Mercury Systems Inc 8-K, filed Nov 10, 2026
Mercury Systems Inc (MRCY)
8-K
2026-11-10
For: 2026-11-10
View Original
Added on
November 10, 2026
About this 8-K
Mercury Systems Inc filed this 8-K on November 10, 2026.
Mercury Systems reported first quarter fiscal 2027 revenue of approximately $253 million, GAAP net income of $13 million, adjusted EBITDA of $56 million, and backlog approaching $2.1 billion. AI summary
Items reported
- Item 2.02: Financial results
- Item 5.02: Director or officer change, or executive pay
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 4, 2026
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| | ||||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | |||||||||||||
Registrant’s telephone number, including area code: (978 ) 256-1300
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Item 2.02. Results of Operations and Financial Condition.
On November 10, 2026 , Mercury Systems, Inc. (the “Company”) issued a press release and an earnings presentation regarding its financial results for the first quarter ended October 2, 2026. The Company’s press release and earnings presentation are attached as exhibits 99.1 and 99.2 to this Current Report on Form 8-K and incorporated by reference herein.
Information in Item 2.02 of this Current Report on Form 8-K and the exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted EPS, and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors more completely understand its past financial performance and prospects for the future. However, the presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP financial measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Chief Operating Officer
On November 10, 2026, the Company announced the formalization of David E. Farnsworth’s role as Chief Operating Officer in addition to his responsibilities as the Company’s Executive Vice President and Chief Financial Officer. In connection with this appointment, Mr. Farnsworth will receive a restricted stock unit award with an aggregate value of $500,000 in the form of shares of the Company’s common stock under the Company’s 2025 Long Term Incentive Plan. The number of shares covered by such award will be determined by dividing the dollar amount of the award by the average closing price of the Company’s common stock during the 30 calendar days prior to November 16, 2026, the grant date, and such shares shall vest in equal installments on each of the first three anniversaries of the grant date. The terms and conditions of the award are identical to the RSUs granted to the Company’s other named executive officers on August 17, 2026. There were no other changes to his compensation related to this additional role.
Chief Accounting Officer
On November 4, 2026, Douglas Munro, the Company’s Senior Vice President and Chief Accounting Officer, informed the Company that he has accepted a role outside the Company and that his last day would be November 13, 2026. His decision was not the result of any disagreement relating to the Company’s operations, policies, or practices.
On November 10, 2026, the Company announced that Brian Caulfield has been appointed as acting Chief Accounting Officer effective as of November 13, 2026. Reporting to David E. Farnsworth, the Company’s Executive Vice President, Chief Financial Officer, and Chief Operating Officer, Mr. Caulfield will be responsible for the Company’s accounting operations and financial reporting on an interim basis while the Company conducts a search for a permanent Chief Accounting Officer.
Mr. Caulfield, age 39, joined the Company in 2014 and most recently served as the Company’s Corporate Controller from 2024 to date. Prior to that he served as the Company’s Assistant Corporate Controller from 2022 to 2024, and from 2014 to 2022 he held roles of increasing leadership in the Company’s accounting function. Prior to joining the Company, Mr. Caulfield held various positions in public accounting at Ernst & Young. He has an MBA from Rivier University and a B.S. in Accounting from Fairfield University and holds his CPA license in Massachusetts.
In connection with this interim position, Mr. Caulfield has entered into a $50,000 retention bonus agreement, payable in 50% increments on May 13, 2027 and November 13, 2027, contingent on his continued employment (or prior termination by the Company without cause) as of those dates. There were no other changes to his compensation related to this interim role.
There are no family relationships between Mr. Caulfield and any director or executive officer of the Company, and he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. | Description | ||||
| 99.1 | Press Release dated | ||||
| 99.2 | Earnings Presentation dated | ||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | ||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Dated: | MERCURY SYSTEMS, INC. | ||||
By: /s/ David E. Farnsworth David E. Farnsworth Executive Vice President, Chief Financial Officer, and Chief Operating Officer | |||||
EXHIBIT INDEX
Exhibit No. | Description | ||||
Exhibit 99.1
| FOR IMMEDIATE RELEASE | |||||
Mercury Systems Reports First Quarter Results
•Record Q1 FY27 Bookings of $370 million grew 48.0% year-over-year; book-to-bill of 1.46
•Record Backlog approaching $2.1 billion; up 44.7% year-over-year
•Record Q1 FY27 Revenue of approximately $253 million; up 12.4% year-over-year
•GAAP net income of $13 million; record Q1 adjusted EBITDA of $56 million grew 58.6% year-over-year; and adjusted EBITDA margin of 22.3%
•Dave Farnsworth's title changed to Chief Financial Officer and Chief Operating Officer
ANDOVER, Mass. November 10, 2026 Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the first quarter of fiscal year 2027, ended October 2, 2026.
“We delivered strong first quarter fiscal 2027 results, with record first quarter bookings, revenue, and adjusted EBITDA, and record backlog," said Bill Ballhaus, Mercury’s Chairman and CEO. “Our first quarter results reflect robust organic growth and margins that are in-line with our target profile. Based on this solid execution, we are raising our outlook for fiscal year 2027."
“In the first quarter we delivered bookings of $370 million, up 48% year-over-year, expanding our backlog to $2.1 billion and next-12-month backlog to over $1 billion; revenue of $253 million, up 12.4% year-over-year; GAAP net income of $13 million; adjusted EBITDA of $56 million, up 58.6% year over-year; adjusted EBITDA margin of 22.3%; cash flows used in operating activities of $14 million; free cash out flow of $24 million; and net debt of $232 million, down 19% year-over-year."
First Quarter Fiscal 2027 Results
First quarter fiscal 2027 revenues were $253 million, compared to $225 million in the first quarter of fiscal 2026.
Total bookings for the first quarter of fiscal 2027 were $370 million, yielding a book-to-bill ratio of 1.46 for the quarter.
