Mercury Systems, Inc.

What they do

Mercury designs and manufactures components, modules, subsystems and integrated systems for signal and data processing, built on commercial silicon technologies adapted for secure, mission-critical use. Its U.S. businesses are organized into three units — Signal Technologies and Processing Technologies (product-oriented) and Integrated Processing Solutions — plus an EMEA unit. Products are deployed in more than 300 programs across 35 countries; the company is headquartered in Andover, Massachusetts, with more than 20 locations worldwide.

Revenue drivers

• Signal Technologies — One of two U.S. product-oriented business units; invests internal R&D in reusable capabilities sold as standard products across multiple customers and mission sets.
• Processing Technologies — The second U.S. product business unit, covering processing building blocks from silicon to system scale that can be leveraged across programs.
• Integrated Processing Solutions — Solutions business that engages directly with customers to meet precise mission requirements, retiring development risk before entering multi-year production phases.
• EMEA — Fourth business unit dedicated to bringing edge processing capabilities to global markets, supported in part by contract manufacturer Cicor in Europe.

Recent performance

Fiscal 2026 (53 weeks ended July 3, 2026) revenue was $983.6 million versus $912.0 million in fiscal 2025, with a GAAP net loss of $29.7 million and diluted loss per share of $0.50. Fourth quarter fiscal 2026 revenue was $290 million, up 6.1% year over year, with GAAP net income of $1 million and diluted EPS of $0.01. Q4 bookings were a record $660 million, up 93% year over year, for a 2.28 book-to-bill, and total backlog reached over $1.9 billion, up roughly $540 million from a year earlier. Full-year operating cash flow was $102.4 million and free cash flow was $68 million; Q4 adjusted EBITDA was $49 million at a 16.7% margin.

Strategy

Mercury runs two models — a product model funded by internal R&D for capabilities reused across customers, and a solutions model developed directly with customers and carried into long production phases. The U.S. businesses are consolidated into Signal Technologies, Processing Technologies and Integrated Processing Solutions, with EMEA serving global demand. Centralized Engineering, Operations and Mission Assurance organizations, an Advanced Concepts Group, an integrated Growth organization and the office of the CTO are intended to keep the Processing Platform ahead of customer requirements. The company has begun deploying AI and automation internally for test procedures, requirements and document analysis, production and material planning, and contract information navigation.

Risks

• Production scaling — Management states backlog and bookings have increased significantly and that failing to add manufacturing throughput, shifts and supplier capacity on customer timelines could cause penalties, margin loss and lost business.
• Supplier and component availability — The 10-K cites reliance on suppliers, many facing their own capacity and labor challenges, and names contract manufacturer Cicor in Europe supporting EMEA operations.
• Government program funding — The 10-Q lists continued funding of defense programs and the timing of that funding, plus U.S. federal government shutdown or extended continuing resolution, among the risks that could change results.
• Legal and regulatory exposure — The 10-Q references a federal securities class action lawsuit and related claims, alongside federal export control, procurement and tariff rule changes.

Outlook

CEO Bill Ballhaus said the fourth quarter came in ahead of expectations on record bookings, backlog, revenue, the year's highest EBITDA margin and robust free cash flow. Management said it enters fiscal 2027 with enhanced visibility and is increasing its outlook for organic growth. Backlog at July 3, 2026 exceeded $1.9 billion, of which $1.0 billion is expected to be recognized as revenue within the next 12 months.