Customer Category (in thousands) | Customer Category | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :---------------- | :-------------------------------- | :-------------------------------- | | U.S. government | $395,337 | $148,600 | | Non-U.S. government | $59,339 | $40,883 | | Total | $454,676 | $189,483 | [2. Investments](index=16&type=section&id=2.%20Investments) The company's investments include available-for-sale equity securities, warrants, and equity method investments Long-term Investments (in thousands) | Investment Type | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Equity securities and warrants | $3,905 | $1,204 | | Investments in limited partnership funds | $32,362 | $30,423 | | Total long-term investments | $36,267 | $31,627 | Unrealized Gain (Loss) on Equity Securities (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net gain (loss) recognized | $2,701 | $(321) | | Unrealized gain (loss) recognized on equity securities still held | $2,701 | $(321) | [3. Fair Value Measurements](index=17&type=section&id=3.%20Fair%20Value%20Measurements) Financial assets measured at fair value are classified into a three-level hierarchy based on input observability Financial Assets Measured at Fair Value (August 2, 2025, in thousands) | Description | Level 1 | Level 2 | Level 3 | Total | | :---------- | :------ | :------ | :------ | :---- | | Equity securities | $3,180 | $— | $— | $3,180 | | Warrants | $— | $725 | $— | $725 | | Total | $3,180 | $725 | $— | $3,905 | [4. Inventories, net](index=18&type=section&id=4.%20Inventories%2C%20net) Inventories consist of raw materials, work in process, and finished goods, with a reserve for excess and obsolescence Inventories, net (in thousands) | Component | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Raw materials | $113,922 | $52,567 | | Work in process | $95,925 | $73,434 | | Finished goods | $61,420 | $46,761 | | Inventories, gross | $271,267 | $172,762 | | Reserve for inventory excess and obsolescence | $(38,379) | $(28,672) | | Inventories, net | $232,888 | $144,090 | [5. Equity Method Investments](index=18&type=section&id=5.%20Equity%20Method%20Investments) The company holds equity method investments in limited partnership funds, recognizing its share of net gains - The company recorded **$1.79 million** in equity method investment income, net of tax, for the three months ended August 2, 2025, compared to **$65 thousand** for the same period in 2024[58](index=58&type=chunk) - The carrying value of equity method investments was **$32.36 million** at August 2, 2025, an increase from **$30.42 million** at April 30, 2025[58](index=58&type=chunk) - The company has committed to make additional capital contributions of **$5.47 million** to a second limited partnership fund[57](index=57&type=chunk) [6. Warranty Reserves](index=20&type=section&id=6.%20Warranty%20Reserves) The company accrues an estimate for warranty claims, which saw an increase due to an acquisition during the period Warranty Reserve Activity (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Beginning balance | $4,189 | $5,538 | | Balance acquired from acquisition | $2,274 | $— | | Warranty expense | $141 | $(647) | | Warranty costs settled | $(321) | $(651) | | Ending balance | $6,283 | $4,240 | [7. Intangibles, net](index=20&type=section&id=7.%20Intangibles%2C%20net) Intangible assets significantly increased due to the BlueHalo acquisition, primarily in technology and customer relations Components of Intangibles (in thousands) | Component | August 2, 2025 | April 30, 2025 | | :-------------------------- | :------------- | :------------- | | Technology | $497,861 | $101,645 | | Customer relationships | $747,682 | $77,588 | | Backlog | $65,008 | $2,963 | | Intangibles, gross | $1,314,243 | $185,888 | | Less accumulated amortization | $(195,395) | $(137,177) | | Intangibles, net | $1,118,848 | $48,711 | - Amortization expense for the three months ended August 2, 2025, was **$58.16 million**, a significant increase from **$4.77 million** in the prior year, primarily due to the BlueHalo acquisition[61](index=61&type=chunk) [8. Goodwill](index=21&type=section&id=8.