V2X, Inc.VVX
V2X, Inc. Revenue Disclosure
REVENUE
Remaining Performance Obligations
Remaining performance obligations represent firm orders by the customer and excludes potential orders under IDIQ contracts, unexercised contract options and contracts awarded to us that are being protested by competitors with the U.S. Government Accountability Office (GAO) or in the U.S. Court of Federal Claims (COFC) for which a stop work order has been received by the Company. The level of order activity related to programs can be affected by the timing of government funding authorizations and their project evaluation cycles. Year-over-year comparisons could, at times, be impacted by these factors, among others.
The Company's contracts are multi-year contracts and typically include an initial period of one year or less with annual one-year (or less) option periods. The number of option periods varies by contract, and there is no guarantee that an option period will be exercised. The right to exercise an option period is at the sole discretion of the U.S. government when we are the prime contractor or of the prime contractor when we are a subcontractor. We expect to recognize a substantial portion of our performance obligations as revenue within the next 12 months. However, the U.S. government or the prime contractor may cancel any contract at any time through a termination for convenience or for cause. Substantially all of our contracts have terms that would permit us to recover all or a portion of our incurred costs and fees for work performed in the event of a termination for convenience.
Remaining performance obligations as of December 31, 2025 and December 31, 2024 are presented in the following table:
| As of December 31, | ||||||||||||||
| (In millions) | 2025 | 2024 | ||||||||||||
| Performance Obligations | $ | 3,375 | $ | 3,483 | ||||||||||
As of December 31, 2025, we expect to recognize approximately 75% of the remaining performance obligations as revenue in 2026 and the majority of the remainder of the balance as revenue in 2027 and 2028.
Contract Estimates
The impact of adjustments in contract estimates on our operating income can be reflected in either revenue or cost of revenue. Cumulative adjustments for the years ended December 31, 2025, 2024 and 2023 increased operating income by $19.2 million, $24.8 million and $22.7 million, respectively.
For the years ended December 31, 2025, 2024, and 2023 the net adjustments to operating income increased revenue by $32.6 million, $29.1 million, and $38.1 million, respectively.
Revenue by Category
Generally, the sales price elements for our contracts are cost-plus, cost-reimbursable, firm-fixed-price and time-and-materials, all of which are commonly identified with a single contract. On a cost-plus contract, we are paid our allowable incurred costs plus a profit, which can be fixed or variable depending on the contract’s fee arrangement, up to funding levels predetermined by our customers.
On cost-plus contracts, we do not bear the risks of unexpected cost overruns, provided that we do not incur costs that exceed the predetermined funded amounts. Most of our cost-plus contracts also contain a firm-fixed-price element. Cost-plus contracts with award and incentive fee provisions are our primary variable contract fee arrangement. Award fees provide for a fee based on actual performance relative to contractually specified performance criteria. Incentive fees provide for a fee based on the relationship between total allowable and target cost.
Most of our contracts include a cost-reimbursable element to capture costs of consumable materials required for the program. Typically, these costs do not bear fees.
On a firm-fixed-price contract, we agree to perform the contractual statement of work for a predetermined contract price. A firm-fixed-price contract typically offers higher profit margin potential than a cost-plus contract, which is commensurate with the greater levels of risk we assume on a firm-fixed-price contract. Although a firm-fixed-price contract generally permits us to retain profits if the total actual contract costs are less than the estimated contract costs, we bear the risk that increased or unexpected costs may reduce our profit or cause us to sustain losses on the contract. Although the overall scope of work required under the contract may not change, profit may be adjusted as experience is gained and as efficiencies are realized or costs are incurred.
On a time-and-materials contract, we are reimbursed for labor at fixed hourly rates and generally reimbursed separately for allowable materials, costs and expenses at cost. For this contract type, we bear the risk that our labor costs and allocable indirect expenses are greater than the fixed hourly rate defined within the contract.
