HawkEye 360, Inc.

We focus on a variety of key performance indicators and non-GAAP financial measures to plan, measure and evaluate our business and financial performance, identify key trends affecting our business, inform our strategic business decisions, and develop operational goals for managing our business.

We believe that these key performance indicators and non-GAAP financial measures provide useful information to investors and others by allowing for transparency with respect to key metrics used by management in our financial and operational decision-making. These metrics may be used by investors in understanding and evaluating our operating results and enhancing the overall understanding of our past performance and future prospects. Our calculation of key performance indicators and non-GAAP financial measures may be different than or otherwise not comparable to similarly named metrics used by other companies.

The following table presents a summary of our key performance indicators and non-GAAP financial measures for the three and six months ended June 30, 2026 and 2025.

(1)Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. For definitions of Adjusted EBITDA and Free Cash Flow, as well as reconciliations to their most directly comparable financial measures calculated and presented in accordance with U.S. GAAP, please see “—Non-GAAP Financial Measures” below.

(1)See “—Backlog” above for more information on backlog.

Non-GAAP Financial Measures

In addition to the financial information prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), we provide non-GAAP financial measures. We define Adjusted EBITDA as net income (loss) before interest income, interest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses that are not considered part of the Company's operations and revenue-generating activities, or are nonrecurring or infrequent in nature. Management believes these items are not useful in evaluating our core operating performance. These items include, but are not limited to, stock-based compensation expense; acquisition-related costs, one-time costs related to the IPO, settlements, net of related legal expenses, changes in fair value of contingent and deferred consideration, changes in fair value of warrant liabilities, and gains or losses on extinguishment of debt. We define Free Cash Flow as net cash provided by (used in) operating activities less purchases of satellites, property, and equipment.

We use Adjusted EBITDA and Free Cash Flow in conjunction with other GAAP measures to evaluate the effectiveness of our business strategies, make strategic decisions, and communicate with our board of directors and investors concerning our financial performance. We use these non-GAAP financial measures to assess our financial performance because they allow us to compare our operating performance on a consistent basis across periods by removing the effects of our capital structure (such as varying levels of interest expense and income), asset base (such as depreciation and capital expenditures) and other items (such as non-recurring or non-cash costs) that impact the comparability of financial results from period to period.

We believe that the presentation of these non-GAAP financial measures will provide useful information to investors and analysts in assessing our financial performance and results of operations across reporting periods by excluding items we do not believe are indicative of our core operating performance. Net income (loss) is the U.S. GAAP measure most directly comparable to Adjusted EBITDA. Net cash provided by (used in) operating activities is the U.S. GAAP measure most directly comparable to Free Cash Flow. Our non-GAAP financial measures should not be considered as an alternative to the most directly comparable U.S. GAAP financial measure. You are encouraged to evaluate each of these adjustments and the reasons management considers them appropriate for supplemental analysis.

In evaluating Adjusted EBITDA and Free Cash Flow, you should be aware that in the future we may incur expenses that are the same as or similar to some of the adjustments in such presentation. Our presentation of these non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. There can be no assurance that we will not modify the presentation of Adjusted EBITDA and Free Cash Flow in the future, and any such modification may be material. Adjusted EBITDA and Free Cash Flow have important limitations as analytical tools, and you should not consider these non-GAAP financial measures in isolation or as a substitute for analysis of our operating results as reported under U.S. GAAP. Adjusted EBITDA and Free Cash Flow may be defined differently by other companies in our industry and may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA

The following table presents a reconciliation of Net Income (loss), the most directly comparable financial measure presented in accordance with U.S. GAAP, to Adjusted EBITDA:

(1)Represents costs for legal, advisory fees and other costs incurred in connection with the December 2025 ISA Acquisition. Refer to Note 3 of the accompanying notes to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

(2)Represents costs incurred related to the IPO that do not meet the direct and incremental criteria per SEC Staff Accounting Bulletin Topic 5.A to be netted against the gross proceeds of the offering and that are not expected to recur in the future.

(3)Represents costs for legal fees and settlement related to litigation initiated by us against a third party, which are not part of our ordinary legal expenses and not reflective of our core operating performance.

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure. We believe that Free Cash Flow is a meaningful indicator of liquidity that provides information to management and investors about the amount of cash generated from or used in operations that, after purchases of property, and equipment, can be used for strategic initiatives, including continuous investment in our business and strengthening our balance sheet.

Free Cash Flow has limitations as a liquidity measure, and you should not consider it in isolation or as a substitute for analysis of our cash flows as reported under U.S. GAAP. Free Cash Flow may be affected in the near to medium term by the timing of capital investments, fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle.

The following table presents a reconciliation of net cash (used in) provided by operating activities, the most directly comparable financial measure presented in accordance with U.S. GAAP, to Free Cash Flow:

Components of Results of Operations

Revenue

We generate revenue primarily from fixed price contract arrangements for RF signal mapping products that are used to analyze and track radio waves, and from signal processing technologies and services. In addition, we generate revenue from long-term contracts to provide engineering services, systems integration and mission support, which are executed under cost-plus-award-fee, cost-plus-fixed-fee, firm fixed-price, time-and-materials and cost-reimbursement arrangements.