%20Goodwill) Goodwill increased substantially due to the BlueHalo acquisition, allocated to AxS and SCDE segments Changes in Goodwill Balance by Segment (in thousands) | Segment | Balance at April 30, 2025 | Additions to goodwill | Balance at August 2, 2025 | | :------ | :------------------------ | :-------------------- | :------------------------ | | AxS | $256,781 | $914,683 | $1,171,464 | | SCDE | $— | $1,368,096 | $1,368,096 | | Total | $256,781 | $2,282,779 | $2,539,560 | - The additions to goodwill are primarily from the BlueHalo acquisition, which contributed **$2.28 billion**[62](index=62&type=chunk) [9. Debt](index=21&type=section&id=9.%20Debt) The company restructured debt, securing and repaying a $700 million term loan and $350 million revolving credit facility - On May 1, 2025, the company entered into a **$700 million** Term Loan Facility and a **$350 million** Revolving Credit Facility for the BlueHalo acquisition[65](index=65&type=chunk)[67](index=67&type=chunk) - In July 2025, the Term A Loan and outstanding Revolving Facility balance were fully repaid using proceeds from common stock and 0% Convertible Senior Notes due 2030[69](index=69&type=chunk) Long-term Debt (in thousands) | Debt Type | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Revolving credit facility | $— | $30,000 | | Convertible Notes | $747,500 | $— | | Total long-term debt | $747,500 | $30,000 | | Total long-term debt, net of unamortized debt issuance costs | $725,703 | $30,000 | [10. Convertible Notes](index=23&type=section&id=10.%20Convertible%20Notes) In July 2025, the company issued **$747.5 million** in 0% Convertible Senior Notes due 2030, which are unsecured obligations - The company issued **$747.5 million** aggregate principal amount of 0% Convertible Senior Notes due 2030 in July 2025[71](index=71&type=chunk) - The Notes do not bear regular interest and mature on July 15, 2030, unless earlier repurchased, redeemed, or converted[73](index=73&type=chunk) - The initial conversion rate is 3.1017 shares of common stock per $1,000 principal amount of Notes, representing an initial conversion price of approximately **$322.40** per share[73](index=73&type=chunk) [11. Leases](index=26&type=section&id=11.%20Leases) Lease costs increased significantly, primarily operating lease costs, with longer weighted average lease terms and higher discount rates Total Lease Costs, Net (in thousands) | Lease Cost Type | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Operating lease cost | $6,850 | $2,430 | | Short term lease cost | $993 | $155 | | Variable lease cost | $899 | $423 | | Total lease costs, net | $8,742 | $3,008 | - The weighted average remaining lease term increased to **80 months** (from 49 months), and the weighted average discount rate increased to **6.8%** (from 5.4%) as of August 2, 2025[80](index=80&type=chunk) [12. Accumulated Other Comprehensive Loss and Reclassifications Adjustments](index=28&type=section&id=12.%20Accumulated%20Other%20Comprehensive%20Loss%20and%20Reclassifications%20Adjustments) The accumulated other comprehensive loss decreased slightly due to a positive change in foreign currency translation adjustments Accumulated Other Comprehensive Loss (in thousands) | Metric | August 2, 2025 | April 30, 2025 | | :-------------------------------- | :------------- | :------------- | | Balance | $(5,875) | $(6,514) | | Change in foreign currency translation adjustments | $639 | $538 | | Balance as of period end | $(5,875) | $(5,054) | [13. Customer-Funded Research & Development](index=28&type=section&id=13.%20Customer-Funded%20Research%20%26%20Development) Revenue from customer-funded R&D activities significantly increased year-over-year - Revenue from customer-funded R&D was approximately **$60.85 million** for the three months ended August 2, 2025, compared to **$18.56 million** for the same period in 2024[82](index=82&type=chunk) [14. Long-Term Incentive Awards](index=28&type=section&id=14.%20Long-Term%20Incentive%20Awards) The company granted long-term incentive awards (LTIPs) to key employees, with compensation expenses recognized over vesting periods Compensation Expense for LTIPs (in thousands) | LTIP | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Fiscal 2026 LTIP | $809 | $— | | Fiscal 2025 LTIP | $3,859 | $306 | | Fiscal 2024 LTIP | $3,008 | $1,112 | | Fiscal 2023 LTIP | $— | $865 | - The maximum compensation expense for the performance-based portion of the Fiscal 2026 LTIP is **$33.25 million**[84](index=84&type=chunk) [15. Income Taxes](index=32&type=section&id=15.