Mercury Systems (MRCY) investor relations material

Executive summary

• Record Q1 FY27 revenue of $253.2M, bookings of $370.5M, adjusted EBITDA of $56.4M and backlog of $2.06B; organic revenue grew 12.4% YoY.

• FY27 revenue, adjusted EBITDA and free cash flow conversion outlooks were raised following strong execution.

Financial highlights

• Revenue increased $27.9M YoY to $253.2M; GAAP net income was $13.1M versus a $12.5M loss, and diluted EPS was $0.21 versus a $0.21 loss.

• Adjusted EBITDA was $56.4M versus $35.6M; adjusted income was $32.0M versus $15.6M, and adjusted EPS was $0.52 versus $0.26.

• Gross profit was $89.2M versus $62.9M; operating income was $18.5M versus an $8.6M loss, while operating expenses were $70.7M versus $71.5M.

• Operating cash flow was -$14.0M and free cash flow was -$24.4M, versus $2.2M and -$4.4M, respectively, in Q1 FY26; targeted inventory investment weighed on cash flow.

Outlook and guidance

• FY27 revenue outlook rose to double-digit YoY growth, with total revenue approaching $1.1B; Q2 revenue is expected to rise 10% YoY and increase through the rest of the year.

• FY27 adjusted EBITDA outlook rose to ~$210M, up 40% YoY, with a high-teens margin; Q2 margin is expected to expand ~500 bps YoY.

• FY27 free cash flow conversion outlook rose to approaching 40% from approaching 35%; positive Q2 free cash flow is expected, with H2 above H1.

• FY28 reference points were unchanged and are not financial guidance; management plans to revisit them in H2 FY27.