22.          Geographic Information

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Sales to non-U.S. customers, including U.S. government foreign military sales in which an end user is a foreign government, accounted for 28%, 52% and 62% of revenue for each of the fiscal years ended April 30, 2026, 2025 and 2024, respectively. For the fiscal years ended April 30, 2025 and 2024, Ukraine represented $149,600,000, or 18%, and $274,136,000, or 38%, respectively, of the Company’s consolidated revenues. The Company’s internationally deployed fixed assets for UGV was $5,062,000 and $5,033,000 as of April 30, 2026 and 2025, respectively. The Company’s internationally deployed in-service assets for MUAS was $5,472,000 and $1,486,000 as of April 30, 2026 and 2025, respectively.

1.           Organization and Significant Accounting Policies

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Organization

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AeroVironment, Inc., a Delaware corporation and its fully owned subsidiaries (collectively referred to herein as the “Company”), is engaged in the design, development, production, delivery and support of autonomous systems, precision strike systems, Counter-Uncrewed Aircraft Systems (“C-UAS”) technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities. The Company provides these products and services primarily to organizations within or supplying the U.S. Department of Defense (“DoD”), other federal agencies and to international allied governments.

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Effective May 1, 2025, the Company reorganized its segments. In connection with the Company’s acquisition of BlueHalo Financing Topco, LLC (“BlueHalo”), the reorganization was implemented to drive additional operational improvements, foster synergies and provide leaders with greater autonomy over their product lines. The Company’s reportable segments are as follows:

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Autonomous Systems (“AxS”)— The AxS segment focuses on the design, development, production, delivery, and support of intelligent, multi-domain robotic systems, including UAS, uncrewed underwater vehicles and ground robot systems. The segment includes the Company’s former Uncrewed Systems (“UxS”), Loitering Munitions Systems (“LMS”), and MacCready Works (“MW”) segments as well as Integrated Air and Missile Defense (“IAMD”), Electronic Warfare Systems (“EW”) and Uncrewed Maritime (“UUV”) products and services from the BlueHalo acquisition. It primarily serves organizations within or supplying the DoD, other federal agencies, and international allied governments. This segment encompasses the Company’s core autonomous platforms, such as drones and robotic systems, tailored for mission-critical applications across air, land and sea domains.

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Space, Cyber, and Directed Energy (“SCDE”)— The SCDE segment focuses on advanced technologies in the space domain providing space-based and ground-based platforms, cyber capabilities, and directed energy systems. This segment positions the Company in high-growth areas of next-generation defense technology, addressing emerging threats and mission requirements in space, cyber warfare, and directed energy applications (e.g., high-energy lasers). It also primarily serves organizations within or supplying the U.S. DoD, other federal agencies, and international allied governments.

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Significant Accounting Policies

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Principles of Consolidation

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The accompanying consolidated financial statements include the accounts of AeroVironment, Inc. and its wholly-owned subsidiaries. Consolidated results include that of the Company and subsidiaries. The assets, liabilities and operating results of acquired companies have been included in the Company’s consolidated financial statements. Refer to Note 19—Business Acquisitions for further details. The Company eliminates intercompany balances and transactions in consolidation.

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Investments in Companies Accounted for Using the Equity or Cost Method

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Investments in other non-consolidated entities are accounted for using the equity method or cost basis depending upon the level of ownership and/or the Company’s ability to exercise significant influence over the operating and financial policies of the investee. When the equity method is used, investments are recorded at original cost and adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the date of investment. When net losses from an investment accounted for under the equity method exceed its carrying amount, the investment balance is reduced to zero and additional losses are not provided for as the Company is not obligated to provide additional capital. The Company resumes accounting for the investment under the equity method if the entity

subsequently reports net income and the Company’s share of that net income exceeds the share of net losses not recognized during the period the equity method was suspended.

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When an investment accounted for using the equity method issues its own shares, the subsequent reduction in the Company’s proportionate interest in the investee is reflected in equity as an adjustment to paid-in-capital. The Company evaluates its investments in companies accounted for by the equity or cost method for impairment when there is evidence or indicators that a decrease in value may be other than temporary. Refer to Note 8—Investments in Companies Accounted for Using the Equity Method for further details. For investments accounted for using the cost basis, refer to Note 2—Investments for further details.

