DLH Holdings (NASDAQ: DLHC) Q3 revenue falls 47% and company swings to loss
Rhea-AI Filing Summary
DLH Holdings Corp. reported weak fiscal third-quarter 2026 results as revenue fell to $44.2 million from $83.3 million, a 46.9% decline driven mainly by the transition of legacy programs to small-business contractors. The company posted an operating loss of $3.9 million versus operating income of $3.8 million a year earlier and a net loss of $16.8 million, or $(1.16) per diluted share, compared with net income of $0.3 million or $0.02 per share. Management noted that the loss includes a $10.4 million valuation allowance against deferred tax assets.
Non-GAAP Adjusted EBITDA was $3.4 million, down from $8.1 million, with margin compressing to 7.6% from 9.7%. DLH generated operating and free cash flow of $4.2 million, reduced debt to $128.7 million from $132.7 million at the prior quarter end, and reported backlog of $408.5 million versus $514.3 million at September 30, 2025. The company completed cost-reduction actions and appointed Kathryn JohnBull as President and CEO and Steve Oroho as CFO and Treasurer, emphasizing organic growth, operating leverage, debt reduction, and positioning for improved performance in fiscal 2027.
Positive
- None.
Negative
- Revenue declined 46.9% year-over-year to $44.2 million, driving a shift from operating income to an operating loss and contributing to a Q3 net loss of $16.8 million, or $(1.16) per diluted share.
- Backlog fell to $408.5 million from $514.3 million at September 30, 2025, while quarterly operating and free cash flow dropped to $4.2 million from $9.6 million in the prior-year quarter.
- Results were heavily affected by a $10.4 million valuation allowance against deferred tax assets, which contributed to reversing retained earnings into an accumulated deficit of $9.4 million.
Filing Explained
At June 30, the completed quarter ended with debt obligations reported in both current and long-term categories.
DLH Holdings Corp. has completed and reported its fiscal third-quarter results for the period ended
The filing lists
For the nine months ended
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Q3 2026 revenue: $44.2 million
Q3 2026 net income (loss): $(16.8) million
Q3 2026 diluted EPS: $(1.16)
+5 more
8 metrics
Q3 2026 revenue
$44.2 million
Three months ended June 30, 2026; down from $83.3 million, a 46.9% decrease year-over-year
Q3 2026 net income (loss)
$(16.8) million
Net loss for the quarter ended June 30, 2026; compared with net income of $0.3 million in Q3 2025
Q3 2026 diluted EPS
$(1.16)
Diluted earnings (loss) per share for Q3 2026; versus $0.02 per share in Q3 2025
Q3 2026 Adjusted EBITDA
$3.4 million
Adjusted EBITDA for Q3 2026 with margin of 7.6% versus $8.1 million and 9.7% in Q3 2025
Valuation allowance impact
$10.4 million
Impact of valuation allowance recorded against deferred tax assets reflected in Q3 2026 net loss
Debt balance
$128.7 million
Total debt at June 30, 2026; reduced from $132.7 million at end of Q2 2026 and $131.6 million at September 30, 2025
Backlog
$408.5 million
Backlog at June 30, 2026; down from $514.3 million at September 30, 2025
Q3 2026 operating and free cash flow
$4.2 million
Cash provided by operating activities and Free Cash Flow for the three months ended June 30, 2026; down from $9.6 million
Key Terms
Adjusted EBITDA, valuation allowance, Free Cash Flow, cost scaling initiatives, +1 more
5 terms
Adjusted EBITDA financial
"Delivered Adjusted EBITDA of $3.4 million, or 7.6% of revenue"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
valuation allowance financial
"Reflects the $10.4 million impact of a valuation allowance recorded against our deferred tax assets"
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
Free Cash Flow financial
"We define the measures as follows ... Free Cash Flow is net cash provided by operating activities"
Free cash flow is the amount of money a company has left over after paying all its expenses and investing in its business, like buying equipment or updating facilities. It shows how much cash is available to reward shareholders, pay down debt, or save for future growth. This helps investors understand if a company is financially healthy and able to grow.
cost scaling initiatives financial
"Cost scaling initiatives represent expenses the Company has incurred as it scales its operations"
backlog financial
"Backlog | $408.5 | $514.3 | (20.6)%"
A backlog is the amount of work or orders that a company has received but hasn't completed yet. It’s like a restaurant with many dishes to serve; the backlog shows how many orders are still waiting to be finished. It matters because a large backlog can indicate strong demand or potential delays in delivering products or services.