Mercury Reports First Quarter Fiscal 2027 Results, Page 2
GAAP net income and diluted earnings per share for the first quarter of fiscal 2027 were $13 million and $0.21, respectively, compared to GAAP net loss and loss per share of $13 million and $0.21, respectively, for the first quarter of fiscal 2026. Adjusted earnings per share (“adjusted EPS”) was $0.52 per share for the first quarter of fiscal 2027, compared to $0.26 per share in the first quarter of fiscal 2026.
First quarter fiscal 2027 adjusted EBITDA was $56 million, compared to $36 million for the first quarter of fiscal 2026.
Cash flows (used in) provided by operating activities in the first quarter of fiscal 2027 were $(14) million, compared to $2 million in the first quarter of fiscal 2026. Free cash flow, defined as cash flows from operating activities less capital expenditures for property and equipment, was $(24) million for the first quarter of fiscal 2027 and $(4) million for the first quarter of fiscal 2026.
Backlog
Mercury’s total backlog at October 2, 2026 was approaching $2.1 billion, an approximate $637 million increase from a year ago. Of the October 2, 2026 total backlog, over $1.0 billion represents orders expected to be recognized as revenue within the next 12 months.
Other Matters
On November 10, 2026, Mercury formalized Dave Farnsworth's role as Chief Operating Officer, in addition to his responsibilities as Chief Financial Officer. Mr. Farnsworth has been effectively operating in this capacity for quite some time.
Conference Call Information
Management will host a conference call and simultaneous webcast at 5:00 p.m. ET on Tuesday, November 10, 2026, to discuss Mercury's quarterly financial results, business highlights and outlook. In addition, Company representatives may answer questions concerning business and financial developments and trends, the Company's view on earnings forecasts, and other business and financial matters affecting the Company, the responses to which may contain information that has not been previously disclosed.
To participate in the conference call Q&A as an analyst please register online at https://events.q4inc.com/analyst/478903701?pwd=p1C55pmZ or dial +1 833 461 5787 by phone using Meeting ID: 478903701. The live listen-only webcast and replay will be available ir.mrcy.com/
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 3
events-presentations. A replay of the webcast will be available two hours after the call and archived on the same web page for six months.
Use of Non-GAAP Financial Measures
In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted earnings per share (“adjusted EPS”) and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non-GAAP financial measures are useful to help investors understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this press release is contained in the attached exhibits.
Mercury Systems – Innovation that Matters®
Mercury Systems is a global leader in aerospace and defense electronics, providing breakthrough capabilities in signal and data processing. With a four-decade legacy of innovation that spans silicon to systems and radio frequency front ends to effectors, we accelerate commercial technology adoption to deliver powerful and secure mission-critical processing solutions to the edge. We are headquartered in Andover, Massachusetts, and have multiple locations worldwide. Our end-to-end processing ecosystem, the Mercury Processing Platform, is built on technologies we have developed and acquired over 40 years. Our technologies are available as standard products or custom solutions from silicon to system scale to ensure interoperability, reduced complexity, optimized performance and speed development. To learn more, visit mrcy.com. (Nasdaq: MRCY)
Investors and others should note that we announce material financial information using our website (www.mrcy.com), SEC filings, press releases, public conference calls, webcasts, and social media, including X (X.com/mrcy) and LinkedIn (www.linkedin.com/company/mercury-systems). Therefore, we encourage investors and others interested in Mercury to review the information we post on the social media and other communication channels listed on our website.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 4
Forward-Looking Safe Harbor Statement
This press release contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhanced execution of the Company's strategic plan. You can identify these statements by the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, cost increases, our inability to increase production and deliver products on time and with appropriate quality, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company’s markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberattacks and emerging threats associated with agentic AI-enabled cyber tools, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the state law claim related to our settled federal securities class action lawsuit, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 3, 2026 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made.
# # #
Contact:
Tyler Hojo, CFA, Senior Vice President, Strategy and Corporate Development
Mercury Systems, Inc.
978-967-3676
Mercury Systems and Innovation That Matters are registered trademarks of Mercury Systems, Inc. Other product and company names mentioned may be trademarks and/or registered trademarks of their respective holders.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 5
| MERCURY SYSTEMS, INC. | ||||||||||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||||||||||
| (In thousands) | ||||||||||||||
| October 2, | July 3, | |||||||||||||
| 2026 | 2026 | |||||||||||||
| Assets | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | $ | 109,679 | $ | 214,306 | ||||||||||
| Accounts receivable, net | 80,772 | 69,222 | ||||||||||||
| Unbilled receivables and costs in excess of billings, net | 290,348 | 285,760 | ||||||||||||
| Inventory | 398,570 | 366,968 | ||||||||||||
| Prepaid income taxes | 1,683 | 2,258 | ||||||||||||
| Prepaid expenses and other current assets | 36,114 | 34,925 | ||||||||||||
| Total current assets | 917,166 | 973,439 | ||||||||||||
| Property and equipment, net | 110,320 | 108,413 | ||||||||||||
| Goodwill | 941,637 | 942,419 | ||||||||||||
| Intangible assets, net | 166,517 | 175,820 | ||||||||||||
| Operating lease right-of-use assets, net | 44,079 | 47,713 | ||||||||||||
| Deferred tax asset | 67,333 | 67,188 | ||||||||||||
| Other non-current assets | 8,847 | 7,784 | ||||||||||||
