AeroVironment Announces Fiscal 2026 Third Quarter Results

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Key Terms

book-to-bill ratio financial

The book-to-bill ratio compares the value of new orders a company receives to the value of products it ships out or bills for over a certain period. If the ratio is above 1, it means the company is getting more orders than it is completing, which can indicate growth. If it's below 1, it suggests demand is slowing down.

funded backlog financial

Funded backlog is the portion of a company’s unfulfilled orders or signed contracts that already has committed financing or approved budget behind it, meaning the customer (or a funding source) has promised the money needed to pay for the work. For investors it signals clearer near-term revenue visibility and lower execution risk — like a stack of paid-for jobs waiting to be finished rather than hopeful leads — which helps assess future cash flow and growth reliability.

goodwill impairment financial

Goodwill impairment occurs when a company’s valued reputation or brand strength, known as goodwill, is found to be worth less than previously recorded on its financial statements. This usually happens when the company's performance declines or market conditions change, signaling that the expected benefits from acquisitions or brand value are no longer as strong. It matters to investors because it can indicate that a company's assets are less valuable than initially thought, potentially affecting its overall financial health.

Other Transaction Agreement regulatory

An "other transaction agreement" is a catch‑all contract used when parties create a custom deal that doesn’t match standard templates like a merger, stock sale or loan. For investors it signals a non‑standard structure that can change who owns assets, when and how cash moves, and what legal or regulatory steps are required — like ordering a custom recipe instead of a menu item, it can affect risks, rights and timing in ways that need careful review.

firm-fixed-price regulatory

A firm-fixed-price contract sets a single, unchanging price for goods or services that the seller must deliver, regardless of how much those costs rise or fall during performance. For investors, this matters because the buyer bears little cost uncertainty while the seller absorbs any cost overruns, which can make revenue more predictable but can squeeze profit margins if expenses increase—think of agreeing to buy a product at a set price even if the seller’s costs go up.

non-GAAP adjusted EBITDA financial

Non-GAAP adjusted EBITDA is a measure of a company's profitability that shows earnings before interest, taxes, depreciation, and amortization, with certain adjustments made to exclude irregular or non-recurring expenses and income. It provides a clearer picture of ongoing operational performance by filtering out items that might distort the core business results. Investors use it to better compare how well different companies are performing without the noise of one-time events.

03/10/2026 - 04:10 PM

ARLINGTON, Va.--(BUSINESS WIRE)-- AeroVironment, Inc. (NASDAQ: AVAV) (“AeroVironment” or the “Company”) reported today financial results for the fiscal third quarter ended January 31, 2026.

Third Quarter Highlights:

Third quarter revenue of $408.0 million
Bookings of $2.1 billion and book-to-bill ratio of 1.6 for the first nine months of the fiscal year
Record funded backlog of $1.1 billion

“While our third quarter results were impacted by revenue timing and adjustments in our Space business, demand for our unique solutions remains robust,” said Wahid Nawabi, AeroVironment chairman, president and chief executive officer. “Strong order flow and growth in funded backlog during the quarter are setting the stage for record fourth quarter revenue and a solid start to fiscal year 2027. We are executing with discipline, scaling manufacturing ahead of demand and accelerating the commercialization of our platforms to improve profitability and time to market. We believe there are tremendous opportunities ahead for AV to shape the next era of defense and we remain confident in our ability to deliver long-term shareholder value.”

FISCAL 2026 THIRD QUARTER RESULTS

Revenue for the third quarter of fiscal 2026 was $408.0 million and $1.3 billion of revenue for the first nine months of the fiscal year. Revenue for third quarter of fiscal 2026 increased 143% as compared to $167.6 million for the third quarter of fiscal 2025, due to higher product sales of $138.1 million and higher service revenue of $102.3 million. The acquisition of BlueHalo on May 1, 2025 contributed to $85.1 million and $91.4 million of the current quarter product and service revenue, respectively. From a segment standpoint, Autonomous Systems (“AxS”) recorded revenue of $278.7 million and Space, Cyber and Directed Energy (“SCDE”) recorded revenue of $129.3 million.