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Segments

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Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM, who is the Chief Executive Officer, makes operating decisions, assesses performance and makes resource allocation decisions, including the focus of research and development (“R&D”) and other significant expenses, leading to decisions related to resource allocations in relation to profit and loss.

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Use of Estimates

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The preparation of consolidated financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management include, but are not limited to, valuation of inventory, acquired intangibles, goodwill, deferred tax assets and liabilities, useful lives of property, plant and equipment, medical and dental liabilities, warranty liabilities, long-term incentive plan liabilities and estimates of anticipated contract costs and transaction price utilized in the revenue recognition process. Actual results could differ from those estimates.

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Reclassifications

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Certain prior year amounts have been reclassified to conform to the current year presentation. Specifically, the Company’s disaggregated revenue disclosure has been recast to conform to the new disaggregation by operating groups and presentation of capitalized software to be sold in the statement of cash flows has been recast to conform to current year presentation.

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Cash Equivalents

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The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company’s cash equivalents are comprised of money market funds, certificates of deposit of major financial institutions and U.S. Treasury bills.

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Investments

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The Company’s investments are accounted for as available-for-sale and are reported at fair value. Unrealized gains and losses for debt securities are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes for available-for-sale investments. Investments in equity securities and warrants are measured at fair value with net unrealized gains and losses from changes in the fair value recognized in other (expense) income, net. Gains and losses realized on the disposition of investment securities are determined on the specific identification basis and credited or charged to income. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each balance sheet date.

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Fair Values of Financial Instruments Approximating Cost

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Fair values of cash and cash equivalents, accounts receivable, unbilled receivables, retentions and accounts payable approximate cost due to the short period of time to maturity.

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Concentration of Credit Risk

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Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of cash, cash equivalents, municipal bonds, U.S. government securities, U.S. government-guaranteed agency securities, U.S. government sponsored agency debt securities, highly rated corporate bonds, and accounts receivable. The Company currently invests in equity securities and limited partnership funds. The Company’s revenue and accounts receivable are with a limited number of corporations and governmental entities. In the aggregate, 85%, 75% and 76% of the Company’s revenue came from agencies of the U.S. government for the years ended April 30, 2026, 2025 and 2024, respectively. These agencies accounted for 76% and 75% of the accounts receivable balances at April 30, 2026 and 2025, respectively. One such agency, the U.S. Army, accounted for 25%, 20% and 11% of the Company’s consolidated revenue for the years ended April 30, 2026, 2025 and 2024, respectively. The Company performs ongoing credit evaluations of its commercial customers and maintains an allowance for potential losses.

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Accounts Receivable, Unbilled Receivables and Retentions

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Accounts receivable represents primarily U.S. government and allied foreign governments, and to a lesser extent commercial receivables, net of allowances for doubtful accounts. Unbilled receivables represent costs in excess of billings on incomplete contracts and, where applicable, accrued profit related to government long-term contracts on which revenue has been recognized, but for which the customer has not yet been billed. Unbilled receivables are considered contract assets.

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Retentions represent amounts withheld by customers until contract completion. At April 30, 2026 and 2025, the retention balances were $3,416,000 and $746,000, respectively. The Company determines the allowance for credit losses based on historical customer experience, age of receivable and other currently available evidence. When a specific account is deemed uncollectible, the account is written off against the allowance. The allowance for credit losses reflects the Company’s best estimate of expected credit losses over the life of the receivable; such losses have historically been within management’s expectations. An account is deemed past due based on contractual terms rather than on how recently payments have been received.

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Inventories

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Inventories are stated at the lower of cost (using the weighted average costing method and the first in first out or FIFO method) or net realizable value. Inventory write-offs and write-down provisions are provided to cover risks arising from slow-moving items or technological obsolescence and for market prices lower than cost. The Company periodically evaluates the quantities on hand relative to current and historical selling prices and historical and projected sales volume. Based on this evaluation, provisions are made to write inventory down to its net realizable value.

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Long-Lived Assets

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Property, plant and equipment are carried at cost. Depreciation of property and equipment, including amortization of leasehold improvements, are provided using the straight-line method over the following estimated useful lives:

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Maintenance, repairs and minor renewals are charged directly to expense as incurred. Additions and betterments to property and equipment are capitalized at cost. When the Company disposes of assets, the applicable costs and accumulated depreciation and amortization thereon are removed from the accounts and any resulting gain or loss is included in other income (expense), net in the period incurred with the exception of in-service intelligence, surveillance and reconnaissance (“ISR”) assets which is included in cost of sales in the period incurred.