Earnings Snapshot
Revenue: $44.2 million · Guidance included
quarter ended June 30, 2026
Revenue
$44.2 million
(46.9)% vs $83.3 million in Q3 2025
Net income (loss)
$(16.8) million
vs $0.3 million in Q3 2025; includes $10.4 million valuation allowance on deferred tax assets
Diluted EPS
$(1.16)
vs $0.02 in Q3 2025
Adjusted EBITDA
$3.4 million
down from $8.1 million in Q3 2025
Adjusted EBITDA margin
7.6%
vs 9.7% in Q3 2025
Backlog
$408.5 million
down from $514.3 million at September 30, 2025
Guidance
Management expects fourth-quarter fiscal 2026 revenue to be generated entirely by technology-powered solutions and believes DLH is positioned for improved performance in fiscal 2027, while targeting disciplined organic growth, improved operating leverage, and accelerated debt reduction.
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did DLH Holdings (DLHC) perform in fiscal Q3 2026?
DLH reported Q3 2026 revenue of $44.2 million, down from $83.3 million, and a net loss of $16.8 million, or $(1.16) per diluted share. The quarter reflected program transitions to small-business contractors and higher costs, turning prior-year profitability into an operating loss.
What caused DLH Holdings (DLHC) to report a large net loss in Q3 2026?
The Q3 net loss of $16.8 million includes a $10.4 million valuation allowance recorded against deferred tax assets. This non-cash tax item, combined with lower revenue and an operating loss of $3.9 million, drove the sharp deterioration from the prior-year profit.
What were DLH Holdings (DLHC) Adjusted EBITDA and margin in Q3 2026?
DLH generated Adjusted EBITDA of $3.4 million in Q3 2026, down from $8.1 million a year earlier. Adjusted EBITDA margin was 7.6% of revenue, compared with 9.7% in the prior-year quarter, reflecting lower volumes and margin compression despite cost-reduction actions.
How did DLH Holdings (DLHC) debt, cash flow, and backlog change in Q3 2026?
DLH produced $4.2 million of operating and free cash flow in Q3 2026 and reduced debt to $128.7 million from $132.7 million at the prior quarter end. Backlog declined to $408.5 million from $514.3 million at September 30, 2025, indicating a smaller future revenue base.
What management changes did DLH Holdings (DLHC) announce around Q3 2026?
DLH appointed Kathryn JohnBull as President and CEO and Steve Oroho as CFO and Treasurer near the end of Q3 2026, following the prior CEO’s retirement. Management highlighted priorities of disciplined organic growth, improving operating leverage, and reducing debt while targeting improved performance in fiscal 2027.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): July 29, 2026
(Exact name of Registrant as Specified in its Charter)
| (State or Other Jurisdiction of Incorporation | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices, and Zip Code)
(770 ) 554-3545
Registrant's telephone number, Including Area Code
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
| Capital Market | |||||||||||
CHECK THE APPROPRIATE BOX BELOW IF THE FORM 8-K FILING IS INTENDED TO SIMULTANEOUSLY SATISFY THE FILING OBLIGATION OF THE REGISTRANT UNDER ANY OF THE FOLLOWING PROVISIONS: | ||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On July 29, 2026, DLH Holdings Corp. announced by press release its financial results for its fiscal quarter ended June 30, 2026. A copy of the press release is attached hereto as Exhibit 99.1.
