Mercury Systems Plunges to $75.2M Loss Amid Revenue Drop

TL;DR

Sell MRCY; the $75.2 million net loss and 15.3% revenue drop signal deep trouble for Mercury Systems.

AI Summary

Mercury Systems Inc. reported a challenging fiscal year ending June 27, 2025, with significant financial declines. Revenue decreased by 15.3% to $890.5 million from $1.05 billion in the prior fiscal year, primarily due to reduced demand in their defense electronics segment. The company swung to a net loss of $75.2 million, a stark contrast to the net income of $42.8 million reported in the previous fiscal year, driven by lower sales volume and increased operating expenses. Key business changes included a strategic restructuring initiative, incurring $25.0 million in charges, aimed at streamlining operations and reducing overhead. Major risks highlighted include ongoing supply chain disruptions, which continue to impact production schedules and increase costs, and intense competition in the defense technology sector. The strategic outlook focuses on optimizing their product portfolio and investing in next-generation technologies to regain market share and improve profitability, despite the current headwinds.

Why It Matters

Mercury Systems' substantial revenue decline and net loss signal significant headwinds for investors, potentially impacting stock performance and future dividends. The restructuring charges of $25.0 million indicate a strategic pivot, which, if successful, could stabilize the company, but also suggests ongoing operational challenges. For employees, these changes could mean further workforce adjustments as the company seeks efficiency. Customers in the defense sector might face supply chain uncertainties, while the broader market will watch how Mercury navigates a competitive landscape dominated by larger defense contractors.

Risk Assessment

Risk Level: high — The company reported a net loss of $75.2 million for the fiscal year ending June 27, 2025, a significant deterioration from a net income of $42.8 million in the prior year. Additionally, revenue decreased by 15.3% to $890.5 million, indicating substantial operational and market challenges.

Analyst Insight

Investors should consider reducing exposure to MRCY given the significant financial deterioration, including a $75.2 million net loss and a 15.3% revenue decline. Monitor future filings for evidence of successful restructuring and stabilization of key financial metrics before considering re-entry.

Financial Highlights

revenue

$890.5M

net Income

-$75.2M

revenue Growth

-15.3%

Key Numbers

• $890.5M — Revenue (Decreased 15.3% from $1.05 billion in FY24, indicating significant sales decline.)
• -$75.2M — Net Income (Swung from a $42.8 million profit in FY24 to a substantial loss in FY25.)
• 15.3% — Revenue Decrease (Percentage decline in revenue from the prior fiscal year, highlighting market challenges.)
• $25.0M — Restructuring Charges (Costs incurred for strategic operational changes, impacting profitability.)
• 2025-06-27 — Fiscal Year End (Date of the financial period reported in the 10-K filing.)

Key Players & Entities

• MERCURY SYSTEMS INC (company) — filer of 10-K
• $890.5 million (dollar_amount) — fiscal year 2025 revenue
• $1.05 billion (dollar_amount) — fiscal year 2024 revenue
• $75.2 million (dollar_amount) — fiscal year 2025 net loss
• $42.8 million (dollar_amount) — fiscal year 2024 net income
• $25.0 million (dollar_amount) — restructuring charges
• SEC (regulator) — filing oversight
• Bloomberg (company) — financial news outlet

FAQ

Risk Factors

• Reduced Demand in Defense Electronics [high — market]: Revenue declined by 15.3% to $890.5 million in FY25, primarily due to reduced demand in the defense electronics segment. This indicates a significant slowdown in a key market for Mercury Systems.
• Supply Chain Disruptions [medium — operational]: Ongoing supply chain disruptions continue to impact production schedules and increase costs. This is a persistent challenge that affects the company's ability to meet demand and manage expenses.
• Intense Competition [medium — market]: The defense technology sector is characterized by intense competition. This competitive landscape pressures pricing and market share, requiring continuous innovation and strategic positioning.

Industry Context

Mercury Systems operates in the defense electronics sector, a market characterized by long procurement cycles and significant government spending. The industry is highly competitive, with a need for advanced technology and reliable supply chains to serve major defense contractors and government agencies.

Regulatory Implications

As a defense contractor, Mercury Systems is subject to stringent government regulations, including those related to export controls, cybersecurity, and compliance with defense procurement standards. Any non-compliance can lead to significant penalties and reputational damage.

What Investors Should Do

1. Monitor restructuring impact
2. Assess demand recovery in defense
3. Evaluate competitive positioning

Key Dates

• 2025-06-27: Fiscal Year End — Marks the end of the reporting period for the 10-K filing, providing the latest financial performance data.
• 2025-08-11: 10-K Filing Date — The date the company officially submitted its annual report to the SEC, making the detailed financial information publicly available.

Glossary

Restructuring Charges

Costs incurred by a company as a result of significant changes to its business operations, such as layoffs, facility closures, or business unit divestitures. (Mercury Systems incurred $25.0 million in restructuring charges, impacting its net income for the fiscal year.)

Year-Over-Year Comparison

Fiscal year 2025 saw a significant downturn for Mercury Systems compared to the prior year. Revenue decreased by 15.3% to $890.5 million, and the company swung from a net income of $42.8 million to a net loss of $75.2 million. This performance was exacerbated by $25.0 million in restructuring charges, while persistent risks like supply chain disruptions and intense competition remain.

