Stock-Based Compensation and Equity Grants

6 Months Ended

Mar. 31, 2026

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation and Equity Grants

Stock-Based Compensation and Equity Grants

Stock-based compensation expense

Options issued under equity incentive plans were designated as either an incentive stock or a non-statutory stock option. No option was granted with a term of more than 10 years from the date of grant. Exercisability of option awards may depend on achievement of certain performance measures determined by the Compensation Committee of our Board. Shares issued upon option exercise are newly issued shares. As of March 31, 2026, there were 1.0 million shares available for grant under the 2025 Plan.

Stock-based compensation expense shown in the table below, is recorded in general and administrative expenses in our consolidated statements of operations as follows (in thousands):

	Three Months Ended				Six Months Ended
	March 31,				March 31,
	2026		2025		2026		2025
DLH employees (a)	$	520	$	402	$	1,071	$	416
Non-employee directors	97		130		193		309
Total stock compensation expense	$	617	$	532	$	1,264	$	725

(a) Included in this amount are equity grants of restricted stock units ("RSU") to Executive Officers, which were issued in accordance with the DLH long-term incentive compensation policy in this fiscal year, and stock option grants to employees during prior fiscal years. The RSUs issued and outstanding totaled 959,582 and 697,384 shares at March 31, 2026 and 2025, respectively.

No grants were awarded during the three months ended March 31, 2026 and 2025.

During the six months ended March 31, 2026 and 2025, the Company granted 427,046 and 312,906 shares of restricted stock units, respectively. Of the RSUs granted during the six months ended March 31, 2026, 380,338 shares have performance and market based vesting criteria and the remaining 46,708 shares have service-based vesting criteria. Of the RSUs granted during the six months ended March 31, 2025, 156,453 shares have performance and market based vesting criteria and the remaining 156,453 shares have service-based vesting criteria.

The RSUs granted were valued using the Monte Carlo Method, and will be amortized over the 3-year measurement period.

				Volatility
				50%
Grant Date	Vesting Base	Vesting Criteria	(Years)	Fair Value
December 17, 2025	Revenue	Revenue increase at the end of the performance period as compared to the year ended September 30, 2028	3	$	1.38
December 17, 2025	Stock price	Stock price is at least $12.62 per share average for the 30 days prior to the end of the performance period	3	$	1.74
December 20, 2024	Revenue	Revenue increase at the end of the performance period as compared to the year ended September 30, 2027	3	$	0.65
December 20, 2024	Stock price	Stock price is at least $23.04 per share average for the 30 days prior to the end of the performance period	3	$	1.67
Notes:
Results based on 100,000 simulations

(b) Equity grants of RSUs were made in accordance with DLH compensation policy for non-employee directors and a total of 67,615 and 61,525 restricted stock units were issued and outstanding at March 31, 2026 and 2025, respectively. These grants have service-based vesting criteria and vest at the end of this fiscal year.

Unrecognized stock-based compensation expense

Unrecognized stock-based compensation expense is presented in the table below (in thousands):

	March 31,
	2026		2025
Unrecognized expense for DLH employees (a)	$	3,955	$	4,567
Unrecognized expense for non-employee directors	193		309
Total unrecognized expense	$	4,148	$	4,876

(a) On a weighted average basis, the unrecognized expense as of March 31, 2026 is expected to be recognized within the next 2.67 years.

Restricted stock unit activity for the six months ended March 31, 2026

	Performance Vesting	Service Vesting	Total
Outstanding, September 30, 2025	232,461	232,460	464,921
Granted	380,338	114,323	494,661
Vested	—	—	—
Cancelled	—	—	—
Outstanding, March 31, 2026	612,799	346,783	959,582

Stock option activity for the six months ended March 31, 2026

The aggregate intrinsic value in the table below represents the total pretax intrinsic value (i.e., the difference between the Company’s closing stock price on the last trading day of the period and the exercise price, times the number of shares) that would have been received by the option holders had all option holders exercised their in the money options on those dates. This amount will change based on the fair market value of the Company’s stock. A summary of the Company's stock option awards is as follows:

				(in years)
				Weighted
		Weighted		Average	(in thousands)
	(in thousands)	Average		Remaining	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
Options outstanding, September 30, 2025	937	$	9.65	5.6	$	10
Granted	250	—		—	—
Exercised	—	—		—	—
Cancelled	(12)	11.66		—	—
Options outstanding, March 31, 2026	1,175	$	8.82	6.1	$	14
Vested and exercisable, March 31, 2026	890	$	9.56	5.0	$	14

Stock option shares outstanding, vested and unvested balance as follows (in thousands):

	March 31,	September 30,
	2026	2025
Vested and exercisable	890	902
Unvested (a)	285	35
Options outstanding	1,175	937

(a) Certain awards vest upon satisfaction of certain performance criteria.