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The Company reviews the recoverability of its long-lived assets whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The estimated future cash flows are based upon, among other things, assumptions about expected future operating performance, and may differ from actual cash flows. If the sum of the projected undiscounted cash flows (excluding interest) is less than the carrying value of the assets, the assets will be written down to the estimated fair value in the period in which the determination is made.

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Cloud Computing Arrangements

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Implementation costs incurred in a cloud computing arrangement that is a service contract are capitalized and recorded on the consolidated balance sheets in prepaid expenses and other current assets and other assets. The amounts capitalized are amortized on a straight-line basis over the estimated useful life of the service arrangement, which generally range from three to seven years. As of April 30, 2026 and 2025, capitalized costs related to cloud computing arrangements was $46,170,000 and $33,656,000, respectively, net of accumulated amortization of $10,349,000 and $4,887,000, respectively. Amortization expense related to cloud computing arrangements for the fiscal years ended April 30, 2026, 2025 and 2024 was $5,536,000, $2,541,000 and $1,440,000.

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Costs of Software to Be Sold

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Costs incurred for internally developed and produced or purchased software to be sold, leased or marketed once the software has established technological feasibility are capitalized and recorded on the consolidated balance sheets in other assets. The amounts capitalized are amortized according to the greater of a straight-line basis over the estimated useful life of the service arrangement, which generally range from two to five years, or the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product. As of April 30, 2026 and 2025, capitalized costs of software to be sold, leased or marketed was $27,410,000 and $3,269,000 respectively, net of accumulated amortization of $6,718,000 and $460,000, respectively.

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Intangibles Assets — Acquired in Business Combinations

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The Company performs valuations of assets acquired and liabilities assumed on each acquisition accounted for as a business combination and allocates the purchase price of the acquired business to the respective net tangible and intangible assets. Acquired intangible assets include technology, backlog, licenses, customer relationships, in-process research and development, trademarks and tradenames, and non-compete agreements. The Company determines the appropriate useful life by performing an analysis of expected cash flows based on historical experience of the acquired businesses. Intangible assets are amortized over their estimated useful lives using the straight-line method which

approximates the pattern in which the economic benefits are consumed. The estimated useful life for the Company’s intangible assets are as follows:

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The Company monitors conditions related to these assets to determine whether events and circumstances warrant a revision to the remaining amortization period. The Company tests its intangible assets with finite lives for potential impairment whenever management concludes events or changes in circumstances indicate that the carrying amount may not be recoverable. The original estimate of an asset’s useful life and the impact of an event or circumstance on either an asset’s useful life or carrying value involve significant judgment. As part of the Company’s annual goodwill impairment and identifiable asset test during the fiscal quarter ended April 30, 2025, a decrease in forecasted results of the Uncrewed Ground Vehicles (“UGV”) reporting unit resulted in accelerated intangible amortization expenses of $4,258,000, which was recorded during the three months ended April 30, 2025. Refer to Note 6—Goodwill for further details.

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Goodwill

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Goodwill represents the excess of the cost of an acquired entity over the fair value of the acquired net assets. The Company tests goodwill for impairment annually during the fourth quarter of the fiscal year or when events or circumstances change in a manner that indicates goodwill might be impaired. Events or circumstances that could trigger an impairment review include, but are not limited to, a significant adverse change in legal factors or in the business or political climate, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant changes in the manner of our use of the acquired assets or the strategy for the Company’s overall business, significant negative industry or economic trends or significant underperformance relative to projected future results of operations.

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The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. For the impairment test, the Company first assesses qualitative factors, macroeconomic conditions, industry and market considerations, triggering events, cost factors, and overall financial performance, to determine whether it is necessary to perform a quantitative goodwill impairment test. Alternatively, the Company may bypass the qualitative assessment for some or all of its reporting units and apply the quantitative impairment test. If determined to be necessary, the quantitative impairment test shall be used to identify goodwill impairment and measure the amount of a goodwill impairment loss to be recognized (if any). For the quantitative impairment test we estimate the fair value by weighting the results from the income approach and the market approach. These valuation approaches consider a number of factors that include, but are not limited to, prospective financial information, growth rates, terminal value, discount rates, and comparable multiples from publicly traded companies in the Company’s industry and require the Company to make certain assumptions and estimates regarding industry economic factors and future profitability of its business.