%20Income%20Taxes) The company recorded an income tax benefit for the quarter, with a higher effective tax rate influenced by net loss and new tax legislation Income Tax (Benefit from) Provision and Effective Tax Rate | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | (Benefit from) provision for income taxes | $(15,169,000) | $1,485,000 | | Effective tax rate | 18.0% | 6.6% | - The One Big Beautiful Bill Act (OBBBA) was enacted in July 2025, eliminating the requirement to capitalize U.S. R&D expenses and is expected to significantly reduce cash tax payments for fiscal year ending April 30, 2026[90](index=90&type=chunk)[152](index=152&type=chunk) [16. Share Issuances](index=32&type=section&id=16.%20Share%20Issuances) In July 2025, the company completed a common stock offering, issuing over 4 million shares and generating significant net proceeds - In July 2025, the company issued 4,057,460 shares of common stock, generating gross proceeds of **$1.01 billion** and net proceeds of **$966.85 million** after costs[91](index=91&type=chunk) [17. Business Acquisitions](index=32&type=section&id=17.%20Business%20Acquisitions) On May 1, 2025, the company acquired BlueHalo LLC for approximately $3.48 billion, integrating it into AxS and SCDE segments - On May 1, 2025, the company acquired BlueHalo LLC for merger consideration, net of cash acquired, of **$3.48 billion**[92](index=92&type=chunk)[93](index=93&type=chunk) - The acquisition resulted in the recognition of **$2.28 billion** in goodwill and **$1.13 billion** in intangible assets (technology, customer relationships, backlog)[95](index=95&type=chunk)[101](index=101&type=chunk) BlueHalo Pro Forma Information (Three Months Ended July 27, 2024, in thousands) | Metric | Pro Forma (July 27, 2024) | | :-------------------------------- | :------------------------ | | Revenue | $378,924 | | Net loss attributable to AeroVironment, Inc. | $(88,402) | [18. Pension](index=36&type=section&id=18.%20Pension) The company maintains a small foreign-based defined benefit pension plan, acquired through Telerob, currently in a funded status Funded Status of Pension Plan (April 30, 2025, in thousands) | Metric | Amount | | :-------------------------- | :----- | | Projected benefit obligation | $(3,335) | | Fair value of plan assets | $3,817 | | Funded status of the plan | $482 | Net Periodic Benefit Cost (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net periodic benefit cost | $31 | $28 | [19. Segments](index=36&type=section&id=19.%20Segments) The company operates two reportable segments, AxS and SCDE, using segment adjusted EBITDA as the primary profitability measure Segment Revenue and Adjusted EBITDA (Three Months Ended August 2, 2025, in thousands) | Segment | Revenue | Segment adjusted EBITDA | | :------ | :------ | :---------------------- | | AxS | $285,324 | $52,760 | | SCDE | $169,352 | $3,796 | | Total | $454,676 | $56,556 | Segment Revenue and Adjusted EBITDA (Three Months Ended July 27, 2024, in thousands) | Segment | Revenue | Segment adjusted EBITDA | | :------ | :------ | :---------------------- | | AxS | $189,483 | $37,178 | | SCDE | $— | $— | | Total | $189,483 | $37,178 | Capital Expenditures by Segment (in thousands) | Segment | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------- | :-------------------------------- | :-------------------------------- | | AxS | $15,178 | $4,573 | | SCDE | $16,437 | $— | | Corporate | $453 | $857 | | Total | $32,068 | $5,430 | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=41&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) Management discusses financial performance, condition, critical accounting estimates, results, backlog, liquidity, and cash flow [Critical Accounting Estimates](index=41&type=section&id=Critical%20Accounting%20Estimates) Management discusses critical accounting estimates for revenue, inventory, intangibles, goodwill, and income taxes, noting potential differences Net (Unfavorable) Favorable Adjustments to Revenue (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Gross favorable adjustments | $2,316 | $812 | | Gross unfavorable adjustments | $(6,459) | $(285) | | Net (unfavorable) favorable adjustments | $(4,143) | $527 | - A goodwill impairment charge of **$18.40 million** was recognized for the Unmanned Ground Vehicles (UGV) reporting unit due to decreased forecasted results[123](index=123&type=chunk) [Results of Operations](index=45&type=section&id=Results%20of%20Operations) Revenue