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Mercury Systems (MRCY - Free Report) reported adjusted earnings of 27 cents per share for the third quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 350%. The bottom line increased significantly year over year from 6 cents in the prior-year quarter.
In the fiscal third quarter, MRCY reported revenues of $236 million, reflecting an 11.5% organic year-over-year increase and surpassing the Zacks Consensus Estimate by 12.06%.
Fiscal third-quarter results were ahead of management's expectations, with significant year-over-year growth in backlog, revenues and adjusted EBITDA, driven by strong demand signals and solid execution.
Mercury Systems Inc Price, Consensus and EPS Surprise
Total bookings for the third quarter of fiscal 2026 were a record $348 million, up 73.7% year over year, yielding a book-to-bill ratio of 1.48. 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. Third-quarter bookings were driven largely by follow-on production orders, reflecting the company's transition toward higher-rate production. The largest bookings spanned several missile, C4I and space programs, and the quarter featured the strongest bookings of the fiscal year for solutions leveraging Mercury's Common Processing Architecture. The company also secured a follow-on development award on a strategic program with potential to proliferate across multiple platforms.
MRCY achieved a record total backlog of approximately $1.6 billion as of March 27, 2026, up 17.9% (an approximately $240 million increase) year over year. Of the total backlog, $891 million represents orders expected to be recognized as revenues within the next 12 months. The 12-month backlog also increased 10.3% sequentially. Trailing 12-month bookings reached a record $1.23 billion.
MRCY's Q3 Operating Details
Third-quarter fiscal 2026 adjusted EBITDA was $36 million, up 46.2% from $25 million in the third quarter of fiscal 2025. The adjusted EBITDA margin was 15.3%, expanding 360 basis points year over year. GAAP net loss and diluted loss per share for the third quarter of fiscal 2026 were $3 million and 4 cents, respectively, compared with GAAP net loss and loss per share of $19 million and 33 cents, respectively, for the third quarter of fiscal 2025.
MRCY’s Q3 Balance Sheet & Cash Flow
As of March 27, 2026, cash and cash equivalents totaled $331.8 million compared with $335 million as of Dec. 26, 2025. Long-term debt was $591.5 million, unchanged from the prior quarter. In the reported quarter, cash flow from operations was $6.4 million compared with $30 million in the third quarter of fiscal 2025. Free cash outflow was $2 million in the third quarter of fiscal 2026 compared with free cash flow of $24 million in the prior-year quarter. The fiscal third-quarter free cash outflow meaningfully outperformed the company's expectations, which had reflected the pull-forward of approximately $30 million of cash receipts into the second quarter.
MRCY Completes SolderMask Acquisition
During the quarter, Mercury Systems completed the acquisition of SolderMask, Inc., a specialized manufacturing process technology provider with unique expertise in dry-film solder mask applications leveraged across more than 20 Mercury programs, including the U.S. Army's Lower Tier Air and Missile Defense Sensor program and a number of Common Processing Architecture programs. The transaction closed on March 3, 2026, with Mercury acquiring SolderMask's assets, intellectual property and five-person workforce. Operations continue at the Huntington Beach, CA, facility, while a parallel manufacturing process line is being established at Mercury's Phoenix facility to enable greater throughput as key programs ramp into higher-rate production.
MRCY Raises Fiscal 2026 Outlook
Following its fiscal third-quarter outperformance, Mercury raised its full-year fiscal 2026 outlook. The company now expects fiscal 2026 annual revenue growth approaching mid single-digits, up from the prior outlook of low single-digits, supported by efforts to stage material earlier and better align the supply base. Full-year adjusted EBITDA margin is now expected in the mid-teens, up from approaching mid-teens previously. Free cash flow is expected to be positive in the fourth quarter of fiscal 2026. Management noted that fourth-quarter bookings have the potential to be the strongest of the fiscal year, based on a pipeline of opportunities more robust than in the third quarter — a potential indicator of increased top-line growth and further margin expansion beyond fiscal 2026. The outlook excludes any upside from domestic priorities, such as the Golden Dome or increased global defense budgets.
MRCY Zacks Rank & Stocks to Consider
Mercury Systems currently carries a Zacks Rank #3 (Hold).
Shares of Analog Devices have gained 46.4% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Applied Materials shares have gained 52.3% in the year-to-date period. Applied Materials is scheduled to report its second-quarter 2026 results on May 14.
Audioeye shares have lost 21.6% in the year-to-date period. Audioeye is set to report its first-quarter 2026 results on May 13.
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Mercury Systems Q3 Earnings Beat on Record Bookings & Backlog
Key Takeaways
Mercury Systems (MRCY - Free Report) reported adjusted earnings of 27 cents per share for the third quarter of fiscal 2026, which beat the Zacks Consensus Estimate by 350%. The bottom line increased significantly year over year from 6 cents in the prior-year quarter.