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In January 2026, a stop-work order was received on the Company’s Other Transaction Agreement (“OTA”) for the delivery of BADGER phased array antenna systems to support Space Force’s SCAR program. Additionally, in March 2026, the customer terminated the agreement for convenience. The Company concluded that the stop-work order represented a trigger event that indicated the carrying value of the Space reporting unit exceeded its fair value. As a result, the Company updated the estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order and termination for convenience as well as an increase in expected research and development and capital investments to achieve product commercialization, which is expected to result in expanded opportunities and improve long term product margins. The changes in estimates resulted in the recognition of a goodwill impairment charge of approximately $240,708,000 in the Space reporting unit. Due to the trigger event, the Company also performed a recoverability test on the long-lived assets, inclusive of the intangibles, of the Space reporting unit for impairment in accordance with ASC 360. The undiscounted cash flows exceeded the carrying value and no impairment was recorded. As of April 30, 2026, our Space reporting unit has a goodwill balance of approximately $291,000,000.

During the Company’s annual impairment test during the fiscal quarter ended April 30, 2025, the Company determined the carrying value of the UGV reporting unit exceeded its fair value due to a decrease in forecasted results of the UGV reporting unit resulting from reduced probability and delays of obtaining certain opportunities as well as an increase in forecast expenditures to support operational decisions identified during the fiscal quarter ended April 30, 2025. These changes in estimates resulted in a full impairment and the recognition of a goodwill impairment charge of $18,359,000 in the UGV reporting unit.

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During the most recent annual impairment test during the fourth quarter of fiscal year 2026, the estimated fair value of all reporting units with goodwill from acquisitions in previous years substantially exceeded their carrying value. The reporting units from the BlueHalo acquisition and the acquisition of Empirical Systems Aerospace, Inc. (“ESAero”) were recently recorded at estimated fair value during the fiscal year ended April 30, 2026 and, other than the Space unit, no triggering event for goodwill impairment was since identified.

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The estimates and assumptions used to determine the fair value of our reporting units are highly subjective in nature. Actual results can be materially different from the estimates and assumptions. If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the carrying amounts, the Company could recognize future impairment charges, the amount of which could be material.

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Product Warranty

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The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred. Product warranty reserves are recorded in other current liabilities. The majority of warranties provided do not provide for services beyond standard assurances. However, certain warranties are considered to be separate performance obligations.

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Accrued Sales Commissions

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As of April 30, 2026 and 2025, the Company accrued sales commissions in other current liabilities of $14,974,000 and $6,535,000, respectively.

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Self-Insurance Liability

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The Company is self-insured for employee medical claims, subject to individual and aggregate stop loss policies. The Company estimates a liability for claims filed and incurred but not reported based upon recent claims experience and an analysis of the average period of time between the occurrence of a claim and the time it is reported to and paid by the Company. As of April 30, 2026 and 2025, the Company estimated and recorded a self-insurance liability in wages and related accruals of approximately $4,343,000 and $1,559,000, respectively.

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Employee Savings Plan

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The Company has an employee 401(k) savings plan covering all eligible employees. The Company expensed approximately $29,137,000, $9,679,000 and $8,554,000 in contributions to the plan for the years ended April 30, 2026, 2025 and 2024, respectively.

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Interest Expense, net

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Interest expense, net includes interest expense and interest income. Interest expense for the fiscal year ended April 30, 2026 was $24,197,000. Interest expense includes interest charges from the Credit Facilities as well as the amortization of debt issuance costs for the issuance of the Convertible Notes and the Fourth Amendment to the Credit Agreement, which upon effectiveness of the Amended Credit Agreement, the Company drew $225,000,000 from the amended Revolving Facility and the full $700,000,000 of the Term Loan Facility.

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Interest income for the fiscal year ended April 30, 2026 was $18,581,000. Interest income includes interest income earned on available-for-sale debt securities.

