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It has been about a month since the last earnings report for Mercury Systems (MRCY). Shares have lost about 6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Mercury Systems due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Mercury Systems' Q1 Earnings & Revenues Beat Estimates, Rise Y/Y
Mercury Systems reported first-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate.
The aerospace and defense tech firm reported non-GAAP earnings of 4 cents per share against the Zacks Consensus Estimate of a loss of 13 cents. The bottom line surged 116.7% year over year.
Mercury Systems’ non-GAAP revenues increased 13% year over year to $204.4 million. The top line beat the consensus mark by 12.9%.
MRCY’s earnings beat the Zacks Consensus Estimate once in the last four quarters and lagged in the remaining three, delivering an average negative surprise of 148.69%.
The results reflected solid progress in each of the priority focus areas, with highlights that include reducing operating expenses, aiding increased positive operating leverage and improving the execution across all product offerings, especially the Common Processing Architecture area.
MRCY’s Q1 in Details
Mercury Systems’ total bookings were up 29% year over year to $247.7 million, yielding a book-to-bill ratio of 1.21 for the quarter.
MRCY’s total backlog as of Sept. 27, 2024, was $1.34 billion, reflecting an increase of $187.8 million from the year-ago quarter’s reported figure. As of Sept. 27, 2024, the total backlog of $777 million represented orders expected to be recognized as revenues within the next 12 months.
Mercury Systems’ gross profit was $51.79 million, up 2.5% year over year. Moreover, its gross margin contracted 258 basis points (bps) to 25.3%.
Total operating expenses decreased 28.12% year over year to $65.2 million due to streamlined operations. As a percentage of revenues, operating expenses contracted 1823 bps to 31.9%.
The company reported an adjusted EBITDA of $21.45 million, up 996% year over year. The margin expanded 941 bps to 10.49% due to the execution of development programs to minimize cost growth, increase organic growth and move closer to a 20:80 ratio of development to production program.