Note 3. Revenue

The amount of revenue recognized as point in time or over time was as follows:

Accounts Receivable

As of June 30, 2026, “Other assets” on the Condensed Consolidated Balance Sheets included $15,820 of unbilled receivables not expected to be invoiced and collected within a period of 12 months, compared to $10,963 as of September 30, 2025.

Accounts receivable in Woodward’s Condensed Consolidated Financial Statements represent the net amount expected to be collected, and an allowance for uncollectible amounts related to credit losses is established based on expected losses. Expected losses are estimated by reviewing specific customer accounts, taking into consideration accounts receivable aging, credit risk of the customers, and historical payment history, as well as current and forecasted economic conditions and other relevant factors.

Contract liabilities

Woodward recognized revenue of $29,244 in the three months and $52,725 in the nine months ended June 30, 2026 from contract liabilities balances recorded as of October 1, 2025, compared to $5,157 in the three months and $26,275 in the nine months ended June 30, 2025 from contract liabilities balances recorded as of October 1, 2024.

Remaining performance obligations

Remaining performance obligations related to the aggregate amount of the total contract transaction price of firm orders for which the performance obligation has not yet been recognized in revenue as of June 30, 2026 were $4,117,859, compared to $3,195,156 as of September 30, 2025, the majority of which related to Woodward’s Aerospace segment in both periods. Woodward expects to recognize almost all remaining performance obligations within two years after June 30, 2026.

Remaining performance obligations related to material rights that have not yet been recognized in revenue as of June 30, 2026 were $486,461, of which $3,583 is expected to be recognized in the remainder of fiscal year 2026, $16,757 is expected to be recognized in fiscal year 2027, and the remaining balance is expected to be recognized thereafter. Woodward expects to recognize revenue from performance obligations related to material rights over the life of the underlying programs, which may be as long as forty years.

Disaggregation of Revenue

Woodward designs, produces, and services reliable, efficient, low-emission, and high-performance energy control products for diverse applications in markets throughout the world. Woodward reports financial results for each of its reportable segments, Aerospace and Industrial, and further disaggregates its revenue from contracts with customers by primary market as Woodward believes this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. Woodward focuses primarily on serving original equipment manufacturers (“OEMs”) and equipment packagers, partnering with them to bring superior component and system solutions to their demanding applications. Woodward also provides repair, maintenance, replacement, and other services support for its installed products. Woodward has traditionally referred to this part of our business as “aftermarket”; however, to better reflect the nature and scope of these offerings, Woodward will now refer to it as “services.”

The customers who each account for approximately 10% or more of net sales of each of Woodward’s reportable segments were as follows: