Frequency Electronics (FEIM) Q4 2026 earnings summary

Executive summary

• Fiscal 2026 was a transitional year with revenue digestion after prior pull-forward, but the company is now positioned for multi-year growth starting in fiscal 2027.

• Achieved record funded backlog of $111 million at year-end, up 34% sequentially and 59% year-over-year, with a book-to-bill ratio near 3x in Q4, indicating strong demand and visibility into future revenue.

• Major contract wins in both traditional and new high-growth markets, including space defense and lunar missions, are expected to drive revenue records in upcoming quarters.

• Strategic restructuring and investments have aligned resources toward higher-margin, high-growth opportunities, including the exit of FEI-Elcom manufacturing.

• Focus shifted to high-growth markets such as quantum sensing, space defense, and alternative PNT.

Financial highlights

• Q4 FY26 revenue was $15.4 million, down from $20.0 million in Q4 2025; full-year revenue was $63.2 million, down from $69.8 million in FY2025.

• Fiscal 2026 revenue decreased by $6.6 million (9%) year-over-year due to prior revenue pull-forward.

• Q4 2026 operating loss was $6.3 million; FY2026 operating loss was $3.0 million.

• Adjusted gross margin for Q4 was 36% and operating margin was 1%; for the full year, adjusted gross margin was 41% and operating margin 11%.

• Significant non-recurring charges, including a $3.8 million inventory write-down and employee benefit accrual, depressed reported margins.

Outlook and guidance

• Three-year revenue target of at least $150 million by FY29, representing a 34% CAGR from FY26.

• Minimum gross margin target of 50% and operating margin target of 30% by FY29, with margin improvements expected to begin in FY27.

• Expects to return to normal cash generation in FY27, with revenue growth starting in Q1.

• No significant additional investments required to achieve growth targets; focus is now on execution.

• Multiple record revenue quarters anticipated in FY27.