Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
MERCURY SYSTEMS INC (MRCY) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results • Record Q4 FY26 Bookings of $660 million grew 93.1% year-over-year; book-to-bill of 2.28 • Record Backlog of over $1.9 billion; up 38.4% year-over-year • Record Q4 FY26 Revenue of a
How this was made
The 30-second read
Why it matters
Record bookings, a higher book-to-bill, and a larger backlog increase revenue visibility for FY27. Management also indicates it is increasing its outlook for organic growth, which can drive re-rating if investors believe demand is sustainable.
Market read
Traders can update models using the newly disclosed bookings, backlog, revenue, EBITDA margin, and free cash flow, and position ahead of the scheduled earnings call.
What to watch
Adjusted metrics (adjusted EBITDA, adjusted EPS) are emphasized; traders may focus on whether free cash flow durability and GAAP profitability improve in FY27.
Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
Record fourth-quarter bookings of $660 million, a 2.28 book-to-bill ratio, record backlog of over $1.9 billion, and record revenue of $290 million support a solid operating read. The result is tempered by lower fourth-quarter GAAP net income, adjusted EPS, adjusted EBITDA, and free cash flow versus the prior-year quarter.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Net revenues, fourth quarter fiscal 2026GAAP | $289.8M | – | up 6.1% year-over-year |
| Gross margin, fourth quarter fiscal 2026GAAP | $88.58M | – | – |
| Total operating expenses, fourth quarter fiscal 2026GAAP | $74.12M | – | – |
| Income from operations, fourth quarter fiscal 2026GAAP | $14.46M | – | – |
| Net income, fourth quarter fiscal 2026GAAP | $798K | – | – |
| Diluted earnings per share, fourth quarter fiscal 2026GAAP | $0.01 | – | – |
| Adjusted income, fourth quarter fiscal 2026non-GAAP | $22.75M | – | – |
| Adjusted earnings per share, fourth quarter fiscal 2026non-GAAP | $0.37 | – | – |
| Adjusted EBITDA, fourth quarter fiscal 2026non-GAAP | $48.52M | – | – |
| Adjusted EBITDA margin, fourth quarter fiscal 2026non-GAAP | 16.7% | – | – |
| Bookings, fourth quarter fiscal 2026other | $660M | – | grew 93.1% year-over-year |
| Book-to-bill ratio, fourth quarter fiscal 2026other | 2.28 | – | – |
| Cash flows provided by operating activities, fourth quarter fiscal 2026GAAP | $42.15M | – | – |
| Free cash flow, fourth quarter fiscal 2026non-GAAP | $28.57M | – | – |
| Net revenues, fiscal 2026GAAP | $983.6M | – | – |
| Gross margin, fiscal 2026GAAP | $281.2M | – | – |
| Total operating expenses, fiscal 2026GAAP | $280.9M | – | – |
| Income from operations, fiscal 2026GAAP | $280K | – | – |
| Net loss, fiscal 2026GAAP | −$29.67M | – | – |
| Diluted loss per share, fiscal 2026GAAP | $(0.50) | – | – |
| Adjusted income, fiscal 2026non-GAAP | $64.17M | – | – |
| Adjusted earnings per share, fiscal 2026non-GAAP | $1.06 | – | – |
| Adjusted EBITDA, fiscal 2026non-GAAP | $150.2M | – | – |
| Bookings, fiscal 2026other | $1.5B | – | – |
| Book-to-bill ratio, fiscal 2026other | 1.57 | – | – |
| Cash flows provided by operating activities, fiscal 2026GAAP | $102.4M | – | – |
| Free cash flow, fiscal 2026non-GAAP | $68.09M | – | – |
| Total backlog at July 3, 2026other | over $1.9 billion | – | up 38.4% year-over-year |
| Backlog expected to be recognized as revenue within the next 12 monthsother | $1B | – | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Payments for retirement of common stock were $(15,001) (in thousands) for fiscal 2026.
