[Cautionary Statement Regarding Forward-Looking Statements](index=4&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section outlines that the Form 10-K contains forward-looking statements, which are not guarantees of future performance and are subject to various risks and uncertainties detailed in the 'Risk Factors' section [Purpose and Risks of Forward-Looking Statements](index=4&type=section&id=4.1%20Purpose%20and%20Risks) This section clarifies that the Form 10-K contains forward-looking statements based on current expectations and assumptions, which are not guarantees of future performance, and highlights that actual results could differ materially due to known and unknown risks and uncertainties, as detailed in the 'Risk Factors' section - Forward-looking statements are based on current expectations and assumptions, not guarantees of performance, and involve **known and unknown risks and uncertainties**[12](index=12&type=chunk) - Important factors that could cause actual results to differ materially are disclosed under 'Risk Factors' in this Form 10-K[13](index=13&type=chunk) - The company undertakes no obligation to update or revise any forward-looking statement unless required by law[14](index=14&type=chunk) [Key Factors Affecting Future Results](index=4&type=section&id=4.2%20Key%20Factors%20Affecting%20Future%20Results) Key factors that could cause actual results to differ from expectations include the ability to attract and retain clients, profitability management, client consolidation or insourcing, general economic conditions, international operations management, natural events, technology adoption (including AI), workforce management, regulatory compliance, cybersecurity, and tax matters - Ability to attract new business and retain key clients[15](index=15&type=chunk) - Profitability based on utilization, pricing, and cost management[15](index=15&type=chunk) - Potential for client consolidation or expansion of insourcing activities[15](index=15&type=chunk) - General economic uncertainty, including inflation, interest rates, recession, and foreign exchange fluctuations[15](index=15&type=chunk) - Ability to manage international operations, particularly in the Philippines, Jamaica, Pakistan, and Nicaragua[15](index=15&type=chunk) - Impact of natural events, health epidemics, geopolitical conditions, and cyberattacks[15](index=15&type=chunk) - Ability to anticipate, develop, and implement information technology solutions, including Artificial Intelligence (AI)[15](index=15&type=chunk) - Ability to recruit, engage, motivate, manage, and retain the global workforce[15](index=15&type=chunk) - Compliance with applicable laws and regulations, including privacy, data protection, and information security[15](index=15&type=chunk) - Impact of tax matters, including new legislation and actions by taxing authorities[15](index=15&type=chunk) Part I [ITEM 1. BUSINESS](index=7&type=section&id=ITEM%201.%20BUSINESS) IBEX Limited provides technology-enabled customer lifecycle experience (CLX) solutions, leveraging its Wave iX platform, global delivery model, and agent-first culture to serve over 140 clients in the BPO industry - IBEX delivers innovative BPO, smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions[28](index=28&type=chunk) - The company serves more than **140 clients**, leveraging its proprietary technology platform, company culture, and operational excellence[29](index=29&type=chunk) - As of June 30, 2025, IBEX operates **30 delivery centers** with approximately **33,000 employees** globally[38](index=38&type=chunk) [Company Overview](index=7&type=section&id=7.1%20Company%20Overview) IBEX Limited offers innovative business process outsourcing (BPO), digital marketing, and end-to-end customer engagement solutions to over 140 clients - IBEX Limited provides innovative business process outsourcing (BPO), smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions[28](index=28&type=chunk) - The company helps over **140 clients** create innovative and differentiated customer experiences to increase loyalty, enhance brand awareness, and drive revenue[29](index=29&type=chunk) [Service Offerings](index=7&type=section&id=7.2%20Service%20Offerings) IBEX provides integrated technology-enabled customer lifecycle experience (CLX) solutions, including customer service, technical support, and digital marketing for customer acquisition - IBEX offers end-to-end technology-enabled customer lifecycle experience (CLX) solutions through an integrated platform[30](index=30&type=chunk) - The 'Connect' business delivers customer service, technical support, revenue generation, and back-office services via an omni-channel CX model[31](index=31&type=chunk) - The 'ibex Digital' suite provides digital marketing, e-commerce technology, and platform solutions for customer acquisition, alongside CX services for measuring and managing customer experiences[32](index=32&type=chunk) [Culture](index=7&type=section&id=7.3%20Culture) IBEX fosters an 'agent-first' culture through branded sites, technology-enabled recruiting, and engagement programs, achieving an Employee Net Promoter Score (eNPS) of 77 - IBEX is built around an **'agent-first' culture**, supported by branded sites, technology-enabled recruiting, and year-round employee engagement programs[33](index=33&type=chunk) - The company achieved an Employee Net Promoter Score (**eNPS) of 77** and has been recognized as a **top employer by Forbes and Newsweek in 2025**[33](index=33&type=chunk) [Technology](index=8&type=section&id=8.1%20Technology) The Wave iX technology platform, with its three-pronged AI strategy, underpins IBEX's service offerings to enhance agent interactions, client CX, and overall performance - The **Wave iX technology platform** is the foundation for IBEX's service offerings, featuring a **three-pronged AI strategy** to enhance agent interactions, client CX, and overall performance[34](index=34&type=chunk) - Wave iX integrates **AI-powered solutions** for hyper-personalized interactions, automation, and customized client solutions, deployed across most of the client portfolio[36](index=36&type=chunk)[37](index=37&type=chunk) [Flexible Operating Delivery Model](index=8&type=section&id=8.2%20Flexible%20Operating%20Delivery%20Model) IBEX employs a global delivery model with 30 centers and approximately 33,000 employees across onshore, nearshore, and offshore locations, including work-at-home capabilities - IBEX operates a **global delivery model** with onshore (U.S.), nearshore (Nicaragua, Honduras, Jamaica), and offshore (Philippines, Pakistan, India) customer experience centers, including work-at-home capabilities[38](index=38&type=chunk) - As of June 30, 2025, the company has **30 delivery centers** and approximately **33,000 employees**, with **97% of on-site capacity** in high-growth, high-margin offshore and nearshore geographies[38](index=38&type=chunk)[42](index=42&type=chunk) [Strategic Approach](index=9&type=section&id=9.1%20Strategic%20Approach) IBEX focuses on delivering exceptional customer experiences through innovative technology, operational excellence, a strong culture, and a client-devoted 'land and expand' strategy - IBEX prioritizes delivering exceptional customer experiences and has transformed into a **technology-led provider**, focusing on clients who view **CX as a competitive differentiator**[43](index=43&type=chunk)[44](index=44&type=chunk) - The growth strategy is based on **four pillars**: innovative technology, best-in-class operations, high-performing company culture, and a client-devoted mentality, utilizing a **'land and expand' approach**[45](index=45&type=chunk)[46](index=46&type=chunk)[49](index=49&type=chunk) [Our Clients](index=9&type=section&id=9.2%20Our%20Clients) IBEX partners with growing 'Digital-First' and established 'Blue Chip' companies across diverse verticals, maintaining high client retention and a Net Promoter Score (NPS) of 68 - IBEX partners with growing companies and established **Fortune 500 brands** across various verticals (Retail & E-commerce, HealthTech, Telecommunication, FinTech, Travel, Technology)[48](index=48&type=chunk) - Clients are categorized as **'Digital-First Companies'** (fast-growing, tech/e-commerce) and **'Blue Chip Companies'** (large customer bases, seeking digital transformation)[50](index=50&type=chunk)[51](index=51&type=chunk) - The company maintains **high client retention rates** and a **client Net Promoter Score (NPS) of 68**, reflecting strong relationships[53](index=53&type=chunk) [Industry Overview and Trends](index=10&type=section&id=10.1%20Industry%20Overview%20and%20Trends) The BPO industry is evolving towards technology-enabled solutions, with increasing integration of AI, a focus on customer experience, and demand for integrated end-to-end partners - The BPO industry is shifting from labor arbitrage to **technology-enabled solutions**, with Blue Chip clients increasingly evaluating **AI-enabled technologies**[55](index=55&type=chunk)[56](index=56&type=chunk) - Prioritization of Customer Experience (CX)[58](index=58&type=chunk)[59](index=59&type=chunk) - Focus on Consumer Centricity & Customer Lifetime Value (LTV)[58](index=58&type=chunk)[59](index=59&type=chunk) - Outsourcing across the entire operational value chain[58](index=58&type=chunk)[59](index=59&type=chunk) - Increasing integration of AI to enhance service delivery, including generative AI for automation and insights[58](index=58&type=chunk)[59](index=59&type=chunk) - Demand for integrated end-to-end partners offering unified solutions[58](index=58&type=chunk)[59](index=59&type=chunk) - Preference for 'Bestshore' flexible delivery models (onshore, nearshore, offshore, remote)[58](index=58&type=chunk)[59](index=59&type=chunk) - Heightened focus on Data Protection & Security[58](index=58&type=chunk)[59](index=59&type=chunk) - Integration of Data and Analytics into core service offerings[58](index=58&type=chunk)[59](index=59&type=chunk) [Sales and Marketing](index=12&type=section&id=12.1%20Sales%20and%20Marketing) Sales and marketing efforts focus on driving awareness, customer acquisition, and expanding existing client relationships through a 'land and expand' strategy across key verticals - Sales and marketing focus on driving awareness, customer acquisition, and expanding existing client relationships through a **'land and expand' strategy**[60](index=60&type=chunk) - Efforts target **key market verticals** (Retail & E-commerce, HealthTech, FinTech, Technology, Travel, Telecommunications) and **key decision-makers** (CDO, CIO, CXO, CCO, CMO)[61](index=61&type=chunk)[69](index=69&type=chunk) - The sales process for digital-first clients is **30-60 days**, while for larger blue-chip clients, it can extend **up to two years**[64](index=64&type=chunk) [Competition](index=13&type=section&id=13.1%20Competition) The highly fragmented BPO industry presents opportunities for differentiated providers like IBEX, which competes on service quality, value-added offerings, and advanced technology - The BPO industry is **highly fragmented**, creating opportunities for differentiated providers like IBEX, especially as clients seek **unified, end-to-end solutions**[71](index=71&type=chunk)[72](index=72&type=chunk) - IBEX faces competition from traditional BPO companies and in-house customer service departments, with key competitive factors including **service quality, value-added offerings, and advanced technological capabilities**[73](index=73&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Competitive Strengths and Differentiators](index=14&type=section&id=14.1%20Competitive%20Strengths%20and%20Differentiators) IBEX differentiates itself through its nimble, innovative culture, Wave iX AI technology, strong employer brand, broad digital service portfolio, and leading global delivery model - Differentiation as a nimble, disruptive provider with an innovative and entrepreneurial culture[78](index=78&type=chunk)[79](index=79&type=chunk)[84](index=84&type=chunk) - Wave iX technology solutions, leveraging generative AI (Wave iX AI Virtual Agent, Wave iX Translate) to drive performance and innovation[78](index=78&type=chunk)[79](index=79&type=chunk)[84](index=84&type=chunk) - Position as a leading brand and employer in its markets, fostering high employee engagement and lower attrition[78](index=78&type=chunk)[79](index=79&type=chunk)[84](index=84&type=chunk) - Broad portfolio of full lifecycle digital services (ibex Connect, ibex Digital, ibex CX)[78](index=78&type=chunk)[79](index=79&type=chunk)[84](index=84&type=chunk) - Leading global delivery model with significant growth in high-margin nearshore and offshore regions, offering geographic diversity and business continuity[78](index=78&type=chunk)[79](index=79&type=chunk)[84](index=84&type=chunk) [Seasonality](index=15&type=section&id=15.1%20Seasonality) IBEX's business experiences seasonal fluctuations, with increased customer engagement during the calendar year-end holiday period and customer acquisition revenues rising in summer and Q4 - IBEX's business performance is subject to **seasonal fluctuations**, with increased activity in customer engagement during the **calendar year-end holiday period**[81](index=81&type=chunk) - Customer acquisition revenues may increase during the **summer (household moves)** and the **final calendar quarter (holiday season)**[82](index=82&type=chunk) [Intellectual Property](index=15&type=section&id=15.2%20Intellectual%20Property) IBEX protects its competitive position through intellectual property laws, contractual arrangements, proprietary technology, registered trademarks, and trade secret controls - IBEX relies on **intellectual property laws, contractual arrangements, and proprietary technology** (next-generation software) to protect its competitive position[83](index=83&type=chunk) - The company registers **trademarks and service marks** in the U.S. and other countries and maintains **trade secrets** through contractual clauses and system access controls[84](index=84&type=chunk)[85](index=85&type=chunk)[86](index=86&type=chunk) [Regulation](index=16&type=section&id=16.1%20Regulation) IBEX is subject to diverse U.S. and foreign laws and regulations concerning privacy, data protection, intellectual property, and employment, with compliance being costly and time-consuming - IBEX is subject to **U.S. federal and state, and foreign laws and regulations** concerning privacy, data protection, intellectual property, competition, consumer protection, export taxation, and employment[87](index=87&type=chunk) - As a Bermuda company, IBEX must comply with the **Bermuda Companies Act 1981**, the **Economic Substance Act 2018** (effective July 1, 2019), and the **Personal Information Protection Act 2016** (fully implemented January 1, 2025)[88](index=88&type=chunk)[91](index=91&type=chunk)[92](index=92&type=chunk) - Compliance with these diverse legal requirements is **costly and time-consuming**, with potential for **significant fines or penalties** for violations[99](index=99&type=chunk) [Human Capital Resources](index=18&type=section&id=18.1%20Human%20Capital%20Resources) IBEX had approximately **33,000 full-time employees** as of June 30, 2025, fostering a customer-centric, employee-driven culture with an eNPS of 77 - IBEX had approximately **33,000 full-time employees** as of June 30, 2025, **up from 30,000 in 2024**, driven by a customer-centric, employee-driven culture[100](index=100&type=chunk) - The company's culture is built on **three principles**: being the best employer, an employee-first approach, and highly immersive engagement, resulting in an **eNPS of 77**[101](index=101&type=chunk)[105](index=105&type=chunk) [Information about our Executive Officers](index=18&type=section&id=18.2%20Information%20about%20our%20Executive%20Officers) This section lists the executive officers of IBEX Limited as of September 11, 2025, who serve at the discretion of the Board with no family relationships Executive Officers as of September 11, 2025 | Name | Age | Title | | :--- | :--- | :--- | | Robert Dechant | 63 | Chief Executive Officer | | Taylor Greenwald | 57 | Chief Financial Officer | | Christy O'Connor | 56 | Chief Legal Officer and Assistant Secretary | | David Afdahl | 51 | Chief Operating Officer | | Julie Casteel | 64 | Chief Marketing and Strategic Accounts Officer | | Bruce Dawson | 61 | Chief Sales and Client Services Officer | | Paul Inson | 61 | Chief People Officer | | Andreas Wilkens | 53 | Chief Technology Officer | | Michael Darwal | 42 | Deputy CFO, President ibex Digital | - Executive officers serve at the discretion of the Board, with no family relationships between them or directors[104](index=104&type=chunk) [ITEM 1A. RISK FACTORS](index=21&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section details material risks to IBEX's business, financial condition, and operations, categorized across business, financial, operational, legal, Bermuda incorporation, and common share factors - Investment in IBEX is **speculative and risky** due to **material risks and uncertainties** that could adversely affect business, results of operation, reputation, prospects, financial condition, operating results, cash flows, profitability, liquidity, and stock price[116](index=116&type=chunk) - The risks described are **not exhaustive**, and **additional unknown or currently immaterial risks** may also harm the business[116](index=116&type=chunk) [Business Risks](index=21&type=section&id=21.1%20Business%20Risks) Business risks include dependence on key clients, challenges in maintaining profitability, potential client claims, effects of consolidation, inability to adapt to market trends, acquisition risks, and intellectual property protection failures - Dependence on key clients, with the top three clients accounting for **26% of revenue in FY2025**[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Profitability relies on efficient asset utilization, appropriate pricing, and cost management, with most contracts lacking minimum volume requirements[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Risk of client claims for reduced payments or damages if quality standards are not met[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Adverse effects from client consolidation or increased insourcing activities[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Inability to anticipate client needs, adapt to market/technology trends (including AI), or successfully convert customer acquisition website visitors[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Risks associated with future acquisitions, including diversion of management attention, dilution, and integration difficulties[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Failure to adequately protect intellectual property and proprietary information, leading to competitive impairment or costly litigation[117](index=117&type=chunk)[118](index=118&type=chunk)[119](index=119&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk)[135](index=135&type=chunk)[136](index=136&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) [Financial, Accounting, and Economic Risks](index=25&type=section&id=25.1%20Financial%2C%20Accounting%2C%20and%20Economic%20Risks) Financial risks encompass high working capital needs, quarterly operating fluctuations, economic uncertainty, client payment defaults, debt covenant restrictions, goodwill impairment, and limitations on net operating loss carryforwards - Inability to fund high working capital requirements and new investments, potentially increasing financing costs[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Operating results may fluctuate quarterly due to factors like client loss, new contracts, termination of existing contracts, and seasonal changes[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Adverse effects from general economic uncertainty, including inflation, rising interest rates, recession, and foreign exchange fluctuations, particularly given **96% of FY2025 revenue from U.S. clients**[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Risk of clients failing to pay accounts receivable balances in a timely manner, impacting financial condition and cash flow[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Debt covenants may restrict operational flexibility, and non-compliance could lead to default[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Potential