| Total assets | $ | 2,255,899 | $ | 2,322,776 | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | $ | 96,212 | $ | 91,041 | ||||||||||
| Accrued expenses | 30,986 | 32,991 | ||||||||||||
| Due to factoring facility | 6,979 | 391 | ||||||||||||
| Accrued compensation | 32,270 | 54,537 | ||||||||||||
| Deferred revenues and customer advances | 150,181 | 149,565 | ||||||||||||
| Total current liabilities | 316,628 | 328,524 | ||||||||||||
| Income taxes payable | 3,487 | 3,487 | ||||||||||||
| Long-term debt | 341,500 | 441,500 | ||||||||||||
| Operating lease liabilities | 41,994 | 45,829 | ||||||||||||
| Other non-current liabilities | 5,614 | 5,977 | ||||||||||||
| Total liabilities | 709,223 | 825,318 | ||||||||||||
| Shareholders’ equity: | ||||||||||||||
| Preferred stock | — | — | ||||||||||||
| Common stock | 607 | 596 | ||||||||||||
| Additional paid-in capital | 1,370,452 | 1,333,410 | ||||||||||||
| Retained earnings | 165,310 | 152,222 | ||||||||||||
| Accumulated other comprehensive income | 10,307 | 11,230 | ||||||||||||
| Total shareholders’ equity | 1,546,676 | 1,497,458 | ||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,255,899 | $ | 2,322,776 | ||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 6
| MERCURY SYSTEMS, INC. | ||||||||||||||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||||||||
| First Quarters Ended | ||||||||||||||||||||||||||
| October 2, 2026 | September 26, 2025 | |||||||||||||||||||||||||
| Net revenues | $ | 253,153 | $ | 225,209 | ||||||||||||||||||||||
Cost of revenues(1) | 163,965 | 162,310 | ||||||||||||||||||||||||
| Gross margin | 89,188 | 62,899 | ||||||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||||||||
Selling, general and administrative(1) | 43,029 | 45,906 | ||||||||||||||||||||||||
Research and development(1) | 16,051 | 13,184 | ||||||||||||||||||||||||
| Amortization of intangible assets | 9,303 | 10,259 | ||||||||||||||||||||||||
| Restructuring and other charges | 2,018 | 1,584 | ||||||||||||||||||||||||
| Acquisition costs and other related expenses | 253 | 563 | ||||||||||||||||||||||||
| Total operating expenses | 70,654 | 71,496 | ||||||||||||||||||||||||
| Income (loss) from operations | 18,534 | (8,597) | ||||||||||||||||||||||||
| Interest income | 1,327 | 2,027 | ||||||||||||||||||||||||
| Interest expense | (5,406) | (7,886) | ||||||||||||||||||||||||
| Other expense, net | (1,147) | (2,080) | ||||||||||||||||||||||||
| Income (loss) before income tax provision (benefit) | 13,308 | (16,536) | ||||||||||||||||||||||||
| Income tax provision (benefit) | 220 | (4,021) | ||||||||||||||||||||||||
| Net income (loss) | $ | 13,088 | $ | (12,515) | ||||||||||||||||||||||
| Basic net earnings (loss) per share | $ | 0.22 | $ | (0.21) | ||||||||||||||||||||||
| Diluted net earnings (loss) per share | $ | 0.21 | $ | (0.21) | ||||||||||||||||||||||
| Weighted-average shares outstanding: | ||||||||||||||||||||||||||
| Basic | 60,121 | 59,191 | ||||||||||||||||||||||||
| Diluted | 61,623 | 59,191 | ||||||||||||||||||||||||
| (1) Includes stock-based compensation expense, allocated as follows: | ||||||||||||||||||||||||||
| Cost of revenues | $ | 1,146 | $ | 1,760 | ||||||||||||||||||||||
| Selling, general and administrative | $ | 9,299 | $ | 6,296 | ||||||||||||||||||||||
| Research and development | $ | 1,726 | $ | 1,517 | ||||||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 7
| MERCURY SYSTEMS, INC. | ||||||||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||||||||||||
| (In thousands) | ||||||||||||||||||||||||||
| First Quarters Ended | ||||||||||||||||||||||||||
| October 2, 2026 | September 26, 2025 | |||||||||||||||||||||||||
| Cash flows from operating activities: | ||||||||||||||||||||||||||
| Net income (loss) | $ | 13,088 | $ | (12,515) | ||||||||||||||||||||||
| Depreciation and amortization | 17,789 | 18,913 | ||||||||||||||||||||||||
| Other non-cash items, net | 17,096 | 12,720 | ||||||||||||||||||||||||
| Changes in operating assets and liabilities | (61,939) | (16,936) | ||||||||||||||||||||||||
| Net cash (used in) provided by operating activities | (13,966) | 2,182 | ||||||||||||||||||||||||
| Cash flows from investing activities: | ||||||||||||||||||||||||||
| Purchases of property and equipment | (10,413) | (6,548) | ||||||||||||||||||||||||
| Net cash used in investing activities | (10,413) | (6,548) | ||||||||||||||||||||||||
| Cash flows from financing activities: | ||||||||||||||||||||||||||
| Proceeds from stock option exercise | 19,848 | — | ||||||||||||||||||||||||
| Payments under credit facilities | (100,000) | — | ||||||||||||||||||||||||
| Net cash used in financing activities | (80,152) | — | ||||||||||||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents | (96) | (17) | ||||||||||||||||||||||||
| Net decrease in cash and cash equivalents | (104,627) | (4,383) | ||||||||||||||||||||||||
| Cash and cash equivalents at beginning of period | 214,306 | 309,099 | ||||||||||||||||||||||||
| Cash and cash equivalents at end of period | $ | 109,679 | $ | 304,716 | ||||||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 8
UNAUDITED SUPPLEMENTAL INFORMATION RECONCILIATION OF GAAP TO NON-GAAP MEASURES
(In thousands, except per share data)
Adjusted EBITDA, a non-GAAP measure for reporting financial performance, excludes the impact of certain items and, therefore, has not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company’s underlying results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. The adjustments to calculate this non-GAAP financial measure, and the basis for such adjustments, are outlined below:
Other non-operating adjustments. The Company records other non-operating adjustments such as gains or losses on foreign currency remeasurement, investments and fixed asset sales or disposals among other adjustments. These adjustments may vary from period to period without any direct correlation to underlying operating performance.
Interest income and expense. The Company receives interest income on investments and incurs interest expense on loans, financing leases and other financing arrangements. These amounts may vary from period to period due to changes in cash and debt balances and interest rates driven by general market conditions or other circumstances which may be outside of the normal course of the Company’s operations.
Income taxes. The Company’s GAAP tax expense can fluctuate materially from period to period due to tax adjustments that are not directly related to underlying operating performance or to the current period of operations.
