Mercury Systems (MRCY) Q4 2025 earnings summary

Executive summary

• Achieved record Q4 bookings of $342 million and a book-to-bill ratio of 1.25, driving backlog to $1.4 billion, up 6% year-over-year.

• Q4 revenue reached $273.1 million, up 9.9% year-over-year; full-year revenue was $912 million, up 9.2% year-over-year.

• Q4 adjusted EBITDA was $51.3 million (18.8% margin); full-year adjusted EBITDA was $119.4 million (13.1% margin), both up substantially year-over-year.

• Record free cash flow of $119 million for FY25, with Q4 free cash flow at $34 million; ended Q4 with $309 million in cash.

• Operating expenses and net working capital significantly reduced, supporting improved margins and cash generation.

Financial highlights

• Q4 adjusted EPS was $0.47, up 104% year-over-year; full-year adjusted EPS was $0.64, compared to a loss of $0.69 last year.

• Q4 GAAP net income was $16.4 million ($0.27 EPS) versus a net loss of $10.8 million prior year; full-year GAAP net loss narrowed to $37.9 million from $137.6 million.

• Q4 gross margin was 31%, up 160 bps year-over-year; full-year gross margin was 27.9%, up 440 bps.

• Q4 operating cash flow was $38.1 million; full-year operating cash flow was $138.9 million, more than double the prior year.

• Net working capital reduced by $90 million year-over-year in Q4; net debt at $282 million, lowest since Q1 FY22.

Outlook and guidance

• FY2026 expected to show low single-digit annual revenue growth, with first half flat and second half increasing sequentially.

• Full-year adjusted EBITDA margin expected to approach mid-teens, with margin expansion in the second half.

• Free cash flow expected to remain positive, with stronger performance in the second half.

• Target profile includes above-market top-line growth, adjusted EBITDA margins in low to mid 20% range, and FCF conversion of 50%.

• No specific FY2026 guidance provided due to ongoing assessment of delivery accelerations and market opportunities.