The information furnished pursuant to Item 2.02 of this Current Report, including Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
The following exhibit is attached to this Current Report on Form 8-K:
Exhibit Number | Exhibit Title or Description | ||||
99.1 | Press Release dated July 29, 2026 | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| DLH Holdings Corp. | ||||||||
| By: /s/ Steven V. Oroho, Jr. | ||||||||
| Name: Steven V. Oroho, Jr. | ||||||||
| Title: Chief Financial Officer | ||||||||
Date: July 29, 2026
DLH Reports Fiscal 2026 Third Quarter Results
ATLANTA, July 29, 2026 – DLH Holdings Corp. (NASDAQ: DLHC) (“DLH” or the “Company”), a leading provider of digital transformation and cybersecurity, systems engineering and integration, and science research and development, today announced financial results for its fiscal third quarter ended June 30, 2026.
Q3 Highlights:
•Announced management changes at the end of the quarter, with the appointments of Kathryn JohnBull to President and CEO and Steve Oroho to CFO and Treasurer
•Revenue declined year-over-year primarily reflecting the transition of legacy programs to small-business set-aside contractors
•Completed indirect cost reduction actions that strengthen the Company’s competitive position by aligning the operating structure with expected, near-term revenue volumes
•Delivered Adjusted EBITDA of $3.4 million, or 7.6% of revenue
•Generated Operating and Free Cash Flow of $4.2 million, as debt was reduced to $128.7 million, from $132.7 million at the end of the second quarter
Management Discussion:
“Being appointed CEO following Zach Parker's retirement is a tremendous honor," said Kathryn JohnBull, President and Chief Executive Officer. "Having aligned indirect costs with expected revenue volumes, I am confident that DLH is competitively positioned to capitalize on a healthy pipeline of organic growth opportunities. As our third-quarter results reflect recent growth challenges and the completion of legacy programs, we expect fourth-quarter revenue to be generated entirely by our technology-powered solutions. We also anticipate our actions to align our indirect costs with these revenue volumes will enable us to maintain Adjusted EBITDA margins at approximately the same level as in the third quarter.
"With that in mind our strategic priorities are clear: drive disciplined organic growth across core markets and capabilities; improve operating leverage; and reduce debt as rapidly as possible. We believe DLH is positioned for improved performance in fiscal 2027 and remain laser focused on creating long-term shareholder value.”
Operating Financial Summary
Three Months Ended | |||||||||||
June 30, | |||||||||||
$ million | 2026 | 2025 | % Change | ||||||||
Revenue | $44.2 | $83.3 | (46.9)% | ||||||||
Income (Loss) from Operations | $(3.9) | $3.8 | (202.6)% | ||||||||
Adjusted Income (Loss) from Operations | $(0.6) | $3.8 | (115.8)% | ||||||||
Net Income (Loss)⁽¹⁾ | $(16.8) | $0.3 | (5700.0)% | ||||||||
Diluted Earnings (Loss) Per Share⁽¹⁾ | $(1.16) | $0.02 | (5900.0)% | ||||||||
Adjusted EBITDA | $3.4 | $8.1 | (58.0)% | ||||||||
Adjusted EBITDA Margin on Revenue | 7.6% | 9.7% | (21.6)% | ||||||||
Cash provided by Operating Activities | $4.2 | $9.6 | (56.3)% | ||||||||
Free Cash Flow⁽²⁾ | $4.2 | $9.6 | (56.3)% | ||||||||
(1) Reflects the $10.4 million impact of a valuation allowance recorded against our deferred tax assets.
(2) Operating cash flow and free cash flow for the quarter are derived by subtracting from this quarter's year-to-date amount the year-to-date amount reported in the Company’s prior Quarterly Report on Form 10-Q.
Reconciliations of EBITDA and Adjusted EBITDA are included later in this press release.
