Mercury Systems, Inc. (MRCY) Stock: Drops Sharply After Q4 Earnings Despite Record $290 Million Revenue 

TLDR

• Mercury Systems stock plunges after Q4 earnings despite record $290M revenue.
• MRCY drops 14.29% after hours as quarterly earnings weaken despite record sales.
• Mercury Systems posts record $660M bookings as backlog climbs above $1.9B.
• MRCY reports $290M quarterly revenue but adjusted EPS falls to $0.37.
• Mercury Systems raises its organic growth outlook after record fiscal Q4 demand.

Mercury Systems (MRCY) stock fell sharply after the defense technology company reported mixed fourth-quarter and fiscal 2026 results. Shares closed at $105.00, down 7.37%, before dropping another 14.29% to $90.00 after hours. The decline came despite record quarterly revenue, bookings, backlog, and stronger expectations for organic growth.

Mercury Systems, Inc., MRCY

Mercury Systems Posts Record $290 Million Q4 Revenue

Mercury Systems reported fourth-quarter fiscal 2026 revenue of $290 million, compared with $273 million one year earlier. Therefore, quarterly revenue increased 6.1% year over year and reached a company record. Total bookings also climbed to a record $660 million during the quarter.

Bookings increased 93% from the previous year and nearly doubled Mercury Systems’ previous quarterly record. As a result, the company recorded a quarterly book-to-bill ratio of 2.28. Strong orders also pushed total backlog above $1.9 billion at the fiscal year-end.

However, quarterly profitability weakened compared with the same period last year. GAAP net income fell to $1 million from $16 million, while diluted EPS declined to $0.01 from $0.27. Adjusted EPS also dropped to $0.37 from $0.47 during the same period.

Full-Year Revenue Rises as Earnings Improve

For fiscal 2026, Mercury Systems generated $984 million in revenue, up from $912 million in fiscal 2025. Meanwhile, total bookings reached $1.5 billion and produced a full-year book-to-bill ratio of 1.57. Adjusted EBITDA increased to $150 million from $119 million during the previous fiscal year.

The company also narrowed its annual GAAP net loss to $30 million from $38 million. Consequently, GAAP loss per share improved to $0.50 from a loss of $0.65 one year earlier. Adjusted EPS reached $1.06, reversing an adjusted loss of $0.64 per share in fiscal 2025.

Still, annual cash generation weakened despite the improved operating performance. Operating cash flow declined to $102 million from $139 million in fiscal 2025. Free cash flow also fell to $68 million from $119 million over the same period.

Record Backlog Supports Mercury Systems Fiscal 2027 Outlook

Mercury Systems ended fiscal 2026 with backlog exceeding $1.9 billion, strengthening revenue visibility entering the new fiscal year. The backlog increased by approximately $540 million compared with the previous year. Furthermore, about $1.0 billion should convert into revenue during the next 12 months.

Fourth-quarter operating cash flow reached $42 million, compared with $38 million in the prior-year period. However, quarterly free cash flow declined to $29 million from $34 million. Adjusted EBITDA also slipped to $49 million from $51 million despite higher quarterly revenue.

Mercury Systems enters fiscal 2027 with stronger demand signals and a larger order base across its defense technology operations. The company also increased its outlook for organic growth based on recent execution and demand trends. Nevertheless, MRCY stock’s after-hours drop followed weaker quarterly earnings and lower annual cash flow despite record revenue and backlog.

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