for significant charges to earnings if goodwill or intangible assets become impaired[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) - Limitations on the ability to use U.S. state and international net operating loss carryforwards, which begin to expire between 2026 and 2039[143](index=143&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk)[150](index=150&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[157](index=157&type=chunk) [Operational Risks](index=27&type=section&id=27.1%20Operational%20Risks) Operational risks involve reliance on technology, challenges with AI integration, dependence on international operations, workforce management, impacts of natural events, currency fluctuations, advertising effectiveness, and facility lease renewals - Heavy reliance on technology, telephone, and computer systems, as well as third-party telecommunications providers, exposing the company to technical difficulties or disruptions[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Risks from integrating AI and generative AI technology, including unintended consequences, data sourcing issues, program bias, security challenges, and potential replacement of lower-tier service offerings[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Significant dependence on international operations, particularly in the Philippines, Jamaica, Pakistan, and Nicaragua, where disruptions could diminish competitive advantage[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Challenges in attracting, retaining, and motivating qualified senior management, employees, and agents, exacerbated by high industry turnover and increasing labor costs[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Adverse effects from natural events, health epidemics, geopolitical conditions, widespread civil unrest, or terrorist attacks in operating countries[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Material impact on results of operations from unhedged fluctuations in local currencies against the U.S. dollar[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Negative impact if unable to advertise cost-effectively on internet search engines to attract consumers to customer acquisition websites[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Difficulties and increased expenses when expanding operations into new countries with less familiar local procedures or less developed infrastructure[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) - Adverse effects if unable to renew leases for facilities on commercially acceptable terms or at all[158](index=158&type=chunk)[159](index=159&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[165](index=165&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk)[176](index=176&type=chunk) [Legal and Regulatory Risks](index=31&type=section&id=31.1%20Legal%20and%20Regulatory%20Risks) Legal and regulatory risks include compliance with diverse laws, potential fines for non-compliance, liability from data breaches, and costs associated with intellectual property infringement claims - Exposure to numerous and sometimes conflicting legal and regulatory requirements across multiple countries and industries, including data privacy, telecommunications, import/export, and anti-corruption laws[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Non-compliance with legal regimes could result in significant fines, penalties, civil enforcement actions, criminal prosecution, and reputational damage[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Unauthorized or improper disclosure of personal information, privacy breaches, or cyber-attacks could lead to significant liability and harm reputation[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) - Claims of intellectual property infringement or violation of contractual protections by others could result in substantial costs, diversion of resources, and reputational harm[177](index=177&type=chunk)[178](index=178&type=chunk)[179](index=179&type=chunk)[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk) [Risks Related to Being Incorporated in Bermuda](index=34&type=section&id=34.1%20Risks%20Related%20to%20Being%20Incorporated%20in%20Bermuda) Risks related to Bermuda incorporation include adverse tax impacts, less shareholder protection under Bermuda law, and difficulties enforcing foreign judgments against the company - Potential adverse impact from tax matters, new legislation (e.g., Bermuda Corporate Income Tax Act 2023 if revenues exceed **€750 million**), and actions by taxing authorities[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Differences in Bermuda law compared to U.S. law may afford less protection to common shareholders, with limited rights for class actions or derivative actions[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) - Difficulty enforcing U.S. or other foreign judgments against IBEX in Bermuda due to its incorporation and asset location outside the U.S[188](index=188&type=chunk)[189](index=189&type=chunk)[190](index=190&type=chunk)[191](index=191&type=chunk)[192](index=192&type=chunk)[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk)[200](index=200&type=chunk)[201](index=201&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) [Risks Related to Our Common Shares](index=36&type=section&id=36.1%20Risks%20Related%20to%20Our%20Common%20Shares) Risks to common shares include influence from major shareholders, dilution from warrants, disclosure exemptions as an emerging growth company, increased compliance costs, potential PFIC characterization, market price volatility, and no planned dividends - The Resource Group International Limited (TRGI) beneficially owns **~13% of common shares** and has consent rights over certain actions, potentially limiting other shareholders' influence[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The Amazon Warrant, if exercised, will dilute ownership interests and could adversely affect the market price of common shares[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - As an 'emerging growth company' and 'smaller reporting company,' IBEX benefits from disclosure exemptions, which may make its common shares less attractive to investors[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Increased costs and demands on management due to complying with public company laws and regulations, including Section 404 of Sarbanes-Oxley Act[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Risk of adverse U.S. tax consequences for certain U.S. holders if IBEX is characterized as a passive foreign investment company (PFIC)[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Potential for a significant portion of total outstanding shares to be sold into the market, causing a decrease in market price[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - Anti-takeover provisions in bye-laws and the ability to issue preferred shares without shareholder approval could make acquisitions more difficult and limit shareholder influence[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - The market price of common shares may be volatile due to various factors, including operating performance, analyst reports, and economic conditions[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) - IBEX does not plan to pay dividends in the foreseeable future, meaning investors may only realize gains if the share price increases[204](index=204&type=chunk)[205](index=205&type=chunk)[206](index=206&type=chunk)[207](index=207&type=chunk)[208](index=208&type=chunk)[209](index=209&type=chunk)[210](index=210&type=chunk)[211](index=211&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk)[214](index=214&type=chunk)[215](index=215&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk)[218](index=218&type=chunk)[219](index=219&type=chunk)[220](index=220&type=chunk) [ITEM 1B. UNRESOLVED STAFF COMMENTS](index=40&type=section&id=ITEM%201B.%20UNRESOLVED%20STAFF%20COMMENTS) This section states that there are no unresolved staff comments from the SEC regarding the company's previous filings - There are **no unresolved staff comments**[221](index=221&type=chunk) [ITEM 1C. CYBERSECURITY](index=40&type=section&id=ITEM%201C.%20CYBERSECURITY) IBEX outlines its comprehensive cybersecurity risk management program, integrated into its enterprise risk management framework, with Board oversight and management-led day-to-day operations - IBEX integrates cybersecurity processes into its overall **enterprise risk management framework** to evaluate and manage risks[222](index=222&type=chunk)[224](index=224&type=chunk) - The **Board of Directors** is responsible for **overseeing cybersecurity risk management**, receiving periodic updates from management[232](index=232&type=chunk)[235](index=235&type=chunk) - While cybersecurity threats in the last fiscal year have **not materially affected** the Company's business strategy, results of operations or financial condition, future incidents are **unavoidable** and could have **material adverse effects**[236](index=236&type=chunk) [Risk Management and Strategy](index=40&type=section&id=40.1%20Risk%20Management%20and%20Strategy) IBEX conducts periodic cybersecurity evaluations, assesses AI-related risks, oversees third-party risks, maintains robust incident response plans, and provides mandatory employee training - **Periodic evaluations** of cybersecurity policies, processes, and practices by in-house security teams and third-party firms, including **audits, penetration testing, and threat modeling**[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Consideration of likelihood, impact, and feasibility of controls in assessing cybersecurity risks, with controls including **vulnerability management, firewalls, access controls, and data encryption**[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Integration of **AI into solutions** and third-party offerings, with **risk assessments** conducted to identify potential threats and vulnerabilities in AI systems[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Established processes to oversee and identify cybersecurity risks from **third parties**, including **contractual controls and periodic assessments** of vendor practices[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - Maintenance of **business continuity, incident response, and disaster recovery plans**, routinely evaluated and updated by IT Security, Operations, and Compliance teams[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - **Regular, mandatory cybersecurity training** for all personnel and out-of-cycle notices from the CTO[225](index=225&type=chunk)[226](index=226&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) [Governance](index=41&type=section&id=41.1%20Governance) The Board oversees cybersecurity risk management, receiving updates from management, while a dedicated Cybersecurity Committee and CISO handle day-to-day oversight - The **Board oversees cybersecurity risk management**, receiving periodic updates from management on strategy, risk assessments, and significant developments[232](index=232&type=chunk)[235](index=235&type=chunk) - Management, supported by dedicated professionals and a Cybersecurity Committee, handles day-to-day oversight, with the **Chief Information Security Officer (CISO)** leading the Information Security department[233](index=233&type=chunk) - The current CISO has **over eighteen years of experience** in cybersecurity and holds **multiple professional certifications** (CIISSP, CISA, CISM)[234](index=234&type=chunk) [Cybersecurity Threats](index=42&type=section&id=42.1%20Cybersecurity%20Threats) IBEX has implemented enhanced safeguards, and while past threats have not materially impacted the company, future cybersecurity incidents are unavoidable and could have material adverse effects - IBEX has implemented **additional technical and procedural safeguards** to strengthen its security posture, including **enhanced incident response protocols and employee awareness training**[236](index=236&type=chunk) - While cybersecurity threats in the last fiscal year have **not materially affected** the Company's business strategy, results of operations or financial condition, future cybersecurity incidents are **unavoidable** and could have **material adverse effects**[236](index=236&type=chunk) [ITEM 2. PROPERTIES](index=42&type=section&id=ITEM%202.%20PROPERTIES) IBEX operates executive management offices in Washington, D.C., and 30 leased global delivery centers, housing **20,456 workstations** as of June 30, 2025, primarily in offshore and nearshore regions - IBEX leases all of its facilities, including executive management offices in Washington, D.C. (**5,300 sq ft**) and **30 delivery centers** globally[237](index=237&type=chunk)[239](index=239&type=chunk) Delivery Centers and Workstations as of June 30, 2025 | Country | Number of centers | Number of workstations | | :--- | :--- | :--- | | United States | 2 | 654 | | Philippines | 9 | 8,567 | | Pakistan | 10 | 4,058 | | Jamaica | 4 | 3,810 | | Nicaragua | 4 | 2,691 | | Honduras | 1 | 676 | | Total | 30 | 20,456 | - The company expects to procure additional space and expand geographically to meet business demands[240](index=240&type=chunk) [ITEM 3. LEGAL PROCEEDINGS](index=43&type=section&id=ITEM%203.%20LEGAL%20PROCEEDINGS) IBEX is involved in ordinary course legal actions, accruing for probable losses, but management believes current proceedings will not materially affect financial position or operations - IBEX is involved in legal actions in the ordinary course of business and accrues for probable and reasonably estimable losses[241](index=241&type=chunk) - Management believes that the disposition or ultimate resolution of any current legal proceedings will **not have a material adverse effect** on the Company's financial position, cash flows, or results of operations[242](index=242&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=43&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) This item is not applicable to IBEX Limited - This item is **not applicable**[243](index=243&type=chunk) Part II [ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES](index=43&type=section&id=ITEM%205.%20MARKET%20FOR%20REGISTRANT%27S%20COMMON%20EQUITY%2C%20RELATED%20STOCKHOLDER%20MATTERS%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) This section provides information on IBEX's common shares trading on Nasdaq, outstanding shares, dividend policy, and details of the **$15 million** share repurchase program authorized on May 1, 2025 - IBEX common shares began trading on the **Nasdaq Global Market** under the symbol 'IBEX' on **August 7, 2020**[245](index=245&type=chunk) - As of August 29, 2025, there were **13,315,077 common shares outstanding** and **94 holders of record**[6](index=6&type=chunk)[245](index=245&type=chunk) - The company currently **does not plan to declare dividends**, intending to retain all future earnings to finance business growth and development[246](index=246&type=chunk) Share Repurchases for the Three Months Ended June 30, 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Program | Approximate Dollar Value of Shares That May Yet Be Purchased Under 2025 Share Repurchase Program ($ thousands) | | :--- | :--- | :--- | :--- | :--- | | April 1 - 30, 2025 | — | — | — | — | | May 1 - 31, 2025 | 14,300 | $28.68 | 14,300 | $14,590 | | June 1 - 30, 2025 | 43,980 | $28.79 | 43,980 | $13,324 | | Total | 58,280 | $28.76 | 58,280 | | [ITEM 6. [RESERVED]](index=44&type=section&id=ITEM%206.%20%5BRESERVED%5D) This item is reserved and contains no information - This item is **reserved**[252](index=252&type=chunk) [ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=44&type=section&id=ITEM%207.%20MANAGEMENT%27S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes IBEX's financial condition and results for FY2025, highlighting **9.8% revenue growth** to **$558.3 million**, **9.5% net income increase** to **$36.9 million**, and diluted EPS of **$2.36**, driven by client growth and strategic shifts - IBEX delivered revenues of **$558.3 million** during the fiscal year ended June 30, 2025, a **9.8% increase** compared to the prior year[257](index=257&type=chunk) - Net income for FY2025 was **$36.9 million**, a **9.5% increase** from **$33.7 million** in the prior year, driven by revenue growth in higher margin offshore regions and improved gross margin performance[257](index=257&type=chunk) - Fully diluted earnings per share for FY2025 was **$2.36**, **up from $1.84** in the prior year, due to higher net income and fewer diluted shares outstanding[257](index=257&type=chunk) [Overview](index=45&type=section&id=45.1%20Overview) IBEX provides innovative BPO, digital marketing, and customer engagement solutions, operating a global CX delivery model with 30 centers and approximately **33,000 employees** - IBEX delivers innovative BPO, smart digital marketing, online acquisition technology, and end-to-end customer engagement solutions[255](index=255&type=chunk) - The company operates a global CX delivery center model with **30 centers** and approximately **33,000 employees**, managing nearly **169 million customer interactions**[255](index=255&type=chunk) [Business Highlights](index=45&type=section&id=45.2%20Business%20Highlights) In FY2025, IBEX achieved strong financial results with growth in key verticals, expanded capacity in offshore/nearshore regions, and secured sixteen new client wins - During FY2025, IBEX delivered **strong financial results** with growth in Retail & E-commerce, HealthTech, Travel, Transportation & Logistics, and Other verticals[256](index=256&type=chunk) - The company increased capacity in offshore and nearshore regions, expanded into **two new sites**, and achieved **sixteen new client wins**[256](index=256&type=chunk) [Recent Financial Highlights](index=45&type=section&id=45.3%20Recent%20Financial%20Highlights) FY2025 saw **revenues of $558.3 million** (+**9.8%**), **net income of $36.9 million** (+**9.5%**), and **fully diluted EPS of $2.36** (+**28.3%**), driven by higher-margin offshore growth Key Financial Highlights (FY2025 vs FY2024) | Metric | FY2025 | FY2024 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $558.3 million | $508.6 million | +9.8% | | Net Income | $36.9 million | $33.7 million | +9.5% | | Fully Diluted EPS | $2.36 | $1.84 | +28.3% | - The increase in net income was driven by **revenue growth in higher margin offshore regions** and **improved gross margin performance**[257](index=257&type=chunk) [Trends and Factors Affecting our Performance](index=45&type=section&id=45.4%20Trends%20and%20Factors%20Affecting%20our%20Performance) Performance is influenced by macroeconomic factors, AI integration, demand for services, capacity utilization, wage pressures, operating margins from geographic shifts, client concentration, pricing strategies, employee turnover, and currency exchange rates - **Macroeconomic factors** (inflation, interest rates, geopolitical uncertainty, foreign exchange) have impacted financial results, leading some clients to shift work to offshore sites for **cost reduction**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - IBEX is aggressively leveraging **generative AI** through its **Wave iX technology** to **increase agent productivity**, provide customer insights, and deploy voice/chat bots, aiming to capture **AI-enabled revenue**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Demand for customer interaction services reflects client business performance; FY2025 saw **higher demand** due to digital-first solutions, existing client growth, and new client wins[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Capacity utilization impacts margins; overall utilization increased to **88% in FY2025** from **84% in FY2024**, with U.S. utilization **over 100%** due to work-at-home model[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **Increasing wage pressure** in all geographies was offset by **higher agent quality, increased productivity, better retention, and contractual cost of living adjustments (COLA)**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Operating margins are influenced by the shift towards **higher-margin offshore and nearshore delivery locations**, which now account for approximately **97% of workstations**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - IBEX has a **strong track record of new client wins**, with in-year wins historically generating **2.0x to 3.0x revenue** in subsequent years[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Client concentration: largest client accounted for **11% of revenue**, and top three clients for **26% in FY2025**, but overall client diversification is increasing[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Pricing strategies include **base price per minute/hour, bonuses/penalties**, and successful negotiation of **price increases/COLA** due to labor market tightening and facilities expenses[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **High employee turnover** in the outsourcing industry impacts profitability; IBEX focuses on employee engagement to support **lower attrition rates**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **Increased costs** for sourcing or generating leads, or changes in conversion rates, can **impact profit margins** in customer acquisition solutions[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - **Increased up-front costs** for hiring and training new employees in response to demand can initially **depress operating profit margins**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) - Net effect of currency exchange rate fluctuations: a **significant portion of operating expenses are in foreign currencies** (PHP, JMD, PKR), while **revenues are primarily in USD**, leading to **FX exposure**[259](index=259&type=chunk)[260](index=260&type=chunk)[261](index=261&type=chunk)[262](index=262&type=chunk)[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk)[268](index=268&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk)[274](index=274&type=chunk)[275](index=275&type=chunk) [Key Operational Metrics](index=48&type=section&id=48.1%20Key%20Operational%20Metrics) Key operational metrics include workstations, work-at-home agents, and capacity utilization, which increased to **88% in FY2025** from **84% in FY2024**, driven by offshore and nearshore optimization - Workstations: Number of physical workstations used for production at delivery centers[276](index=276&type=chunk) - Work at home: Number of production agents working from home[277](index=277&type=chunk) - Capacity Utilization: Efficiency metric defined as (on-site workstations in use + work at home seats) / total on-site workstations[278](index=278&type=chunk) - Capacity utilization increased to **88% in FY2025** from **84% in FY2024**, driven by utilization in nearshore and offshore geographies and optimization of onshore capacity[279](index=279&type=chunk) Capacity Utilization by Region (as of June 30, 2025 and 2024) | | As of June 30, 2025 | | As of June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | | Total Production Workstations | Utilization % | Tota

