Mercury Systems (MRCY) Q3 2025 earnings summary

Executive summary

• Q3 FY25 revenue reached $211.4 million, up 1.5% year-over-year, with year-to-date revenue growth of 8.9%.

• Backlog increased 4% year-over-year to $1.34 billion, with a trailing twelve-month book-to-bill ratio of 1.1.

• Adjusted EBITDA was $24.7 million (11.7% margin), up from $(2.4) million last year; adjusted EPS improved to $0.06 from $(0.26).

• Free cash flow for Q3 was $24.1 million, a $50 million improvement year-over-year.

• Net loss for Q3 narrowed to $19.2 million from $44.6 million last year, aided by cost controls and workforce reductions.

Financial highlights

• Q3 FY25 revenue: $211.4 million; nine-month revenue: $638.9 million.

• Q3 FY25 gross margin: 27.0% (up 750 bps year-over-year); nine-month gross margin: 26.6%.

• Q3 FY25 adjusted EBITDA: $24.7 million; nine-month adjusted EBITDA: $68.2 million.

• Q3 FY25 adjusted EPS: $0.06; nine-month adjusted EPS: $0.17.

• Cash and equivalents at quarter-end: $269.8 million; net debt at $322 million, lowest since Q1 FY22.

Outlook and guidance

• FY25 revenue growth expected to approach mid-single digits year-over-year.

• Q4 adjusted EBITDA margin anticipated to be the highest of the year, approaching mid-teens.

• Full-year free cash flow projected above prior expectations, with $85 million generated year-to-date.

• No specific FY26 guidance yet; commentary to be provided next quarter.

• Management expects existing cash, revolver, and operations to cover anticipated needs for at least the next 12 months.