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Income Taxes

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Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax bases of assets and liabilities that will result in taxable or deductible amounts in the future. The provision for income taxes reflects the taxes to be paid for the period and the change during the period in the deferred income tax assets and liabilities. The Company records a valuation allowance to reduce the deferred tax assets to the amount of future tax benefit that is more likely than not to be realized. For uncertain tax positions, the Company determines whether it is “more likely than not” that a tax position will be sustained upon examination by the appropriate taxing authorities before any part of the benefit can be recorded in the financial statements. For those tax positions where it is “not more likely than not” that a tax benefit will be sustained, no tax benefit is recognized. Where applicable, associated interest and penalties are also recorded. The Company records a deferred tax asset for acquisition-related costs incurred for an acquisition that closes in a subsequent reporting period. The Company reevaluates the deferred tax asset in the period the acquisition closes and reverses the deferred tax asset to tax expense for deductible expenses.

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Customer Advances

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The Company receives advances, performance-based payments and progress payments from customers that may exceed costs incurred on certain contracts, including contracts with agencies of the U.S. government resulting in contract liabilities. These advances are classified as customer advances and will be offset against billings.

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Revenue Recognition

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The Company’s revenue is generated pursuant to written contractual arrangements to design, develop, manufacture and/or modify complex products, and to provide related engineering, technical and other services according to the specifications of the customers. These contracts may be firm fixed price (“FFP”), cost-plus-fixed fee, cost-plus-award fee, and cost-plus-incentive fee (“Cost Plus”), or time and materials (“T&M”). The Company considers all such contracts to be within the scope of ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”).

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Performance Obligations

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A performance obligation is a promise in a contract to transfer distinct goods or services to a customer, and it is the unit of account in ASC 606. A contract’s transaction price is allocated to each distinct performance obligation and revenue is recognized when each performance obligation under the terms of a contract is satisfied. Revenue is measured at the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using its observable standalone selling price for products and services. When the standalone selling price is not directly observable, the Company uses its best estimate of the standalone selling price of each distinct

good or service in the contract using the cost plus reasonable margin approach. This approach estimates the Company’s expected costs of satisfying the performance obligation and then adds an appropriate margin for that distinct good or service.

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Contract modifications are routine in the performance of the Company’s contracts. In most instances, contract modifications are for additional goods and/or services that are distinct and, therefore, accounted for as new contracts.

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Performance obligations are satisfied over time if the customer receives the benefits as the Company performs, if the customer controls the asset as it is being developed or produced, or if the product being produced for the customer has no alternative use and the Company has a contractual right to payment for the Company’s costs incurred to date plus a reasonable margin. The contractual right to payment is generally supported by termination for convenience clauses that allow the customer to unilaterally terminate the contract for convenience, pay the Company for costs incurred plus a reasonable profit, and take control of any work in process. Product revenue for certain Precision Strike products including LMS, Space, Directed Energy and Cyber and Mission Solutions product deliveries and customization of UGV transport vehicles is recognized over time as costs are incurred. Contract services revenue is recognized over time and composed of revenue recognized on contracts for the provision of services, including repairs and maintenance, training, engineering design, development and prototyping activities, technical support services, ISR services, and customer-funded R&D contracts. Contract services revenue is recognized over time as services are rendered. Typically, revenue is recognized over time using an input measure (e.g., costs incurred to date relative to total estimated costs at completion) to measure progress. Certain contract services revenue is recognized over time as services are rendered. The Company elected the right to invoice practical expedient in which if an entity has a right to consideration from a customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date, the entity may recognize revenue in the amount to which the entity has a right to invoice. Certain training services are recognized over time using an output method based on days of training completed. LMS product revenue is currently recognized over time as the product is considered to not have alternative use as the U.S. government is the only current customer including FMS sales. Once LMS products receive a DCS contract, which is expected during fiscal year 2027, the products are considered to have alternative use and revenue will be recognized at a point in time.

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For performance obligations satisfied over time, revenue is generally recognized using costs incurred to date relative to total estimated costs at completion to measure progress. Incurred costs represent work performed, which correspond with, and thereby best depict, transfer of control to the customer. Contract costs include labor, materials, subcontractors’ costs, other direct costs, and indirect costs applicable on government and commercial contracts.

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For performance obligations which are not satisfied over time per the aforementioned criteria above, revenue is recognized at the point in time in which each performance obligation is fully satisfied. The Company’s product sales revenue is primarily composed of revenue recognized on contracts for the delivery of UAS, UGV, UUV, IAMD, and EW systems and spare parts, respectively. Revenue is recognized at the point in time when control transfers to the customer, which generally occurs when title and risk of loss have passed to the customer.

