The quarter beat on revenue but missed slightly on EPS. Published consensus was approximately $0.39 of adjusted EPS and $271.9 million of revenue; Mercury delivered $0.37 and $289.8 million, respectively. The revenue beat was meaningful, but it came with weaker profitability: adjusted EBITDA fell 5% year over year to $48.5 million and margin declined to 16.7% from 18.8% (Q4 Financial Highlights).
| Metric | Q4 FY26 | Q4 FY25 | Market comparison |
|---|---|---|---|
| Revenue | $289.8M | $273.1M | ~$271.9M consensus |
| Adjusted EPS | $0.37 | $0.47 | ~$0.39 consensus |
| Adjusted EBITDA | $48.5M | $51.3M | Not reliably published |
| Adjusted EBITDA margin | 16.7% | 18.8% | Not reliably published |
| Free cash flow | $28.6M | $34.0M | Not reliably published |
| Backlog | $1,945.0M | $1,404.9M | Not applicable |
Bookings and backlog are the filing’s strongest new information. Fourth-quarter bookings reached $659.6 million, nearly doubling the prior record, while backlog rose 38% to $1.945 billion and next-12-month backlog reached $996 million (Q4 Financial Highlights). That materially improves revenue visibility entering FY27, although bookings are not revenue until Mercury converts them through production.
The FY27 outlook shifts the story toward growth, but not immediate cash conversion. Management now expects FY27 revenue to approach $1.1 billion and adjusted EBITDA to approach $200 million, implying nearly 30% EBITDA growth; it also says organic growth should approach double digits (FY27 Outlook). However, expected free-cash-flow conversion is only about 35%, below the company’s 50% target, with Q1 projected to have an unusually large outflow as inventory and factory investments rise (FY27 Outlook).
Net read: operational demand is better than feared, but earnings quality is mixed. The filing delivers a large bookings surprise and a stronger growth framework, yet the quarter itself had lower adjusted EPS, lower EBITDA margin, and lower free cash flow year over year. The market therefore gets better visibility and demand evidence, but must wait for backlog conversion and margin expansion to prove that the stronger FY27 revenue outlook becomes durable profit and cash growth.
Read the original 8-K on SEC EDGAR ↗