Additional Financial Metrics
June 30, 2026 | September 30, 2025 | % Change | |||||||||
Debt | $128.7 | $131.6 | (2.2)% | ||||||||
Backlog | $408.5 | $514.3 | (20.6)% | ||||||||
Earnings Call & Webcast:
DLH management will discuss third quarter results and provide a general business update, including current competitive conditions and strategies, during a conference call beginning at 10:00 AM Eastern Time tomorrow, July 30, 2026. Interested parties may listen to the conference call by dialing 888-347-5290 or 412-317-5256. Presentation materials will also be posted on the Investor Relations section of the DLH website prior to the commencement of the conference call.
A digital recording of the conference call will be available for replay two hours after the completion of the call and can be accessed on the DLH Investor Relations website or by dialing 855-669-9685 and entering the conference ID #1652291.
About DLH:
DLH (NASDAQ: DLHC) enhances technology, public health, and cyber security readiness missions through science, technology, cyber, and engineering solutions and services. Our experts solve some of the most complex and critical missions faced by federal customers, leveraging digital transformation, artificial intelligence, advanced analytics, cloud-based applications, telehealth systems, and more. With a world-class workforce dedicated to the idea that “Your Mission is Our Passion,” DLH brings a unique combination of government sector experience, proven methodology, and unwavering commitment to innovative solutions to improve the lives of millions. For more information, visit www.DLHcorp.com.
Contact Information:
Investor Relations
Chris Witty
(646) 438-9385
cwitty@darrowir.com
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or DLH`s future financial performance. Any statements that refer to expectations, projections or other characterizations of future events or circumstances or that are not statements of historical fact (including without limitation statements to the effect that the Company or its management “believes”, “expects”, “anticipates”, “plans”, “intends” and similar expressions) should be considered forward-looking statements that involve risks and uncertainties which could cause actual events or DLH’s actual results to differ materially from those indicated by the forward-looking statements. Forward-looking statements in this release include, among others, statements regarding benefits of acquisitions, estimates of future revenues, operating income, earnings, earnings per share, backlog, and cash flows. These statements reflect our belief and assumptions as to future events that may not prove to be accurate. Our actual results may differ materially from such forward-looking statements made in this release due to a variety of factors, including: the failure to achieve the anticipated benefits of any future acquisition (including anticipated future financial operating performance and results); the inability to retain employees and customers; contract awards in connection with re-competes for present business and/or competition for new business; our ability to manage our debt obligations; compliance with bank financial and other covenants; changes in client budgetary priorities; government contract procurement (such as bid and award protests, small business set asides, loss of work due to organizational conflicts of interest, etc.) and termination risks; significant delays or reductions in appropriations for our programs and broader changes in U.S. government funding and spending patterns; legislation that amends or changes discretionary spending levels or budget priorities; legal, regulatory, and political changes from the federal government that could result in economic uncertainty; the impact of inflation and higher interest rates; and other risks described in our SEC filings. For a discussion of such risks and uncertainties which could cause actual results to differ from those contained in the forward-looking statements, see “Risk Factors” in the Company’s periodic reports filed with the SEC, including our Annual Report on Form 10-K for the fiscal year ended September 30, 2025, as well as interim quarterly filings thereafter. The forward-looking statements contained herein are not historical facts, but rather are based on current expectations, estimates, assumptions and projections about our industry and business.
Such forward-looking statements are made as of the date hereof and may become outdated over time. The Company does not assume any responsibility for updating forward-looking statements.