Executive Summary & Fiscal Year 2025 Highlights IBEX Limited achieved record FY25 financial results, exceeding guidance with its strongest quarterly growth in nearly three years [Overall Performance Summary](index=1&type=section&id=Overall%20Performance%20Summary) IBEX Limited achieved record FY25 financial results, exceeding revenue and Adjusted EBITDA guidance with strong top-line growth and record EPS - IBEX achieved its strongest quarterly growth rate in nearly 3 years and record fiscal year 2025 financial results[1](index=1&type=chunk) - The company exceeded the high end of its Revenue and Adjusted EBITDA Guidance for FY25[4](index=4&type=chunk) Key Financial Highlights (Q4 & FY25 vs FY24) | Metric | Q4 2025 | Q4 2024 | Q4 Change (%) | FY 2025 | FY 2024 | FY Change (%) | | :-------------------------------- | :------ | :------ | :------------ | :------ | :------ | :------------ | | Revenue | $147.1M | $124.5M | 18.2% | $558.3M | $508.6M | 9.8% | | Net income | $9.6M | $9.8M | (2.5)% | $36.9M | $33.7M | 9.5% | | Adjusted net income | $12.6M | $10.2M | 23.3% | $43.0M | $38.4M | 12.1% | | Adjusted EBITDA | $20.5M | $17.9M | 14.0% | $72.0M | $65.2M | 10.4% | | Diluted EPS | $0.66 | $0.56 | 18.7% | $2.36 | $1.84 | 27.8% | | Adjusted diluted EPS | $0.87 | $0.58 | 50.0% | $2.75 | $2.10 | 30.7% | [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Bob Dechant highlighted IBEX's BPO market outperformance, driven by operational excellence, market share gains, new client wins, and AI solution deployments - CEO Bob Dechant stated that IBEX continues to outperform the BPO market, completing a tremendous fourth quarter and fiscal year 2025 with record financial results[2](index=2&type=chunk) - Growth was driven by operational excellence with existing clients, enabling significant market share wins, and continued new logo wins with 'trophy clients'[2](index=2&type=chunk) - Fiscal 2025 marked the shift from proof of concept for AI solutions to full-scale deployments, setting the stage for future growth, and included a successful entry into India[2](index=2&type=chunk) Fourth Quarter Fiscal Year 2025 Financial Results IBEX Limited reported strong Q4 FY25 financial results, driven by significant revenue growth and improved adjusted profitability [Revenue Performance (Q4)](index=1&type=section&id=Revenue%20Performance%20(Q4)) Fourth quarter revenue increased by 18.2% year-over-year to $147.1 million, marking the highest growth rate in eleven quarters Q4 2025 Revenue Performance | Metric | Q4 2025 | Q4 2024 | Change (%) | | :------- | :------ | :------ | :--------- | | Revenue | $147.1M | $124.5M | 18.2% | - Q4 revenue growth of **18.2%** was the highest rate in eleven quarters[2](index=2&type=chunk) - Growth was driven by top three verticals: Retail & E-commerce (**+24.5%**), HealthTech (**+19.0%**), and Travel, Transportation and Logistics (**+10.0%**), as well as outstanding growth in the digital acquisition business[3](index=3&type=chunk) [Net Income and Earnings Per Share (Q4)](index=2&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share%20(Q4)) Q4 net income remained consistent at $9.6 million, while diluted EPS rose 18.7% to $0.66, and adjusted diluted EPS increased 50.0% to $0.87 Q4 2025 Net Income and EPS | Metric | Q4 2025 | Q4 2024 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net income | $9.6M | $9.8M | (2.5)% | | Diluted EPS | $0.66 | $0.56 | 18.7% | | Adjusted net income | $12.6M | $10.2M | 23.3% | | Adjusted diluted EPS | $0.87 | $0.58 | 50.0% | | Net income margin | 6.5% | 7.9% | (140)bps | | Adjusted net income margin | 8.5% | 8.2% | 30 bps | - Diluted EPS benefited from fewer diluted shares outstanding due to share repurchase activities during fiscal 2025[9](index=9&type=chunk) - Net income margin decreased due to increases in selling, general, and administrative expenses, including higher payroll costs (**$5.7M**), impairment losses (**$1.4M**), and net foreign currency losses (**$1.3M**), partially offset by lower income tax expense[9](index=9&type=chunk) [Adjusted EBITDA (Q4)](index=2&type=section&id=Adjusted%20EBITDA%20(Q4)) Adjusted EBITDA for Q4 increased by 14.0% to $20.5 million, though the margin slightly decreased to 13.9% due to higher operating expenses Q4 2025 Adjusted EBITDA Performance | Metric | Q4 2025 | Q4 2024 | Change (%) | | :------------------ | :------ | :------ | :--------- | | Adjusted EBITDA | $20.5M | $17.9M | 14.0% | | Adjusted EBITDA margin | 13.9% | 14.4% | (50)bps | - Adjusted EBITDA margin decreased due to increases in selling, general, and administrative expenses, including higher payroll and related costs of **$5.7 million** to support growth[9](index=9&type=chunk) Full Fiscal Year 2025 Financial Results IBEX Limited achieved robust full fiscal year 2025 financial results, marked by strong revenue growth and record adjusted earnings [Revenue Performance (FY25)](index=2&type=section&id=Revenue%20Performance%20(FY25)) For the full fiscal year 2025, revenue grew by 9.8% to $558.3 million, representing the highest growth in three years FY 2025 Revenue Performance | Metric | FY 2025 | FY 2024 | Change (%) | | :------- | :------ | :------ | :--------- | | Revenue | $558.3M | $508.6M | 9.8% | - Full-year revenue growth of **9.8%** was the highest in three years[2](index=2&type=chunk) - Growth was driven by top three verticals: HealthTech (**+23.2%**), Travel, Transportation and Logistics (**+13.7%**), and Retail & E-commerce (**+12.6%**), and outstanding growth in the digital acquisition business[6](index=6&type=chunk) [Net Income and Earnings Per Share (FY25)](index=2&type=section&id=Net%20Income%20and%20Earnings%20Per%20Share%20(FY25)) Fiscal year 2025 net income increased by 9.5% to $36.9 million, with diluted EPS rising 27.8% to $2.36, and adjusted EPS reaching a record $2.75 FY 2025 Net Income and EPS | Metric | FY 2025 | FY 2024 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | | Net income | $36.9M | $33.7M | 9.5% | | Diluted EPS | $2.36 | $1.84 | 27.8% | | Adjusted net income | $43.0M | $38.4M | 12.1% | | Adjusted diluted EPS | $2.75 | $2.10 | 30.7% | | Net income margin | 6.6% | 6.6% | — bps | | Adjusted net income margin | 7.7% | 7.5% | 20 bps | - Net income was favorably impacted by an increase in gross margin due to revenue growth, particularly in higher-margin offshore regions, offset by increases in SG&A, interest, and income tax expenses[10](index=10&type=chunk) - Diluted EPS benefited from diluted shares outstanding declining to **15.7 million** from **18.3 million** in the prior year, a result of share repurchase activities[10](index=10&type=chunk) [Adjusted EBITDA (FY25)](index=2&type=section&id=Adjusted%20EBITDA%20(FY25)) Adjusted EBITDA for fiscal year 2025 increased by 10.4% to $72.0 million, maintaining a consistent Adjusted EBITDA margin of 12.9% FY 2025 Adjusted EBITDA Performance | Metric | FY 2025 | FY 2024 | Change (%) | | :------------------ | :------ | :------ | :--------- | | Adjusted EBITDA | $72.0M | $65.2M | 10.4% | | Adjusted EBITDA margin | 12.9% | 12.8% | 10 bps | Cash Flow and Balance Sheet Analysis IBEX Limited demonstrated improved operating cash flow and record free cash flow in FY25, while managing its net cash position through strategic share repurchases

FORM 10-Q Filing Information [Registrant Information](index=1&type=section&id=Registrant%20Information) Provides basic identification details for Torrid Holdings Inc.'s Form 10-Q, covering incorporation, address, and stock exchange - Registrant: **TORRID HOLDINGS INC.**[3](index=3&type=chunk) - Incorporation: **Delaware**[3](index=3&type=chunk) - Principal Executive Offices: **City of Industry, California**[3](index=3&type=chunk) Securities Registered | Title of each class | Trading Symbol | Name of each exchange on which registered | | :------------------ | :------------- | :---------------------------------------- | | Common stock, par value $0.01 per share | CURV | New York Stock Exchange | - As of September 1, 2025, approximately **99.2 million** shares of common stock were outstanding[5](index=5&type=chunk) FORWARD-LOOKING STATEMENTS [Nature of Forward-Looking Statements](index=3&type=section&id=Nature%20of%20Forward-Looking%20Statements) Clarifies forward-looking statements are subject to risks and uncertainties, potentially causing actual results to differ - Forward-looking statements reflect current expectations and projections relating to financial condition, results of operations, plans, objectives, future performance, and business[9](index=9&type=chunk) - Statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations[9](index=9&type=chunk) [Key Risk Factors](index=3&type=section&id=Key%20Risk%20Factors) Identifies factors that could materially affect results, including economic conditions, supply chain, competition, and operations - Changes in consumer spending and general economic conditions[9](index=9&type=chunk) - Negative impact on revenue and profitability from new or increased duties/tariffs on imported goods[9](index=9&type=chunk) - Increased competition from other brands and retailers[9](index=9&type=chunk) - Dependence on third parties for merchandise manufacturing and transportation[9](index=9&type=chunk) - Reliance on information systems and risks related to system security or unauthorized data disclosure[13](index=13&type=chunk) - Substantial indebtedness and lease obligations, and restrictions imposed by debt[13](index=13&type=chunk) PART I — FINANCIAL INFORMATION [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited condensed consolidated financial statements, including balance sheets, income, deficit, and cash flows [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | **Assets** | | | | Cash and cash equivalents | $21,543 | $48,523 | | Inventory | $130,235 | $148,493 | | Total current assets | $189,086 | $226,166 | | Total assets | $414,465 | $488,441 | | **Liabilities and Stockholders' Deficit** | | | | Accounts payable | $53,198 | $72,378 | | Accrued and other current liabilities | $108,898 | $125,743 | | Total current liabilities | $228,191 | $263,132 | | Noncurrent debt, net | $264,337 | $272,409 | | Total liabilities | $615,581 | $679,530 | | Total stockholders' deficit | $(201,116) | $(191,089) | | Total liabilities and stockholders' deficit | $414,465 | $488,441 | - Total assets decreased from **$488.4 million** at February 1, 2025, to **$414.5 million** at August 2, 2025[17](index=17&type=chunk) - Total liabilities decreased from **$679.5 million** to **$615.6 million** over the same period[17](index=17&type=chunk) - Stockholders' deficit increased from **$(191.1) million** to **$(201.1) million**[17](index=17&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (in thousands, except per share data) | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $262,806 | $284,638 | $528,771 | $564,409 | | Gross profit | $93,488 | $110,258 | $194,890 | $225,679 | | Income from operations | $10,160 | $20,413 | $26,187 | $46,556 | | Net income | $1,567 | $8,328 | $7,507 | $20,500 | | Basic net earnings per share | $0.02 | $0.08 | $0.07 | $0.20 | | Diluted net earnings per share | $0.02 | $0.08 | $0.07 | $0.19 | - Net sales decreased by **7.7%** for the three months ended August 2, 2025, and by **6.3%** for the six months ended August 2, 2025, compared to the prior year periods[19](index=19&type=chunk) - Net income significantly decreased from **$8.3 million** to **$1.6 million** for the three-month period and from **$20.5 million** to **$7.5 million** for the six-month period year-over-year[19](index=19&type=chunk) [Condensed Consolidated Statements of Stockholders' Deficit](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Deficit) Changes in Stockholders' Deficit (in thousands) | Item | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Balance at beginning of period | $(191,089) | $(211,717) | | Net income | $7,507 | $20,500 | | Issuance of common shares and withholding tax payments | $(438) | $(419) | | Share-based compensation | $2,605 | $2,412 | | Purchase of common stock, including excise tax | $(20,285) | $0 | | Other comprehensive income (loss) | $391 | $(187) | | Balance at end of period | $(201,116) | $(188,946) | - Total stockholders' deficit increased from **$(191.1) million** at February 1, 2025, to **$(201.1) million** at August 2, 2025[21](index=21&type=chunk) - The company repurchased **6.0 million** shares of common stock for **$20.3 million** during the six months ended August 2, 2025[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Activity | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash (used in) provided by operating activities | $(2,270) | $68,447 | | Net cash used in investing activities | $(3,671) | $(10,180) | | Net cash used in financing activities | $(21,470) | $(15,981) | | (Decrease) increase in cash, cash equivalents and restricted cash | $(26,980) | $42,205 | | Cash, cash equivalents and restricted cash at end of period | $21,942 | $54,339 | - Operating activities shifted from providing **$68.4 million** in cash in the prior year to using **$2.3 million** in the current six-month period[25](index=25&type=chunk) - Investing activities used less cash, decreasing from **$10.2 million** to **$3.7 million**, primarily due to fewer store openings and remodels[25](index=25&type=chunk) - Financing activities used more cash, increasing from **$16.0 million** to **$21.5 million**, mainly due to share repurchases[25](index=25&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1. Basis of Presentation and Description of the Business](index=13&type=section&id=Note%201.%20Basis%20of%20Presentation%20and%20Description%20of%20the%20Business) Outlines corporate structure, fiscal year, financial statement presentation, business description, and accounting policies - **TORRID HOLDINGS INC.** is a direct-to-consumer brand specializing in apparel, intimates, and accessories for women wearing sizes **10** to **30**, primarily through its e-Commerce platform and stores in North America[33](index=33&type=chunk) - The fiscal year ends on the Saturday nearest to January **31**; fiscal years **2025** and **2024** are **52-week** years[30](index=30&type=chunk) - A change in significant accounting policies occurred for treasury stock, now recorded at cost as a separate component of stockholders' deficit[35](index=35&type=chunk)[36](index=36&type=chunk) [Note 2. Accounting Standards](index=14&type=section&id=Note%202.%20Accounting%20Standards) Discusses recently adopted and not yet adopted accounting standards, with no new adoptions in current interim periods - No new accounting standards were adopted during the three- and six-month periods ended August 2, 2025[39](index=39&type=chunk) - ASU 2023-09 (Income Taxes: Improvements to Income Tax Disclosures) is effective for fiscal year ended January 31, 2026, and the company is evaluating its impact[40](index=40&type=chunk) - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for annual periods beginning after December 15, 2026, and the company is evaluating its impact[41](index=41&type=chunk) [Note 3. Property and Equipment](index=15&type=section&id=Note%203.%20Property%20and%20Equipment) Summarizes property and equipment, net of depreciation, showing a decrease in net value; no impairment charges Property and Equipment, Net (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Property and equipment, at cost | $305,925 | $323,230 | | Less: accumulated depreciation and amortization | $(242,253) | $(245,561) | | Property and equipment, net | $63,672 | $77,669 | - Depreciation expense was **$9.4 million** for the three months and **$18.8 million** for the six months ended August 2, 2025[44](index=44&type=chunk) - No impairment charges were recognized during the three- and six-month periods ended August 2, 2025, or August 3, 2024[45](index=45&type=chunk) [Note 4. Revenue Recognition](index=15&type=section&id=Note%204.%20Revenue%20Recognition) Disaggregates revenue by product category and details contract liabilities; apparel remains largest component Revenue by Product Category (in thousands) | Category | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Apparel | $241,411 | $259,782 | $481,198 | $512,515 | | Non-apparel | $13,457 | $17,536 | $31,710 | $37,828 | | Other | $7,938 | $7,320 | $15,863 | $14,066 | | Total net sales | $262,806 | $284,638 | $528,771 | $564,409 | Contract Liabilities (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Accrued loyalty program | $10,610 | $10,887 | | Gift cards | $11,590 | $13,676 | | Deferred revenue | $3,374 | $2,777 | | Deferred PLCC Funds | $3,208 | $3,458 | - Revenue recognized from accrued loyalty program, gift cards, and deferred PLCC Funds from the beginning of fiscal year 2025 was **$1.3 million**, **$0.8 million**, and **$0.2 million**, respectively, for the three-month period[50](index=50&type=chunk) [Note 5. Related Party Transactions](index=16&type=section&id=Note%205.%20Related%20Party%20Transactions) Details transactions with related parties, including services, merchandise purchases, and a share repurchase - Hot Topic charged Torrid **$0.5 million** for services in the three months ended August 2, 2025, and Torrid charged Hot Topic **$0.1 million** for IT services[53](index=53&type=chunk)[55](index=55&type=chunk) - Cost of goods sold included **$8.8 million** from MGF Sourcing US, LLC for the three months ended August 2, 2025[59](index=59&type=chunk) - On June 23, 2025, Torrid repurchased **6.0 million** shares of common stock from **Sycamore** for **$20.0 million** in a private transaction[61](index=61&type=chunk) [Note 6. Debt](index=17&type=section&id=Note%206.