Mercury Systems — Fourth Quarter and Fiscal 2026 Earnings Summary

Financial Performance

• Q4 FY26 revenue was $290 million, up 6.1% year-over-year (YoY) compared to $273 million in Q4 FY25; full-year FY26 revenue was $984 million, up from $912 million in FY25.
• Q4 FY26 GAAP net income was $1 million ($0.01 per share), down from $16 million ($0.27 per share) in Q4 FY25; full-year FY26 GAAP net loss was $30 million ($0.50 per share), an improvement from a $38 million loss ($0.65 per share) in FY25.
• Q4 FY26 adjusted EPS was $0.37, down from $0.47 in Q4 FY25; full-year adjusted EPS was $1.06, up from an adjusted loss of $0.64 per share in FY25.
• Q4 FY26 adjusted EBITDA was $49 million (16.7% margin), down from $51 million in Q4 FY25; full-year adjusted EBITDA was $150 million, up from $119 million in FY25.
• Q4 FY26 operating cash flow was $42 million, up from $38 million in Q4 FY25; full-year operating cash flow was $102 million, down from $139 million in FY25.
• Q4 FY26 free cash flow was $29 million, down from $34 million in Q4 FY25; full-year free cash flow was $68 million, down from $119 million in FY25.
• Total backlog was over $1.9 billion at July 3, 2026, up 38.4% YoY; $1.0 billion of backlog is expected to be recognized as revenue within the next 12 months.
• Q4 FY26 bookings were $660 million, up 93.1% YoY, resulting in a book-to-bill ratio of 2.28; full-year bookings were $1.5 billion with a book-to-bill ratio of 1.57.
• Long-term debt decreased to $441.5 million at July 3, 2026, from $591.5 million at June 27, 2025.
• Deferred revenues and customer advances increased to $149.6 million at July 3, 2026, from $126.8 million at June 27, 2025.

Guidance and Future Outlook

• Management increased the outlook for organic growth for fiscal year 2027 based on solid execution and strong demand signals.
• Management stated the company enters fiscal year 2027 with enhanced visibility.

Business Segments and Product Lines

• No specific segment or product line performance data is detailed in the press release; the company is identified as a global leader in aerospace and defense electronics providing signal and data processing solutions.

Market and Competitive Landscape

• No specific market share, competitor names, or market trend data is provided in the press release.

Risks and Challenges

• Forward-looking statements identify risks including cost increases, production delays, inability to deliver products on time, and continued funding of defense programs.
• Risks include U.S. federal government shutdowns, geopolitical events, competition, technology changes, supply chain disruptions, component shortages, and inflation.
• Risks also include changes in export control rules, tariffs, cyber-security threats, litigation, and difficulties in retaining key employees.

Management Commentary and Tone

• Bill Ballhaus, Chairman and CEO, described Q4 FY26 results as ahead of expectations, citing record bookings, backlog, revenue, EBITDA margin, and robust free cash flow.
• Management expressed confidence in the company's execution and demand signals, leading to an increased outlook for organic growth.

Other Key Points

• The company sold manufacturing operations to Cicor Group, generating $6.2 million in proceeds in Q4 FY25 (no proceeds in Q4 FY26).
• The company paid $15.0 million for the retirement of common stock in full-year FY26.
• The company repaid $150.0 million under credit facilities in full-year FY26.
• Stock-based compensation expense was $14.8 million in Q4 FY26 and $57.1 million for full-year FY26.
• Litigation and settlement expenses were $1.8 million in Q4 FY26 and $13.5 million for full-year FY26.
• The company hosts a conference call and webcast on August 18, 2026, to discuss results and outlook.