5. Contract Assets and Liabilities

We enter into contracts to sell products and provide services, and we recognize contract assets and liabilities that arise from these transactions. We recognize revenue and corresponding accounts receivable according to ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). When we recognize revenue in advance of the point in time at which contracts give us the right to invoice a customer, we record this as unbilled revenue, which is included in accounts receivable, net, on the consolidated balance sheets. We may also receive consideration, per the terms of a contract, from customers prior to transferring control of goods to the customer. We record customer deposits as contract liabilities. Additionally, we may receive payments, most typically under service and warranty contracts, at the onset of the contract and before services have been performed. In such instances, we record a deferred revenue liability in either Current liabilities or Other long-term liabilities. We recognize these contract liabilities as sales after all revenue recognition criteria are met.

The table below shows the balance of contract assets and liabilities as of June 30, 2026 and September 30, 2026, including the change between such dates. There were no substantial non-current contract assets for the periods presented.

Contract Assets (in thousands)

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Contract Liabilities (in thousands)

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Contract Assets. Unbilled revenue increased by $34.1 million primarily reflecting continued execution on certain Security Division contracts where we met the revenue recognition criteria under ASC 606 in advance of contractual billing milestones, partially offset by reductions for billings due to the timing and nature of achievement of milestones during the quarter giving us the right to invoice customers.

Contract Liabilities. Advances from customers increased by $21.7 million primarily due to the receipt of customer deposits on certain contracts in our Security division in advance of performance, partially offset by the application of certain amounts to customer invoices during the period. Total deferred revenue decreased by $1.7 million primarily due to recognition of service revenue for performance of obligations during the period, partially offset by service contracts which allow us to collect payment prior to performance of these obligations.

Remaining Performance Obligations. Remaining performance obligations related to ASC 606 represent the portion of the transaction price allocated to performance obligations under contracts which are fully or partially unsatisfied at the end of the period. As of September 30, 2026, the aggregate portion of the transaction price allocated to remaining performance obligations was approximately $2.0 billion. As of September 30, 2026, we expect to recognize revenue on approximately 64% of the remaining performance obligations over the next 12 months, and the remainder is expected to be recognized thereafter. During the three months ended September 30, 2026, we recognized revenue of $37.8 million from contract liabilities existing at the beginning of the period.

Practical Expedients. In cases where we are responsible for shipping after the customer has obtained control of the goods, we have elected to treat the shipping activities as fulfillment activities rather than as a separate performance obligation. Additionally, we have elected to capitalize the cost to obtain a contract only if the period of amortization would be longer than one year. We only give consideration to whether a customer agreement has a financing component if the period of time between transfer of goods and services and customer payment is greater than one year.