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On April 30, 2026, the Company had approximately $1,176,192,000 of remaining performance obligations under contracts with its customers, which the Company also refers to as backlog. The Company currently expects to recognize approximately 85% of the remaining performance obligations as revenue in fiscal 2027, an additional 15% in fiscal 2028 and thereafter.

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The Company collects sales, value add, and other taxes concurrent with revenue producing activities, which are excluded from revenue when they are both imposed on a specific transaction and collected from a customer.

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Contract Estimates

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Accounting for contracts and programs involves the use of various techniques to estimate total contract revenue and costs. For long-term contracts, the Company estimates the total expected costs to complete the contract and recognizes revenue based on the percentage of costs incurred at period end.

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Contract estimates are based on various assumptions to project the outcome of future events that may span several years. These assumptions include labor productivity and availability, the complexity of the work to be performed, the cost and availability of materials, the performance of subcontractors, and the availability and timing of funding from the customer.

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The nature of the Company’s contracts gives rise to several types of variable consideration, including undefinitized contract actions and unpriced change orders, which are within the scope of ASC 606 with final contract values to be negotiated, penalty fees and incentive awards generally for late delivery and early delivery, respectively. The Company generally estimates such variable consideration as the most likely amount. In addition, the Company includes the estimated variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the related uncertainty is resolved. These estimates are based on historical award experience, anticipated performance and the Company’s best judgment at the time. Based on experience in estimating these amounts, they are included in the transaction price of the Company’s contracts and the associated remaining performance obligations.

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As a significant change in one or more of these estimates could affect the profitability of the Company’s contracts, the Company regularly reviews and updates its contract-related estimates. Changes in cumulative revenue estimates, due to changes in the estimated transaction price or cost estimates including definitization of contracts, are recorded using a cumulative catch-up adjustment in the period identified. In the period undefinitized contract actions or unpriced change orders become definitized, a cumulative catch-up adjustment is recorded to reflect the final consideration, which could have a material positive or negative impact.

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If at any time the estimate of contract profitability indicates an anticipated loss on the contract and the contract falls under the scope of onerous contract guidance, contracts for which specifications are provided by the customer for the construction of facilities or the production of goods or the provision of related services, the Company recognizes the total loss in the quarter it is identified, and it is recorded in other current liabilities. The balance of forward loss reserves as of April 30, 2026 and April 30, 2025 was $6,103,000 and $104,000, respectively. The Company records forward loss reserves when the total estimated costs to complete the contracts are in excess of the total remaining consideration of the contracts. As of April 30, 2026, one IAMD contract had a forward loss reserve of $3,889,000 due to increase estimated costs to complete the project. No other individual contract in the forward loss reserve was material to the Company’s consolidated financial statements for the fiscal years ended April 30, 2026, 2025 or 2024.

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The impact of adjustments in contract estimates on the Company’s operating earnings can be reflected in either operating costs and expenses or revenue. The aggregate impact of adjustments in contract estimates on revenue related to performance obligations satisfied or partially satisfied in previous periods was a decrease to revenue of $(2,557,000) for the year ended April 30, 2026 and an increase to revenue of $6,002,000, and $5,408,000 for the years ended April 30, 2025, and 2024, respectively. For the year ended April 30, 2026, the Company had two individual contracts with material adjustments. One Cyber and Mission Solutions contract had an adjustment due to revised estimates of the total expected costs to complete contracts, which decreased revenue by approximately $(3,091,000). One Space and Directed Energy contract had a favorable adjustment due to lower expected costs and an increase in profitability which increased revenue by approximately $6,659,000. During the year ended April 30, 2025, the Company definitized four LMS undefinitized contract actions, which resulted in a cumulative catch-up revenue adjustment of $9,870,000 increase to revenue, and eight LMS unpriced change orders, which resulted in a cumulative catch-up revenue adjustment of $2,177,000 increase to revenue. The Company also had one LMS contract with a material adjustment due to revised estimates of the total expected costs to complete contracts, which decreased revenue by approximately $2,874,000. During the year ended April 30, 2024, the Company had two LMS contracts with a material adjustment due to revised estimates of the total expected costs to complete contracts, which increased revenue by approximately $2,672,000.

