Mercury Systems (MRCY) investor relations material

Executive summary

• Q3 FY26 delivered record bookings of $348.3M, a book-to-bill ratio of 1.48, and backlog nearing $1.6B, reflecting robust organic growth and margin expansion year-over-year.

• Revenue reached $235.8M, up 11.5% organically year-over-year, with adjusted EBITDA of $36.1M (15.3% margin), up 46% year-over-year.

• Domestic revenue, comprising 88% of Q3 revenue, grew 17% year-over-year, driven by strong demand across missile, C4I, and space programs.

• GAAP net loss narrowed to $2.9M ($0.04/share) from $19M ($0.33/share) year-over-year.

• Free cash outflow was $2M, with cash and equivalents at quarter-end of $332M.

Financial highlights

• Q3 bookings reached $348.3M, up 74% year-over-year; backlog up 18% to $1.6B.

• Gross margin improved by 230 bps to 29.3% year-over-year.

• Adjusted EPS rose to $0.27 from $0.06 year-over-year.

• Adjusted EBITDA was $36M, up 46% year-over-year; adjusted EBITDA margin expanded to 15.3%, up 360 bps.

• Free cash flow was negative $2M for the quarter, compared to $24M in Q3 FY25.

Outlook and guidance

• FY26 revenue growth outlook raised to approach mid-single digits (from low single digits); full-year adjusted EBITDA margin expected in the mid-teens.

• Q4 bookings pipeline is more robust than Q3, with potential for strongest quarter of the year.

• Free cash flow expected to be positive in Q4 and for the full year.

• Approximately 50% of $859.8M in remaining performance obligations expected to be recognized as revenue in the next 12 months.

• Management expects sufficient liquidity for at least the next twelve months.