Depreciation. The Company incurs depreciation expense related to capital assets purchased to support the ongoing operations of the business. These assets are recorded at cost or fair value and are depreciated using the straight-line method over the useful life of the asset. Purchases of such assets may vary significantly from period to period and without any direct correlation to underlying operating performance.
Amortization of intangible assets. The Company incurs amortization of intangible assets primarily as a result of acquired intangible assets such as backlog, customer relationships and completed technologies but also due to licenses, patents and other arrangements, including the implementation costs of cloud computing arrangements. These intangible assets are valued at the time of acquisition or upon receipt of right to use the asset, amortized over the requisite life and generally cannot be changed or influenced by management after acquisition.
Restructuring and other charges. The Company incurs restructuring and other charges in connection with management’s decisions to undertake certain actions to realign operating expenses through workforce reductions and the closure of certain Company facilities, businesses and lines of business. The Company’s adjustments reflected in restructuring and other charges are typically related to acquisitions and organizational redesign programs initiated as part of discrete post-acquisition integration activities or other transformation activities, including the analysis, evaluation, and planning of information system upgrades and/or deployments. Management believes these items are non-routine and may not be indicative of ongoing operating results.
Impairment of long-lived assets. The Company incurs impairment charges of long-lived assets based on events that may or may not be within the control of management. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 9
Acquisition, financing and other third party costs. The Company incurs transaction costs related to acquisition and potential acquisition opportunities, such as legal, accounting, and other third party advisory fees. The Company may also incur third party costs, such as legal, banking, communications, proxy solicitation, and other third party advisory fees in connection with engagements by activist investors or unsolicited acquisition offers. Although the Company may incur such third party costs and other related charges and adjustments, it is not indicative that any transaction will be consummated. Additionally, the Company incurs unused revolver and bank fees associated with maintaining its credit facility as well as non-cash financing expenses associated with obtaining its credit facility. Management believes these items are outside the normal operations of the Company’s business and are not indicative of ongoing operating results.
Fair value adjustments from purchase accounting. As a result of applying purchase accounting rules to acquired assets and liabilities, certain fair value adjustments are recorded in the opening balance sheet of acquired companies. These adjustments are then reflected in the Company’s income statements in periods subsequent to the acquisition. In addition, the impact of any changes to originally recorded contingent consideration amounts are reflected in the income statements in the period of the change. Management believes these items are outside the normal operations of the Company and are not indicative of ongoing operating results.
Litigation and settlement income and expense. The Company periodically receives income and incurs expenses related to pending claims and litigation and associated legal fees and potential case settlements and/or judgments. Although the Company may incur such costs and other related charges and adjustments, it is not indicative of any particular outcome until the matter is fully resolved. Management believes these items are outside the normal operations of the Company’s business, often occur in periods other than the period of activity, and are not indicative of ongoing operating results. The Company periodically receives warranty claims from customers and makes warranty claims towards its vendors and supply chain. Management believes the expenses and gains associated with these recurring warranty items are within the normal operations and operating cycle of the Company’s business. Therefore, management deems no adjustments are necessary unless under extraordinary circumstances.
Stock-based and other non-cash compensation expense. The Company incurs expense related to stock-based compensation included in its GAAP presentation of cost of revenues, selling, general and administrative expense and research and development expense. The Company also incurs non-cash based compensation in the form of pension related expenses and matching contributions to its defined contribution plan. Although stock-based and other non-cash compensation is an expense of the Company and viewed as a form of compensation, these expenses vary in amount from period to period, and are affected by market forces that are difficult to predict and are not within the control of management, such as the market price and volatility of the Company’s shares, risk-free interest rates and the expected term and forfeiture rates of the awards, as well as pension actuarial assumptions. Management believes that exclusion of these expenses allows comparisons of operating results to those of other companies, both public, private or foreign, that disclose non-GAAP financial measures that exclude stock-based compensation and other non-cash compensation.
Mercury uses adjusted EBITDA as an important indicator of the operating performance of its business. Management excludes the above-described items from its internal forecasts and models when establishing internal operating budgets, supplementing the financial results and forecasts reported to the Company’s board of directors, determining a portion of bonus compensation for executive officers and other key employees based on operating performance, evaluating short-term and long-term operating trends in the Company’s operations, and allocating resources to various initiatives and operational requirements. The Company believes that adjusted EBITDA permits a comparative assessment of its operating performance, relative to its performance based on its GAAP results, while isolating the effects of charges that may vary from period to period without direct correlation to underlying operating performance. The Company believes that these non-GAAP financial adjustments are useful to investors because they allow investors to evaluate the effectiveness of the methodology and information used by management in its financial and operational decision-making. The Company believes that trends in its adjusted EBITDA are valuable indicators of its operating performance.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 10
Adjusted EBITDA is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenses similar to the adjusted EBITDA financial adjustments described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these costs are unusual, infrequent or non-recurring.
The following table reconciles the most directly comparable GAAP financial measure to the non-GAAP financial measure.
| First Quarters Ended | ||||||||||||||||||||||||||
| October 2, 2026 | September 26, 2025 | |||||||||||||||||||||||||
| Net income (loss) | $ | 13,088 | $ | (12,515) | ||||||||||||||||||||||
| Other non-operating adjustments, net | 584 | 748 | ||||||||||||||||||||||||
| Interest expense, net | 4,079 | 5,859 | ||||||||||||||||||||||||
| Income tax provision (benefit) | 220 | (4,021) | ||||||||||||||||||||||||
| Depreciation | 8,486 | 8,654 | ||||||||||||||||||||||||
| Amortization of intangible assets | 9,303 | 10,259 | ||||||||||||||||||||||||
| Restructuring and other charges | 2,018 | 1,584 | ||||||||||||||||||||||||
| Impairment of long-lived asset | — | — | ||||||||||||||||||||||||
| Acquisition, financing and other third party costs | 750 | 1,317 | ||||||||||||||||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | ||||||||||||||||||||||||
| Litigation and settlement expense, net | 545 | 7,224 | ||||||||||||||||||||||||
| Stock-based and other non-cash compensation expense | 17,191 | 16,328 | ||||||||||||||||||||||||
| Adjusted EBITDA | $ | 56,395 | $ | 35,568 | ||||||||||||||||||||||
Free cash flow, a non-GAAP measure for reporting cash flow, is defined as cash provided by operating activities less capital expenditures for property and equipment, which includes capitalized software development costs, and, therefore, has not been calculated in accordance with GAAP. Management believes free cash flow provides investors with an important perspective on cash available for investment and acquisitions after making capital investments required to support ongoing business operations and long-term value creation. The Company believes that trends in its free cash flow are valuable indicators of its operating performance and liquidity.