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in thousands, except per share amounts)
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
Revenue | $ | 44,225 | $ | 83,343 | $ | 172,383 | $ | 263,337 | ||||||||||||||||||
Cost of operations: | ||||||||||||||||||||||||||
Contract costs | 36,819 | 67,649 | 140,229 | 212,014 | ||||||||||||||||||||||
General and administrative costs | 7,337 | 7,631 | 22,104 | 23,937 | ||||||||||||||||||||||
Depreciation and amortization | 4,001 | 4,308 | 12,600 | 12,880 | ||||||||||||||||||||||
Total operating costs | 48,157 | 79,588 | 174,933 | 248,831 | ||||||||||||||||||||||
Income (loss) from operations | (3,932) | 3,755 | (2,550) | 14,506 | ||||||||||||||||||||||
Interest expense, net | 3,082 | 3,540 | 9,617 | 11,549 | ||||||||||||||||||||||
Income (loss) before provision for income taxes | (7,014) | 215 | (12,167) | 2,957 | ||||||||||||||||||||||
Provision for income taxes (benefit) | 9,773 | (74) | 8,479 | 676 | ||||||||||||||||||||||
Net income (loss) | $ | (16,787) | $ | 289 | $ | (20,646) | $ | 2,281 | ||||||||||||||||||
Net income (loss) per share | ||||||||||||||||||||||||||
Basic | $ | (1.16) | $ | 0.02 | $ | (1.42) | $ | 0.16 | ||||||||||||||||||
Diluted | $ | (1.16) | $ | 0.02 | $ | (1.42) | $ | 0.16 | ||||||||||||||||||
Weighted average common stock outstanding | ||||||||||||||||||||||||||
Basic | 14,493 | 14,386 | 14,493 | 14,386 | ||||||||||||||||||||||
Diluted | 14,493 | 14,450 | 14,493 | 14,458 | ||||||||||||||||||||||
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value of shares)
June 30, 2026 | September 30, 2025 | |||||||||||||
(unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Current assets: | ||||||||||||||
Cash | $ | 235 | $ | 125 | ||||||||||
Accounts receivable | 24,408 | 38,394 | ||||||||||||
Other current assets | 4,062 | 4,018 | ||||||||||||
Total current assets | 28,705 | 42,537 | ||||||||||||
Goodwill | 138,161 | 138,161 | ||||||||||||
Intangible assets, net | 79,818 | 91,865 | ||||||||||||
Operating lease right-of-use assets | 7,249 | 8,764 | ||||||||||||
Deferred tax asset | — | 7,947 | ||||||||||||
Equipment and improvements, net | 761 | 1,274 | ||||||||||||
Other long-term assets | 115 | 115 | ||||||||||||
Total assets | $ | 254,809 | $ | 290,663 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable and accrued liabilities | $ | 10,398 | $ | 19,246 | ||||||||||
Accrued payroll | 7,836 | 12,153 | ||||||||||||
Debt obligations - current, net of deferred financing costs | 21,372 | 8,067 | ||||||||||||
Operating lease liabilities - current | 2,872 | 2,918 | ||||||||||||
Other current liabilities | 57 | 287 | ||||||||||||
Total current liabilities | 42,535 | 42,671 | ||||||||||||
Long-term liabilities: | ||||||||||||||
Debt obligations - long-term, net of deferred financing costs | 104,942 | 119,966 | ||||||||||||
Operating lease liabilities - long-term | 11,958 | 14,022 | ||||||||||||
Deferred tax liability | 1,111 | — | ||||||||||||
Other long-term liabilities | 999 | 1,046 | ||||||||||||
Total liabilities | 161,545 | 177,705 | ||||||||||||
Shareholders' equity: | ||||||||||||||
Common stock, $0.001 par value; 40,000 shares authorized; 14,493 and 14,493 shares issued and outstanding at June 30, 2026 and September 30, 2025, respectively | 14 | 14 | ||||||||||||
Additional paid-in capital | 102,686 | 101,734 | ||||||||||||
Retained earnings (accumulated deficit) | (9,436) | 11,210 | ||||||||||||
Total shareholders’ equity | 93,264 | 112,958 | ||||||||||||
Total liabilities and shareholders' equity | $ | 254,809 | $ | 290,663 | ||||||||||
DLH HOLDINGS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
(Amounts in thousands)
Nine Months Ended | ||||||||||||||
June 30, | ||||||||||||||
2026 | 2025 | |||||||||||||
Operating activities | ||||||||||||||
Net income (loss) | $ | (20,646) | $ | 2,281 | ||||||||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
Depreciation and amortization | 12,600 | 12,880 | ||||||||||||