- Proceeds from employee stock plans were $2,690 (in thousands) in the fourth quarter of fiscal 2026 and $5,418 (in thousands) for fiscal 2026.
What drove it
- Fourth-quarter bookings of $660 million grew 93.1% year-over-year and produced a 2.28 book-to-bill ratio.
- Management cited solid execution and strong demand signals.
- The company reported record revenue of approximately $290 million and the highest EBITDA margin of the year.
- Backlog was over $1.9 billion at July 3, 2026, including $1.0 billion expected to be recognized as revenue within the next 12 months.
Concerns
- Fourth-quarter GAAP net income was $798 (in thousands), compared with $16,370 (in thousands) in the prior-year quarter.
- Fourth-quarter adjusted EPS was $0.37, compared with $0.47 in the prior-year quarter, and adjusted EBITDA was $48,518 (in thousands), compared with $51,269 (in thousands).
- Fiscal 2026 cash flows provided by operating activities were $102,388 (in thousands), compared with $138,851 (in thousands) in fiscal 2025, while free cash flow was $68,087 (in thousands), compared with $119,048 (in thousands).
- Fourth-quarter selling, general and administrative expense was $47,848 (in thousands), compared with $37,714 (in thousands) in the prior-year quarter. Stock-based compensation expense allocated to selling, general and administrative expense was $9,319 (in thousands), compared with $653 (in thousands).
- Fiscal 2026 remained a GAAP net-loss year, with a net loss of $(29,673) (in thousands).
What to watch
- Conversion of the over $1.9 billion backlog, including $1.0 billion expected to be recognized as revenue within the next 12 months.
- Whether record bookings and the 2.28 fourth-quarter book-to-bill ratio continue to support the company's stated outlook for organic growth.
- The progression of GAAP profitability following fourth-quarter income from operations of $14,465 (in thousands) and full-year income from operations of $280 (in thousands).
- Operating cash flow and free cash flow following fiscal-2026 capital expenditures of $34,301 (in thousands).
- Execution risks identified by the company, including production timing and quality, defense-program funding, supply chain volatility, manufacturing execution, and fixed-price service and system integration engagements.
Balance sheet and cash flow
- Cash and cash equivalents were $214,306 (in thousands) at July 3, 2026, compared with $309,099 (in thousands) at June 27, 2025.
- Long-term debt was $441,500 (in thousands) at July 3, 2026, compared with $591,500 (in thousands) at June 27, 2025.
- Inventory was $366,968 (in thousands) at July 3, 2026, compared with $332,920 (in thousands) at June 27, 2025.
- Accounts receivable, net were $69,222 (in thousands) at July 3, 2026, compared with $109,588 (in thousands) at June 27, 2025.
- Unbilled receivables and costs in excess of billings, net were $285,760 (in thousands) at July 3, 2026, compared with $278,475 (in thousands) at June 27, 2025.
- Deferred revenues and customer advances were $149,565 (in thousands) at July 3, 2026, compared with $126,797 (in thousands) at June 27, 2025.
- Capital expenditures for property and equipment were $13,588 (in thousands) in the fourth quarter and $34,301 (in thousands) for fiscal 2026.
- Payments under credit facilities were $(150,000) (in thousands) in the fourth quarter and fiscal 2026.
Analysis
Mercury closed fiscal 2026 with a record demand quarter. Fourth-quarter bookings were $660 million, up 93.1% year-over-year, and the 2.28 book-to-bill ratio lifted backlog to over $1.9 billion, up 38.4% year-over-year. The company reported that $1.0 billion of this backlog is expected to be recognized as revenue within the next 12 months, providing the clearest documented indicator of near-term revenue visibility.
Fourth-quarter revenue was a record $289,782 (in thousands), compared with $273,106 (in thousands) a year earlier. Gross margin was $88,583 (in thousands), while income from operations was $14,465 (in thousands), below $23,550 (in thousands) in the prior-year quarter. Selling, general and administrative expense increased to $47,848 (in thousands) from $37,714 (in thousands), and the company recorded $9,319 (in thousands) of stock-based compensation in that expense line versus $653 (in thousands) a year earlier.