%20Debt) Provides details on company debt, including ABL Facility and Term Loan, with ABL maturity extended to 2030 Debt Composition (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Borrowings under credit facility (ABL) | $7,900 | $0 | | Amended Term Loan Credit Agreement | $284,375 | $293,125 | | Less: unamortized original issue discount and debt financing costs | $(3,894) | $(4,572) | | Noncurrent debt, net | $264,337 | $272,409 | - The **Amended ABL Facility**'s maturity date was extended from June 14, 2026, to August 1, 2030[63](index=63&type=chunk) - As of August 2, 2025, availability under the **Amended ABL Facility** was **$90.2 million**[64](index=64&type=chunk) - Interest expense for the **Amended Term Loan Credit Agreement** was **$7.4 million** for the three months and **$14.9 million** for the six months ended August 2, 2025[68](index=68&type=chunk) [Note 7. Leases](index=18&type=section&id=Note%207.%20Leases) Details company lease costs, primarily fixed operating and variable, showing a slight decrease year-over-year Lease Costs (in thousands) | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Fixed operating lease cost | $11,956 | $12,663 | $24,374 | $25,808 | | Short-term lease cost | $21 | $40 | $43 | $79 | | Variable lease cost | $5,613 | $5,539 | $11,278 | $11,137 | | Total lease cost | $17,590 | $18,242 | $35,695 | $37,024 | [Note 8. Income Taxes](index=19&type=section&id=Note%208.%20Income%20Taxes) Provides income tax provision and effective tax rates, impacted by non-deductible compensation and new legislation Income Tax Provision and Effective Tax Rate | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Provision for income taxes | $0.5 million | $3.1 million | $3.1 million | $7.6 million | | Effective tax rate | **23.7%** | **26.9%** | **29.4%** | **26.9%** | - The decrease in the three-month effective tax rate was primarily due to a decrease in non-deductible compensation[71](index=71&type=chunk) - The '**One Big Beautiful Bill Act**' was signed into law on July 4, 2025, allowing more favorable deductibility of certain business expenses, with an immaterial impact expected for the current year[72](index=72&type=chunk)[73](index=73&type=chunk) [Note 9. Commitments and Contingencies](index=19&type=section&id=Note%209.%20Commitments%20and%20Contingencies) Discloses ongoing legal proceedings, including class action lawsuits, with $4.1 million accrued for probable losses - A class action complaint filed in April 2024 alleges misleading and unlawful pricing, sales, and discounting practices; a proposed settlement agreement was reached in May 2025[74](index=74&type=chunk) - Six class action lawsuits were consolidated in February 2025, alleging failure to protect data after a potential unauthorized access incident[75](index=75&type=chunk) - Accrued legal liabilities were **$4.1 million** as of August 2, 2025, for estimated probable losses[74](index=74&type=chunk) [Note 10. Earnings Per Share](index=20&type=section&id=Note%2010.%20Earnings%20Per%20Share) Provides computation of basic and diluted net earnings per share, showing a decrease from the prior year Net Earnings Per Share (in thousands, except per share amounts) | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net income—basic and diluted | $1,567 | $8,328 | $7,507 | $20,500 | | Weighted-average number of shares—basic | 102,470 | 104,500 | 103,699 | 104,384 | | Weighted-average number of shares—diluted | 102,746 | 106,074 | 104,400 | 105,728 | | Basic net earnings per share | $0.02 | $0.08 | $0.07 | $0.20 | | Diluted net earnings per share | $0.02 | $0.08 | $0.07 | $0.19 | Potentially Dilutive Securities Excluded (in thousands) | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Restricted stock awards, restricted stock units and performance stock units | 708 | 31 | 312 | 51 | | Stock options | 2,597 | 1,461 | 2,321 | 1,383 | | Total anti-dilutive securities | 3,305 | 1,492 | 2,633 | 1,434 | [Note 11. Fair Value Measurements](index=21&type=section&id=Note%2011.%20Fair%20Value%20Measurements) Provides fair value measurements for financial assets and liabilities, including money market funds and term loan Fair Value Measurements (in thousands) | Item | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Money market funds (cash equivalent) | $151 | $31,727 | | Deferred compensation plan liability (current) | $224 | $1,767 | | Deferred compensation plan liability (noncurrent) | $3,801 | $3,913 | | Fair value of Amended Term Loan Credit Agreement | $253,100 | $274,100 | - The fair value of money market funds is based on quoted prices in active markets (Level **1**)[81](index=81&type=chunk) - The fair value of the **Amended Term Loan Credit Agreement** is determined using current applicable rates for similar instruments (Level **2**)[83](index=83&type=chunk) [Note 12. Segment Reporting](index=22&type=section&id=Note%2012.%20Segment%20Reporting) States the company operates as a single reportable segment, managed on a consolidated net income basis - Torrid has one reportable segment, including e-Commerce and stores, managed by the CEO based on consolidated net income[84](index=84&type=chunk) Segment Information (in thousands) | Item | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net sales | $262,806 | $284,638 | $528,771 | $564,409 | | Net income | $1,567 | $8,328 | $7,507 | $20,500 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion of financial condition, operations, liquidity, and cash flows, including performance factors [Overview](index=23&type=section&id=Overview) Torrid is a direct-to-consumer brand offering apparel, intimates, and accessories for curvy women - Torrid is a direct-to-consumer brand offering stylish, comfortable, and affordable apparel, intimates, and accessories for curvy women in sizes **10** to **30**[89](index=89&type=chunk) - The company is implementing a retail store optimization strategy, having closed **59** stores through Q2 FY2025 and targeting up to **120** additional closures for the remainder of FY2025[90](index=90&type=chunk) [Key Financial and Operating Metrics](index=23&type=section&id=Key%20Financial%20and%20Operating%20Metrics) Presents key financial and operating metrics, including store count, comparable sales, net income, and Adjusted EBITDA Key Financial and Operating Metrics | Metric | Three Months Ended August 2, 2025 | Three Months Ended August 3, 2024 | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Number of stores (as of end of period) | 575 | 657 | 575 | 657 | | Comparable sales | (7)% | (1)% | (5)% | (5)% | | Net income (in thousands) | $1,567 | $8,328 | $7,507 | $20,500 | | Adjusted EBITDA (in thousands) | $21,525 | $34,592 | $48,653 | $72,820 | - Comparable sales decreased by **7%** for the three months and **5%** for the six months ended August 2, 2025[92](index=92&type=chunk) - Adjusted EBITDA decreased by **37.8%** for the three months and **33.2%** for the six months ended August 2, 2025[92](index=92&type=chunk) [Factors Affecting Our Performance](index=24&type=section&id=Factors%20Affecting%20Our%20Performance) Identifies internal and external factors influencing performance, including consumer spending, economic trends, and marketing - Success depends on efficient and profitable customer acquisition and retention, with omni-channel customers spending approximately **3.5 times** more per year[100](index=100&type=chunk)[102](index=102&type=chunk) - Overall economic trends, including high inflation rates, have led to softening consumer demand and increased costs for wages, transportation, and products[103](index=103&type=chunk) - The company plans to continue investing in brand awareness, customer engagement, and conversion through targeted marketing and infrastructure enhancements[105](index=105&type=chunk)[107](index=107&type=chunk) - The business is generally not seasonal, with Adjusted EBITDA typically strongest in the first half of the year due to more favorable product margins and lower expenses[108](index=108&type=chunk) [Components of Our Results of Operations](index=26&type=section&id=Components%20of%20Our%20Results%20of%20Operations) Defines key components of results of operations: net sales, gross profit, SG&A, marketing, and interest expense - Net Sales: Includes merchandise sales, shipping revenue, royalties, PLCC Funds, and gift card breakage income, less returns and discounts[110](index=110&type=chunk) - Gross Profit: Net sales less cost of goods sold, which includes merchandise costs, freight, inventory shrinkage, payroll, distribution center, and store occupancy expenses[111](index=111&type=chunk) - Selling, General and Administrative Expenses: All operating costs not included in cost of goods sold or marketing expenses[112](index=112&type=chunk) - Marketing Expenses: Primarily targeted online performance marketing, store and brand marketing, public relations, photographic production, and marketing team payroll[113](index=113&type=chunk) - Interest Expense: Primarily associated with the **Amended ABL Facility** and **Amended Term Loan Credit Agreement**[114](index=114&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) [Three Months Ended August 2, 2025 Compared to Three Months Ended August 3, 2024](index=27&type=section&id=Three%20Months%20Ended%20August%202%2C%202025%20Compared%20to%20Three%20Months%20Ended%20August%203%2C%202024) Net sales decreased by 7.7% to $262.8 million, gross profit declined by 15.2%, and net income fell significantly Consolidated Results of Operations (Three Months Ended, in thousands) | Item | August 2, 2025 | % of Net Sales | August 3, 2024 | % of Net Sales | | :-------------------------------- | :------------- | :------------- | :------------- | :------------- | | Net sales | $262,806 | 100.0% | $284,638 | 100.0% | | Cost of goods sold | $169,318 | 64.4% | $174,380 | 61.3% | | Gross profit | $93,488 | 35.6% | $110,258 | 38.7% | | Selling, general and administrative expenses | $70,511 | 26.8% | $76,838 | 27.0% | | Marketing expenses | $12,817 | 4.9% | $13,007 | 4.6% | | Income from operations | $10,160 | 3.9% | $20,413 | 7.1% | | Net income | $1,567 | 0.6% | $8,328 | 2.9% | - Net sales decreased by **$21.8 million** (**7.7%**) due to lower sales transaction values and a reduction of **82** stores[118](index=118&type=chunk) - Gross profit decreased by **$16.8 million** (**15.2%**), and gross profit as a percentage of net sales decreased by **3.1%** to **35.6%**[119](index=119&type=chunk) - Selling, general and administrative expenses decreased by **$6.3 million** (**8.2%**), primarily due to lower payroll and other store operating costs[120](index=120&type=chunk) - Adjusted EBITDA decreased from **$34.6 million** to **$21.5 million**[116](index=116&type=chunk) [Six Months Ended August 2, 2025 Compared to Six Months Ended August 3, 2024](index=29&type=section&id=Six%20Months%20Ended%20August%202%2C%202025%20Compared%20to%20Six%20Months%20Ended%20August%203%2C%202024) Net sales decreased by 6.3% to $528.8 million, gross profit declined by 13.6%, and net income fell significantly Consolidated Results of Operations (Six Months Ended, in thousands) | Item | August 2, 2025 | % of Net Sales | August 3, 2024 | % of Net Sales | | :-------------------------------- | :------------- | :------------- | :------------- | :------------- | | Net sales | $528,771 | 100.0% | $564,409 | 100.0% | | Cost of goods sold | $333,881 | 63.1% | $338,730 | 60.0% | | Gross profit | $194,890 | 36.9% | $225,679 | 40.0% | | Selling, general and administrative expenses | $140,527 | 26.6% | $153,304 | 27.2% | | Marketing expenses | $28,176 | 5.3% | $25,819 | 4.6% | | Income from operations | $26,187 | 5.0% | $46,556 | 8.2% | | Net income | $7,507 | 1.4% | $20,500 | 3.6% | - Net sales decreased by **$35.6 million** (**6.3%**) primarily due to a decrease in sales transaction values[128](index=128&type=chunk) - Gross profit decreased by **$30.8 million** (**13.6%**), and gross profit as a percentage of net sales decreased by **3.1%** to **36.9%**[130](index=130&type=chunk) - Marketing expenses increased by **$2.4 million** (**9.1%**) due to increased social media spend, retargeting, and photographic production[132](index=132&type=chunk) - Adjusted EBITDA decreased from **$72.8 million** to **$48.7 million**[125](index=125&type=chunk) [Liquidity and Capital Resources](index=30&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses liquidity sources (cash flows, ABL Facility) and primary cash needs (inventory, payroll, capital expenditures) - Primary liquidity source is cash flows from operations, supplemented by the **Amended ABL Facility**[135](index=135&type=chunk) Liquidity Position (in thousands) | Item | August 2, 2025 | | :-------------------------------- | :------------- | | Cash and cash equivalents | $21,543 | | Outstanding indebtedness (net) | $288,400 | | Borrowings on ABL Facility | $7,900 | | Term loans under Amended Term Loan Credit Agreement | $280,500 | | Additional liquidity from ABL Facility | $90,200 | - The **Amended ABL Facility** maturity was extended to August 1, 2030, and the company remains compliant with all debt covenants[137](index=137&type=chunk)[139](index=139&type=chunk) - Primary cash needs include merchandise inventories, payroll, rent, capital expenditures, logistics, and information technology[143](index=143&type=chunk) - A **$20.0 million** share repurchase from **Sycamore** occurred on June 23, 2025[144](index=144&type=chunk) [Cash Flow Analysis](index=32&type=section&id=Cash%20Flow%20Analysis) Analyzes cash flows from operating, investing, and financing activities, highlighting significant year-over-year changes Cash Flow Summary (in thousands) | Activity | Six Months Ended August 2, 2025 | Six Months Ended August 3, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash (used in) provided by operating activities | $(2,270) | $68,447 | | Net cash used in investing activities | $(3,671) | $(10,180) | | Net cash used in financing activities | $(21,470) | $(15,981) | - Operating cash flow shifted from a **$68.4 million** inflow to a **$2.3 million** outflow, primarily due to decreases in accounts payable and accrued expenses[148](index=148&type=chunk) - Investing cash used decreased from **$10.2 million** to **$3.7 million**, driven by fewer new store openings and remodels[150](index=150&type=chunk) - Financing cash used increased from **$16.0 million** to **$21.5 million**, mainly due to the repurchase of common stock[152](index=152&type=chunk) [Critical Accounting Policies and Estimates](index=32&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) No material changes to critical accounting policies and estimates since the 2024 Form 10-K filing - No material changes to critical accounting policies and estimates since the 2024 Form 10-K[153](index=153&type=chunk) [Recently Issued Accounting Pronouncements](index=33&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Refers to Note 2 for detailed information regarding recently issued accounting pronouncements - Refer to Note **2** for information regarding recently issued accounting pronouncements[154](index=154&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to the market risk profile as disclosed in the 2024 Form 10-K - No material changes to the market risk profile as of August 2, 2025, compared to the 2024 Form 10-K[155](index=155&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective; a new ERP system implementation involved control modifications - Disclosure controls and procedures were effective as of August 2, 2025[156](index=156&type=chunk) - A new ERP system was implemented for financial accounting systems, leading to new and modified internal controls[157](index=157&type=chunk) - No other material changes in internal control over financial reporting occurred during the fiscal quarter[157](index=157&type=chunk) PART II — OTHER INFORMATION [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 9 for legal proceedings; no other litigation expected to materially affect financial statements - Refer to Note **9** for information regarding certain legal proceedings[160](index=160&type=chunk) - No other current litigation is expected to have a material adverse effect on the business, financial condition, operating results, or cash flows[161](index=161&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - No material changes to the risk factors disclosed in the 2024 Form 10-K[162](index=162&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=34&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details share repurchase activities, including a private transaction with Sycamore for $20.0 million Issuer Purchases of Equity Securities | Period | Total number of shares purchased | Average price paid per share | Maximum dollar value of shares that may yet to be purchased under the plans or programs | | :-------------------------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------------------- | | June 1, 2025 - July 5, 2025 | 6,030,908 | $3.31625 | $44,946,650 | - On June 23, 2025, the company repurchased **6.0 million** shares of common stock from **Sycamore** for **$20.0 million** in a private transaction[164](index=164&type=chunk) - The repurchase was part of a **$100.0 million** share repurchase program authorized on December 6, 2021[163](index=163&type=chunk) [Item 3. Defaults Upon Senior Securities](index=34&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities during the reporting period - No defaults upon senior securities[165](index=165&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to the company's operations - Mine Safety Disclosures are not applicable[166](index=166&type=chunk) [Item 5. Other Information](index=34&type=section&id=Item%205.%20Other%20Information) Confirms no other material information and no Rule 10b5-1 trading arrangement changes by officers/directors - No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the fiscal quarter ended August 2, 2025[168](index=168&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including corporate governance, debt agreements, and certifications - Includes Amended and Restated Certificate of Incorporation and Bylaws[169](index=169&type=chunk) - Lists the Stock Repurchase Agreement dated June 23, 2025, and the Fifth Amendment to Amended and Restated Credit Agreement dated August 1, 2025[169](index=169&type=chunk) - Contains certifications from the Principal Executive Officer and Principal Financial Officer (Sections **302** and **906** of Sarbanes-Oxley Act)[169](index=169&type=chunk) SIGNATURES [Report Signatories](index=36&type=section&id=Report%20Signatories) Confirms official signing of the Form 10-Q report by the Chief Executive Officer and Chief Financial Officer - Report signed on September 11, 2025[171](index=171&type=chunk) - Signed by Lisa Harper, Chief Executive Officer and Director (Principal Executive Officer)[173](index=173&type=chunk) - Signed by Paula Dempsey, Chief Financial Officer (Principal Financial Officer)[173](index=173&type=chunk)

SECOND QUARTER 2025 FINANCIAL RESULTS AND SHAREHOLDER LETTER Exhibit 99.2 A LETTER FROM OUR CHAIRMAN AND CEO RH REPORTS SECOND QUARTER 2025 REVENUES INCREASED 8.4%, NET INCOME INCREASED 79% AND FREE CASH FLOW OF $81M SECOND QUARTER 2025 HIGHLIGHTS GAAP Net Revenues Increased 8.4% to $899.2M Free Cash Flow of $80.7M Please see the tables below for reconciliations of all GAAP to non-GAAP measures referenced in this press release. There are no adjustments to GAAP net revenues presented in this press release. T ...

Exhibit 99.1 Farmer Brothers Coffee Reports Fourth Quarter and Full Year Fiscal 2025 Financial Results Fiscal year 2025 gross margin increase of 420 basis points year-over-year to 43.5% Reported full year net loss of $14.5 million, increase in year-over-year adjusted EBITDA of more than $14 million 1 Fiscal 2025 net sales of $342.3 million Fort Worth, Texas, Sept. 11, 2025 – Farmer Brothers Coffee Co. (NASDAQ: FARM), a leading roaster, wholesaler and distributor of coffee, tea and allied products, announced ...

Exhibit 99.1 Kestra Medical Technologies Reports First Quarter Fiscal 2026 Financial Results KIRKLAND, Wash., September 11, 2025 (GLOBE NEWSWIRE) — Kestra Medical Technologies, Ltd. (Nasdaq: KMTS), a wearable medical device and digital healthcare company, today reported financial results for the first quarter fiscal 2026, which ended July 31, 2025. Financial Highlights First Quarter Fiscal 2026 Financial Results *Adjusted EBITDA is a non-GAAP financial measure. See "Use of Non-GAAP Financial Measures" below ...