grew 140% driven by the BlueHalo acquisition and Switchblade demand, but increased costs led to a net loss Key Financial Results (Three Months Ended August 2, 2025 vs. July 27, 2024, in thousands) | Metric | August 2, 2025 | July 27, 2024 | Change ($) | Change (%) | | :-------------------------------- | :------------- | :------------ | :--------- | :--------- | | Revenue | $454,676 | $189,483 | $265,193 | 140% | | Cost of sales | $359,558 | $108,016 | $251,542 | 233% | | Gross margin | $95,118 | $81,467 | $13,651 | 16.7% | | Selling, general and administrative | $131,276 | $33,795 | $97,481 | 288.5% | | Research and development | $33,114 | $24,613 | $8,501 | 34.5% | | (Loss) income from operations | $(69,272) | $23,059 | $(92,331) | -400.4% | | Net (loss) income | $(67,370) | $21,166 | $(88,536) | -418.3% | - The increase in revenue was primarily due to **$123.70 million** in product revenue and **$111.50 million** in service revenue from the BlueHalo acquisition[126](index=126&type=chunk)[127](index=127&type=chunk) - Cost of sales increased significantly due to BlueHalo product lines (**$83.00 million**), intangible amortization (**$29.00 million**), and a mix shift to lower margin products (**$17.00 million**)[128](index=128&type=chunk) [Autonomous Systems (AxS)](index=49&type=section&id=Autonomous%20Systems%20%28AxS%29) The AxS segment experienced substantial revenue growth, driven by the BlueHalo acquisition and Switchblade demand, increasing adjusted EBITDA AxS Segment Performance (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | Change ($) | Change (%) | | :-------------------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenue | $285,324 | $189,483 | $95,841 | 51% | | Segment adjusted EBITDA | $52,760 | $37,178 | $15,582 | 42% | - AxS product revenue increased by **$81.20 million**, with **$50.90 million** from BlueHalo and **$30.30 million** from legacy AV products due to increased Switchblade demand[136](index=136&type=chunk) [Space, Cyber and Directed Energy (SCDE)](index=49&type=section&id=Space%2C%20Cyber%20and%20Directed%20Energy%20%28SCDE%29) The SCDE segment, newly formed from the BlueHalo acquisition, generated significant revenue and adjusted EBITDA in its first quarter SCDE Segment Performance (in thousands) | Metric | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Revenue | $169,352 | $— | | Segment adjusted EBITDA | $3,796 | $— | - The SCDE segment's revenue and adjusted EBITDA are entirely attributable to business units obtained in the BlueHalo acquisition on May 1, 2025[138](index=138&type=chunk)[139](index=139&type=chunk) [Backlog](index=51&type=section&id=Backlog) The company's funded backlog increased significantly, and it maintains a substantial unfunded backlog, which does not guarantee future orders - Funded backlog was approximately **$1.07 billion** as of August 2, 2025, up from **$726.60 million** as of April 30, 2025[141](index=141&type=chunk) - Unfunded backlog stood at **$3.09 billion** as of August 2, 2025, representing potential future orders under various contract types[142](index=142&type=chunk) [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) The company enhanced liquidity via stock and convertible notes offerings, repaying acquisition debt, and expects sufficient capital for future needs - In July 2025, the company completed a Common Stock Offering and a Notes Offering, generating aggregate net proceeds of approximately **$1.70 billion**[145](index=145&type=chunk) - Approximately **$965.30 million** of the proceeds were used to repay indebtedness under the Term Loan Facility and Revolving Credit Facility[145](index=145&type=chunk) - As of August 2, 2025, approximately **$338.10 million** was available under the Revolving Facility[146](index=146&type=chunk) [Cash Flows](index=53&type=section&id=Cash%20Flows) Operating cash flows shifted to net use, investing activities increased due to BlueHalo acquisition, and financing activities provided substantial cash Cash Flow Data (in thousands) | Activity | Three Months Ended August 2, 2025 | Three Months Ended July 27, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash (used in) provided by operating activities | $(123,726) | $28,351 | | Net cash used in investing activities | $(876,648) | $(6,613) | | Net cash provided by (used in) financing activities | $1,645,443 | $(13,954) | - The