Mercury Systems reports record Q4 bookings, revenue and backlog

On Tuesday, Mercury Sys (NASDAQ: MRCY ) discussed fourth-quarter financial results during its earnings call.

The full transcript is provided below.

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View the webcast at Summary Mercury Systems reported record Q4 numbers, including bookings of $660 million, backlog over $1.9 billion, and revenue of $290 million, driven by strong demand signals and execution.

The company highlighted four strategic priorities: performance excellence, organic growth, margin expansion, and free cash flow, with significant progress noted in each area.

FY27 outlook includes organic growth expectations in the low double digits, adjusted EBITDA margin in the high teens, and free cash flow conversion approaching 35%.

Notable operational highlights include a strategic agreement with Palantir to leverage AI for material planning and factory operations, aiming to enhance backlog conversion.

Management emphasized strong domestic revenue growth of 13% and the transition of several development programs to higher-volume production, contributing to overall growth.

The company sees potential market tailwinds from increased defense budgets and anticipated higher demand across various programs but has not yet factored these into the outlook.

Q4 adjusted EBITDA was $49 million, with a margin of 16.7%, and free cash flow was $29 million, reflecting ongoing efficiency improvements and strong execution.

Full Transcript OPERATOR (Moderator) Good morning and welcome to the Mercury Sys fourth quarter fiscal 2026 conference call.

Today's call is being recorded.

At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Vice President of Investor Relations, Tyler Hojo.

Please go ahead, Mr.

Hojo.

Tyler Hojo, Vice President of Investor Relations Good afternoon and thank you for joining us.

With me today is our Chairman and Chief Executive Officer, Bill Ballhaus, and our Executive Vice President and CFO, Dave Farnsworth.

If you have not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our website at mrcy.com.

The slide presentation that we will be referencing is posted on the Investor Relations section of the website under Events and Presentations.

Turning to Slide 2 in the presentation, I'd like to remind you that today's presentation includes forward-looking statements, including information regarding Mercury Sys' financial outlook, future plans, objectives, business prospects, and anticipated financial performance.

These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially.

All forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2 in the earnings press release and the risk factors included in Mercury Sys' SEC filings.

We will also be providing fiscal year 28 reference points today, which, along with our target profile, should not be construed as financial guidance and speak only as of today.

They illustrate the financial profile the business could achieve based on the factors referenced above, including our ability to convert backlog to revenue and gain additional orders beyond current backlog.

These factors may materially affect whether we reach these reference points or target profile.

I'd also like to mention that in addition to reporting financial results in accordance with Generally Accepted Accounting Principles, or GAAP, during our call we will also discuss several non-GAAP financial measures, specifically Adjusted Income, Adjusted Earnings per Share, Adjusted EBITDA, and free cash flow.

A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release.

I'll now turn the call over to Mercury Sys' Chairman and CEO, Bill Ballhaus.

Please turn to Slide 3.

Bill Ballhaus, President and CEO Thanks, Tyler, good afternoon.

Thank you for joining our FY26 Q4 and full-year earnings call.

We delivered Q4 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.

Based on our solid execution and strong demand signals, we enter FY27 with enhanced visibility and are increasing our outlook for organic growth.

Today I'll cover three topics.

First, some introductory comments on our business and results.