PART I [Business Overview](index=6&type=section&id=Item%201.%20Business) Guidewire Software, Inc. is a leading platform provider for property and casualty (P&C) insurers, offering core systems, digital engagement, analytics, and AI capabilities primarily through cloud-based subscription services. The company's growth strategy focuses on continuous product enhancement, efficient cloud operations, and expanding local content, serving a diverse customer base globally. The P&C insurance industry is undergoing rapid transformation, driven by increased catastrophes, rising customer expectations for digital interactions, and demand for data-driven decision-making, which Guidewire addresses with its modern, cloud-based solutions - **Guidewire** is the platform P&C insurers rely on to engage with customers, innovate, and operate more efficiently, serving insurers of all sizes globally[20](index=20&type=chunk) - The platform combines core systems of record (InsuranceSuite, InsuranceNow) with digital, analytics, and AI capabilities, delivered primarily as a cloud-based subscription service leveraging **Guidewire Cloud Platform (GWCP)**[21](index=21&type=chunk) - Key industry trends driving demand for **Guidewire's** solutions include the need for agility and efficiency from core systems, increased catastrophes, rising customer expectations for digital engagement, and advances in data and AI-based analytics[27](index=27&type=chunk)[28](index=28&type=chunk) - Subscription agreements are generally five years in duration, with annual renewals, and pricing for core products is typically based on Direct Written Premium (DWP) managed on the platform[24](index=24&type=chunk) - As of July 31, **2025**, **Guidewire** had approximately **500** customers, representing about **570** insurance brands across **43** countries[71](index=71&type=chunk) - The company experiences seasonal variations, with increased license and subscription orders in the fourth fiscal quarter due to sales team incentives, though ratable subscription revenue recognition dampens this impact over time[87](index=87&type=chunk) [Overview and Purpose](index=6&type=section&id=Overview%20and%20Purpose) This section provides an overview of the company's business and its strategic objectives [Industry Background](index=6&type=section&id=Industry%20Background) The industry context and key trends influencing the company's market are discussed [Products](index=9&type=section&id=Products) Details on the company's product offerings and their functionalities are presented [Technology](index=14&type=section&id=Technology) The underlying technology and infrastructure supporting the company's solutions are described [Services](index=14&type=section&id=Services) Information on the professional services and support provided by the company is outlined [Customer Support](index=14&type=section&id=Customer%20Support) The company's approach to customer assistance and support services is detailed [Employees and Human Capital Resources](index=14&type=section&id=Employees%20and%20Human%20Capital%20Resources) Information regarding the company's workforce, talent management, and human capital strategies is provided [Customers](index=16&type=section&id=Customers) The company's customer base, segments, and engagement strategies are highlighted [Strategic Relationships](index=16&type=section&id=Strategic%20Relationships) Key partnerships and alliances that support the company's business objectives are discussed [Sales and Marketing](index=17&type=section&id=Sales%20and%20Marketing) The company's strategies for sales, marketing, and market penetration are presented [Research and Development](index=17&type=section&id=Research%20and%20Development) Details on the company's innovation efforts, R&D investments, and future product pipeline are provided [Competition](index=17&type=section&id=Competition) An analysis of the competitive landscape and the company's market positioning is offered [Intellectual Property](index=19&type=section&id=Intellectual%20Property) Information on the company's intellectual property, patents, and protective measures is outlined [Information about Segment and Geographic Revenue](index=19&type=section&id=Information%20about%20Segment%20and%20Geographic%20Revenue) Revenue breakdown by business segment and geographical regions is presented [Seasonality](index=19&type=section&id=Seasonality) The impact of seasonal trends on the company's financial performance is discussed [Where You Can Find More Information](index=20&type=section&id=WHERE%20YOU%20CAN%20FIND%20MORE%20INFORMATION) Guidance on where to access additional public information about the company is provided [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) Guidewire faces a range of material risks, including significant fluctuations in quarterly and annual results due to economic conditions, customer behavior, and contract terms. The company's reliance on a relatively small number of large P&C insurance customers, coupled with lengthy sales and implementation cycles, poses substantial business risks. Intense competition, challenges in managing expanding global and hybrid operations, and the evolving regulatory landscape around AI and data privacy are also critical concerns. Furthermore, potential cybersecurity incidents, intellectual property disputes, and financial risks related to indebtedness and market volatility could adversely impact the company's operations and financial performance - Quarterly and annual results may fluctuate **significantly** due to economic conditions, customer behavior, contract provisions, operational costs, and seasonality, impacting stock price[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - Reliance on a relatively small number of P&C insurance customers (top **10** accounted for **20%** of revenue and **ARR** in FY2025) gives them substantial negotiating leverage, affecting pricing and contract terms[94](index=94&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - Lengthy and variable sales and implementation cycles require significant resource expenditure before revenue generation, with factors beyond control potentially causing delays and increased costs[94](index=94&type=chunk)[102](index=102&type=chunk)[103](index=103&type=chunk) - **Intense competition** from internal solutions, P&C software vendors, horizontal software vendors, and emerging insurtech companies, including those leveraging AI technologies, could lead to market share decline and increased pricing pressure[94](index=94&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk)[108](index=108&type=chunk) - Issues in the development and use of AI, combined with an uncertain regulatory environment, may result in reputational harm, liability, or other adverse consequences to business operations[94](index=94&type=chunk)[113](index=113&type=chunk)[116](index=116&type=chunk) - Exposure to risks in relation to **data security incidents** or breaches of cloud-based products, unauthorized access to data, and the related impact on operating the cloud environment could harm reputation and lead to liabilities[94](index=94&type=chunk)[160](index=160&type=chunk)[161](index=161&type=chunk) - Compliance with current and evolving local **data privacy** and cybersecurity laws and regulations (e.g., GDPR, CCPA, EU AI Act) in all jurisdictions where customers are located may increase costs and liabilities[94](index=94&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[171](index=171&type=chunk) - Servicing **$690.0 million** in **2029 Convertible Senior Notes** requires significant cash, and the company may not have sufficient cash flow or ability to raise funds for conversions or repurchases, potentially impacting business and results of operations[221](index=221&type=chunk)[222](index=222&type=chunk)[223](index=223&type=chunk) [Summary of Material Risks Associated with Our Business](index=21&type=section&id=SUMMARY%20OF%20MATERIAL%20RISKS%20ASSOCIATED%20WITH%20OUR%20BUSINESS) A concise overview of the primary risks impacting the company's business operations and financial health is presented [Risks Related to Our Business and Industry](index=23&type=section&id=Risks%20Related%20to%20our%20Business%20and%20Industry) Specific risks pertaining to the company's business model and the broader industry environment are detailed [Risks Related to Data Security and Privacy, Intellectual Property, and Information Technology](index=39&type=section&id=Risks%20Related%20to%20Data%20Security%20and%20Privacy%2C%20Intellectual%20Property%2C%20and%20Information%20Technology) Risks associated with data protection, intellectual property, and IT infrastructure are outlined [Risks Related to Legal, Regulatory, Accounting, and Tax Matters](index=45&type=section&id=Risks%20Related%20to%20Legal%2C%20Regulatory%2C%20Accounting%2C%20and%20Tax%20Matters) Potential legal, regulatory, accounting, and tax-related risks are discussed [Risks Related to Ownership of Our Common Stock](index=46&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Risks pertinent to holding the company's common stock are presented [General Risk Factors](index=48&type=section&id=General%20Risk%20Factors) Broad risk factors that could generally affect the company's operations are outlined [Unresolved Staff Comments](index=54&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the SEC - No unresolved staff comments are applicable to the company[243](index=243&type=chunk) [Cybersecurity](index=55&type=section&id=Item%201C.%20Cybersecurity) Guidewire maintains a comprehensive cybersecurity risk management program, integrated into its enterprise risk management, to protect critical systems and customer data. The program adheres to industry-leading frameworks and is overseen by the Board's Risk Committee, with management, including the CISO, responsible for its implementation and ongoing assessment - **Guidewire** has a cybersecurity risk management program to safeguard products and protect confidentiality, integrity, and availability of customer data and confidential information[244](index=244&type=chunk)[245](index=245&type=chunk) - The program adopts best practices from industry-leading frameworks like ISO 27001, SOC 2, U.S. NIST Cybersecurity Framework (CSF), and CIS Critical Security Controls[246](index=246&type=chunk) - The Board's Risk Committee oversees cybersecurity risk management, receiving periodic reports from management, including the Chief Information Security Officer (CISO)[249](index=249&type=chunk)[250](index=250&type=chunk)[252](index=252&type=chunk) - No risks from known cybersecurity threats have **materially affected** or are reasonably likely to **materially affect** the company's operations, business strategy, results of operations, or financial condition to date[248](index=248&type=chunk) [Risk Management and Strategy](index=55&type=section&id=Risk%20Management%20and%20Strategy) The company's approach to identifying, assessing, and mitigating cybersecurity risks is described [Governance](index=55&type=section&id=Governance) Details on the oversight structure for cybersecurity risk management are provided [Properties](index=56&type=section&id=Item%202.%20Properties) Guidewire's corporate headquarters are in San Mateo, California, and its European headquarters are in Dublin, Ireland. The company leases additional facilities globally for various operations and believes its current facilities are adequate, with plans for future expansion as needed - Corporate headquarters in San Mateo, California (**79,000** sq ft, leased through June **2027**)[254](index=254&type=chunk) - European headquarters in Dublin, Ireland (**85,000** sq ft, leased through March **2032**)[254](index=254&type=chunk) - The company leases additional facilities globally for sales, services, development, operations, and administrative activities[254](index=254&type=chunk) [Legal Proceedings](index=56&type=section&id=Item%203.%20Legal%20Proceedings) Guidewire is involved in routine legal proceedings but does not anticipate any outcomes that would have a material adverse effect on its business or financial position. No accruals for claims were recorded as of July 31, 2025 and 2024 - The company is involved in legal proceedings arising in the ordinary course of business[256](index=256&type=chunk) - No current legal proceeding is judged likely to have a **material adverse effect** on the business or financial position[257](index=257&type=chunk) - No accrual for claims has been recorded as of July 31, **2025** and **2024**[547](index=547&type=chunk) [Mine Safety Disclosures](index=56&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Guidewire Software, Inc - Mine Safety Disclosures are not applicable to the registrant[259](index=259&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Guidewire's common stock is listed on the NYSE under the symbol 'GWRE'. As of July 31, 2025, the closing price was $226.22 per share, with 31 holders of record. The company has not declared or paid cash dividends and does not anticipate doing so. A performance graph illustrates the cumulative total return of Guidewire's stock against market indices - **Guidewire's** common stock is listed on the New York Stock Exchange under the symbol '**GWRE**'[260](index=260&type=chunk) Common Stock Information (July 31, 2025) | Metric | Value | | :----------------------- | :------ | | **Closing Price per Share** | **$226.22** | | **Holders of Record** | **31** | - The company has never declared or paid cash dividends on its common stock and does not anticipate doing so in the foreseeable future[261](index=261&type=chunk)[202](index=202&type=chunk)[203](index=203&type=chunk) Cumulative Total Return (July 31, 2020 - July 31, 2025) | Index | 7/31/2020 | 7/31/2021 | 7/31/2022 | 7/31/2023 | 7/31/2024 | 7/31/2025 | | :----------------------------------- | :-------- | :-------- | :-------- | :-------- | :-------- | :-------- | | **Guidewire Software, Inc.** | $100.00 | $97.91 | $66.05 | $72.09 | $127.55 | $192.27 | | **NASDAQ Composite-Total Return Index** | $100.00 | $137.53 | $116.96 | $136.63 | $168.91 | $204.14 | | **S&P Software & Services Select Industry Index** | $100.00 | $147.80 | $104.47 | $123.74 | $135.95 | $162.85 | [Performance Graph](index=58&type=section&id=Performance%20Graph) A visual representation of the company's stock performance compared to market indices is included [Unregistered Sales of Equity Securities and Use of Proceeds from Registered Securities](index=59&type=section&id=Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds%20from%20Registered%20Securities) Information on equity security sales not registered under the Securities Act and use of proceeds is provided [Reserved](index=60&type=section&id=Item%206.%20%5BReserved%5D) This item is intentionally reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=60&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Guidewire's financial performance in fiscal year 2025 showed significant growth, with total revenue increasing by 23% to $1,202.5 million and a shift towards cloud-based subscription services. Subscription revenue grew 40%, driving an improvement in overall gross margin to 63%. Operating expenses increased due to investments in R&D, sales, and marketing, but decreased as a percentage of revenue. The company achieved net income of $69.8 million, a substantial improvement from a net loss in the prior year. Liquidity remains strong, supported by cash, cash equivalents, and investments, and operating cash flow increased significantly. The company also managed its debt, including the issuance of 2029 Convertible Senior Notes and the settlement of 2025 notes - **Guidewire's** platform combines core systems with digital, analytics, and AI capabilities, primarily delivered as cloud-based subscription services (InsuranceSuite and InsuranceNow on **GWCP**)[269](index=269&type=chunk)[270](index=270&type=chunk)[272](index=272&type=chunk)[273](index=273&type=chunk) - The company's growth strategy involves continuous product enhancement, new capabilities, efficient cloud operations, expanding local content, and leveraging the **Guidewire Marketplace**[274](index=274&type=chunk) - Seasonality impacts revenue, with increased orders in the fourth fiscal quarter, but the ratable recognition of subscription revenue is dampening this effect over time[281](index=281&type=chunk) - Global events, including conflicts, inflation, and interest rate fluctuations, continue to create economic uncertainty and may impact **ARR**, revenue growth, sales cycles, and margins[283](index=283&type=chunk)[284](index=284&type=chunk) Key Business Metrics (FY2025 vs. FY2024) | Metric | FY2025 | FY2024 | Change (%) | | :----------------------- | :------- | :------- | :--------- | | **ARR** ($ millions) | **$1,041** | N/A | **20%** (**19%** constant currency) | | **Net cash from operations** ($ thousands) | **$300,867K** | **$195,748K** | **53.7%** | | **Free Cash Flow** ($ thousands) | **$280,412K** | **$177,221K** | **58.2%** | - Revenue recognition requires significant judgment, especially in identifying performance obligations and allocating transaction prices for contracts with non-standard terms or multiple components[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk) Revenue Breakdown (FY2025 vs. FY2024) | Revenue Type | FY2025 (in millions) | % of Total | FY2024 (in millions) | % of Total | Change ($ millions) | Change (%) | | :----------------------- | :-------------------- | :--------- | :-------------------- | :--------- | :--------- | :--------- | | **Subscription and support** | 731.3 | **61%** | 549.1 | **56%** | 182.2 | **33%** | | **License** | 251.9 | **21%** | 250.2 | **26%** | 1.8 | **1%** | | **Services** | 219.2 | **18%** | 181.2 | **18%** | 38.0 | **21%** | | **Total Revenue** | **1,202.5** | **100%** | **980.5** | **100%** | **222.0** | **23%** | Gross Profit and Margin (FY2025 vs. FY2024) | Metric | FY2025 (in millions) | Margin % | FY2024 (in millions) | Margin % | Change ($ millions) | Change (%) | | :----------------------- | :-------------------- | :------- | :-------------------- | :------- | :--------- | :--------- | | **Subscription and support** | 496.2 | **68%** | 344.3 | **63%** | 151.9 | **44%** | | **License** | 248.3 | **99%** | 245.6 | **98%** | 2.7 | **1%** | | **Services** | 7.6 | **3%** | (6.6) | (**4%**) | 14.1 | (**215%**) | | **Total Gross Profit** | **752.1** | **63%** | **583.4** | **59%** | **168.7** | **29%** | Operating Expenses (FY2025 vs. FY2024) | Expense Type | FY2025 (in millions) | % of Total Revenue | FY2024 (in millions) | % of Total Revenue | Change ($ millions) | Change (%) | | :----------------------- | :-------------------- | :----------------- | :-------------------- | :----------------- | :--------- | :--------- | | Research and development | 296.2 | **25%** | 269.4 | **27%** | 26.8 | **10%** | | Sales and marketing | 230.3 | **19%** | 199.0 | **20%** | 31.3 | **16%** | | General and administrative | 184.5 | **15%** | 167.5 | **17%** | 17.0 | **10%** | | **Total Operating Expenses** | **711.0** | **59%** | **635.9** | **64%** | **75.1** | **12%** | Other Income (Expense) (FY2025 vs. FY2024) | Item | FY2025 (in millions) | FY2024 (in millions) | Change ($ millions) | Change (%) | | :----------------------- | :-------------------- | :-------------------- | :--------- | :--------- | | **Interest income** | 56.6 | 43.5 | 13.1 | **30%** | | **Interest expense** | (13.2) | (6.7) | (6.5) | **96%** | | **Other income (expense), net** | (35.1) | (11.0) | (24.1) | **219%** | - **Net income** for fiscal year **2025** was **$69.8 million**, a significant improvement from a net loss of **$6.1 million** in fiscal year **2024**[303](index=303&type=chunk) Liquidity and Capital Resources (July 31, 2025 vs. July 31, 2024) | Metric | July 31, 2025 (in millions) | July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------- | :--------------------------- | | **Cash, cash equivalents, and investments** | 1,483.2 | 1,129.5 | | **Working capital** | 962.6 | 457.9 | - The increase in **working capital** was primarily due to proceeds from the issuance of **2029 Convertible Senior Notes** and positive operating cash flow, partially offset by the settlement of **2025 Convertible Senior Notes** and capped call purchases[364](index=364&type=chunk) - A **$300.0 million** senior revolving credit facility was entered into in December **2024**, with no outstanding borrowings as of July 31, **2025**[365](index=365&type=chunk) - The share repurchase program had **$138.2 million** remaining available as of July 31, **2025**, with no repurchases made in fiscal years **2024** or **2025**[366](index=366&type=chunk) [Overview](index=60&type=section&id=Overview) An