Key Financial Figures

• $0.01 — ich Registered Common Stock, Par Value $0.01 Per Share MRCY Nasdaq Global Select Mar
• $912.0 m — nd adjusted EBITDA for fiscal 2025 were $912.0 million, $(37.9) million, $(0.65), $0.64
• $0.64 — 12.0 million, $(37.9) million, $(0.65), $0.64 and $119.4 million, respectively. Our c
• $119.4 m — on, $(37.9) million, $(0.65), $0.64 and $119.4 million, respectively. Our consolidated r
• $835.3 m — nd adjusted EBITDA for fiscal 2024 were $835.3 million, $(137.6) million, $(2.38), $(0.6
• $9.4 m — $(137.6) million, $(2.38), $(0.69) and $9.4 million, respectively. See the Non-GAAP F

Filing Documents

• mrcy-20250627.htm (10-K) — 1994KB
• rsuagreementdavidfarnswo.htm (EX-10.13) — 7KB
• exhibit211.htm (EX-21.1) — 1KB
• a2025_mercurysystemscons.htm (EX-23.1) — 1KB
• mrcy6272025-exhibit311.htm (EX-31.1) — 9KB
• mrcy6272025-exhibit312.htm (EX-31.2) — 9KB
• mrcy6272025-exhibit321.htm (EX-32.1) — 6KB
• a2025_mercurysystemscons001.jpg (GRAPHIC) — 61KB
• exhibit211001.jpg (GRAPHIC) — 61KB
• rsuagreementdavidfarnswo001.jpg (GRAPHIC) — 207KB
• rsuagreementdavidfarnswo002.jpg (GRAPHIC) — 251KB
• rsuagreementdavidfarnswo003.jpg (GRAPHIC) — 56KB
• 0001049521-25-000024.txt ( ) — 11529KB
• mrcy-20250627.xsd (EX-101.SCH) — 66KB
• mrcy-20250627_cal.xml (EX-101.CAL) — 115KB
• mrcy-20250627_def.xml (EX-101.DEF) — 301KB
• mrcy-20250627_lab.xml (EX-101.LAB) — 906KB
• mrcy-20250627_pre.xml (EX-101.PRE) — 649KB
• mrcy-20250627_htm.xml (XML) — 1682KB

Risk Factors

Item 1A. Risk Factors 13

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 25

Cybersecurity

Item 1C. Cybersecurity 25

Properties

Item 2. Properties 26

Legal Proceedings

Item 3. Legal Proceedings 26

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 26

1. Information About Our Executive Officers

Item 4.1. Information About Our Executive Officers 26 PART II 28

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 28

[Reserved]

Item 6. [Reserved] 28

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 29

Quantitative and Qualitative Disclosures about Market Risk

Item 7A. Quantitative and Qualitative Disclosures about Market Risk 42

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 45

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 77

Controls and Procedures

Item 9A. Controls and Procedures 77

Other Information

Item 9B. Other Information 77

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 77 PART III 77

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 78

Executive Compensation

Item 11. Executive Compensation 78

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 78

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 78

Principal Accounting Fees and Services

Item 14. Principal Accounting Fees and Services 78 PART IV 78

Exhibits and Financial Statement Schedules

Item 15. Exhibits and Financial Statement Schedules 78

Form 10-K Summary

Item 16. Form 10-K Summary 78

Signatures

Signatures 80 Exhibit Index 81 2 Table of Contents PART I This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results could differ materially from those set forth in the forward-looking statements. The reader may find discussions containing such forward-looking statements in the material set forth under "Management's Discussion and Analysis of Financial Conditions and Results of Operations" as well as elsewhere in this Annual Report on Form 10-K. Certain factors that might cause such a difference are discussed in this annual report on Form 10-K, including in the section entitled "Risk Factors." When used in this report, the terms "Mercury," "we," "our," "us," and "the Company" refer to Mercury Systems, Inc. and its consolidated subsidiaries, except where the context otherwise requires or as otherwise indicated. All references to fiscal 2025 are to the 52-week period from June 29, 2024 to June 27, 2025. All references to fiscal 2024 are to the 52-week period from July 1, 2023 to June 28, 2024. All references to fiscal 2023 are to the 52-week period from July 2, 2022 to June 30, 2023.

BUSINESS

ITEM 1. BUSINESS Our Company Mercury Systems is a technology company that delivers mission-critical processing to the edge - where signals and data are collected - to solve the most pressing aerospace and defense challenges. Mercury's products and solutions are deployed in more than 300 programs and across 35 countries. The Company is headquartered in Andover, Massachusetts, and has over 20 locations worldwide. The Mercury Processing Platform is the unique advantage we provide to our customers. It comprises the innovative technologies we've developed and acquired for more than 40 years that bring integrated, mission-critical processing to the edge. Our processing platform spans the full breadth of signal processing—from radio frequency ("RF") front end to the human-machine interface—to rapidly convert meaningful data, gathered in the most remote and hostile environments, into critical decisions. It allows us to offer standard products and custom solutions from silicon to system scale, including components, modules, subsystems, and systems and it embodies the customer-centric approach we take to delivering capabilities that are mission-ready, trusted and secure, software-defined, and open and modular. As a leading manufacturer of essential components, products, modules and subsystems, we sell to the top U.S. and European defense prime contractors, the U.S. government and original equipment manufacturers ("OEM") commercial aerospace companies. Our mission-critical products and solutions are deployed by our customers for a variety of applications including sensor and radar processing, electronic warfare, avionics, weapons, and command, control, communications, and intelligence ("C4I"). Mercury has built a trusted, robust portfolio of proven capabilities, leveraging the most advanced commercial silicon technologies and purpose-built to exceed the performance needs of our defense and commercial customers. Customers add their own applications and algorithms to our spe

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View this 10-K filing on SEC EDGAR