For the three and six months ended June 30, 2026, fixed price contract arrangements accounted for over 78% of our revenue. We also sell archived data to our customers upon request as well as data on a subscription basis. Additionally, we have reseller arrangements with our distribution partners. Revenue under resell arrangements is generally recognized net of any reseller discounts, as the reseller is considered our customer, when the products are delivered to the reseller, provided all other revenue recognition criteria are met. The agreements can be single year or multiyear and often contain minimum commitments by year. For agreements that call for upfront payments of the minimum commitments, revenue is deferred until a sale of our product occurs.

We address our customers’ needs through the delivery of data and analytics that provide intelligence across the following applications: Maritime Intelligence, Military Radar Monitoring, GNSS Jamming Detection, Communications Mapping, and Spectrum Exploitation through the collection and delivery of data. The data delivered may be unprocessed or processed depending on the client’s needs. For arrangements where the performance obligation is the collection and delivery of data, revenue is recognized at a point-in-time as data is delivered to the customer.

Services provided to the customer may also include professional services, which include on-site data analytics support, studies, trainings services, and other general support services. Professional services revenue including on-site data analytics support and studies are recognized over time.

Contracts are executed under Federal Acquisition Regulation (“FAR”) and include cost-plus-award-fee, cost-plus-fixed-fee, firm fixed-price, time-and-materials and cost-reimbursement arrangements.

Direct cost of sales, excluding depreciation and amortization

Cost of sales primarily includes employee-related costs for personnel involved in the execution of customer contracts, such as salaries, benefits, bonuses, and stock-based compensation. To a lesser extent, cost of sales includes travel and accommodation costs, certain storage and computing expenses, and costs from professional services, including costs paid to subcontractors, solution partners and certain third-party fees which directly relate to revenue generating contracts.

Indirect cost of sales, excluding depreciation and amortization

Indirect cost of sales includes expenses such as indirect travel, allocated indirect fringe costs and other expenses and departmental costs that are related to the fulfillment of contract performance obligations but are not directly attributable to a single revenue-related contract. For certain governmental contracts that are governed by Cost Accounting Standards (“CAS”) requirements, these costs are considered expenses which are allowable and included in our total estimated contract costs.

Selling, general and administrative expenses primarily consist of employee-related costs including salaries, stock-based compensation, and benefits for legal, finance, information technology, sales, and human resources staff which are otherwise not allocated to indirect cost of sales for our CAS contracts. Expenses also consist of consultant expenses, sales commissions, costs associated with professional services, marketing events, and office occupancy-related costs.

We expect selling, general and administrative expenses to increase in the future as we incur additional costs associated with operating as a public company, including increased expenses related to legal, audit, accounting, regulatory, and tax-related services associated with maintaining compliance with exchange listing and Securities and Exchange Commission ("SEC") requirements, director and officer insurance costs, investor and public relations costs, and other administrative and professional services.

Research and development costs consist of hardware and software research and development including designing, developing, and testing new satellite and sensor technology and data science modeling and algorithm development related to our platform. Our research and development expenses consist of employees’ salaries, taxes and benefits, consultant expenses, certain software and storage expenses, and materials and supplies which are otherwise not allocated to indirect cost of sales for our CAS contracts.

Depreciation and amortization costs include the depreciation of satellites, machinery, and equipment, as well as the amortization of finite-lived licenses and patents, trade names, and customer relationships and developed technology.

Interest income primarily relates to interest earned on cash and cash equivalents.

Interest expense consists of charges on the 2025 Loans through the date they were paid off, as well as the amortization of debt issuance costs and discounts related to those loans. In addition, interest expense includes recurring commitment fees under the 2026 Credit Facility and the amortization of debt issuance costs associated with that facility (see Note 7 - Debt). Unamortized debt issuance costs and discounts related to the 2025 Loans were written off at the time the loans were paid off and recorded to Loss from Extinguishment of Debt. The remaining unamortized debt issuance costs that are associated with the 2026 Credit Facility are amortized over the life of the facility using the straight-line method.

Other income, net

Other non-operating income, net primarily includes adjustments to fair value associated with the ISAcontingent consideration, bank warrants and at-the-money warrants, and the ISA deferred consideration as described in Note 17 - Fair Value Measurements.

Income tax benefit (expense)

Income tax benefit (expense) consists of federal and certain state income taxes in the United States and income taxes in certain foreign jurisdictions. We account for income taxes using the asset and liability method, whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in laws and rates on the date of enactment.

The expense for income tax was $0.3 million (-2.0%) and $0.3 million (-1.1%) for the three and six months ended June 30, 2026, respectively. There was no income tax expense for the three and six months ended June 30, 2025, respectively. The increase in income tax expense was primarily related to changes in valuation allowance, non-deductible stock-based compensation expenses, and state income taxes. The Company’s effective tax rate for the three and six months ended June 30, 2026 differed from the U.S. statutory rate of 21% primarily due to changes in valuation allowance, non-deductible stock-based compensation expenses, and state income taxes. The Company’s effective tax rate for the three and six months ended June 30, 2025 differed from the U.S. statutory rate of 21% primarily due to changes in valuation allowance