Gross margin for the third quarter of fiscal 2026 was $98.8 million, an increase of 56% as compared to $63.2 million for the third quarter of fiscal 2025, reflecting higher product margin of $19.1 million and higher service margin of $16.5 million. Fiscal 2026 third quarter gross margin was negatively impacted by $12.7 million of intangible amortization expense and other related non-cash purchase accounting expenses, as compared to $3.7 million in the third quarter of fiscal 2025. As a percentage of revenue, gross margin fell to 24% from 38%, primarily due to an increase in the proportion of service revenue resulting from the BlueHalo acquisition and the increased amortization and other non-cash purchase accounting expenses.

Impairment of goodwill for the third quarter of fiscal 2026 was $151.3 million. In January 2026, a stop-work order was received on the Company’s Other Transaction Agreement for the delivery of BADGER phased array antenna systems to support Space Force’s Satellite Communication Augmentation Resource (“SCAR”) program. We 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, we updated our estimates of the long-term cash flows of the Space reporting unit to reflect the reduced revenue associated with the stop-work order 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 $151.3 million in the Space reporting unit.

Loss from operations for the third quarter of fiscal 2026 was $(179.0) million as compared to $(3.1) million for the third quarter of last fiscal year. The current quarter was negatively impacted by $43.9 million of intangible amortization and other related non-cash purchase accounting expenses as compared to $4.8 million in the third quarter of fiscal 2025. The decrease year-over-year was primarily due to the goodwill impairment of $151.3 million recorded during the third quarter of fiscal 2026 related to Space, an increase in selling, general and administrative (“SG&A”) expense of $55.6 million, which includes an increase of $30.1 million of intangible amortization expense and incremental headcount resulting from our acquisition of BlueHalo which closed on May 1, 2025, partially offset by a decrease of $3.1 million of acquisition related expenses, an increase in research and development (“R&D”) expense of $4.6 million, partially offset by an increase in gross margin of $35.6 million.

Other income, net for the third quarter of fiscal 2026 was $3.3 million, as compared to $0.7 million for the third quarter of fiscal 2025. The increase year-over-year was primarily due to an increase in interest income due to a combination of higher cash and investment balances and lower interest bearing debt balances.

Benefit from income taxes for the third quarter of fiscal 2026 was $(19.5) million, as compared to $(0.6) million for the third quarter of last fiscal year. The increase year-over-year was primarily due to the loss before income taxes, partially offset by non-deductible goodwill impairment.

Net loss for the third quarter of fiscal 2026 was $(156.6) million, or $(3.15) per diluted share, as compared to $(1.8) million, or $(0.06) per diluted share, in the prior-year period, respectively. The current quarter was negatively impacted by goodwill impairment charges of $151.3 million, or $2.95 per diluted share, and $43.9 million, or $0.70 per diluted share, of intangible amortization and other related non-cash purchase accounting expenses as compared to $4.8 million, or $0.13 per diluted share, in the third quarter of fiscal 2025.

Non-GAAP adjusted EBITDA for the third quarter of fiscal 2026 was $44.5 million and non-GAAP earnings per diluted share were $0.64, as compared to $21.8 million and $0.30, respectively, for the third quarter of fiscal 2025.

BACKLOG

As of January 31, 2026, funded backlog (defined as remaining performance obligations under firm orders for which funding is currently appropriated to us under a customer contract) was $1.1 billion, as compared to $726.6 million as of April 30, 2025.

FISCAL 2026 — OUTLOOK FOR THE FULL YEAR

For fiscal year 2026, the Company now expects revenue of between $1.85 billion and $1.95 billion, net loss of between $(218) million and $(201) million, non-GAAP adjusted EBITDA of between $265 million and $285 million, loss per diluted share of between $(4.44) and $(4.10) and non-GAAP earnings per diluted share, which excludes amortization of intangible assets, other non-cash purchase accounting expenses, goodwill impairment, equity securities investments gains or losses, and equity method income or loss of between $2.75 and $3.10.

The foregoing estimates are forward-looking and reflect management’s view of current and future market conditions, subject to certain risks and uncertainties, including certain assumptions with respect to our ability to efficiently and on a timely basis integrate acquisitions, obtain and retain government contracts, changes in the timing and/or amount of government spending, react to changes in the demand for our products and services, activities of competitors, changes in the regulatory environment, and general economic and business conditions in the United States and elsewhere in the world. Investors are reminded that actual results may differ materially from these estimates and investors should review all risks related to achievement of the guidance reflected under “forward-looking statements” below and in the Company’s filings with the Securities and Exchange Commission.