Revenue by contract type is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cost-plus and cost-reimbursable | $ | 2,744,753 | $ | 2,531,792 | $ | 2,209,241 | ||||||||||||||
| Firm-fixed-price | 1,609,027 | 1,675,603 | 1,626,262 | |||||||||||||||||
| Time-and-materials | 126,258 | 114,760 | 127,623 | |||||||||||||||||
| Total revenue | $ | 4,480,038 | $ | 4,322,155 | $ | 3,963,126 | ||||||||||||||
Revenue by geographic region in which the contract is performed is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| United States | $ | 2,609,257 | $ | 2,388,598 | $ | 2,286,052 | ||||||||||||||
| Middle East | 1,351,318 | 1,399,436 | 1,193,598 | |||||||||||||||||
| Asia | 313,024 | 326,961 | 264,346 | |||||||||||||||||
| Europe | 206,439 | 207,160 | 219,130 | |||||||||||||||||
| Total revenue | $ | 4,480,038 | $ | 4,322,155 | $ | 3,963,126 | ||||||||||||||
Revenue by contract relationship is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Prime contractor | $ | 4,239,080 | $ | 4,049,543 | $ | 3,726,199 | ||||||||||||||
| Subcontractor | 240,958 | 272,612 | 236,927 | |||||||||||||||||
| Total revenue | $ | 4,480,038 | $ | 4,322,155 | $ | 3,963,126 | ||||||||||||||
Revenue by customer is as follows:
| Year Ended December 31, | ||||||||||||||||||||
| (In thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Army | $ | 1,828,977 | $ | 1,837,843 | $ | 1,633,525 | ||||||||||||||
| Navy | 1,479,815 | 1,441,355 | 1,233,463 | |||||||||||||||||
| Air Force | 570,663 | 481,265 | 538,698 | |||||||||||||||||
| Other | 600,583 | 561,692 | 557,440 | |||||||||||||||||
| Total revenue | $ | 4,480,038 | $ | 4,322,155 | $ | 3,963,126 | ||||||||||||||
Contract Balances
The timing of revenue recognition, billings and cash collections results in billed and unbilled accounts receivable (contract assets) and customer advances and deposits (contract liabilities) on the Consolidated Balance Sheets. Amounts are billed as work progresses in accordance with agreed-upon contractual terms at periodic intervals (e.g., biweekly or monthly). Generally, billing occurs subsequent to revenue recognition, resulting in contract assets. However, we may receive advances or deposits from our customers, before revenue is recognized, resulting in contract liabilities. These advance billings and payments are not considered significant financing components because they are frequently intended to ensure that both parties are in conformance with the primary contract terms. These assets and liabilities are reported on the Consolidated Balance Sheets on a contract-by-contract basis at the end of each reporting period.
As of January 1, 2024, we had contract assets of $561.9 million. As of December 31, 2025 and 2024, we had contract assets of $637.2 million and $620.5 million, respectively. Contract assets primarily consist of unbilled receivables which represent rights to consideration for work completed but not billed as of the reporting date. The balance of unbilled receivables consists of costs and fees that are: (i) billable immediately; (ii) billable on contract completion; or (iii) billable upon other specified events, such as the resolution of a REA. Refer to Note 4, Receivables, for additional information regarding the composition of our receivables balances. As of January 1, 2024, we had contract liabilities of $109.6 million. As of December 31, 2025 and 2024, we had contract liabilities of $109.4 million and $98.7 million, respectively, included in other accrued liabilities in the Consolidated Balance Sheets.
About Revenue Disclosures
Revenue disclosures under ASC 606 explain how a company identifies performance obligations, allocates transaction prices, and determines when revenue is recognized. This section is essential for understanding whether reported revenue reflects genuine economic activity or aggressive accounting choices. Analysts examine the mix of point-in-time versus over-time recognition, which directly affects revenue timing and comparability.
Key signals: rising contract liabilities (deferred revenue) suggest strong future revenue visibility, while declining contract assets may indicate slowing project milestones. Watch for variable consideration estimates — rebates, returns, and performance bonuses that require management judgment. Significant changes in disaggregated revenue by geography or product line can reveal shifting business mix before it appears in headline numbers. Compare revenue growth against contract liability growth to assess sustainability, and scrutinize any changes in the timing of recognition that coincide with earnings pressure.