Amortization of deferred financing costs charged to interest expense | 1,291 | 1,309 | ||||||||||||
Stock-based compensation expense | 1,045 | 1,284 | ||||||||||||
Deferred income taxes, net | 9,058 | 1,437 | ||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||
Accounts receivable | 13,986 | 4,933 | ||||||||||||
Other assets | 1,438 | (4,216) | ||||||||||||
Accounts payable and accrued liabilities | (8,848) | (11,614) | ||||||||||||
Accrued payroll | (4,317) | 2,175 | ||||||||||||
Other liabilities | (2,388) | 2,067 | ||||||||||||
Net cash provided by operating activities | 3,219 | 12,536 | ||||||||||||
Investing activities | ||||||||||||||
Purchase of equipment and improvements | (39) | (213) | ||||||||||||
Net cash used in investing activities | (39) | (213) | ||||||||||||
Financing activities | ||||||||||||||
Proceeds from revolving line of credit | 154,580 | 172,056 | ||||||||||||
Repayments of revolving line of credit | (148,898) | (170,075) | ||||||||||||
Repayments of secured term loan | (8,500) | (14,250) | ||||||||||||
Payments of deferred financing costs | (159) | (202) | ||||||||||||
Payments for taxes related to net share settlement of restricted stock units | (93) | — | ||||||||||||
Net cash used in financing activities | (3,070) | (12,471) | ||||||||||||
Net change in cash | 110 | (148) | ||||||||||||
Cash - beginning of period | 125 | 342 | ||||||||||||
Cash - end of period | $ | 235 | $ | 194 | ||||||||||
Supplemental disclosure of cash flow information | ||||||||||||||
Cash paid during the period for interest | $ | 7,952 | $ | 10,415 | ||||||||||
Cash paid during the period for income taxes | $ | 779 | $ | 563 | ||||||||||
Supplemental disclosure of non-cash activity | ||||||||||||||
Common stock surrendered for the settlement of restricted stock units | $ | 93 | $ | — | ||||||||||
Lease liability recognized to acquire a right-of-use asset | $ | — | $ | 4,187 | ||||||||||
Non-GAAP Financial Measures
The Company uses Adjusted Income from Operations, EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, and Adjusted EBITDA as a percent of revenue as supplemental non-GAAP measures of performance. The Company uses Free Cash Flow as a supplemental non-GAAP liquidity measure. We define the measures as follows:
Adjusted Income from Operations represents income from operations before the costs associated with scaling indirect expenses within contract and general and administrative costs to revenue volume, referred to below as cost scaling initiatives.
EBITDA represents net income before income taxes, interest, depreciation and amortization; Adjusted EBITDA represents net income before income taxes, interest, depreciation and amortization, and the costs associated with scaling general and administrative costs to revenue volume.
EBITDA and Adjusted EBITDA as a percent of revenue are calculated by dividing EBITDA or Adjusted EBITDA, respectively, for the measurement period by revenue for the same period.
Free Cash Flow is net cash provided by operating activities less the impact of purchases of equipment and improvements.
Adjusted Income from Operations, EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, and Adjusted EBITDA as a percent of revenue are non-GAAP measures of performance and are used by management to conduct and evaluate its business during its review of operating results for the periods presented. Free Cash Flow, a non-GAAP liquidity measure, is used by management to assess our ability to generate cash from our business operations and plan for future operating and capital actions.
Management and the Company's Board utilize these non-GAAP measures to make decisions about the use of the Company's resources, analyze performance between periods, develop internal projections and measure management performance. We believe that these non-GAAP measures are useful to investors in evaluating the Company's ongoing operating and financial results and understanding how such results compare with the Company's historical performance.