CONFERENCE CALL AND PRESENTATION

In conjunction with this release, AeroVironment, Inc. will host a conference call today, Tuesday, March 10, 2026, at 4:30 pm Eastern Time that will be webcast live. Wahid Nawabi, chairman, president and chief executive officer, Kevin P. McDonnell, executive vice president and chief financial officer, and Denise Pacioni, investor relations director, will host the call.

Investors may access the call by registering via the following participant registration link up to ten minutes prior to the start time.

Participant registration URL: https://register-conf.media-server.com/register/BI42ffd1d0f4154de3b038f735824a329c

Investors may also listen to the live audio webcast via the Investor Relations page of the AeroVironment, Inc. website, http://investor.avinc.com. Please allow 15 minutes prior to the call to download and install any necessary audio software. A supplementary investor presentation for the third quarter fiscal year 2026 can be accessed at https://investor.avinc.com/events-and-presentations.

Audio Replay

An audio replay of the event will be archived on the Investor Relations section of the Company's website at http://investor.avinc.com.

ABOUT AEROVIRONMENT, INC.

AeroVironment (“AV”) (NASDAQ: AVAV) is a defense technology leader delivering integrated capabilities across air, land, sea, space, and cyber. The company develops and deploys autonomous systems, precision strike systems, counter-UAS technologies, space-based platforms, directed energy systems, and cyber and electronic warfare capabilities—built to meet the mission needs of today’s warfighter and tomorrow’s conflicts. With a national manufacturing footprint and a deep innovation pipeline, AV delivers proven systems and future-defining capabilities with speed, scale, and operational relevance. For more information visit: www.avinc.com.

FORWARD-LOOKING STATEMENTS

This press release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate or imply future results, performance or achievements, and may contain words such as “will,” “believe,” “anticipate,” “expect,” “estimate,” “intend,” “project,” “plan,” or words or phrases with similar meaning. Forward-looking statements are based on current expectations, forecasts and assumptions that involve risks and uncertainties, including, but not limited to, economic, competitive, governmental and technological factors outside of our control, that may cause our business, strategy or actual results to differ materially from the forward-looking statements.

Factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the impact of our ability to successfully close and integrate acquisitions into our operations and avoid disruptions from acquisition transactions that will harm our business; the recording of goodwill and other intangible assets as part of acquisitions that are subject to potential impairments in the future and any realization of such impairments; any actual or threatened disruptions to our relationships with our distributors, suppliers, customers and employees, including shortages in components for our products, whether due to restrictions and sanctions imposed by foreign governments or otherwise; the ability to timely and sufficiently integrate international operations into our ongoing business and compliance programs; reliance on sales to the U.S. government, including uncertainties in classification, pricing or potentially burdensome imposed terms for certain types of government contracts; availability of U.S. government funding for defense procurement and R&D programs; our ability to win U.S. and international government R&D and procurement programs, including foreign military financing aid; changes in the timing and/or amount of government spending, including due to continuing resolutions and/or changing government priorities; adverse impacts of any U.S. government shutdown; our ability to realize the anticipated benefits of the BlueHalo transaction or other acquisitions; our ability to execute contracts for anticipated sales, perform under such contracts and other existing contracts and obtain new contracts; risks related to our international business, including compliance with export control laws; the extensive and increasing regulatory requirements governing our contracts with the U.S. government and international customers; the consequences to our financial position, business and reputation that could result from failing to comply with such regulatory requirements; unexpected technical and marketing difficulties inherent in major research and product development efforts; the impact of potential security and cyber threats or the risk of unauthorized access to and resulting misuse of our, our customers’ and/or our suppliers’ information and systems; failure to remain a market innovator, to create new market opportunities or to expand into new markets; our ability to increase production capacity to support anticipated growth; unexpected changes in significant operating expenses, including components and raw materials; failure to develop new products or integrate new technology into current products; any increase in litigation activity or unfavorable results in legal proceedings, including pending class actions, or litigation that may arise from or in conjunction with our recent acquisition of BlueHalo; our ability to respond and adapt to legal, regulatory and government budgetary changes; our ability to comply with the covenants in our loan documents, outstanding convertible notes or merger agreement with BlueHalo; our ability to attract and retain skilled employees, including retention of BlueHalo employees; the impact of inflation; and general economic and business conditions in the United States and elsewhere in the world; and the failure to establish and maintain effective internal control over financial reporting. For a further list and description of such risks and uncertainties, see the reports we file with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

NON-GAAP MEASURES

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), this earnings release also contains non-GAAP financial measures. See in the financial tables below the calculation of these measures, the reasons why we believe these measures provide useful information to investors, and a reconciliation of these measures to the most directly comparable GAAP measures.