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Revenue by Category

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The following tables present the Company’s revenue disaggregated by operating group, contract type, customer category and geographic location (in thousands):

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Each of these contract types presents advantages and disadvantages. Typically, the Company assumes more risk with FFP contracts. However, these types of contracts generally offer additional profits when the Company completes the work for less than originally estimated. CPFF contracts generally subject the Company to lower risk. Accordingly, the associated base fees are usually lower than fees on FFP contracts. Under T&M contracts, the Company’s profit may vary if actual labor hour rates vary significantly from the negotiated rates.

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Contract Balances

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The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables, and customer advances and deposits on the consolidated balance sheets. In the Company’s services

contracts, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals, which is generally monthly, or upon the achievement of contractual milestones. Generally, billing occurs subsequent to revenue recognition, resulting in contract assets recorded in unbilled receivables and retentions on the consolidated balance sheets. However, the Company sometimes receives advances or deposits from its customers before revenue is recognized, resulting in contract liabilities recorded in customer advances on the consolidated balance sheets. Contract liabilities are not a significant financing component as they are generally utilized to pay for contract costs within a one-year period or are used to ensure the customer meets contractual requirements. These assets and liabilities are reported on the consolidated balance sheets on a contract-by-contract basis at the end of each reporting period. For the Company’s product revenue, the Company generally receives cash payments subsequent to satisfying the performance obligation via delivery of the product, resulting in billed accounts receivable. Changes in the contract asset and liability balances during the years ended April 30, 2026 or 2025 were not materially impacted by any other factors. For the Company’s contracts, there are no significant gaps between the receipt of payment and the transfer of the associated goods and services to the customer for material amounts of consideration.

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Revenue recognized for the years ended April 30, 2026, 2025, and 2024 that was included in contract liability balances at the beginning of each year were $12,331,000, $9,980,000 and $13,757,000, respectively.

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Cost to Fulfill a Contract with a Customer

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The Company recognizes assets for the costs to fulfill a contract with a customer if the costs are specifically identifiable, generate or enhance resources used to satisfy future performance obligations, and are expected to be recovered in accordance with ASC 340-40 Other Assets and Deferred Costs: Contracts with Customers. The assets related to costs to fulfill contracts with customers are capitalized and amortized over the period the related performance obligations are satisfied. As of April 30, 2026 and 2025, the Company’s costs to fulfill were $0 and $1,948,000, respectively.

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Stock-Based Compensation

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Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award. No compensation cost is ultimately recognized for awards for which employees do not render the requisite service and are forfeited.

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Long-Term Incentive Awards

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For long-term incentive awards outstanding as of April 30, 2026, the awards include time-based awards which vest equally over three years and performance-based awards which vest based on the achievement of a target payout established at the beginning of each performance period. The actual payout at the end of the performance period is calculated based upon the Company’s achievement of such targets. Payouts are made in shares of restricted stock which become immediately vested upon issuance.

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At each reporting period, the Company reassesses the probability of achieving the performance targets. The estimation of whether the performance targets will be achieved requires judgment, and, to the extent actual results or updated estimates differ from the Company’s current estimates, the cumulative effect on current and prior periods of those changes will be recorded in the period estimates are revised.

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Research and Development

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Internally funded R&D costs sponsored by the Company relate to both U.S. government products and services and those for commercial and foreign customers. Internally funded R&D costs for the Company are recoverable and allocable under government contracts in accordance with U.S. government procurement regulations.

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Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform research and development activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the research and development services

are performed. Revenue from customer-funded R&D was $240,889,000, $78,491,000 and $82,104,000 for the years ended April 30, 2026, 2025 and 2024, respectively. The related cost of sales for customer-funded R&D totaled $209,656,000, $58,028,000 and $62,181,000 for the years ended April 30, 2026, 2025 and 2024, respectively.

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Lease Accounting

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The Company leases certain buildings, land and equipment. At contract inception the Company determines whether the contract is, or contains, a lease and whether the lease should be classified as an operating or a financing lease. Operating leases are recorded in operating lease right-of-use assets, current operating lease liabilities and non-current operating lease liabilities.