executive summary of the company's financial condition and operational highlights is presented [Seasonality](index=61&type=section&id=Seasonality) The impact of seasonal trends on the company's financial performance is discussed [Global Events](index=62&type=section&id=Global%20Events) The impact of significant global events on the company's business and financial performance is discussed [Key Business Metrics](index=62&type=section&id=Key%20Business%20Metrics) Important financial and operational metrics used to evaluate the company's performance are detailed [Critical Accounting Policies and Estimates](index=63&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Key accounting policies and significant estimates that impact the financial statements are explained [Results of Operations](index=65&type=section&id=Results%20of%20Operations) A detailed analysis of the company's revenues, expenses, and profitability is provided [Non-GAAP Financial Measures](index=74&type=section&id=Non-GAAP%20Financial%20Measures) Reconciliation and explanation of financial measures not prepared in accordance with GAAP are presented [Liquidity and Capital Resources](index=75&type=section&id=Liquidity%20and%20Capital%20Resources) An assessment of the company's cash position, funding sources, and capital management strategies is provided [Quantitative and Qualitative Disclosures About Market Risk](index=77&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Guidewire is exposed to market risks primarily from fluctuations in interest rates and foreign currency exchange rates. The company's cash, cash equivalents, and investments are sensitive to interest rate changes, with a hypothetical 1% increase estimated to decrease market value by $5.3 million in FY2025. Foreign currency fluctuations, particularly across several major currencies, can impact results, with a 10% change potentially leading to a $60.7 million transaction gain or loss. Strategic investments in privately held securities also carry inherent risks - Market risk exposure primarily results from fluctuations in interest rates and foreign currency exchange rates[376](index=376&type=chunk) - A hypothetical **one percent** increase in interest rates is estimated to decrease the market value of available-for-sale securities by **$5.3 million** as of July 31, **2025**[377](index=377&type=chunk) - Foreign currency exchange rate fluctuations, particularly in AUD, GBP, CAD, EUR, INR, JPY, NZD, PLN, and CHF, can impact results, with a hypothetical **ten percent** change estimated to result in a **$60.7 million** transaction gain or loss[378](index=378&type=chunk)[379](index=379&type=chunk) - Strategic investments in privately held securities are classified as Level **3** fair value measurements and are subject to the risk of partial or total loss of invested capital[381](index=381&type=chunk) [Interest Rate Sensitivity](index=77&type=section&id=Interest%20Rate%20Sensitivity) The company's exposure to interest rate fluctuations and their potential financial impact is analyzed [Foreign Currency Exchange Risk](index=77&type=section&id=Foreign%20Currency%20Exchange%20Risk) The risks associated with changes in foreign currency exchange rates are discussed [Fair Value of Financial Instruments](index=79&type=section&id=Fair%20Value%20of%20Financial%20Instruments) Information on the fair value measurements of the company's financial instruments is presented [Financial Statements and Supplementary Data](index=80&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Guidewire's audited consolidated financial statements for the fiscal years ended July 31, 2025, 2024, and 2023, including balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows. KPMG LLP provided an unqualified audit opinion. The accompanying notes detail significant accounting policies, revenue recognition, fair value measurements, acquisitions, balance sheet components, debt, leases, commitments, stock-based compensation, and income taxes, providing comprehensive financial disclosure - **KPMG LLP** issued an **unqualified opinion** on **Guidewire's** consolidated financial statements and **internal control over financial reporting** for the fiscal year ended July 31, **2025**[386](index=386&type=chunk)[387](index=387&type=chunk) - The consolidated financial statements include balance sheets, statements of operations, comprehensive income (loss), stockholders' equity, and cash flows for the three-year period ended July 31, **2025**[386](index=386&type=chunk) - Revenue recognition policies are critical, involving judgment in identifying performance obligations, allocating transaction prices, and accounting for contract modifications[293](index=293&type=chunk)[295](index=295&type=chunk)[296](index=296&type=chunk)[297](index=297&type=chunk)[432](index=432&type=chunk) - The company completed the acquisition of **Quantee Sp. z o.o.** in April **2025** for approximately **$27.9 million**, resulting in **$21.4 million** in **goodwill**[494](index=494&type=chunk)[497](index=497&type=chunk) - As of July 31, **2025**, the company had **$690.0 million** aggregate principal amount of **1.25% Convertible Senior Notes** due October **2029** outstanding, and fully settled the **2025 Convertible Senior Notes** at maturity in March **2025**[517](index=517&type=chunk)[521](index=521&type=chunk)[523](index=523&type=chunk) - Total **unrecognized stock-based compensation expense** was **$278.5 million** as of July 31, **2025**, to be recognized over a weighted average period of **2.0** years[552](index=552&type=chunk) - The company recognized an **income tax benefit** of **$20.4 million** for fiscal year **2025**, similar to the prior year, due to deductions from stock-based compensation, foreign derived intangible income, and R&D tax credits, partially offset by non-deductible debt retirement expense[352](index=352&type=chunk)[567](index=567&type=chunk) [Report of Independent Registered Public Accounting Firm](index=81&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The auditor's opinion on the company's financial statements and internal controls is provided [Consolidated Balance Sheets](index=83&type=section&id=Consolidated%20Balance%20Sheets) A snapshot of the company's assets, liabilities, and equity at specific points in time is presented [Consolidated Statements of Operations](index=84&type=section&id=Consolidated%20Statements%20of%20Operations) A summary of the company's revenues, expenses, and net income or loss over a period is provided [Consolidated Statements of Comprehensive Income (Loss)](index=85&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Details on all changes in equity during a period, except those from transactions with owners, are presented [Consolidated Statements of Stockholders' Equity](index=86&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) Changes in the company's equity accounts over a period are detailed [Consolidated Statements of Cash Flows](index=87&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) Information on the cash inflows and outflows from operating, investing, and financing activities is provided [Notes to Consolidated Financial Statements](index=88&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Detailed explanations and supplementary information for the financial statements are included [Changes in and Disagreements with Accountants on Accounting and Financial Disclosures](index=123&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosures) Guidewire reports no changes in or disagreements with its independent registered public accounting firm, KPMG LLP, regarding accounting or financial disclosures - There are no changes in or disagreements with accountants on accounting and financial disclosures[583](index=583&type=chunk) [Controls and Procedures](index=123&type=section&id=Item%209A.%20Controls%20and%20Procedures) Guidewire's management, including its principal executive and financial officers, concluded that the company's disclosure controls and procedures were effective as of July 31, 2025. Management also assessed and concluded that internal control over financial reporting was effective, acknowledging the inherent limitations of all control systems - Management concluded that **disclosure controls and procedures** were effective as of July 31, **2025**[584](index=584&type=chunk) - Management assessed and concluded that **internal control over financial reporting** was effective as of July 31, **2025**, based on the **COSO** framework[587](index=587&type=chunk) - No changes in **internal control over financial reporting** **materially affected** or are reasonably likely to **materially affect** controls during the quarter ended July 31, **2025**[590](index=590&type=chunk) - The report acknowledges the inherent limitations of internal control systems, which provide reasonable, not absolute, assurance[589](index=589&type=chunk) [Evaluation of Disclosure Controls and Procedures](index=123&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management's assessment of the effectiveness of the company's disclosure controls is presented [Management's Annual Report on Internal Control Over Financial Reporting](index=123&type=section&id=Management%27s%20Annual%20Report%20on%20Internal%20Control%20Over%20Financial%20Reporting) Management's report on the effectiveness of the company's internal control over financial reporting is provided [Inherent Limitations of Internal Controls](index=123&type=section&id=Inherent%20Limitations%20of%20Internal%20Controls) A discussion of the inherent limitations that affect the effectiveness of any internal control system is included [Changes in Internal Control over Financial Reporting](index=123&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Information on any material changes in the company's internal control over financial reporting is disclosed [Other Information](index=124&type=section&id=Item%209B.%20Other%20Information) This item reports that there is no other information required to be disclosed - No other information is required to be disclosed under this item[591](index=591&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=124&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) Guidewire reports that there are no foreign jurisdictions that prevent inspections relevant to its operations - No foreign jurisdictions prevent inspections relevant to the company[592](index=592&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=126&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding Guidewire's directors, executive officers, and corporate governance, including its Code of Business Conduct and Ethics, is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Stockholders - Information is incorporated by reference from the definitive Proxy Statement for the **2025** Annual Meeting of Stockholders[596](index=596&type=chunk) - A Code of Business Conduct and Ethics applies to all directors, officers, and employees and is posted on the investor relations website[594](index=594&type=chunk) [Executive Compensation](index=126&type=section&id=Item%2011.%20Executive%20Compensation) Information concerning executive compensation is incorporated by reference from Guidewire's definitive Proxy Statement - Information on executive compensation is incorporated by reference from the Proxy Statement[597](index=597&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=126&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Details regarding security ownership of certain beneficial owners and management, along with related stockholder matters, are incorporated by reference from Guidewire's definitive Proxy Statement - Information on security ownership and related stockholder matters is incorporated by reference from the Proxy Statement[598](index=598&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=126&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on certain relationships, related transactions, and director independence is incorporated by reference from Guidewire's definitive Proxy Statement - Information on certain relationships, related transactions, and director independence is incorporated by reference from the Proxy Statement[599](index=599&type=chunk) [Principal Accountant Fees and Services](index=126&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) Information regarding principal accountant fees and services is incorporated by reference from Guidewire's definitive Proxy Statement - Information on principal accountant fees and services is incorporated by reference from the Proxy Statement[600](index=600&type=chunk) PART IV [Exhibits and Financial Statement Schedules](index=128&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the 10-K report, including consolidated financial statements, omitted financial statement schedules, and a comprehensive exhibit index. The exhibits include corporate governance documents, debt instruments, stock plans, and certifications - The report includes consolidated financial statements and an exhibit index[603](index=603&type=chunk) - Financial statement schedules have been omitted as the information is either not applicable or presented in the financial statements or notes[603](index=603&type=chunk) - Exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Indenture for **2029 Convertible Senior Notes**, Credit Agreement, various stock plans, and certifications[606](index=606&type=chunk)[607](index=607&type=chunk) [FORM 10-K Summary](index=131&type=section&id=Item%2016.%20Form%2010-K%20Summary) This section indicates that no summary is provided for the Form 10-K - No summary is provided for the Form **10-K**[610](index=610&type=chunk)

[Press Release Overview](index=1&type=section&id=Press%20Release%20Overview) This section provides an overview of Frequency Electronics' Q1 FY2026 financial results and the newly authorized share repurchase program [Headline and Introduction](index=1&type=section&id=Headline%20and%20Introduction) Frequency Electronics, Inc. announced its financial results for the first quarter of fiscal year 2026 and authorized a new $20 million share repurchase program - Frequency Electronics, Inc. announced its financial results for the first quarter of fiscal year 2026[3](index=3&type=chunk) - The Company announced a **$20 million share repurchase authorization**[2](index=2&type=chunk)[8](index=8&type=chunk) [Key Financial Highlights (Q1 FY2026 vs Q1 FY2025)](index=1&type=section&id=Key%20Financial%20Highlights%20%28Q1%20FY2026%20vs%20Q1%20FY2025%29) For the first quarter of fiscal year 2026, Frequency Electronics experienced declines in revenue, operating income, and net income compared to the prior year, but saw a significant improvement in net cash provided by operating activities and a slight increase in backlog Q1 FY2026 vs Q1 FY2025 Financial Summary (in millions) | Metric | Q1 FY2026 (approx.) | Q1 FY2025 | Change | | :--------------------------------- | :------------------ | :------------------ | :------------------ | | Revenue | $13.8 | $15.1 | -$1.3 | | Operating Income | $0.4 | $2.4 | -$2.0 | | Net Income from operations | $0.6 | $2.4 | -$1.8 | | Diluted EPS | $0.07 | $0.25 | -$0.18 | | Net cash from operating activities | $1.2 (provided) | $1.5 (used) | +$2.7 | | Backlog (as of July 31, 2025) | $71 | $70 (as of April 30, 2025) | +$1 | [Management Commentary and Business Outlook](index=1&type=section&id=Management%20Commentary%20and%20Business%20Outlook) This section details management's analysis of Q1 FY2026 performance, strategic initiatives for future growth, and commitment to shareholder returns [Q1 FY2026 Performance Analysis](index=1&type=section&id=Q1%20FY2026%20Performance%20Analysis) CEO Tom McClelland attributed the Q1 FY2026 revenue and operating income declines to timing issues, including revenue pulled forward into Q4 FY2025 and customer-driven delays on key programs, emphasizing these are not cancellations and the underlying business fundamentals remain strong - Q1 FY2026 results reflect declines in revenue and operating income compared to both Q1 FY2025 and Q4 FY2025, primarily due to timing issues[5](index=5&type=chunk) - Declines were impacted by revenue booked in Q4 FY2025 that was previously expected in FY2026, and customer-driven delays on key programs, which are not cancellations[5](index=5&type=chunk) - The underlying fundamentals of the business remain **strong**, with an extremely encouraging overall outlook and confidence in an upward trajectory despite non-linear growth[5](index=5&type=chunk) [Strategic Initiatives and Future Growth](index=1&type=section&id=Strategic%20Initiatives%20and%20Future%20Growth) The company maintains a historically high backlog, is actively pursuing significant new programs in defense markets, and is investing in quantum sensing through a new Boulder facility and government R&D funding, with expectations for positive contributions by Q3 FY2026 - Backlog remains at a **historically high level ($71 million)**, indicating future success[6](index=6&type=chunk) - Actively bidding on new programs, some significantly larger than typical contract wins, with follow-on potential over the next decade in space and non-space defense markets[6](index=6&type=chunk) - Opened an engineering facility in Boulder, Colorado, and hired senior scientists to support new initiatives in quantum sensing, anticipating positive bottom-line contributions by **Q3 FY2026**[6](index=6&type=chunk) - Pursuing external government funding for research and development, particularly in the large emerging market of quantum sensing[6](index=6&type=chunk) - Will host its second annual Quantum Sensing Summit in New York City in October to explore emerging technologies and reinforce leadership[7](index=7&type=chunk) [Shareholder Return and Financial Strength](index=1&type=section&id=Shareholder%20Return%20and%20Financial%20Strength) FEI highlights its strong fundamentals, profitability in core technologies, and innovation investments, supported by a debt-free balance sheet. The company authorized a $20 million share repurchase program, equivalent to its last two special dividends, to return cash to shareholders and allow future value gains to accrue to equity holders - Strong fundamentals remain unchanged, with continued profitability in core technologies and active investment in innovation for long-term growth[8](index=8&type=chunk) - Maintains a **debt-free balance sheet** and leadership in position, navigation, and timing (PNT) in the industry[8](index=8&type=chunk) - Authorized a **$20 million share repurchase program**, reflecting balance sheet strength and belief in the company's outlook, and serving as an effective tool for rewarding shareholders[8](index=8&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) This section provides an overview of Frequency Electronics' business, its mission, and details regarding investor relations and legal disclosures [About Frequency Electronics](index=3&type=section&id=About%20Frequency%20Electronics) Frequency Electronics, Inc. (FEI) is a global leader in high-precision timing, frequency generation, and RF control products for space and terrestrial applications, serving commercial, government, and military sectors. The company is committed to transforming research discoveries into practical products and investing significantly in R&D - FEI is a world leader in the design, development, and manufacture of high precision timing, frequency generation, and RF control products for space and terrestrial applications[11](index=11&type=chunk) - Products are used in satellite payloads and various commercial, government, and military systems, including C4ISR, electronic warfare, missiles, UAVs, and GPS[11](index=11&type=chunk) - The company's mission is to transform research discoveries into practical, real-world products, building on a legacy of delivering unique precision time and frequency generation products[12](index=12&type=chunk) - FEI invests significant resources in research and development to expand its capabilities and markets[11](index=11&type=chunk) [Investor Relations and Legal Disclosures](index=2&type=section&id=Investor%20Relations%20and%20Legal%20Disclosures) The press release provides details for an upcoming investor conference call, refers to an 8-K filing for additional information, and includes standard forward-looking statements with associated risks and disclaimers - An investor conference call is scheduled for **Thursday, September 11, 2025, at 4:30 PM Eastern Time** to discuss the results[10](index=10&type=chunk) - Further information can be found in the **8-K filed after market close**[9](index=9&type=chunk) - The press release contains forward-looking statements subject to inherent risks and uncertainties, and investors should not rely on them as predictions of actual results[13](index=13&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) This section presents the condensed consolidated statements of operations and balance sheets for Frequency Electronics [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three months ended July 31, 2025, Frequency Electronics reported a decrease in revenues, gross margin, operating income, and net income compared to the same period in 2024 Condensed Consolidated Statements of Operations (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | Change | | :-------------------- | :--- | :--- | :--- | | Revenues | $13,812 | $15,077 | -$1,265 | | Cost of revenues | $8,730 | $8,379 | +$351 | | Gross margin | $5,082 | $6,698 | -$1,616 | | Selling and administrative | $3,585 | $2,845 | +$740 | | Research and development | $1,133 | $1,488 | -$355 | | Operating income | $364 | $2,365 | -$2,001 | | Income before Income Taxes | $557 | $2,563 | -$2,006 | | Net income | $634 | $2,430 | -$1,796 | | Basic and diluted income per share | $0.07 | $0.25 | -$0.18 | | Weighted average shares outstanding (Basic and diluted) | 9,723 | 9,538 | +185 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of July 31, 2025, total assets slightly decreased compared to April 30, 2025, primarily due to lower cash and contract assets, while inventories and accounts receivable increased. Stockholders' equity saw a modest increase Condensed Consolidated Balance Sheets (as of July 31, 2025 vs April 30, 2025, in thousands) | Asset/Liability | July 31, 2025 | April 30, 2025 | Change | | :----------------------------- | :------------ | :------------- | :----- | | Cash and cash equivalents | $4,512 | $4,720 | -$208 | | Accounts receivable, net | $7,440 | $5,914 | +$1,526 | | Contract assets | $14,213 | $17,914 | -$3,701 | | Inventories, net | $24,772 | $23,487 | +$1,285 | | Total Assets | $93,203 | $93,737 | -$534 | | Contract liabilities | $13,105 | $13,454 | -$349 | | Stockholders' equity | $56,319 | $55,620 | +$699 |