AeroVironment, Inc. Consolidated Statements of Operations (In thousands except share and per share data)

	Three Months Ended						Nine Months Ended
	January 31,			January 25,			January 31,			January 25,
	2026			2025			2026			2025
	(Unaudited)						(Unaudited)
Revenue:
Product sales	$	277,814		$	139,753		$	916,384		$	450,488
Contract services		130,231			27,883			418,845			95,089
		408,045			167,636			1,335,229			545,577
Cost of sales:
Product sales		199,973			81,001			672,057			253,572
Contract services		109,278			23,436			365,155			73,701
		309,251			104,437			1,037,212			327,273
Gross margin:
Product sales		77,841			58,752			244,327			196,916
Contract services		20,953			4,447			53,690			21,388
		98,794			63,199			298,017			218,304
Selling, general and administrative		99,414			43,788			329,026			115,499
Research and development		27,112			22,498			96,219			75,827
Impairment of goodwill		151,306			—			151,306			—
(Loss) income from operations		(179,038	)		(3,087	)		(278,534	)		26,978
Other income (loss):
Interest income (expense), net		3,696			(248	)		(9,050	)		(1,177	)
Other (expense) income, net		(400	)		976			6,912			758
(Loss) income before income taxes		(175,742	)		(2,359	)		(280,672	)		26,559
(Benefit from) provision for income taxes		(19,486	)		(605	)		(36,960	)		659
Equity method investment (loss) income, net of tax		(295	)		—			2,688			1,055
Net (loss) income	$	(156,551	)	$	(1,754	)	$	(241,024	)	$	26,955
Net (loss) income per share
Basic	$	(3.15	)	$	(0.06	)	$	(4.94	)	$	0.96
Diluted	$	(3.15	)	$	(0.06	)	$	(4.94	)	$	0.96
Weighted-average shares outstanding:
Basic		49,741,441			28,031,901			48,761,481			28,001,089
Diluted		49,741,441			28,031,901			48,761,481			28,171,089

AeroVironment, Inc. Consolidated Balance Sheets (In thousands except share data)

	January 31,			April 30,
	2026			2025
Assets
Current assets:
Cash and cash equivalents	$	289,878		$	40,862
Short-term investments		297,259			—
Accounts receivable, net of allowance for credit losses of $2,213 at January 31, 2026 and $203 at April 30, 2025		201,046			101,967
Unbilled receivables and retentions		528,557			290,009
Inventories, net		299,277			144,090
Income taxes receivable		43,031			622
Prepaid expenses and other current assets		45,199			28,966
Total current assets		1,704,247			606,516
Long-term investments		61,659			31,627
Property and equipment, net		158,867			50,704
Operating lease right-of-use assets		91,810			31,879
Deferred income taxes		—			61,460
Intangibles, net		925,925			48,711
Goodwill		2,461,714			256,781
Other assets		49,414			32,889
Total assets	$	5,453,636		$	1,120,567
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	109,633		$	72,462
Wages and related accruals		75,765			44,253
Customer advances		67,543			15,952
Current operating lease liabilities		15,569			10,479
Income taxes payable		320			356
Other current liabilities		40,489			28,659
Total current liabilities		309,319			172,161
Long-term debt		727,877			30,000
Non-current operating lease liabilities		82,567			23,812
Other non-current liabilities		1,995			2,026
Liability for uncertain tax positions		6,061			6,061
Deferred income taxes		53,627			—
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value:
Authorized shares—10,000,000; none issued or outstanding at January 31, 2026 and April 30,2025		—			—
Common stock, $0.0001 par value:
Authorized shares—100,000,000
Issued and outstanding shares—49,934,738 shares at January 31, 2026 and 28,267,517 shares at April 30, 2025		6			4
Additional paid-in capital		4,244,416			618,711
Accumulated other comprehensive loss		(5,514	)		(6,514	)
Retained earnings		33,282			274,306
Total stockholders’ equity		4,272,190			886,507
Total liabilities and stockholders’ equity	$	5,453,636		$	1,120,567

AeroVironment, Inc. Consolidated Statements of Cash Flows (In thousands)