In the fiscal third quarter, MRCY reported revenues of $236 million, reflecting an 11.5% organic year-over-year increase and surpassing the Zacks Consensus Estimate by 12.06%.
Fiscal third-quarter results were ahead of management's expectations, with significant year-over-year growth in backlog, revenues and adjusted EBITDA, driven by strong demand signals and solid execution.
Mercury Systems Inc Price, Consensus and EPS Surprise
Mercury Systems Inc price-consensus-eps-surprise-chart | Mercury Systems Inc Quote
MRCY's Q3 Details
Total bookings for the third quarter of fiscal 2026 were a record $348 million, up 73.7% year over year, yielding a book-to-bill ratio of 1.48. 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. Third-quarter bookings were driven largely by follow-on production orders, reflecting the company's transition toward higher-rate production. The largest bookings spanned several missile, C4I and space programs, and the quarter featured the strongest bookings of the fiscal year for solutions leveraging Mercury's Common Processing Architecture. The company also secured a follow-on development award on a strategic program with potential to proliferate across multiple platforms.
MRCY achieved a record total backlog of approximately $1.6 billion as of March 27, 2026, up 17.9% (an approximately $240 million increase) year over year. Of the total backlog, $891 million represents orders expected to be recognized as revenues within the next 12 months. The 12-month backlog also increased 10.3% sequentially. Trailing 12-month bookings reached a record $1.23 billion.
MRCY's Q3 Operating Details
Third-quarter fiscal 2026 adjusted EBITDA was $36 million, up 46.2% from $25 million in the third quarter of fiscal 2025. The adjusted EBITDA margin was 15.3%, expanding 360 basis points year over year. GAAP net loss and diluted loss per share for the third quarter of fiscal 2026 were $3 million and 4 cents, respectively, compared with GAAP net loss and loss per share of $19 million and 33 cents, respectively, for the third quarter of fiscal 2025.
MRCY’s Q3 Balance Sheet & Cash Flow
As of March 27, 2026, cash and cash equivalents totaled $331.8 million compared with $335 million as of Dec. 26, 2025. Long-term debt was $591.5 million, unchanged from the prior quarter. In the reported quarter, cash flow from operations was $6.4 million compared with $30 million in the third quarter of fiscal 2025. Free cash outflow was $2 million in the third quarter of fiscal 2026 compared with free cash flow of $24 million in the prior-year quarter. The fiscal third-quarter free cash outflow meaningfully outperformed the company's expectations, which had reflected the pull-forward of approximately $30 million of cash receipts into the second quarter.
MRCY Completes SolderMask Acquisition
During the quarter, Mercury Systems completed the acquisition of SolderMask, Inc., a specialized manufacturing process technology provider with unique expertise in dry-film solder mask applications leveraged across more than 20 Mercury programs, including the U.S. Army's Lower Tier Air and Missile Defense Sensor program and a number of Common Processing Architecture programs. The transaction closed on March 3, 2026, with Mercury acquiring SolderMask's assets, intellectual property and five-person workforce. Operations continue at the Huntington Beach, CA, facility, while a parallel manufacturing process line is being established at Mercury's Phoenix facility to enable greater throughput as key programs ramp into higher-rate production.
MRCY Raises Fiscal 2026 Outlook
Following its fiscal third-quarter outperformance, Mercury raised its full-year fiscal 2026 outlook. The company now expects fiscal 2026 annual revenue growth approaching mid single-digits, up from the prior outlook of low single-digits, supported by efforts to stage material earlier and better align the supply base. Full-year adjusted EBITDA margin is now expected in the mid-teens, up from approaching mid-teens previously. Free cash flow is expected to be positive in the fourth quarter of fiscal 2026. Management noted that fourth-quarter bookings have the potential to be the strongest of the fiscal year, based on a pipeline of opportunities more robust than in the third quarter — a potential indicator of increased top-line growth and further margin expansion beyond fiscal 2026. The outlook excludes any upside from domestic priorities, such as the Golden Dome or increased global defense budgets.
MRCY Zacks Rank & Stocks to Consider
Mercury Systems currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Zacks Computer and Technology sector include Analog Devices (ADI - Free Report) , Applied Materials (AMAT - Free Report) and Audioeye (AEYE - Free Report) , each carrying a Zacks Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Analog Devices have gained 46.4% in the year-to-date period. Analog Devices is set to report the second quarter of fiscal 2026 results on May 20.
Applied Materials shares have gained 52.3% in the year-to-date period. Applied Materials is scheduled to report its second-quarter 2026 results on May 14.
Audioeye shares have lost 21.6% in the year-to-date period. Audioeye is set to report its first-quarter 2026 results on May 13.