Part I. FINANCIAL INFORMATION [Item 1: Financial Statements](index=3&type=section&id=Item%201%3A%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for RF Industries, Ltd. and its subsidiaries, including balance sheets, statements of operations, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, significant accounts, and recent financial activities for the periods ended July 31, 2025, and October 31, 2024 [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The company's total assets increased to $73.2 million as of July 31, 2025, from $71.0 million at October 31, 2024, driven primarily by an increase in cash and trade accounts receivable | Metric | July 31, 2025 (Unaudited) (in thousands) | October 31, 2024 (Note 1) (in thousands) | | :--------------------------------------- | :--------------------------------------- | :--------------------------------------- | | **ASSETS** | | | | Cash and cash equivalents | $3,000 | $839 | | Trade accounts receivable, net | $15,348 | $12,119 | | Inventories | $14,169 | $14,725 | | Total Current Assets | $34,086 | $29,113 | | Total Property and equipment, net | $4,368 | $4,813 | | Operating lease right-of-use assets, net | $14,255 | $15,265 | | Goodwill | $8,085 | $8,085 | | Amortizable intangible assets, net | $10,675 | $11,908 | | Total Assets | $73,201 | $71,046 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $4,806 | $3,798 | | Accrued expenses | $6,334 | $4,247 | | Line of credit | $7,828 | $8,197 | | Total Current Liabilities | $21,013 | $18,090 | | Operating lease liabilities | $17,209 | $18,680 | | Total Liabilities | $38,429 | $36,980 | | Total Stockholders' Equity | $34,772 | $34,066 | | Total Liabilities and Stockholders' Equity | $73,201 | $71,046 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) For the three months ended July 31, 2025, net sales increased by 17.6% year-over-year, leading to a significant improvement from an operating loss to an operating income and a net income of $0.4 million | Metric (in thousands, except per share) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $19,790 | $16,836 | $57,900 | $46,404 | | Cost of sales | $13,071 | $11,875 | $39,514 | $33,316 | | Gross profit | $6,719 | $4,961 | $18,386 | $13,088 | | Operating income (loss) | $720 | $(419) | $882 | $(2,919) | | Income (loss) before income taxes | $480 | $(757) | $161 | $(3,595) | | Consolidated net income (loss) | $392 | $(705) | $(98) | $(6,361) | | Basic EPS | $0.04 | $(0.07) | $(0.01) | $(0.61) | | Diluted EPS | $0.04 | $(0.07) | $(0.01) | $(0.61) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20STOCKHOLDERS%27%20EQUITY) Stockholders' equity increased from $34.066 million at November 1, 2024, to $34.772 million at July 31, 2025, primarily due to stock-based compensation expense and the exercise of stock options | Metric (in thousands, except shares) | Balance, Nov 1, 2024 | Exercise of stock options | Stock-based compensation expense | Issuance of restricted stock | Tax withholding | Consolidated net loss | Balance, July 31, 2025 | | :----------------------------------- | :------------------- | :------------------------ | :------------------------------- | :--------------------------- | :-------------- | :-------------------- | :--------------------- | | Common Stock Shares | 10,544,431 | 50,623 | - | 82,500 | (10,107) | - | 10,667,447 | | Common Stock Amount | $106 | $1 | - | - | - | - | $107 | | Additional Paid-in Capital | $26,988 | $206 | $640 | - | $(43) | - | $27,791 | | Retained Earnings | $6,972 | - | - | - | - | $(98) | $6,874 | | Total | $34,066 | $207 | $640 | - | $(43) | $(98) | $34,772 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the nine months ended July 31, 2025, net cash provided by operating activities was $2.481 million, resulting in a net increase in cash and cash equivalents of $2.161 million | Cash Flow Category (in thousands) | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------ | :------------------------------ | | Net cash provided by operating activities | $2,481 | $3,409 | | Net cash used in investing activities | $(158) | $(564) | | Net cash used in financing activities | $(162) | $(5,978) | | Net increase (decrease) in cash and cash equivalents | $2,161 | $(3,133) | | Cash and cash equivalents, beginning of period | $839 | $4,897 | | Cash and cash equivalents, end of period | $3,000 | $1,764 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=9&type=section&id=NOTES%20TO%20UNAUDITED%20CONDENSED%20CONSOLIDATED%20FINANCIAL%20STATEMENTS) These notes provide essential context and detail for the unaudited condensed consolidated financial statements, covering accounting policies, significant estimates, segment information, and specific financial instruments and liabilities [Note 1 – Unaudited interim condensed consolidated financial statements](index=9&type=section&id=Note%201%20%E2%80%93%20Unaudited%20interim%20condensed%20consolidated%20financial%20statements) The interim financial statements are prepared in accordance with GAAP for interim reporting, assuming the company will continue as a going concern - The company generated operating income of **$0.719 million** for the three months ended July 31, 2025, and **$0.882 million** for the nine months ended July 31, 2025, compared to operating losses of **$0.419 million** and **$2.919 million** for the same periods last year, respectively. This improvement is attributed to increased sales and cost-cutting measures, including facility consolidation[23](index=23&type=chunk) - On March 15, 2024, the Company entered into a loan and security agreement with Eclipse Business Capital (EBC), using proceeds to repay and terminate the prior revolving credit facility and term loan with Bank of America, N.A[24](index=24&type=chunk) [Note 2 – Concentrations of credit risk](index=11&type=section&id=Note%202%20%E2%80%93%20Concentrations%20of%20credit%20risk) The company faces credit risk primarily from cash and cash equivalents held in high-credit quality financial institutions and from accounts receivable - As of July 31, 2025, cash and cash equivalent balances exceeded federally insured limits by approximately **$2.7 million**[31](index=31&type=chunk) | Customer | Three Months Ended July 31, 2025 (Net Sales) | Three Months Ended July 31, 2024 (Net Sales) | Nine Months Ended July 31, 2025 (Net Sales) | Nine Months Ended July 31, 2024 (Net Sales) | | :--------------- | :------------------------------------------- | :------------------------------------------- | :------------------------------------------ | :------------------------------------------ | | Wireless provider A | 11% | 11% | - | - | | Distributor A | 15% | - | - | - | | Distributor B | - | 13% | - | - | - For the three months ended July 31, 2025, Wireless provider A accounted for **17%** of total net accounts receivable, and Distributor A accounted for **22%**. For the nine months ended July 31, 2025, these same customers accounted for **17%** and **22%** of total net accounts receivable, respectively[32](index=32&type=chunk) [Note 3 – Inventories and major vendors](index=11&type=section&id=Note%203%20%E2%80%93%20Inventories%20and%20major%20vendors) Inventories are valued at the lower of cost or net realizable value using the weighted average cost method, decreasing to $14.169 million at July 31, 2025 | Inventory Category (in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------ | :------------ | :--------------- | | Raw materials and supplies | $9,586 | $10,886 | | Work in process | $793 | $530 | | Finished goods | $3,790 | $3,309 | | Totals | $14,169 | $14,725 | - No single vendor accounted for **10% or more** of inventory purchases for the three or nine months ended July 31, 2025 and 2024[33](index=33&type=chunk) [Note 4 – Other current assets](index=13&type=section&id=Note%204%20%E2%80%93%20Other%20current%20assets) Other current assets increased to $1.569 million at July 31, 2025, primarily driven by an increase in prepaid expenses | Other Current Assets (in thousands) | July 31, 2025 | October 31, 2024 | | :-------------------------------- | :------------ | :--------------- | | Prepaid taxes | $139 | $262 | | Prepaid expense | $1,001 | $699 | | Deposits | $378 | $329 | | Other | $51 | $140 | | Totals | $1,569 | $1,430 | [Note 5 – Accrued expenses and other current liabilities](index=13&type=section&id=Note%205%20%E2%80%93%20Accrued%20expenses%20and%20other%20current%20liabilities) Accrued expenses significantly increased to $6.334 million at July 31, 2025, mainly due to higher wages payable and accrued receipts | Accrued Expenses (in thousands) | July 31, 2025 | October 31, 2024 | | :------------------------------ | :------------ | :--------------- | | Wages payable | $2,993 | $2,357 | | Accrued receipts | $1,602 | $762 | | Deferred revenue | $521 | - | | Other accrued expenses | $1,218 | $1,128 | | Totals | $6,334 | $4,247 | [Note 6 – Income (Loss) per share](index=13&type=section&id=Note%206%20%E2%80%93%20Income%20%28Loss%29%20per%20share) Basic and diluted income (loss) per share are calculated based on net income (loss) and weighted average common shares outstanding | Weighted Average Shares Outstanding | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Basic | 10,668,375 | 10,495,082 | 10,632,566 | 10,466,862 | | Diluted | 10,774,304 | 10,495,082 | 10,632,566 | 10,466,862 | - Potentially dilutive securities that were out-of-the-money totaled **50,000 shares** for the three and nine months ended July 31, 2025, and **846,889 shares** for the same periods in 2024, and were excluded from diluted EPS calculations due to their anti-dilutive effect[36](index=36&type=chunk) [Note 7 – Stock-based compensation and equity transactions](index=13&type=section&id=Note%207%20%E2%80%93%20Stock-based%20compensation%20and%20equity%20transactions) The company granted restricted stock and incentive stock options to officers and managers, with $919,000 in expenses for nonvested options yet to be recognized - Grants of restricted stock and incentive stock options occurred on November 1, 2023 (**15,202 restricted shares**), January 11, 2024 (**110,099 restricted shares** and **220,001 options**), April 16, 2024 (**25,000 options**), December 2, 2024 (**47,500 options**), and January 13, 2025 (**82,500 restricted shares** and **165,000 options**)[38](index=38&type=chunk)[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk)[43](index=43&type=chunk) | Black-Scholes Assumption | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----------------------- | :------------------------------ | :------------------------------ | | Weighted average volatility | 44.37% | 51.30% | | Expected dividends | 0.00% | 0.00% | | Expected term (in years) | 6.14 | 7.00 | | Risk-free interest rate | 4.54% | 4.00% | | Weighted average fair value of options granted | $1.85 | $3.97 | | Weighted average fair value of options vested | $2.38 | $5.08 | | Stock Option Activity (Nine Months Ended July 31, 2025) | Shares or Price Per Share | Weighted Average Exercise Price | | :------------------------------------------------------ | :------------------------ | :------------------------------ | | Outstanding at beginning of November 1, 2024 | 874,816 | $5.10 | | Options granted | 212,500 | $3.97 | | Options exercised | (50,623) | $4.07 | | Options canceled or expired | (25,000) | $8.69 | | Options outstanding at July 31, 2025 | 1,011,693 | $4.82 | | Options exercisable at July 31, 2025 | 562,868 | $5.52 | | Options vested and expected to vest at July 31, 2025 | 1,011,693 | $4.82 | - Stock-based compensation expense was **$0.219 million** for the three months ended July 31, 2025 (vs. **$0.241 million** in 2024) and **$0.640 million** for the nine months ended July 31, 2025 (vs. **$0.744 million** in 2024), classified in selling and general expense[46](index=46&type=chunk) [Note 8 – Segment information](index=16&type=section&id=Note%208%20%E2%80%93%20Segment%20information) The company operates in two segments: RF Connector and Cable Assembly, and Custom Cabling Manufacturing and Assembly, with Custom Cabling showing significant growth - The company has two reportable segments: **RF Connector and Cable Assembly (RF Connector)** and **Custom Cabling Manufacturing and Assembly (Custom Cabling)**. The RF Connector segment primarily sells through distribution, while Custom Cabling uses a combination of distribution and direct sales[47](index=47&type=chunk)[49](index=49&type=chunk) | Geographic Area (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :----------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | United States | $18,432 | $15,473 | $52,952 | $41,948 | | Foreign Countries: | | | | | | Canada | $1,052 | $765 | $3,678 | $2,595 | | Germany | $138 | $23 | $305 | $118 | | All Other | $168 | $575 | $965 | $1,743 | | Totals | $19,790 | $16,836 | $57,900 | $46,404 | | Segment Performance (in thousands) | RF Connector (3M 2025) | Custom Cabling (3M 2025) | Corporate (3M 2025) | Total (3M 2025) | RF Connector (3M 2024) | Custom Cabling (3M 2024) | Corporate (3M 2024) | Total (3M 2024) | | :--------------------------------- | :--------------------- | :----------------------- | :------------------ | :-------------- | :--------------------- | :----------------------- | :------------------ | :-------------- | | Net sales | $9,230 | $10,560 | - | $19,790 | $9,697 | $7,139 | - | $16,836 | | (Loss) income before income taxes | $(1,424) | $2,144 | $(240) | $480 | $(715) | $297 | $(339) | $(757) | | Total assets | $45,675 | $22,398 | $5,128 | $73,201 | $49,355 | $18,112 | $4,393 | $71,860 | | Expenditures for Segment Assets | $60 | $48 | - | $108 | $249 | $3 | - | $252 | | Segment Performance (in thousands) | RF Connector (9M 2025) | Custom Cabling (9M 2025) | Corporate (9M 2025) | Total (9M 2025) | RF Connector (9M 2024) | Custom Cabling (9M 2024) | Corporate (9M 2024) | Total (9M 2024) | | :--------------------------------- | :--------------------- | :----------------------- | :------------------ | :-------------- | :--------------------- | :----------------------- | :------------------ | :-------------- | | Net sales | $27,311 | $30,589 | - | $57,900 | $28,406 | $17,998 | - | $46,404 | | (Loss) income before income taxes | $(4,209) | $5,265 | $(894) | $161 | $(3,104) | $386 | $(877) | $(3,595) | | Total assets | $45,675 | $22,398 | $5,128 | $73,201 | $49,355 | $18,112 | $4,393 | $71,860 | | Expenditures for Segment Assets | $83 | $86 | - | $169 | $544 | $20 | - | $564 | [Note 9 – Income taxes](index=19&type=section&id=Note%209%20%E2%80%93%20Income%20taxes) The company recorded an income tax provision of $88,000 for the three months ended July 31, 2025, and is evaluating the impact of the 'One Big Beautiful Bill Act' | Income Tax Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Provision (benefit) | $88,000 | $(52,000) | $259,000 | $2,766,000 | | Effective tax rate | 18.3% | 6.9% | 160.9% | (76.9%) | - Unrecognized tax benefits were **$0.241 million** as of July 31, 2025, which, if recognized, would result in a net tax benefit of **$0.195 million**[54](index=54&type=chunk) - The company has a partial valuation allowance against its deferred tax assets, totaling **$4.146 million** as of July 31, 2025, due to the assessment that it is not more likely than not that all deferred tax assets will be realized[55](index=55&type=chunk) - The 'One Big Beautiful Bill Act' (OBBBA), signed into law on July 4, 2025, includes corporate tax provisions like restored **100% bonus depreciation** and immediate expensing of R&E expenditures. The company is evaluating its impact for fiscal 2026[56](index=56&type=chunk)[57](index=57&type=chunk) [Note 10 – Intangible assets](index=20&type=section&id=Note%2010%20%E2%80%93%20Intangible%20assets) Amortizable intangible assets, net, decreased to $10.675 million at July 31, 2025, primarily due to ongoing amortization | Intangible Asset Category (in thousands) | July 31, 2025 (Net) | October 31, 2024 (Net) | | :--------------------------------------- | :------------------ | :--------------------- | | Non-compete agreement | $0 | $0 | | Customer relationships | $1,920 | $2,210 | | Backlog | $0 | $0 | | Patents | $135 | $160 | | Tradename | $1,313 | $1,398 | | Proprietary technology | $7,307 | $8,140 | | **Totals (Amortizable)** | **$10,675** | **$11,908** | | Trademarks (Non-amortizable) | $1,174 | $1,174 | - Amortization expense for the nine months ended July 31, 2025, was **$1.233 million**. The weighted-average amortization period for amortizable intangible assets is **6.91 years** as of July 31, 2025[59](index=59&type=chunk) [Note 11 – Commitments](index=20&type=section&id=Note%2011%20%E2%80%93%20Commitments) The company has operating leases for corporate offices, manufacturing facilities, and storage units, with future minimum lease payments amounting to $25.2 million | Operating Lease Cost (in thousands) | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Nine Months Ended July 31, 2025 | Nine Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Operating lease cost | $733 | $749 | $2,212 | $2,217 | - As of July 31, 2025, operating lease right-of-use assets were **$14.3 million** and operating lease liabilities totaled **$19.3 million**, with **$2.0 million** classified as current. Future minimum lease payments under non-cancellable leases are **$25.2 million**[61](index=61&type=chunk) [Note 12 – Term Loan and Line of credit](index=21&type=section&id=Note%2012%20%E2%80%93%20Term%20Loan%20and%20Line%20of%20credit) The company entered into a new loan and security agreement with Eclipse Business Capital (EBC), providing a senior secured revolving loan facility of up to $15.0 million - The EBC Credit Agreement provides for a senior secured revolving loan facility of up to **$15.0 million** and an additional senior secured revolving credit facility of up to **$1.0 million** (modified to decrease over time)[63](index=63&type=chunk) - Interest rates for the EBC Revolving Loan Facility are Adjusted Term SOFR plus **5.00%**, and for the EBC Additional Line, Adjusted Term SOFR plus **6.50%**, both with a **2.00% SOFR floor**. A commitment fee of **0.50%** per annum applies to the unused portion of the revolving loan facility[64](index=64&type=chunk) - Financial covenants include maintaining Excess Availability (greater of **$1.0 million** or **10%** of Adjusted Borrowing Base) and a capital expenditure limitation of **$2.5 million** per fiscal year[65](index=65&type=chunk) - As of July 31, 2025, outstanding borrowings under the EBC Credit Agreement were **$7.828 million**, classified as current liabilities[67](index=67&type=chunk) [Note 13 – Cash dividend and declared