Nasdaq:MRCY
MERCURY SYSTEMS INC
Aerospace electronics manufacturer specializing in cockpit displays and avionics systems for military and commercial applications.
Key Metrics
Investment Thesis
Bull Case
Mercury Systems benefits from strong secular tailwinds in defense modernization and commercial aviation recovery, supported by a robust cash position of $309.1M. The significant goodwill on the balance sheet indicates a history of successful acquisitions that have expanded its technological portfolio and market reach.
Bear Case
Persistent net losses and a retained earnings deficit of $-181.9M raise concerns about the company's ability to sustain operations without further capital infusions. Revenue contraction in 2024 followed by only partial recovery in 2025 highlights sensitivity to macroeconomic headwinds and cyclical demand in the aerospace sector.
About MERCURY SYSTEMS INC
Mercury Systems Inc. designs and manufactures advanced electronic systems for aerospace, defense, and commercial aviation markets, including cockpit displays, avionics, and mission computers. The company serves global government agencies and commercial airlines with a focus on high-reliability embedded computing solutions.
Analysis
Management Discussion
The company reported a revenue of $912.0M in 2025, recovering from a decline in 2024, though it continues to operate with a net loss of $-37.9M. Operating expenses and R&D investments totaling over $240M suggest the firm is prioritizing long-term product development over immediate profitability.
Industry Overview
The global avionics industry is experiencing steady growth driven by air traffic expansion and military modernization programs, creating opportunities for specialized electronic system integrators. Competition remains intense as traditional players compete with emerging tech firms offering alternative solutions.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Revenue | $973.9M | $835.3M | $912.0M |
| Cost of Revenue | $657.2M | $639.4M | $657.5M |
| Gross Profit | $316.7M | $195.9M | $254.5M |
| Operating Expenses | $338.4M | $343.7M | $274.1M |
| Operating Income | $-21.7M | $-147.8M | $-19.6M |
| R&D | $108.8M | $101.3M | $67.6M |
| G&A | $160.6M | $166.8M | $154.4M |
| Stock-Based Comp | $27.8M | $25.7M | $25.0M |
| D&A | $97.3M | $88.0M | $82.0M |
| Depreciation | $43.8M | $40.4M | $39.2M |
| Amortization | $53.6M | $47.7M | $42.8M |
| Other OpEx | $69.0M | $75.5M | $52.1M |
| Non-Operating Income | $-26.9M | $-41.5M | $-30.8M |
| Interest Expense | $25.2M | $35.0M | $33.4M |
| Interest Income | $1.1M | $1.2M | $3.6M |
| Pre-Tax Income | $-48.5M | $-189.3M | $-50.4M |
| Income Tax | $-20.2M | $-51.6M | $-12.5M |
| Continuing Ops | $-28.3M | $-137.6M | $-37.9M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-28.3M | $-137.6M | $-37.9M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-28.3M | $-137.6M | $-37.9M |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Current Assets | $937.0M | $953.8M | $1.06B |
| Cash & Equivalents | $71.6M | $180.5M | $309.1M |
| Accounts Receivable | $124.7M | $111.4M | $109.6M |
| Inventory | $337.2M | $335.3M | $332.9M |
| Prepaid Expenses | $21.0M | $22.5M | $27.6M |
| Other Current Assets | $382.6M | $304.0M | $278.9M |
| Long-Term Assets | $1.45B | $1.43B | $1.38B |
| PP&E (Net) | $119.6M | $110.4M | $101.4M |
| Intangibles | $298.1M | $250.5M | $210.6M |
| Goodwill | $938.1M | $938.1M | $938.1M |
| Operating Leases | $63.0M | $60.9M | $52.3M |
| Other LT Assets | $35.6M | $65.3M | $74.2M |
| Total Assets | $2.39B | $2.38B | $2.43B |
| Current Liabilities | $233.3M | $234.4M | $300.4M |
| Accounts Payable | $104.0M | $81.1M | $79.1M |
| Current Leases | $10.4M | $11.6M | $11.8M |
| Deferred Revenue | $56.6M | $73.9M | $126.8M |
| Taxes Payable | $13.9M | $109.0K | $0 |
| Other Current Liab | $20.0M | $24.8M | $39.5M |
| Long-Term Liabilities | $591.4M | $671.7M | $660.9M |
| LT Operating Leases | $66.8M | $62.6M | $52.7M |
| Other LT Liab | $519.5M | $601.4M | $604.1M |
| Total Liabilities | $824.7M | $906.1M | $961.3M |
| Shareholders' Equity | $1.57B | $1.47B | $1.47B |
| Paid-In Capital | $1.20B | $1.24B | $1.29B |
| Retained Earnings | $357.4M | $219.8M | $181.9M |
| AOCI | $11.8M | $10.0M | $3.5M |
| Total L&E | $2.39B | $2.38B | $2.43B |
| Metric | 2023 | 2024 | 2025 |
|---|---|---|---|
| Net Income (CFO) | $-28.3M | $-137.6M | $-37.9M |
| Non-Cash Adjustments | $-130.9M | $271.3M | $160.7M |
| Working Capital Changes | $138.0M | $-73.3M | $16.0M |
| Cash from Operations | $-21.3M | $60.4M | $138.9M |
| Capital Expenditures | $38.8M | $34.3M | $19.8M |
| Cash from Investing | $-38.6M | $-34.3M | $-13.5M |
| Share Buybacks | $63.0K | $31.0K | $0 |
| Cash from Financing | $65.4M | $82.7M | $1.4M |
| FX Effect | $295.0K | $187.0K | $1.8M |
| Net Change in Cash | $5.9M | $109.0M | $128.6M |
| Beginning Cash | $65.7M | $71.6M | $180.5M |
| Ending Cash | $71.6M | $180.5M | $309.1M |
Frequently Asked Questions
How does MERCURY SYSTEMS INC make money?
Commercial Avionics, Defense Electronics, Government Systems, and Commercial Displays
What are the main risks for MRCY?
High reliance on government defense contracts which can be subject to budget cuts or delays; Volatility in raw material costs impacting gross margins; Potential impact from geopolitical tensions affecting global supply chains.
What is MRCY's competitive advantage?
Deep expertise in ruggedized, high-reliability embedded computing; Strong relationships with major Original Equipment Manufacturers (OEMs) like Boeing and Airbus; Proprietary software integration capabilities for complex avionics systems.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.