Mercury Systems — First Quarter Fiscal 2027 Earnings Summary

Financial Performance:

• Revenue for Q1 FY27 was $253 million, a 12.4% increase year-over-year compared to $225 million in Q1 FY26.
• GAAP net income was $13 million ($0.21 per diluted share), reversing a GAAP net loss of $13 million ($0.21 per share) in Q1 FY26.
• Adjusted EBITDA was $56 million, a 58.6% increase year-over-year from $36 million in Q1 FY26, with an adjusted EBITDA margin of 22.3%.
• Adjusted EPS was $0.52 per share, up from $0.26 per share in Q1 FY26.
• Cash flows used in operating activities were $14 million, compared to $2 million provided in Q1 FY26.
• Free cash flow was a $24 million outflow, compared to a $4 million outflow in Q1 FY26.
• Net debt was $232 million, down 19% year-over-year.
• Gross margin was $89.2 million, compared to $62.9 million in Q1 FY26.
• Total operating expenses were $70.7 million, down from $71.5 million in Q1 FY26.
• Income from operations was $18.5 million, compared to a loss from operations of $8.6 million in Q1 FY26.

Guidance and Future Outlook:

• Management raised its outlook for fiscal year 2027 based on solid execution and record bookings.
• Bookings for Q1 FY27 were $370 million, a 48.0% increase year-over-year.
• Book-to-bill ratio for Q1 FY27 was 1.46.
• Total backlog approached $2.1 billion, an increase of approximately $637 million (44.7%) year-over-year.
• Over $1.0 billion of the total backlog represents orders expected to be recognized as revenue within the next 12 months.

Business Segments and Product Lines:

• The press release does not provide specific financial performance data broken down by individual business segments or product lines.
• The company describes itself as a global leader in aerospace and defense electronics, providing signal and data processing capabilities.

Market and Competitive Landscape:

• The press release does not contain specific data regarding market share, specific competitors, or detailed market trend analysis beyond general references to robust organic growth.

Risks and Challenges:

• Forward-looking statements identify risks including cost increases, inability to increase production, delays in delivery, and funding of defense programs.
• Risks include geopolitical events, U.S. government shutdowns, supply chain disruptions, component shortages, and inflation.
• Potential risks involve changes in export control rules, tariffs, cyber threats, and litigation costs.
• Risks also include failure to achieve manufacturing quality certifications, integration challenges from acquisitions, and shareholder activism.

Management Commentary and Tone:

• Bill Ballhaus, Chairman and CEO, stated the company delivered "strong first quarter fiscal 2027 results" with record bookings, revenue, adjusted EBITDA, and backlog.
• Management noted that results reflect "robust organic growth and margins that are in-line with our target profile."
• Dave Farnsworth's title was formalized as Chief Financial Officer and Chief Operating Officer.

Other Key Points:

• On November 10, 2026, Mercury formalized Dave Farnsworth's role as Chief Operating Officer in addition to his responsibilities as Chief Financial Officer.
• A conference call and webcast were scheduled for November 10, 2026, at 5:00 p.m. ET to discuss results and outlook.
• The company utilizes non-GAAP measures including Adjusted EBITDA, Adjusted Income, Adjusted EPS, and Free Cash Flow to evaluate performance.
• The company maintains a "Mercury Processing Platform" built on technologies developed and acquired over 40 years.