Mercury Systems reported record quarterly bookings of $660 million in Q4 2026, up 93.1 percent year-over-year, according to a filing with the Securities and Exchange Commission. The defense contractor's backlog expanded to over $1.9 billion, a 38.4 percent increase from the prior year.
Revenue for the quarter came to $290 million, exceeding analyst estimates of $266 million. Adjusted EBITDA reached $49 million on a 16.7 percent margin, matching consensus expectations. The company's book-to-bill ratio stood at 2.28, indicating bookings valued at more than twice the quarter's revenue run rate.
Mercury Systems manufactures embedded computing and power conversion systems for aerospace, defense and space applications. The $1.9 billion backlog represents orders already won but not yet delivered.
Adjusted earnings per share came to $0.37, missing analyst forecasts of $0.38 by a margin wider than the revenue beat. Free cash flow declined to $29 million from estimates of $55.8 million, a 48 percent shortfall. Operating cash flow grew 11 percent to $42 million. GAAP net income fell to $1 million from $22.6 million a year earlier.
The company said it enters fiscal 2027 with enhanced visibility and is increasing its outlook for organic growth, based on strong demand and solid execution. Defense contractors have benefited from higher government spending on advanced weapons systems and industrial capacity expansion at suppliers.
Mercury's bookings surge to nearly double its previous quarterly record, a 93 percent year-over-year jump not typical of the defense supply chain in stable periods. The book-to-bill ratio of 2.28 implies the company could sustain current revenue levels for over two quarters purely from backlog conversion, compared to the typical one-quarter visibility most suppliers maintain.
The document to watch is Mercury Systems' 10-K annual filing for fiscal 2027, due in the first half of 2027, which will disclose customer concentration and the composition of the $1.9 billion backlog by program and contract type.