Profitability was mixed across reported bases. GAAP net income was $798 (in thousands), or $0.01 per diluted share, versus $16,370 (in thousands), or $0.27 per diluted share, in the prior-year quarter. Adjusted EBITDA was $48,518 (in thousands), compared with $51,269 (in thousands), while adjusted EPS was $0.37 compared with $0.47. For fiscal 2026, adjusted EBITDA rose to $150,192 (in thousands) from $119,438 (in thousands), and adjusted EPS was $1.06, although the company recorded a GAAP net loss of $(29,673) (in thousands) for the year.
Cash generation improved year over year in the fourth quarter, with operating cash flow of $42,153 (in thousands) versus $38,075 (in thousands), but free cash flow was $28,565 (in thousands) versus $33,977 (in thousands) as property and equipment purchases rose to $13,588 (in thousands). For the full year, operating cash flow and free cash flow were below fiscal 2025. Cash and cash equivalents ended at $214,306 (in thousands), while long-term debt was $441,500 (in thousands), after $150,000 (in thousands) of payments under credit facilities and $(15,001) (in thousands) of payments for retirement of common stock.
Management said it is increasing its outlook for organic growth, but the release contains no quantitative fiscal-2027 guidance. The operating focus is therefore the conversion of elevated backlog into revenue, preservation of the reported 16.7% adjusted EBITDA margin, and improvement in GAAP earnings and annual free cash flow. The company also identified execution, quality, supply chain, customer funding, manufacturing capacity, and fixed-price program risks as factors that could affect future results.
Management, verbatim
We delivered fourth quarter fiscal 2026 results that were ahead of our expectations, with record bookings, record backlog, record revenue, the highest EBITDA margin of the year, and robust free cash flow.
Bill Ballhaus, Mercury’s Chairman and CEO
Based on our solid execution and strong demand signals, we enter fiscal year 2027 with enhanced visibility and are increasing our outlook for organic growth.
Bill Ballhaus, Mercury’s Chairman and CEO
Not in the filing
stated, not guessed- Quantitative fiscal 2027 revenue guidance
- Quantitative fiscal 2027 gross-margin guidance
- Quantitative fiscal 2027 operating-expense guidance
- Quantitative fiscal 2027 tax-rate guidance
- Quantitative fiscal 2027 adjusted EBITDA, EPS, operating cash flow, or free-cash-flow guidance
- Previous-quarter outlook for comparison
- Revenue by operating segment
- Segment growth rates and segment drivers
- Reported GAAP or non-GAAP gross-margin percentage
- Dividend information
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This SEC 8-K includes Mercury Systems’ Q4 and fiscal year 2026 results and related exhibit 99.1, with non-GAAP measures and conference call details.
Ticker impact
Mercury Systems reported record FY26 bookings of $1.5B, record backlog over $1.9B, and Q4 revenue of about $290M.
Likely positive bias for the stock as traders price improved visibility into FY27 organic growth.
The filing provides multiple fresh, company-specific datapoints (bookings, backlog, revenue, EBITDA margin, free cash flow) and states management is increasing its outlook for organic growth.
Market effects
Defense and aerospace electronics peers may see read-across demand optimism if bookings and backlog strength is viewed as sector-wide.
Limited, as the disclosure is company-specific with no stated regional policy or procurement changes.
Moderate, since defense electronics demand signals can influence broader government spending expectations, but no new geopolitical trigger is cited.
Counterpoint
Despite record bookings and backlog, GAAP results remain weak (FY26 GAAP net loss), so the market may discount quality of earnings and cash conversion.
Key entities
- companyMercury Systems, Inc.
NASDAQ-listed defense and aerospace electronics provider reporting Q4 and FY26 results and outlook.
- executiveBill Ballhaus
Chairman and CEO quoted on record bookings/backlog and increased FY27 organic growth outlook.