Free cash flow is a non-GAAP financial measure and should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. This non-GAAP financial measure may not be computed in the same manner as similarly titled measures used by other companies. The Company expects to continue to incur expenditures similar to the free cash flow financial adjustment described above, and investors should not infer from the Company’s presentation of this non-GAAP financial measure that these expenditures reflect all of the Company's obligations which require cash.
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
Mercury Reports First Quarter Fiscal 2027 Results, Page 11
The following table reconciles the most directly comparable GAAP financial measure to the non-GAAP financial measure.
| First Quarters Ended | ||||||||||||||||||||||||||
| October 2, 2026 | September 26, 2025 | |||||||||||||||||||||||||
| Net cash (used in) provided by operating activities | $ | (13,966) | $ | 2,182 | ||||||||||||||||||||||
| Purchases of property and equipment | (10,413) | (6,548) | ||||||||||||||||||||||||
| Free cash flow | $ | (24,379) | $ | (4,366) | ||||||||||||||||||||||
Adjusted income and adjusted earnings per share (“adjusted EPS”) are non-GAAP measures for reporting financial performance, exclude the impact of certain items and, therefore, have not been calculated in accordance with GAAP. Management believes that exclusion of these items assists in providing a more complete understanding of the Company’s underlying results and trends and allows for comparability with its peer company index and industry. These non-GAAP financial measures may not be computed in the same manner as similarly titled measures used by other companies. The Company uses these measures along with the corresponding GAAP financial measures to manage the Company’s business and to evaluate its performance compared to prior periods and the marketplace. The Company defines adjusted income as income before other non-operating adjustments, amortization of intangible assets, restructuring and other charges, impairment of long-lived assets, acquisition, financing and other third party costs, fair value adjustments from purchase accounting, litigation and settlement income and expense, and stock-based and other non-cash compensation expense. The impact to income taxes includes the impact to the effective tax rate, current tax provision and deferred tax provision(1). Adjusted EPS expresses adjusted income on a per share basis using weighted average diluted shares outstanding.
The following table reconciles the most directly comparable GAAP financial measures to the non-GAAP financial measures.
| First Quarters Ended | ||||||||||||||||||||||||||
| October 2, 2026 | September 26, 2025 | |||||||||||||||||||||||||
| Net income (loss) and earnings (loss) per share | $ | 13,088 | $ | 0.21 | $ | (12,515) | $ | (0.21) | ||||||||||||||||||
| Other non-operating adjustments, net | 584 | 748 | ||||||||||||||||||||||||
| Amortization of intangible assets | 9,303 | 10,259 | ||||||||||||||||||||||||
| Restructuring and other charges | 2,018 | 1,584 | ||||||||||||||||||||||||
| Impairment of long-lived assets | — | — | ||||||||||||||||||||||||
| Acquisition, financing and other third party costs | 750 | 1,317 | ||||||||||||||||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | ||||||||||||||||||||||||
| Litigation and settlement expense, net | 545 | 7,224 | ||||||||||||||||||||||||
| Stock-based and other non-cash compensation expense | 17,191 | 16,328 | ||||||||||||||||||||||||
Impact to income taxes(1) | (11,605) | (9,516) | ||||||||||||||||||||||||
| Adjusted income and adjusted earnings per share | $ | 32,005 | $ | 0.52 | $ | 15,560 | $ | 0.26 | ||||||||||||||||||
| Diluted weighted-average shares outstanding | 61,623 | 60,140 | ||||||||||||||||||||||||
| (1) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes. The recalculation also adjusts for any discrete tax provision or benefit related to the items. | ||||||||||||||||||||||||||
| (2) Adjusted earnings per share is calculated using diluted shares whereas Net loss per share is calculated using basic shares. There was no impact to the calculation of adjusted earnings per share as a result of this for the first quarter ended September 26, 2025. | ||||||||||||||||||||||||||
50 Minuteman Road, Andover, Massachusetts 01810 U.S.A. | +1-(978)-256-1300 | www.mrcy.com | X: @MRCY
© Mercury Systems, Inc. WEBCAST LOGIN AT WWW.MRCY.COM/INVESTOR WEBCAST REPLAY AVAILABLE BY 7:00 P.M. ET NOVEMBER 10, 2026 Bill Ballhaus Chairman and CEO David Farnsworth Executive Vice President, CFO, and COO November 10, 2026, 5:00 pm ET FIRST QUARTER FISCAL YEAR 2027 FINANCIAL RESULTS 1
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Forward-looking safe harbor statement This presentation contains certain forward-looking statements, as that term is defined in the Private Securities Litigation Reform Act of 1995, including those relating to the Company's focus on enhanced execution of the Company's strategic plan. You can identify these statements by the words “may,” “will,” “could,” “should,” “would,” “plans,” “expects,” “anticipates,” “continue,” “estimate,” “project,” “intend,” “likely,” “forecast,” “probable,” “potential,” and similar expressions. These forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected or anticipated. Such risks and uncertainties include, but are not limited to, cost increases, our inability to increase production and deliver products on time and with appropriate quality, continued funding of defense programs, the timing and amounts of such funding, general economic and business conditions, including unforeseen weakness in the Company’s markets, effects of any U.S. federal government shutdown or extended continuing resolution, effects of increasingly volatile geopolitical events and regional conflicts, competition, changes in technology and methods of marketing, delays in or cost increases related to completing development, engineering and manufacturing programs, changes in customer order patterns, changes in product mix, continued success in technological advances and delivering technological innovations, changes in, or in the U.S. government’s interpretation of, federal export control or procurement rules and regulations, including tariffs, changes in, or in the interpretation or enforcement of, environmental rules and regulations, market acceptance of the Company's products, shortages or delays in receiving components, supply chain delays or volatility for critical components, production delays or unanticipated expenses including due to quality issues or manufacturing execution issues, failure