	Nine Months Ended
	January 31,			January 25,
	2026			2025
Operating activities
Net (loss) income	$	(241,024	)	$	26,955
Adjustments to reconcile net (loss) income to cash used in operating activities:
Depreciation and amortization		202,960			27,144
Impairment of goodwill		151,306			—
Gain from equity method investments		(2,688	)		(1,055	)
Amortization of debt issuance costs		10,273			1,121
Provision for credit losses		1,867			(64	)
Reserve for inventory excess and obsolescence		5,125			2,025
Other non-cash expense, net		3,543			1,810
Non-cash lease expense		18,889			7,379
Loss (gain) on foreign currency transactions		264			(22	)
Unrealized gain on available-for-sale equity securities, net		(7,446	)		(1,187	)
Deferred income taxes		(4,334	)		—
Stock-based compensation		28,065			15,518
Loss on disposal of property and equipment		1,149			201
Amortization of debt securities		(661	)		—
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		(19,892	)		(11,095	)
Unbilled receivables and retentions		(142,088	)		(30,172	)
Inventories		(92,721	)		(1,167	)
Income taxes receivable		(38,646	)		(14,738	)
Prepaid expenses and other assets		(13,287	)		(9,314	)
Accounts payable		(17,397	)		(1,359	)
Other liabilities		(17,174	)		(13,034	)
Net cash used in operating activities		(173,917	)		(1,054	)
Investing activities
Acquisition of property and equipment		(46,134	)		(14,292	)
Contributions in equity method investments		(3,243	)		(2,309	)
Purchase of available-for-sale investments		(335,183	)		—
Redemption of available-for-sale investments		21,500
Acquisition of capitalized software to be sold		(17,275	)		—
Business acquisitions, net of cash acquired		(844,586	)		—
Net cash used in investing activities		(1,224,921	)		(16,601	)
Financing activities
Principal payments of term loan		(700,000	)		(28,000	)
Principal payments of revolver		(265,000	)		—
Proceeds from long-term debt		693,202			—
Proceeds from revolver, net of creditor costs		233,939			25,000
Proceeds from shares issued, net of underwriter costs		968,515			—
Proceeds from convertible debt, net of underwriter costs		726,944			—
Payment of debt issuance costs		(2,445	)		(1,056	)
Payment of equity issuance costs		(1,388	)		(365	)
Holdback and retention payments for business acquisition		—			(390	)
Tax withholding payment related to net settlement of equity awards		(10,900	)		(4,064	)
Employee stock purchase plan contributions		4,355			—
Exercise of stock options		—			506
Other		(12	)		(19	)
Net cash provided by (used in) financing activities		1,647,210			(8,388	)
Effects of currency translation on cash and cash equivalents		644			(258	)
Net increase (decrease) in cash and cash equivalents		249,016			(26,301	)
Cash and cash equivalents at beginning of period		40,862			73,301
Cash and cash equivalents at end of period	$	289,878		$	47,000
Supplemental disclosures of cash flow information
Cash paid, net during the period for:
Income taxes	$	4,335		$	19,342
Interest	$	12,535		$	1,196
Non-cash activities
Issuance of common stock for business acquisition	$	2,640,365		$	—
Unrealized loss on available-for-sale investments	$	(15	)	$	—
Change in foreign currency translation adjustments	$	1,015		$	(605	)
Acquisitions of property and equipment included in accounts payable	$	4,961		$	1,608

AeroVironment, Inc. Reportable Segment Results (Unaudited) (In thousands)

	Three Months Ended January 31, 2026
	AxS		SCDE			Total
Revenue	$	278,744	$	129,301		$	408,045

Segment adjusted EBITDA	$	46,167	$	(1,691	)	$	44,476

	Three Months Ended January 25, 2025
	AxS		SCDE			Total
Revenue	$	167,636	$	—		$	167,636

Segment adjusted EBITDA	$	21,766	$	—		$	21,766


AeroVironment, Inc. Reconciliation of non-GAAP Earnings per Diluted Share (Unaudited)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
	January 31, 2026			January 25, 2025			January 31, 2026			January 25, 2025

(Loss) earnings per diluted share	$	(3.15	)	$	(0.06	)	$	(4.94	)	$	0.96
Amortization of acquired intangible assets and other purchase accounting adjustments		0.70			0.13			2.78			0.40
Acquisition-related expenses		0.11			0.28			0.76			0.39
Equity method and equity securities investments activity, net		0.03			(0.05	)		(0.18	)		(0.08	)
Goodwill impairment		2.95			—			3.00			—
Earnings per diluted share as adjusted (non-GAAP)	$	0.64		$	0.30		$	1.42		$	1.67