dividends](index=22&type=section&id=Note%2013%20%E2%80%93%20Cash%20dividend%20and%20declared%20dividends) The company did not pay any dividends during the three or nine months ended July 31, 2025, nor during the comparable periods in 2024 - No dividends were paid during the three or nine months ended July 31, 2025, or July 31, 2024[68](index=68&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=22&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and operational results, highlighting key performance drivers, liquidity, and capital resources [Cautionary Note Regarding Forward-Looking Statements](index=22&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section advises readers that the report contains forward-looking statements about future events and financial performance, which are predictions and may differ materially from actual results - The report contains forward-looking statements that are predictions about future events or financial performance, identifiable by terms like 'may,' 'will,' 'should,' 'expect,' 'plan,' 'anticipate,' 'believe,' 'estimate,' 'predict,' 'potential,' or 'continue'[69](index=69&type=chunk) - Actual events or results may differ materially from these forward-looking statements, and the company is under no obligation to update them[69](index=69&type=chunk)[70](index=70&type=chunk) [Critical Accounting Estimates](index=24&type=section&id=Critical%20Accounting%20Estimates) Management confirms that there have been no material changes to the critical accounting estimates disclosed in the Annual Report on Form 10-K for the fiscal year ended October 31, 2024 - No material changes occurred during the three months ended July 31, 2025, to the critical accounting estimates previously disclosed in the Annual Report on Form 10-K for the fiscal year ended October 31, 2024[73](index=73&type=chunk) [Overview](index=24&type=section&id=Overview) RF Industries, Ltd. is a national manufacturer and marketer of interconnect products and systems, operating through two segments: RF Connector and Cable Assembly, and Custom Cabling Manufacturing and Assembly - RF Industries, Ltd. manufactures and markets interconnect products and systems, including RF connectors, adapters, coaxial cables, data cables, fiber optic cables, custom cabling, energy-efficient cooling systems, and integrated small cell enclosures[74](index=74&type=chunk) - The company operates through two segments: **RF Connector and Cable Assembly (RF Connector)** and **Custom Cabling Manufacturing and Assembly (Custom Cabling)**[75](index=75&type=chunk) - For the nine months ended July 31, 2025, Custom Cabling accounted for **53% of total sales**, and RF Connector accounted for **47%**. Custom Cabling's revenue is more volatile due to larger, customized orders, while RF Connector's revenue is more stable from standardized products[76](index=76&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity improved, with cash and cash equivalents increasing to $3.0 million at July 31, 2025, and working capital at $13.1 million - Cash and cash equivalents increased to **$3.0 million** as of July 31, 2025, from **$0.8 million** as of October 31, 2024[79](index=79&type=chunk) - As of July 31, 2025, working capital was **$13.1 million**, and the current ratio was approximately **1.6:1**[79](index=79&type=chunk) - Net cash provided by operating activities was **$2.5 million** for the nine months ended July 31, 2025, primarily due to decreased inventories, depreciation and amortization, and changes in accounts payable and accrued expenses[81](index=81&type=chunk) - The company had a backlog of **$19.7 million** as of July 31, 2025, compared to **$19.5 million** as of October 31, 2024[80](index=80&type=chunk) - Capital expenditures for the nine months ended July 31, 2025, totaled **$0.170 million**. The company may undertake acquisitions to diversify offerings and customer base, which could impact capital resources[82](index=82&type=chunk)[84](index=84&type=chunk) [Results of Operations](index=26&type=section&id=Results%20of%20Operations) The company experienced significant improvements in its financial performance for both the three and nine months ended July 31, 2025, driven by strong growth in the Custom Cabling segment and improved gross margins [Three Months Ended July 31, 2025 vs. Three Months Ended July 31, 2024](index=26&type=section&id=Three%20Months%20Ended%20July%2031%2C%202025%20vs.%20Three%20Months%20Ended%20July%2031%2C%202024) Net sales increased by 17.9% to $19.8 million, primarily due to a 49.3% increase in the Custom Cabling segment, leading to a net income of $0.4 million - Net sales increased by **17.9%** (**$3.0 million**) to **$19.8 million**[85](index=85&type=chunk) - Custom Cabling segment net sales increased by **49.3%** (**$3.5 million**) to **$10.6 million**, driven by aerospace and new market penetration[85](index=85&type=chunk) - RF Connector segment net sales decreased by **5.2%** (**$0.5 million**) to **$9.2 million**, primarily due to timing of small cell applications[85](index=85&type=chunk) - Gross profit increased by **$1.7 million**, and gross margins improved to **34%** from **29.5%**, attributed to product mix and new market penetration[86](index=86&type=chunk) - Net income was **$0.4 million** (**$0.04 diluted EPS**) compared to a net loss of **$0.7 million** (**$0.07 diluted loss per share**) in the prior year[91](index=91&type=chunk) [Nine Months Ended July 31, 2025 vs. Nine Months Ended July 31, 2024](index=26&type=section&id=Nine%20Months%20Ended%20July%2031%2C%202025%20vs.%20Nine%20Months%20Ended%20July%2031%2C%202024) Net sales for the nine-month period increased by 24.8% to $57.9 million, largely driven by a 70.0% increase in the Custom Cabling segment, substantially reducing the net loss - Net sales increased by **24.8%** (**$11.5 million**) to **$57.9 million**[92](index=92&type=chunk) - Custom Cabling segment net sales increased by **70.0%** (**$12.6 million**) to **$30.6 million**, driven by tier one carrier applications for direct air cooling and small cell enclosures, and new market penetration[92](index=92&type=chunk) - RF Connector segment net sales decreased by **3.9%** (**$1.1 million**) to **$27.3 million** due to fluctuations in the distribution business[93](index=93&type=chunk) - Gross profit increased by **$5.3 million**, and gross margins improved to **31.8%** from **28.2%**, driven by direct air cooling, small cell enclosure offerings, and diverse custom cabling products[94](index=94&type=chunk) - Net loss was **$0.1 million** (**$0.01 diluted loss per share**) compared to a net loss of **$6.4 million** (**$0.61 diluted loss per share**) in the prior year[99](index=99&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a 'smaller reporting company,' RF Industries, Ltd. is exempt from providing the detailed quantitative and qualitative disclosures about market risk typically required under this Item - The company is a **'smaller reporting company'** and is not required to provide quantitative and qualitative disclosures about market risk[100](index=100&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, with the participation of the CEO and CFO, evaluated the effectiveness of the company's disclosure controls and procedures, concluding they were effective at a reasonable assurance level as of July 31, 2025 [Evaluation of Disclosure Controls and Procedures](index=28&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of July 31, 2025 - The Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of disclosure controls and procedures and concluded they were **effective at a reasonable assurance level** as of July 31, 2025[103](index=103&type=chunk) [Changes in Internal Control Over Financial Reporting](index=28&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) There were no changes in the company's internal control over financial reporting during the third quarter of fiscal 2025 that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting - No changes in internal control over financial reporting materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting during the third quarter of fiscal 2025[104](index=104&type=chunk) Part II. OTHER INFORMATION [Item 1. Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in an employee class action lawsuit filed on July 24, 2024, alleging California state law violations related to wages, meal/rest periods, expense reimbursement, and wage statements - On July 24, 2024, a former employee filed a class action lawsuit against the company and its subsidiary C Enterprises, Inc., alleging California state law violations regarding wages, meal/rest periods, business expense reimbursement, timely wage payments, and accurate wage statements[106](index=106&type=chunk) - The lawsuit also includes a cause of action under the **Private Attorneys General Act of 2004 (PAGA)**[107](index=107&type=chunk) - The parties reached a settlement in principle on August 7, 2025, which is currently being negotiated into a long-form agreement and is subject to Court approval[108](index=108&type=chunk) [Item 1A. Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) This section updates the risk factors from the Annual Report, emphasizing the risks associated with changes in trade policies, tariffs, and import/export regulations by the U.S. and foreign governments - The company is subject to risks from changes in trade policies, tariffs, and import/export regulations by the U.S. and foreign governments[111](index=111&type=chunk) - These changes, such as tariffs on imports from China, Mexico, and Canada, could increase product costs, lead to lower gross profit and margins, and negatively affect business performance, financial condition, and relationships with stakeholders[112](index=112&type=chunk)[113](index=113&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities and no issuer purchases of equity securities during the period - There were no unregistered sales of equity securities during the period[114](index=114&type=chunk) - There were no issuer purchases of equity securities during the period[115](index=115&type=chunk) [Item 3. Defaults upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) The company reports no defaults upon senior securities during the period - There were no defaults upon senior securities during the period[116](index=116&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Mine Safety Disclosures are not applicable to the company[117](index=117&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarterly period ended July 31, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarterly period ended July 31, 2025[118](index=118&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including certifications from the CEO and CFO under the Sarbanes-Oxley Act and various Inline XBRL documents - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[119](index=119&type=chunk) - The filing also includes various Inline XBRL documents (Instance Document, Taxonomy Schema, Calculation Linkbase, Definition Linkbase, Label Linkbase, Presentation Linkbase, and Cover Page Interactive Data File)[119](index=119&type=chunk) [SIGNATURES](index=33&type=section&id=SIGNATURES) The report is duly signed on behalf of RF Industries, Ltd. by Robert Dawson, Chief Executive Officer, and Peter Yin, Chief Financial Officer, on September 11, 2025 - The report was signed by Robert Dawson, Chief Executive Officer, and Peter Yin, Chief Financial Officer, on September 11, 2025[123](index=123&type=chunk)

[Press Release Overview](index=1&type=section&id=Press_Release_Overview) [Third Quarter Fiscal 2025 Highlights and Operating Results](index=1&type=section&id=Third%20Quarter%20Fiscal%202025%20Highlights%20and%20Operating%20Results) RF Industries reported strong Q3 FY2025 results with 17.5% net sales growth, 34% gross profit margin, and a return to profitability Third Quarter Fiscal 2025 Key Financial Metrics | Metric | Q3 FY2025 (in thousands) | Q3 FY2024 (in thousands) | YoY Change (%) | | :-------------------------- | :----------------------- | :----------------------- | :------------- | | Net sales | $19,790 | $16,836 | 17.5% | | Gross profit margin | 34% | 29.5% | +4.5 ppts | | Operating income (loss) | $720 | $(419) | N/A | | Consolidated net income (loss) | $392 | $(705) | N/A | | Non-GAAP net income (loss) | $1,110 | $(95) | N/A | | Adjusted EBITDA | $1,556 | $460 | 238.3% | - Quarter-end backlog reached **$19.7 million**, with Q3 bookings of **$24.5 million**; current backlog is **$16.1 million**[8](index=8&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management highlighted strong execution, exceeding gross profit targets, achieving consistent operating profit, and successful diversification into new markets - Achieved **four consecutive quarters of operating profit** and a **34% gross profit**, surpassing the **30% target**[6](index=6&type=chunk) - The long-term strategy to become a technology-solutions provider is effective, with high-value solutions such as DAC thermal cooling and small cell products gaining traction[7](index=7&type=chunk) - Customer base successfully diversified into new end markets including aerospace, transportation, and data centers, preparing for future stadium and venue buildouts[7](index=7&type=chunk) [Company Information](index=2&type=section&id=Company_Information) [About RF Industries](index=2&type=section&id=About%20RF%20Industries) RF Industries manufactures and markets interconnect products and systems for diversified markets including telecom, data communications, and industrial sectors - RF Industries designs and manufactures interconnect products for diversified markets including wireless/wireline telecom, data communications, and industrial[11](index=11&type=chunk) - Product portfolio includes RF connectors, adapters, cables, wire harnesses, cooling systems, and integrated small cell enclosures[11](index=11&type=chunk) [Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section outlines forward-looking statements concerning future events, profitability, and market trends, subject to inherent risks and uncertainties - Forward-looking statements cover expectations regarding profitability, revenues, industry trends, market demand, backlog, and financial goals[12](index=12&type=chunk) - Actual results may differ due to factors like liquidity, going concern ability, credit facility compliance, telecom industry changes, new product timing, tariffs, and margin maintenance[12](index=12&type=chunk) [Non-GAAP Financial Measures Explanation](index=3&type=section&id=Non-GAAP_Financial_Measures_Explanation) [Note Regarding Use of Non-GAAP Financial Measures](index=3&type=section&id=Note%20Regarding%20Use%20of%20Non-GAAP%20Financial%20Measures) RF Industries uses non-GAAP measures like Adjusted EBITDA and non-GAAP net income to clarify operating trends by excluding non-cash and one-time expenses - Non-GAAP financial measures (Adjusted EBITDA, non-GAAP net income/loss, non-GAAP EPS) supplement GAAP results, offering insights into operating trends by excluding non-cash and one-time expenses[13](index=13&type=chunk)[14](index=14&type=chunk) - Non-GAAP exclusions include stock-based compensation, non-cash/one-time charges, severance, amortization expense, and for Adjusted EBITDA, depreciation and interest expense[15](index=15&type=chunk) - Bookings represent new orders received, while backlog signifies orders where revenue is not yet recognized, both indicating future revenues[17](index=17&type=chunk) [Financial Statements](index=5&type=section&id=Financial_Statements) [Condensed Consolidated Balance Sheets](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) The balance sheets as of July 31, 2025, show increased total assets, driven by cash and receivables, with a corresponding rise in liabilities and stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | ASSETS (in thousands) | Jul. 31, 2025 | Oct. 31, 2024 | | :-------------------- | :------------ | :------------ | | Cash and cash equivalents | $3,000 | $839 | | Trade accounts receivable, net | $15,348 | $12,119 | | Inventories | $14,169 | $14,725 | | TOTAL CURRENT ASSETS | $34,086 | $29,113 | | TOTAL ASSETS | $73,201 | $71,046 | | LIABILITIES AND STOCKHOLDERS' EQUITY (in thousands) | | | | Accounts payable and accrued expenses | $11,140 | $8,045 | | Line of Credit | $7,828 | $8,197 | | TOTAL CURRENT LIABILITIES | $21,013 | $18,090 | | TOTAL LIABILITIES | $38,429 | $36,980 | | TOTAL STOCKHOLDERS' EQUITY | $34,772 | $34,066 | | TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $73,201 | $71,046 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) Statements of operations for Q3 and 9 months ended July 31, 2025, show significant improvements, with 17.5% net sales growth and a return to profitability Condensed Consolidated Statements of Operations (in thousands, except per share) | (In thousands, except share and per share amounts) | Three Months Ended Jul. 31, 2025 | Three Months Ended Jul. 31, 2024 | Nine Months Ended Jul. 31, 2025 | Nine Months Ended Jul. 31, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Net sales | $19,790 | $16,836 | $57,900 | $46,404 | | Cost of sales | $13,071 | $11,875 | $39,514 | $33,316 | | Gross profit | $6,719 | $4,961 | $18,386 | $13,088 | | Operating expenses | $5,999 | $5,380 | $17,504 | $16,007 | | Operating income (loss) | $720 | $(419) | $882 | $(2,919) | | Income (loss) before provision for income taxes | $480 | $(757) | $161 | $(3,595) | | Consolidated net income (loss) | $392 | $(705) | $(98) | $(6,361) | | Earnings (loss) per share - Diluted | $0.04 | $(0.07) | $(0.01) | $(0.61) | [Unaudited Reconciliation of GAAP to Non-GAAP Net Income (Loss)](index=7&type=section&id=Unaudited%20Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Net%20Income%20(Loss)) This reconciliation adjusts GAAP net income to non-GAAP net income by adding back specific non-cash and one-time expenses, resulting in **$1.1 million** non-GAAP net income for Q3 FY2025 Unaudited Reconciliation of GAAP to Non-GAAP Net Income (Loss) (in thousands, except per share) | (In thousands, except share and per share amounts) | Three Months Ended Jul. 31, 2025 | Three Months Ended Jul. 31, 2024 | Nine Months Ended Jul. 31, 2025 | Nine Months Ended Jul. 31, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Consolidated net income (loss) | $392 | $(705) | $(98) | $(6,361) | | Provision (benefit) from income taxes | $88 | $(52) | $259 | $2,766 | | Stock-based compensation expense | $219 | $241 | $640 | $744 | | Non-cash and other one-time charges | - | - | $123 | $145 | | Severance | - | - | $51 | $56 | | Amortization expense | $411 | $421 | $1,233 | $1,266 | | Non-GAAP net income (loss) | $1,110 | $(95) | $2,208 | $(1,384) | | Non-GAAP earnings (loss) per share - Diluted | $0.10 | $(0.01) | $0.21 | $(0.13) | [Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA](index=7&type=section&id=Unaudited%20Reconciliation%20of%20Net%20Income%20(Loss)%20to%20Adjusted%20EBITDA) This reconciliation adjusts consolidated net income to Adjusted EBITDA by adding back various non-cash and one-time expenses, resulting in **$1.6 million** Adjusted EBITDA for Q3 FY2025 Unaudited Reconciliation of Net Income (Loss) to Adjusted EBITDA (in thousands) | (In thousands) | Three Months Ended Jul. 31, 2025 | Three Months Ended Jul. 31, 2024 | Nine Months Ended Jul. 31, 2025 | Nine Months Ended Jul. 31, 2024 | | :----------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Consolidated net income (loss) | $392 | $(705) | $(98) | $(6,361) | | Stock-based compensation expense | $219 | $241 | $640 | $744 | | Non-cash and other one-time charges | - | - | $123 | $145 | | Severance | - | - | $51 | $56 | | Amortization expense | $411 | $421 | $1,233 | $1,266 | | Depreciation expense | $206 | $217 | $615 | $638 | | Other expense | $240 | $338 | $721 | $676 | | Provision (benefit) from income taxes | $88 | $(52) | $259 | $2,766 | | Adjusted EBITDA | $1,556 | $460 | $3,544 | $(70) | [Investor Relations](index=2&type=section&id=Investor_Relations) [Conference Call and Webcast](index=2&type=section&id=Conference%20Call%20and%20Webcast) RF Industries hosted a conference call and webcast on September 11, 2025, to discuss its fiscal Q3 2025 financial results - A conference call and live webcast were held on **September 11, 2025**, at **4:30 p.m. Eastern Time** to discuss Q3 FY2025 financial results[10](index=10&type=chunk) [Contact Information](index=4&type=section&id=Contact%20Information) Contact information for RF Industries' SVP and CFO, Peter Yin, and IR contact, Donni Case, is provided for inquiries - Contact information for RF Industries' SVP and CFO, Peter Yin, and IR Contact, Donni Case of Financial Profiles, Inc., is provided[18](index=18&type=chunk)