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The Company recognizes operating lease right-of-use assets and operating lease liabilities based on the present value of the future minimum lease payments over the lease term at commencement date. The Company uses its incremental borrowing rate based on the information available at commencement date to determine the present value of future payments and the appropriate lease classification. The Company defines the initial lease term to include renewal options determined to be reasonably certain. The Company’s leases have remaining lease terms of less than one year to six years, some of which may include options to extend the lease for up to ten years, and some of which may include options to terminate the lease after one to twelve months. If the Company determines the option to extend or terminate is reasonably certain, it is included in the determination of lease assets and liabilities. For operating leases, the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

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Many of the Company’s real estate lease agreements contain incentives for tenant improvements, rent holidays, or rent escalation clauses. For tenant improvement incentives, if the incentive is determined to be a leasehold improvement owned by the lessee, the Company generally records the incentive as a reduction to fixed lease payments thereby reducing rent expense. For rent holidays and rent escalation clauses during the lease term, the Company records rental expense on a straight-line basis over the term of the lease. For these lease incentives, the Company uses the date of initial possession as the commencement date, which is generally when the Company is given the right of access to the space and begins to make improvements in preparation for intended use.

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The Company does not have any material restrictions or covenants in its lease agreements, sale-leaseback transactions, land easements or residual value guarantees.

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In determining the inputs to the incremental borrowing rate calculation, the Company makes judgments about the value of the leased asset, its credit rating and the lease term including the probability of its exercising options to extend or terminate the underlying lease or purchase the underlying asset. Additionally, the Company makes judgments around contractual asset substitution rights in determining whether a contract contains a lease.

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Advertising Costs

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Advertising costs are expensed as incurred. Advertising expenses included in SG&A expenses were $1,445,000, $416,000 and $457,000 for the years ended April 30, 2026, 2025 and 2024, respectively.

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Foreign Currency Transactions

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Foreign currency transaction gains and losses are charged or credited to earnings as incurred. For the fiscal years ended April 30, 2026, 2025 and 2024, foreign currency transaction losses that are included in other income (expense), net in the accompanying consolidated statements of (loss) income were $102,000, $491,000, and $22,000, respectively.

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(Loss) Earnings Per Share

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Basic (loss) earnings per share are computed using the weighted-average number of common shares outstanding and excludes any anti-dilutive effects of options, restricted stock and restricted stock units. The dilutive effect of potential common shares outstanding is included in diluted (loss) earnings per share.

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The reconciliation of diluted to basic shares is as follows:

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During the years ended April 30, 2026, 2025 and 2024, certain options, shares of restricted stock and restricted stock units were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive. Due to the net loss for the fiscal year ended April 30, 2026, no shares reserved for issuance upon exercise of stock options or shares of unvested restricted stock were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive. The number of options, restricted stock and restricted stock units which met this anti-dilutive criterion was approximately 344,578; 393 and 1,000 for the years ended April 30, 2026, 2025 and 2024, respectively.

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Recently Adopted Accounting Standards

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In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires updates to the rate reconciliation, income taxes paid and other disclosures. Effective April 30, 2026, the Company adopted the ASU 2023-09. The Company is evaluating the potential impact of this adoption on its consolidated financial statements. The Company’s adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements but did result in additional disclosures in the notes to the Company’s consolidated financial statements.

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Recently Issued Accounting Standards

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In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income— Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”). ASU 2024-03 requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses included in each expense caption on the face of the income statement at interim and annual reporting periods. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, and should be applied either prospectively to financial statements issued for reporting periods after the effective date of this ASU or retrospectively to any or all prior periods presented in the financial statements. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements; however, the ASU will result in additional disclosures in the notes to our consolidated financial statements.

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In September 2025, the FASB issued ASU 2025-06, Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”), which better aligns the accounting guidance to how software is developed by eliminating project stages from capitalization criteria. The new standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. The standard allows for prospective, modified, or retrospective transition. Early adoption is permitted. The Company is currently evaluating the impact of adopting this new pronouncement.

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In December 2025, the FASB issued ASU 2025-11, Interim Reporting (“ASU 2025-11”), which is intended to improve the navigability of required interim disclosures and clarify when that guidance is applicable, and also to provide additional guidance on what disclosures should be provided in interim reporting periods. The new standard is effective for annual reporting periods beginning after December 15, 2027 and interim periods within those annual reporting periods. The standard allows for prospective or retrospective transition. Early adoption is permitted. The Company does not expect the adoption of ASU 2024-03 to have a material impact on its consolidated financial statements.

SUPPLEMENTARY DATA

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SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS

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