Reconciliation of non-GAAP adjusted EBITDA (Unaudited)

	Three Months Ended			Three Months Ended			Nine Months Ended			Nine Months Ended
(in millions)	January 31, 2026			January 25, 2025			January 31, 2026			January 25, 2025
Net (loss) income	$	(156.6	)	$	(1.8	)	$	(241.0	)	$	27.0
Interest expense, net		(3.7	)		0.2			9.1			1.2
Provision for income taxes		(19.5	)		(0.6	)		(37.0	)		0.7
Depreciation and amortization		54.6			9.4			203.0			27.1
EBITDA (non-GAAP)		(125.2	)		7.2			(65.9	)		56.0
Amortization of cloud computing arrangement implementation		1.7			0.7			3.7			1.9
Stock-based compensation		8.1			5.4			28.1			15.5
Acquisition-related expenses		6.9			10.0			38.9			13.7
Equity method and equity securities investments activity, net		1.7			(1.5	)		(10.1	)		(2.2	)
Goodwill impairment		151.3			—			151.3			—
Adjusted EBITDA (non-GAAP)	$	44.5		$	21.8		$	146.0		$	84.9


Reconciliation of Forecast Earnings per Diluted Share (Unaudited)

	Fiscal year ending
	April 30, 2026
Forecast loss per diluted share	$	(4.44) - (4.10	)
Amortization of acquired intangible assets and other purchase accounting adjustments		3.58
Acquisition-related expenses		0.81
Equity method and equity securities investments activity, net		(0.19	)
Goodwill impairment		2.99
Forecast earnings per diluted share as adjusted (non-GAAP)	$	2.75 - 3.10


Reconciliation of 2026 Forecast and Fiscal Year 2025 Actual Non-GAAP adjusted EBITDA (Unaudited)

	Fiscal year ending			Fiscal year ended
(in millions)	April 30, 2026			April 30, 2025
Net (loss) income	$	(218) - (201	)	$	44
Interest expense, net		7			2
(Benefit from) provision for income taxes		(25) - (22	)		1
Depreciation and amortization		268			41
EBITDA (non-GAAP)		32 - 52			88
Amortization of cloud computing arrangement implementation		6			2
Stock-based compensation		42			22
Acquisition-related expenses		44			19
Equity method and equity securities investments activity, net		(10	)		(5	)
Goodwill impairment		151			18
Legal accrual		—			2
Adjusted EBITDA (non-GAAP)	$	265 - 285		$	146

Statement Regarding Non-GAAP Measures

The non-GAAP measures set forth above should be considered in addition to, and not as a replacement for or superior to, the comparable GAAP measures, and may not be comparable to similarly titled measures reported by other companies. Management believes that these measures provide useful information to investors by offering additional ways of viewing our results that, when reconciled to the corresponding GAAP measures, help our investors to understand the long-term profitability trends of our business and compare our profitability to prior and future periods and to our peers. In addition, management uses these non-GAAP measures to evaluate our operating and financial performance.

Non-GAAP Earnings per Diluted Share

We exclude acquisition-related expenses, amortization of acquisition-related intangible assets, equity method investment gains and losses, equity securities investments gains or losses, goodwill impairment and one-time non-operating items because we believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation and that intangible asset amortization will recur in future periods until such intangible assets have been fully amortized.

Adjusted EBITDA (Non-GAAP)

Adjusted EBITDA is defined as net income before interest income, interest expense, income tax expense (benefit) and depreciation and amortization, adjusted for the impact of certain other non-cash items, including amortization of implementation of cloud computing arrangements, stock-based compensation, acquisition related expenses, equity method investment gains or losses, equity securities investments gains or losses, goodwill impairment and one-time non-operating gains or losses. We present Adjusted EBITDA, which is not a recognized financial measure under U.S. GAAP, because we believe it is frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We believe this facilitates more consistent comparisons of operating results over time between our newly acquired and existing businesses, and with our peer companies. We believe, however, that it is important for investors to understand that such intangible assets contribute to revenue generation, intangible asset amortization will recur in future periods until such intangible assets have been fully amortized and that interest and income tax expenses will recur in future periods. In addition, Adjusted EBITDA may not be comparable to similarly titled measures used by other companies in our industry or across different industries.