Adjusted Income from Operations, EBITDA, Adjusted EBITDA, EBITDA as a percent of revenue, Adjusted EBITDA as a percent of revenue, and Free Cash Flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP, and when analyzing our performance and liquidity investors should (i) evaluate adjustments in our reconciliation to the nearest GAAP financial measures and (ii) use non-GAAP measures in addition to, and not as an alternative to, measures of our operating results, as defined under GAAP.
Reconciliation of GAAP Measures to Adjusted Income from Operations, EBITDA and Adjusted EBITDA (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
Adjusted Income (Loss) from Operations | ||||||||||||||||||||||||||||||||||||||
Income (Loss) from Operations | $ | (3,932) | $ | 3,755 | $ | (7,687) | $ | (2,550) | $ | 14,506 | $ | (17,056) | ||||||||||||||||||||||||||
Cost scaling initiatives⁽¹⁾ | 3,283 | — | 3,283 | 5,174 | — | 5,174 | ||||||||||||||||||||||||||||||||
Adjusted Income (Loss) from Operations | $ | (649) | $ | 3,755 | $ | (4,404) | $ | 2,624 | $ | 14,506 | $ | (11,882) | ||||||||||||||||||||||||||
EBITDA and Adjusted EBITDA | ||||||||||||||||||||||||||||||||||||||
Net income (loss) | $ | (16,787) | $ | 289 | $ | (17,076) | $ | (20,646) | $ | 2,281 | $ | (22,927) | ||||||||||||||||||||||||||
Depreciation and amortization | 4,001 | 4,308 | (307) | 12,600 | 12,880 | (280) | ||||||||||||||||||||||||||||||||
Interest expense, net | 3,082 | 3,540 | (458) | 9,617 | 11,549 | (1,932) | ||||||||||||||||||||||||||||||||
Provision for income taxes (benefit) | 9,773 | (74) | 9,847 | 8,479 | 676 | 7,803 | ||||||||||||||||||||||||||||||||
EBITDA | $ | 69 | $ | 8,063 | $ | (7,994) | $ | 10,050 | $ | 27,386 | $ | (17,336) | ||||||||||||||||||||||||||
Cost scaling initiatives⁽¹⁾ | 3,283 | — | 3,283 | 5,174 | — | 5,174 | ||||||||||||||||||||||||||||||||
Adjusted EBITDA | $ | 3,352 | $ | 8,063 | $ | (4,711) | $ | 15,224 | $ | 27,386 | $ | (12,162) | ||||||||||||||||||||||||||
Net income (loss) as a % of revenue | (38.0) | % | 0.3 | % | (12.0) | % | 0.9 | % | ||||||||||||||||||||||||||||||
EBITDA as a % of revenue | 0.2 | % | 9.7 | % | 5.8 | % | 10.4 | % | ||||||||||||||||||||||||||||||
Adjusted EBITDA as a % of revenue | 7.6 | % | 9.7 | % | 8.8 | % | 10.4 | % | ||||||||||||||||||||||||||||||
Revenue | $ | 44,225 | $ | 83,343 | $ | 172,383 | $ | 263,337 | ||||||||||||||||||||||||||||||
Reconciliation of Free Cash Flow (in thousands):
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||||||||||||||||
2026 | 2025 | Change | 2026 | 2025 | Change | |||||||||||||||||||||||||||||||||
Net cash provided by operating activities | $ | 4,204 | $ | 9,571 | $ | (5,367) | $ | 3,219 | $ | 12,536 | $ | (9,317) | ||||||||||||||||||||||||||
Less: Purchases of equipment and improvements | — | — | — | (39) | (213) | 174 | ||||||||||||||||||||||||||||||||
Free Cash Flow⁽¹⁾ | $ | 4,204 | $ | 9,571 | $ | (5,367) | $ | 3,180 | $ | 12,323 | $ | (9,143) | ||||||||||||||||||||||||||
(1) Operating cash flow and free cash flow for the quarter are derived by subtracting from this quarter's year-to-date amount the year-to-date amount reported in the Company’s prior Quarterly Report on Form 10-Q.