Revenue Growth

FY 2026

mid-single digits "

low single digits " "

lowered

Adjusted EBITDA Margin

FY 2026

low double digits "

mid-teens " "

raised

Free Cash Flow

FY 2026

Q4 expected around breakeven with full‑year FCF ahead of prior expectations "

Expected to be positive " "

raised

Revenue Pull-Forward

Mentioned consistently in Q1 with accelerated revenue from Q2 " " and in Q2 noting a $30 million pull-forward " " " , as well as in Q3 where the strategy shifted revenue timing but maintained full‐year expectations. " "

In Q4, the company again accelerated approximately $30 million of revenue into the quarter, positively impacting top‐line growth and EBITDA margins, while warning that FY26 outlook would reflect this pull-forward. " " " " "

Consistent topic across periods; sentiment remains positive with continued emphasis on acceleration, though with caution for future guidance.

Margin Expansion through Higher‐Margin Production Contracts

Q1 discussions highlighted a strong production mix with over 90% production-related bookings supporting higher margins " " ; Q2 emphasized the shift from development to production contracts with margins 1,000 basis points higher " " ; Q3 reinforced steady progress with improved backlog margins. " " "

In Q4, Mercury reported backlog margin improvements, with higher-margin production contracts driving an 18.8% adjusted EBITDA margin, reflecting further operational efficiencies and margin expansion. " " "

Consistent upward trend; steady transition to higher-margin contracts with enhanced operational performance over time.

Free Cash Flow Generation and Operational Efficiency Improvements

Q1 reported a negative free cash flow that improved from -$47.1M to -$20.9M " " ; Q2 noted record free cash flow of $82M with major operating expense reductions and efficient working capital management " " " ; Q3 demonstrated improved free cash flow generation and expense reductions. " "

Q4 delivered $34M quarterly free cash flow and a record FY free cash flow of $119M, driven by reduced net working capital and further operating expense cuts, along with improved gross margins. " " "

Continuous improvement across quarters, with a marked positive shift in cash flow and operational efficiency in Q4.

Production Pipeline Strength and Key Contract Wins

Q1 highlighted over 90% production mix and significant contract awards " " ; Q2 reported solid bookings of $242M and several key defense contracts " " " ; Q3 noted $200M in bookings and multiple follow-on orders. " "

Q4 achieved record quarterly bookings of $342M and a record backlog of $1.4B with multiple high-value contracts, underlining strong demand and production pipeline strength. " " "

Robust and growing; contracts and backlog continue to strengthen, reflecting improved market demand.

Technical Advancements in Common Processing Architecture

Q1 showed progress in CPA with corrective actions and ramp-up efforts " " ; Q2 detailed ramp-up to full-rate production and competitive wins " " " ; Q3 highlighted a $40M production contract and integration of cybersecurity via Starlab. " "

Q4 secured $36.9M in new production awards related to CPA, with continued improvements in backlog margins and strategic leveraging of technical advancements. " "

Consistent progress; steady technical improvements and favorable contract wins enhance competitive differentiation.

Golden Dome Initiative Uncertainty

No discussion in Q1 and Q2; Q3 mentioned Golden Dome with a positive bias as part of the overall defense market trends. "

Q4 explicitly addressed uncertainty around Golden Dome by excluding its potential impact from FY26 outlook due to unclear timing and magnitude. " "

New and evolving; emerging topic with a shift from earlier positive sentiment in Q3 to cautious uncertainty in Q4.

Legacy Lower‐Margin Backlog Challenges

Q1 cited lower gross margins and adverse EAC adjustments from legacy contracts " " ; Q2 explained the natural turnover of low-margin backlog and challenges from low-margin development programs " " " ; Q3 reiterated steady burning off of lower‐margin books with gradual improvements. " " "

Q4 acknowledged that legacy lower‐margin backlog still impacts margins but noted progressive improvements through conversion to higher-margin bookings and expect further improvement into FY26. " " "

Ongoing challenge with gradual improvement; legacy issues remain but are being mitigated over time.

Deferred Revenue and Unbilled Receivables Impact

Q1 reported increases in deferred revenue (+$22M sequentially, +$38M YoY) alongside a decrease in unbilled receivables (-$6M sequentially, -$90.3M YoY) " " ; Q2 showed significant progress with deferred revenue increases and substantial unbilled receivables reductions " " " ; Q3 had similar trends with increased deferred revenue and reduced unbilled amounts. " "

Q4 saw deferred revenue rise by approximately $53M YoY and a notable decrease of unbilled receivables by about $26M YoY, reflecting improved working capital management and effective milestone billing. " "

Consistently managed; continuous improvement in working capital with effective deferral and receivables management across periods.

Book-to-Bill Ratio and Order Intake Concerns

Q1 reported a robust ratio of 1.21 with 90% production mix and strong follow-on orders " " " ; Q2 cited a trailing 12-month ratio of 1.12 and strong order flow " " ; Q3 showed a quarter dip to 0.95 but a trailing 12-month average of 1.1, with management attributing the dip to timing. " " "

Q4 reported a book-to-bill ratio of 1.13 with record bookings and a healthy backlog, indicating strong order intake despite recent pull-forward acceleration impacting near-term visibility. " " " "

Overall stable and positive over time; minor fluctuations acknowledged but long-term trends and quality orders remain strong.

Customer Market Tailwinds and Growth in High-Growth Subsegments

Q1 did not specifically mention these topics; Q2 initiated discussion by targeting high-growth defense electronics and subsegments such as sensors, EW, and C4I " " ; Q3 further emphasized positive market tailwinds with an overall favorable DoD environment and record awards activity. " "

Q4 reinforced a positive outlook driven by favorable defense budgets, European market growth, and increased customer conversations about accelerating production, indicating broad market tailwinds and growth opportunities in high-growth subsegments. " " " "

Emerging focus with increasing emphasis; absent in Q1, progressively detailed from Q2 to Q4 with a clearly optimistic outlook on market opportunities.

Supply Chain and Workforce Stability

Q1 highlighted stable supply chain performance and no major workforce constraints " ; Q2 had minimal detail, though some restructuring was mentioned; Q3 provided limited discussion with reference to tariff management. "

Q4 provided detailed insights on actively managing supply chain constraints by optimizing factory capacity and highlighted organizational realignment that has led to reduced operating expenses, with workforce stability maintained. " " " "

Increasing emphasis in Q4; while stability was maintained across earlier periods, Q4 shows a concentrated focus on optimizing supply chain processes and workforce efficiency.