Mercury Systems Inc. reported fourth-quarter fiscal 2026 revenue of $289.8 million, a 6.1% organic increase from the prior year and 9.2% above the $265.4 million consensus estimate. The company attributed the gain to record bookings of $660 million, up 93.1% year-over-year, which pushed total backlog to $1.9 billion, a 38.4% increase.
Adjusted earnings per share fell to $0.37 from $0.47 a year earlier, missing the $0.39 forecast by 5.1%. Adjusted EBITDA totaled $49 million, with a margin of 16.7%, down from 18.8% in the same period last year. GAAP net income was $1 million, or $0.01 per share, compared with $16 million, or $0.27 per share, in the prior-year quarter.
Full-year fiscal 2026 revenue reached a record $984 million, up 7.9% organically, while adjusted EPS rose to $1.06 from $0.64. Adjusted EBITDA for the year was $150.6 million, with a margin of 15.3%, up 217 basis points year-over-year. Free cash flow declined to $29 million in the quarter and $68 million for the year, down from $34 million and $85 million, respectively.
Domestic revenue accounted for 85.8% of total sales, growing 13% year-over-year, while international revenue fell about 15% due to a shift to contract manufacturing. Net debt decreased 19.5% year-over-year to $227 million at quarter-end.
Mercury Systems set fiscal 2027 revenue guidance at approximately $1.1 billion, implying low-double-digit growth, with adjusted EBITDA expected to approach $200 million. The company guided full-year free cash flow conversion to about 35%, below its 50% target, as it invests in inventory and materials. Long-term targets include organic revenue growth in the low double digits and adjusted EBITDA margins in the low to mid-20s by fiscal 2027.
Chief Executive Officer Bill Ballhaus highlighted record bookings and backlog, stating the company’s visibility into fiscal 2027 and 2028 has improved. He also referenced a strategic agreement with Palantir to integrate AI software for material planning and factory operations.
Mercury Systems shares closed 7.37% lower at $105.00 in regular trading and fell an additional 10.57% in after-hours trading to $93.90.