to meet contractual performance specifications, adherence to required manufacturing standards, capacity underutilization, increases in scrap or inventory write-offs, failure to achieve or maintain manufacturing quality certifications, such as AS9100, failure to achieve or maintain qualified business systems, such as those required by the DFARS, adverse findings in government audits or investigations, the impact of supply chain disruption, inflation and labor shortages, among other things, on program execution and the resulting effect on customer satisfaction, inability to fully realize the expected benefits from acquisitions, restructurings and operational efficiency initiatives or delays in realizing such benefits, challenges in integrating acquired businesses and achieving anticipated synergies, effects of shareholder activism, increases in interest rates, changes to industrial security and cyber-security regulations and requirements and impacts from any cyber or insider threat events, including the risks from heightened, persistent, and increasingly sophisticated nation-state level cyberattacks and emerging threats associated with agentic AI-enabled cyber tools, changes in tax rates or tax regulations, changes to interest rate swaps or other cash flow hedging arrangements, changes to generally accepted accounting principles, difficulties in retaining key employees and customers, litigation, including the state law claim related to our settled federal securities class action lawsuit, unanticipated costs under fixed-price service and system integration engagements, and various other factors beyond our control. These risks and uncertainties also include such additional risk factors as are discussed in the Company's filings with the U.S. Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended July 3, 2026 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. The Company cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made. Use of Non-GAAP (Generally Accepted Accounting Principles) Financial Measures In addition to reporting financial results in accordance with generally accepted accounting principles, or GAAP, the Company provides adjusted EBITDA, adjusted income, adjusted EPS, and free cash flow, which are non-GAAP financial measures. Adjusted EBITDA, adjusted income, and adjusted EPS exclude certain non-cash and other specified charges. The Company believes these non- GAAP financial measures are useful to help investors better understand its past financial performance and prospects for the future. However, these non-GAAP measures should not be considered in isolation or as a substitute for financial information provided in accordance with GAAP. Management believes these non-GAAP measures assist in providing a more complete understanding of the Company’s underlying operational results and trends, and management uses these measures along with the corresponding GAAP financial measures to manage the Company’s business, to evaluate its performance compared to prior periods and the marketplace, and to establish operational goals. A reconciliation of GAAP to non-GAAP financial results discussed in this presentation is contained in the Appendix hereto. 2
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Today’s call ▪ Opening remarks on business and results ▪ Update on our four priorities ▪ Performance expectations for FY27 and beyond ▪ Q&A 3
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Business and results ▪ Our Q1 results reflect robust organic growth and margins that are in-line with our target profile: • Record Q1 bookings of $370M, up 48.0% year-over-year; a 1.46 book-to-bill, record backlog of $2.1B, and record next-12-month backlog of over $1B. • Record Q1 revenue of $253M. • Record Q1 adjusted EBITDA of $56M and adjusted EBITDA margin of 22.3%; and • Free cash out flow of $24M; better-than-expected performance. We ended Q1 with $232M of net debt, down 19.2% year-over- year. ▪ These Q1 results reflect relentless focus on our four priority areas, with highlights that include: • Solid execution across our portfolio leading to Q1 year-over-year organic revenue growth of 12.4% and adjusted EBITDA growth of 58.6%. • Year-over-year growth in backlog and next-12-month backlog of 44.7% and 27.9%, respectively. • An increase of 648 basis points year-over-year in adjusted EBITDA margin; and • Continued progress on free cash flow drivers with net working capital down 60 basis points year-over-year as a percent of trailing twelve-month revenue. 4
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving performance excellence ▪ Focused on sound execution on development programs, delivering for our customers, and scaling efficiently on numerous programs transitioning to higher volume production. • In Q1, we ramped up across a number of programs generating record Q1 revenue and record trailing twelve-month revenue of just over $1B. • We believe Q1 revenue reflects increased linearity in the business enabled by an improving material posture. ▪ Our progress in scaling efficiently, combined with strong bookings and record backlog, have resulted in organic growth above our prior expectation for Q1, and a raised outlook for the full year. ▪ Beyond this solid performance, we continue efforts to expand capacity and increase automation to drive scalability and efficiency. 5
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving organic growth ▪ Record first quarter with $370M of bookings, up 48.0% year-over-year, and a book-to-bill of 1.46 for the quarter. • Our trailing twelve-month bookings of $1.7B is the highest in the Company’s history, and our record total backlog of over $2B is providing enhanced visibility as we progress through FY27 and into FY28. ▪ Strength in Q1 bookings reflected demand across multiple areas of our portfolio. Importantly, we are also beginning to see some of the defense spending tailwinds we've discussed on past calls materialize in the form of earlier-than-expected bookings. • Effectors were a particular area of strength, with bookings increasing meaningfully year-over-year, including a significant production award for advanced weapons systems that expands Mercury's role on the program. We also received a follow -on production order supporting an established missile defense platform. • Radar bookings also increased year over year, supported by awards across multiple programs. • Electronic warfare was another area of strength, with bookings increasing significantly year over year, including a competiti ve takeaway on the F-35 program driven in part by improvements in our operational execution. • We also received notable awards across our common processing architecture and space-based tracking applications, including follow-on orders supporting existing satellite programs and additional funding associated with early-stage Golden Dome-related missile tracking capabilities. 6