increase in net cash used in operating activities was primarily due to changes in operating assets and liabilities (**$157.80 million** decrease) and a decrease in net income (**$88.50 million**)[153](index=153&type=chunk) - Net cash used in investing activities increased by **$870.00 million**, mainly due to the **$844.60 million** cash consideration for the BlueHalo acquisition[154](index=154&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=55&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Market risk assessment is largely unchanged, but the issuance of 0% Convertible Senior Notes in July 2025 impacts interest rate risk - The issuance of **$747.50 million** of 0% Convertible Senior Notes in July 2025, used to repay other indebtedness, impacts the company's interest rate risk profile[157](index=157&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=55&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Disclosure controls were effective as of August 2, 2025, excluding BlueHalo, which had identified three material weaknesses - The Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures were effective as of August 2, 2025[161](index=161&type=chunk) - Management's evaluation of disclosure controls and procedures excludes BlueHalo's controls, which are being integrated[161](index=161&type=chunk) - BlueHalo identified three material weaknesses prior to acquisition: ineffective IT general controls, an ineffective control environment, and ineffective monitoring activities[163](index=163&type=chunk)[164](index=164&type=chunk) [PART II. OTHER INFORMATION](index=59&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, exhibits, and signatures [ITEM 1. LEGAL PROCEEDINGS](index=59&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is involved in class action and PAGA complaints, with an agreement in principle to settle reached in June 2025 - A class action complaint and a PAGA complaint were filed by former employees alleging California Labor Code violations[170](index=170&type=chunk)[172](index=172&type=chunk) - An agreement in principle to settle all claims in the class action and PAGA complaints was reached on June 11, 2025, subject to court approval[171](index=171&type=chunk) [ITEM 1A. RISK FACTORS](index=59&type=section&id=ITEM%201A.%20RISK%20FACTORS) Updated risk factors highlight increased indebtedness, cash flow limitations, and risks related to government budgets and contract funding - Total indebtedness of approximately **$725.00 million** from the Notes could limit cash flow, restrict additional financing, and dilute existing stockholders' interests upon conversion[175](index=175&type=chunk)[177](index=177&type=chunk)[179](index=179&type=chunk) - A decline in U.S. and other government budgets, changes in spending priorities, or delays in contract awards could significantly and adversely affect future revenue[181](index=181&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=63&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) There were no unregistered sales of equity securities or use of proceeds to report during the period [ITEM 3. DEFAULTS UPON SENIOR SECURITIES](index=63&type=section&id=ITEM%203.%20DEFAULTS%20UPON%20SENIOR%20SECURITIES) There were no defaults upon senior securities during the period [ITEM 4. MINE SAFETY DISCLOSURES](index=63&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to the company [ITEM 5. OTHER INFORMATION](index=63&type=section&id=ITEM%205.%20OTHER%20INFORMATION) EVP and CFO Kevin McDonnell adopted a Rule 10b5-1 trading plan for the sale of 4,296 shares of common stock - Kevin McDonnell, EVP and CFO, adopted a Rule 10b5-1 Trading Plan for the sale of **4,296** shares of common stock, with a term of approximately 8 months[185](index=185&type=chunk) [ITEM 6. EXHIBITS](index=64&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed as part of the Form 10-Q, including corporate governance, debt agreements, and certifications - Key exhibits include the Indenture for the Convertible Notes, the Fourth Amendment to Credit Agreement, and certifications from the CEO and CFO[188](index=188&type=chunk) [SIGNATURES](index=65&type=section&id=SIGNATURES) The report is duly signed by the company's Chairman, CEO, CFO, and Chief Accounting Officer - The report is signed by Wahid Nawabi (CEO), Kevin P. McDonnell (CFO), and Brian C. Shackley (CAO)[192](index=192&type=chunk)