Mercury Systems (MRCY) Q2 2026 earnings summary

Executive summary

• Q2 FY26 delivered strong organic growth, margin expansion, and record backlog, with first-half revenue up 7.1% year-over-year and bookings of $288 million, up 18.6% year-over-year.

• Adjusted EBITDA for Q2 was $30 million, up 36.3% year-over-year, and adjusted EPS was $0.16, more than double the prior year.

• Net loss for Q2 was $15.1 million ($0.26 per share), improved from $17.6–$18 million loss last year.

• Streamlined operations, performance excellence initiatives, and key contract wins in missile defense, air mobility, and space supported results.

Financial highlights

• Q2 revenue reached $233 million, up 4.4% year-over-year; first half revenue up 7.1%.

• Adjusted EBITDA margin was 12.9% (up 300 bps); gross margin for Q2 was 26.0%, down 130 bps year-over-year.

• Free cash flow for Q2 was $46 million, down from $82 million prior year; cash and equivalents at $335 million.

• GAAP net loss per share was $0.26; adjusted EPS was $0.16.

• Q2 revenue growth driven by modules/sub-assemblies and components, offset by a decrease in integrated solutions.

Outlook and guidance

• FY26 guidance maintained: low single-digit annual revenue growth, adjusted EBITDA margin approaching mid-teens, and positive free cash flow.

• Q3 revenue expected to be down year-over-year due to Q2 delivery acceleration, with a ramp in Q4.

• Management expects existing cash, cash flow, and credit facilities to be sufficient for at least the next 12 months.

• Targeting above-market top-line growth, adjusted EBITDA margins in low to mid 20% range, and 50% free cash flow conversion over time.

• About 50% of $823.5 million in remaining performance obligations expected to be recognized as revenue in the next 12 months.