We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Mercury Systems Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Read MoreHide Full Article
Key Takeaways
MRCY reported $288M in fiscal Q2 bookings, delivering a solid 1.23 book-to-bill ratio for the quarter.
MRCY achieved a record $1.5B backlog, up 8.8% year over year, reflecting sustained order momentum.
MRCY boosted adjusted EBITDA 36.3% year over year and generated $45.7M in free cash flow.
Mercury Systems (MRCY - Free Report) reported adjusted earnings of 16 cents per share for the second quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 128.6%. The bottom line increased significantly year over year from 7 cents per share in the prior year quarter.
In the fiscal second quarter, MRCY reported revenues of $232.87 million, reflecting a 4.4% year-over-year increase and surpassing the Zacks Consensus Estimate by 12.29%.
Mercury Systems Inc Price, Consensus and EPS Surprise
Total bookings for the second quarter of fiscal 2026 were $288 million, yielding a book-to-bill ratio of 1.23 for the quarter. As a defense technology company focused on mission-critical processing systems, Mercury Systems operates primarily as a single-segment business serving aerospace and defense markets.
MRCY achieved a record backlog of $1.5 billion, up 8.8% year over year.
MRCY's Q2 Operating Details
Second-quarter fiscal 2026 adjusted EBITDA was $30 million compared to $22 million for the second quarter of fiscal 2025, representing a 36.3% year-over-year increase. The adjusted EBITDA margin was 12.9%, representing an improvement year over year. GAAP net loss and diluted loss per share for the second quarter of fiscal 2026 were $15.1 million and 26 cents, respectively, compared to GAAP net loss and loss per share of $17.6 million and 30 cents, respectively, for the second quarter of fiscal 2025.
Balance Sheet & Cash Flow
As of Dec. 26, 2025, cash and cash equivalents totaled $335 million, which increased from $304.7 million as of Sept. 26, 2025. Long-term debt was $591.5 million, unchanged from the prior quarter. In the reported quarter, cash flow from operations was $51.6 million compared with $2.2 million in the prior quarter. In the second quarter of fiscal 2026, free cash flow was $45.7 million compared to negative $4.4 million for the first quarter of fiscal 2026.
MRCY Maintains Fiscal 2026 Outlook
Mercury maintains its full-year fiscal 2026 outlook, expecting low single-digit annual revenue growth and adjusted EBITDA margin approaching mid-teens. The company continues to anticipate positive free cash flow for the year. The company expects fiscal third-quarter revenues to be down year over year, excluding any additional accelerations, followed by a ramp in the fiscal fourth quarter. Third quarter adjusted EBITDA margin is expected to approach double digits as the company converts low-margin backlog, while fourth quarter adjusted EBITDA margin is expected to be the highest of the fiscal year.
View the Zacks #1 Rank List
Image: Bigstock
Mercury Systems Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Key Takeaways
Mercury Systems (MRCY - Free Report) reported adjusted earnings of 16 cents per share for the second quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 128.6%. The bottom line increased significantly year over year from 7 cents per share in the prior year quarter.
In the fiscal second quarter, MRCY reported revenues of $232.87 million, reflecting a 4.4% year-over-year increase and surpassing the Zacks Consensus Estimate by 12.29%.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote
MRCY's Q2 Details
Total bookings for the second quarter of fiscal 2026 were $288 million, yielding a book-to-bill ratio of 1.23 for the quarter. As a defense technology company focused on mission-critical processing systems, Mercury Systems operates primarily as a single-segment business serving aerospace and defense markets.
MRCY achieved a record backlog of $1.5 billion, up 8.8% year over year.
MRCY's Q2 Operating Details
Second-quarter fiscal 2026 adjusted EBITDA was $30 million compared to $22 million for the second quarter of fiscal 2025, representing a 36.3% year-over-year increase. The adjusted EBITDA margin was 12.9%, representing an improvement year over year. GAAP net loss and diluted loss per share for the second quarter of fiscal 2026 were $15.1 million and 26 cents, respectively, compared to GAAP net loss and loss per share of $17.6 million and 30 cents, respectively, for the second quarter of fiscal 2025.
Balance Sheet & Cash Flow
As of Dec. 26, 2025, cash and cash equivalents totaled $335 million, which increased from $304.7 million as of Sept. 26, 2025. Long-term debt was $591.5 million, unchanged from the prior quarter. In the reported quarter, cash flow from operations was $51.6 million compared with $2.2 million in the prior quarter. In the second quarter of fiscal 2026, free cash flow was $45.7 million compared to negative $4.4 million for the first quarter of fiscal 2026.
MRCY Maintains Fiscal 2026 Outlook
Mercury maintains its full-year fiscal 2026 outlook, expecting low single-digit annual revenue growth and adjusted EBITDA margin approaching mid-teens. The company continues to anticipate positive free cash flow for the year. The company expects fiscal third-quarter revenues to be down year over year, excluding any additional accelerations, followed by a ramp in the fiscal fourth quarter. Third quarter adjusted EBITDA margin is expected to approach double digits as the company converts low-margin backlog, while fourth quarter adjusted EBITDA margin is expected to be the highest of the fiscal year.
Zacks Rank & Stocks to Consider
MRCY currently carries a Zacks Rank #4 (Sell).
CAE (CAE - Free Report) , Innovative Solution (ISSC - Free Report) and Bae Systems (BAESY - Free Report) are some better-ranked stocks that investors can consider in the broader Aerospace sector.
While Innovative Solution sports a Zacks Rank #1 (Strong Buy), CAE and Bae Systems carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
CAE and Innovation Solutions are set to report their upcoming results on Feb. 12. Bae Systems is slated to report its upcoming results on Feb. 18.