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expanding margins ▪ In our efforts toward consistently delivering adjusted EBITDA margins in the low to mid 20s, we are focused on the following drivers: • Backlog margin expansion as we convert legacy lower-margin backlog and add new bookings aligned with our target margin profile. • Ongoing initiatives to further simplify, automate, and optimize our operations. • Driving organic growth to increase positive operating leverage. ▪ Gross margin for Q1 of 35.2% was up 730 basis points year-over-year reflecting a favorable mix in the quarter and improved average backlog margin. ▪ Q1 FY27 operating expenses are flat on an absolute basis and down year-over-year as a percent of revenue reflecting our ongoing focus to drive efficiencies and enable positive operating leverage with top-line growth. ▪ Quarterly adjusted EBITDA margin of 22.3% was ahead of our expectation and up 648 basis points year-over- year driven by the favorable mix in the quarter. We are encouraged by Q1 adjusted EBITDA margin which we believe is an early indication of our ability over time to consistently deliver results within our target margin profile. 7
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Driving improved free cash flow conversion and release ▪ Continue to make progress on drivers of free cash flow. Net working capital at approximately $491M, while up $33M year-over-year, is down 60 basis points as a percent of trailing twelve- month revenue. ▪ Net debt of $232M at the end of the quarter is down $55M year-over-year. With a $100M debt repayment in Q1, we have paid down $250M in debt over the last two quarters, reflecting confidence in our expected ability to generate robust free cash flow on an ongoing basis. ▪ We believe our continuous improvement related to program execution, demand planning, and supply chain management, along with strong balance sheet flexibility, positions us well to drive organic growth efficiently and to capitalize on any additional potential market tailwinds. 8
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expectations for FY27 and beyond* ▪ Our Q1 results reflect significant progress toward consistently delivering on our target financial profile of top- line growth above our estimated market growth rate of 9.9%, adjusted EBITDA margins in the low to mid 20s, and free cash flow conversion of 50%. ▪ Based on our Q1 performance, we are raising our FY27 outlook for revenue, adjusted EBITDA, and FCF conversion. ▪ For FY27, we now expect revenue growth of double digits year-over-year, up from approaching double digits, with total revenue approaching $1.1B. • We anticipate Q2 revenue to be up 10% year-over-year, with revenue increasing through the balance of the year. ▪ We expect FY27 adjusted EBITDA margin in the high-teens and adjusted EBITDA around $210M, reflecting 40% year-over-year growth, up from our prior view of approaching $200M and 30% year-over-year growth. • We expect Q2 adjusted EBITDA margin to expand roughly 500 basis points year over year and adjusted EBITDA margin to increase quarterly through the balance of the year. ▪ Amid increased demand, we are making targeted investments in inventory, automation, and factory optimization to drive organic growth. • For the full year, we are now anticipating FY27 free cash flow conversion approaching 40%, up from approaching 35%, with positive Q2 free cash flow and second half free cash flow expected to be higher than in the first half. 9
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Expectations for FY27 and beyond* - continued ▪ While our revised FY27 outlook incorporates a limited set of tailwinds that have materialized in firm bookings, it does not incorporate the benefit of potential tailwinds that could occur on a number of production programs across our portfolio, including our Common Processing Architecture, effectors, airborne applications, space, and missile defense. • Additionally, this outlook does not incorporate benefits from automation efforts across our organization to improve backlog conversion. • We believe any such improvements may translate into higher organic growth and adjusted EBITDA margin, representing potential upside to our outlook. ▪ Finally, while we are not updating today the FY28 reference points that we provided last quarter, our record Q1 performance, record backlog, and improving visibility gives us increasing confidence in our outlook beyond FY27. We expect to revisit and update these reference points as we progress through the back half of FY27. ▪ In summary, with our positive momentum coming out of a record Q1, we look forward to executing well for our customers, enabling high-performance processing and mission dominance for the warfighter at the edge, and delivering on what we believe is a significant value creation opportunity in front of us. 10 * Our previously provided FY28 reference points, along with our target profile, should not be construed as financial guidance. They illustrate the financial profile the business could achieve based on the factors referenced in the forward-looking safe harbor statement, including our ability to convert backlog to revenue and gain additional orders beyond current backlog. These factors may materially affect whether we reach these reference points or target profile.
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ 11 $ millions, except percentage and per share data Q1 FY27(2) Q1 FY26(2) CHANGE Bookings $370.5 $250.2 48% Book-to-Bill 1.46 1.11 Backlog $2,061.4 $1,424.5 45% 12-Month Backlog 1,042.9 815.6 Revenue $253.2 $225.2 12% Gross Margin 35.2% 27.9% 730 bps Operating Expenses $70.7 $71.5 (1%)Selling, General & Administrative 43.0 45.9 Research & Development 16.1 13.2 Amortization/Restructuring/Acquisition 11.6 12.4 GAAP Net Income (Loss) $13.1 ($12.5) N.A. GAAP Net Income (Loss) Per Share $0.21 ($0.21) N.A. Weighted Average Diluted Shares 61.6 59.2 Adjusted EPS(1) $0.52 $0.26 100% Adj. EBITDA(1) $56.4 $35.6 59% % of revenue 22.3% 15.8% Operating Cash Flow $(14.0) $2.2 N.A. Free Cash Flow(1) ($24.4) ($4.4) N.A. % of Adjusted EBITDA N/A N/A Q1 FY27 vs. Q1 FY26 Notes (1) Non-GAAP, see reconciliation table. (2) All references in this presentation to the first quarter of fiscal 2027 are to the quarter ended October 2, 2026. All references in this presentation to the first quarter of fiscal 2026 are to the quarter ended September 26, 2025.
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Balance sheet 12 Notes 1. Rounded amounts used. (In $ millions)(1) 9/26/25 12/26/25 3/27/26 7/3/26 10/2/26 ASSETS Cash & cash equivalents $304.7 $335.0 $331.8 $214.3 $109.7 Accounts receivable and unbilled receivables, net 367.5 379.8 365.0 355.0 371.1 Inventory, net 340.2 349.6 361.7 367.0 398.6 PP&E, net 102.6 102.0 102.6 108.4 110.3 Goodwill and intangibles, net 1,138.5 1,131.3 1,127.8 1,118.2 1,108.2 Other 204.1 204.4 192.4 159.9 158.0 TOTAL ASSETS $2,457.6 $2,502.1 $2,481.3 $2,322.8 $2,255.9 LIABILITIES AND S/E AP and accrued expenses $196.7 $246.1 $224.2 $179.0 $166.5 Deferred revenues and customer advances 125.5 136.9 126.3 149.6 150.2 Other liabilities 68.9 67.6 61.6 55.2 51.0 Debt 591.5 591.5 591.5 441.5 341.5 Total liabilities 982.6 1,042.1 1,003.6 825.3 709.2 Stockholders' equity 1,475.0 1,460.0 1,477.7 1,497.5 1,546.7 TOTAL LIABILITIES AND S/E $2,457.6 $2,502.1 $2,481.3 $2,322.8 $2,255.9
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Cash flow summary 13 Notes 1. Rounded amounts used. 2. Non-GAAP, see reconciliation table. (In $ millions)(1) 9/26/25 12/26/25 3/27/26 7/3/26 10/2/26 Net (loss) income ($12.5) ($15.1) ($2.9) $0.8 $13.1 Depreciation and amortization 18.9 18.3 18.0 17.5 17.8 Other non-cash items, net 12.7 12.5 12.3 23.8 17.1 Changes in Operating Assets and Liabilities Accounts receivable, unbilled receivables, and costs in excess of billings 20.1 (12.0) 14.5 10.1 (17.5) Inventory (12.1) (11.6) (12.7) (8.1) (32.3) Accounts payable and accrued expenses 20.9 46.1 (19.5) (43.6) (10.4) Other (45.8) 13.4 (3.3) 41.6 (1.7) (16.9) 35.9 (21.0) 0.0 (61.9) Operating Cash Flow 2.2 51.6 6.4 42.1 (14.0) Capital expenditures (6.6) (5.9) (8.3) (13.6) (10.4) Free Cash Flow(2) ($4.4) $45.7 ($1.8) $28.6 ($24.4) Free Cash Flow(2) / Adjusted EBITDA(2) N/A 152.3% N/A 140.3% N/A Free Cash Flow(2) / GAAP Net (Loss) Income N.A. N.A. N.A. 3,575% N.A.
© Mercury Systems, Inc. APPENDIX
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Adjusted EPS reconciliation Notes (1) Per share information is presented on a fully diluted basis. (2) Rounded amounts used. (3) Impact to income taxes is calculated by recasting income before income taxes to include the items involved in determining adjusted income and recalculating the income tax provision using this adjusted income from operations before income taxes. The recalculation also adjusts for any discrete tax provision or benefit related to the items. (4) All references in this presentation to the first quarter of fiscal 2027 and LTM Q1 FY27 are to the quarter ended October 2, 2026, and the four-quarter period ended October 2, 2026. All references in this presentation to the first quarter of fiscal 2026 and LTM Q1 FY26 are to the quarter ended September 26, 2025, and the four- quarter period ended September 26, 2025. (5) Earnings per share and Adjusted earnings per share is calculated using diluted shares whereas loss per share and adjusted loss per share is calculated using basic shares. There was no impact to the calculation of adjusted earnings per share as a result of the first quarter ended September 26, 2025. (In thousands, except per share data)(2) Q1 FY26 Q1 FY27 LTM Q1 FY26 LTM Q1 FY27 (Loss) income per share(1) ($0.21) $0.21 ($0.57) ($0.07) Net (Loss) Income ($12,515) $13,088 ($32,894) ($4,070) Other non-operating adjustments, net 748 584 (5,259) 2,799 Amortization of intangible assets 10,259 9,303 41,873 37,948 Restructuring and other charges 1,584 2,018 6,540 6,373 Impairment of long-lived assets — — — — Acquisition, financing and other third party costs 1,317 750 5,624 3,942 Fair value adjustments from purchase accounting 131 131 571 525 Litigation and settlement expense, net 7,224 545 18,840 6,772 Stock-based and other non-cash compensation expense 16,328 17,191 44,041 58,007 Impact to income taxes(3) (9,516) (11,605) (28,354) (31,681) Adjusted income $15,560 $32,005 $50,982 $80,615 Adjusted earnings per share(1)(5) $0.26 $0.52 $0.86 $1.32 Weighted-average shares outstanding: Basic 59,191 60,121 Diluted 60,140 61,623
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Adjusted EBITDA reconciliation 16 Notes (1) Rounded amounts used. (2) All references in this presentation to the first quarter of fiscal 2027 and LTM Q1 FY27 are to the quarter ended October 2, 2026, and the four- quarter period ended October 2, 2026. All references in this presentation to the first quarter of fiscal 2026 and LTM Q1 FY26 are to the quarter ended September 26, 2025, and the four-quarter period ended September 26, 2025. (In thousands)(1)(2) Q1 FY26 Q1 FY27 LTM Q1 FY26 LTM Q1 FY27 Net (loss) income ($12,515) $13,088 ($32,894) ($4,070) Other non-operating adjustments, net 748 584 (5,259) 2,799 Interest expense, net 5,859 4,079 27,320 20,087 Income tax (benefit) provision (4,021) 220 (10,947) 5,025 Depreciation 8,654 8,486 37,847 33,611 Amortization of intangible assets 10,259 9,303 41,873 37,948 Restructuring and other charges 1,584 2,018 6,540 6,373 Impairment of long-lived assets — — — — Acquisition, financing and other third party costs 1,317 750 5,624 3,942 Fair value adjustments from purchase accounting 131 131 571 525 Litigation and settlement expense, net 7,224 545 18,840 6,772 Stock-based and other non-cash compensation expense 16,328 17,191 44,041 58,007 Adjusted EBITDA $35,568 $56,395 $133,556 $171,019
© Mercury Systems, Inc. /Mercury Proprietary/No Tech Data/ Free cash flow reconciliation 17 Notes 1. Rounded amounts used.(In thousands)(1) Q1 FY26 Q1 FY27 LTM Q1 FY26 LTM Q1 FY27 Cash provided by (used in) operating activities $2,182 ($13,966) $155,693 $86,240 Purchases of property and equipment (6,548) (10,413) (20,115) (38,166) Free cash flow ($4,366) ($24,379) $135,578 $48,074