Mercury Systems Reports Fourth Quarter and Fiscal 2026 Results
Rhea-AI Summary
Mercury Systems (NASDAQ:MRCY) reported fourth quarter FY26 revenue of $289.8 million, up 6.1% year-over-year, with record bookings of $660 million, a book-to-bill ratio of 2.28, and record backlog of over $1.9 billion, 38.4% higher than a year ago.
Q4 GAAP net income was $1 million (diluted EPS $0.01), with adjusted EPS of $0.37 and adjusted EBITDA of $49 million, a 16.7% margin. Full-year FY26 revenue reached $983.6 million versus $912.0 million in FY25, with GAAP net loss of $30 million, adjusted EPS of $1.06, and adjusted EBITDA of $150 million. FY26 operating cash flow was $102 million and free cash flow $68 million, while cash and equivalents ended at $214.3 million and long-term debt at $441.5 million.
Positive
- Q4 FY26 bookings $660M, up 93.1% YoY; book-to-bill 2.28
- Total backlog over $1.9B at July 3, 2026, up 38.4% YoY
- Q4 FY26 revenue $289.8M, up 6.1% year-over-year
- FY26 revenue $983.6M vs. $912.0M in FY25
- FY26 adjusted EBITDA $150M vs. $119M in FY25
- FY26 adjusted EPS $1.06 vs. adjusted loss per share $0.64 in FY25
Negative
- Q4 GAAP net income $1M vs. $16M in Q4 FY25; EPS $0.01 vs. $0.27
- FY26 GAAP net loss $30M, though improved from $38M in FY25
- FY26 operating cash flow $102M vs. $139M in FY25
- FY26 free cash flow $68M vs. $119M in FY25
- Cash and equivalents $214.3M at year-end vs. $309.1M prior year
Market reaction after 4Q26 earnings report: MRCY -12.34%
Following this news, MRCY has declined 12.34%, reflecting a significant negative market reaction. Argus tracked a trough of -14.3% from its starting point during tracking. Our momentum scanner has triggered 60 alerts so far, indicating high trading interest and price volatility. The stock is currently trading at $92.04. Trading volume is very high at 4.3x the average, suggesting heavy selling pressure.
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Key Figures
Historical Context
| Date | Event | Sentiment | 24h Move | Catalyst |
|---|---|---|---|---|
| Aug 03 | Palantir partnership | Positive | +8.9% | Automation agreement targeted material planning and factory operations for military programs. |
| Jul 28 | Earnings date notice | Neutral | -9.3% | Company scheduled fiscal 2026 fourth-quarter and full-year results for August 18. |
| May 28 | Production order | Positive | +3.3% | Mercury received a multi-year order for 1,000 secure edge servers. |
| May 05 | Third-quarter earnings | Positive | +10.5% | Record bookings, backlog growth, higher revenue, and improved adjusted EBITDA were reported. |
| Apr 14 | Earnings date notice | Neutral | +1.7% | Company announced the scheduled release date for third-quarter fiscal 2026 results. |
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Substantive positive company announcements were followed by positive reactions, while an earnings-date notice was followed by a negative reaction.
Key Terms
book-to-bill financial
adjusted ebitda financial
gaap financial
free cash flow financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
- Record Q4 FY26 Bookings of
$660 million grew93.1% year-over-year; book-to-bill of 2.28 - Record Backlog of over
$1.9 billion ; up38.4% year-over-year - Record Q4 FY26 Revenue of approximately
$290 million ; up6.1% year-over-year - GAAP net income of
$1 million ; adjusted EBITDA of$49 million and adjusted EBITDA margin of16.7%
ANDOVER, Mass., Aug. 18, 2026 (GLOBE NEWSWIRE) -- Mercury Systems, Inc. (NASDAQ: MRCY, www.mrcy.com), reported operating results for the fourth quarter and fiscal year 2026, ended July 3, 2026.
“We delivered fourth quarter fiscal 2026 results that were ahead of our expectations, with record bookings, record backlog, record revenue, the highest EBITDA margin of the year, and robust free cash flow," said Bill Ballhaus, Mercury’s Chairman and CEO. “Based on our solid execution and strong demand signals, we enter fiscal year 2027 with enhanced visibility and are increasing our outlook for organic growth."
“In the fourth quarter we delivered record bookings of
Fourth Quarter Fiscal 2026 Results
Fourth quarter fiscal 2026 revenues were
Total bookings for the fourth quarter of fiscal 2026 were
GAAP net income and diluted earnings per share for the fourth quarter of fiscal 2026 were
Fourth quarter fiscal 2026 adjusted EBITDA was
Cash flows provided by operating activities in the fourth quarter of fiscal 2026 were
Full Year Fiscal 2026 Results
Full year fiscal 2026 revenues were
Total bookings for fiscal 2026 were
GAAP net loss and loss per share for fiscal 2026 were
Fiscal 2026 adjusted EBITDA was
Cash flows provided by operating activities in fiscal 2026 were
Backlog
Mercury’s total backlog at July 3, 2026 was over
Conference Call Information
Management will host a conference call and simultaneous webcast at 5:00 p.m. ET on Tuesday, August 18, 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/603599389?pwd=RYGqad9c or dial +1 585 542 9983 by phone using Meeting ID: 603599389. The live listen-only webcast and replay will be available ir.mrcy.com/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.
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, Vice President of Investor Relations
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.
| MERCURY SYSTEMS, INC. | ||||||
| UNAUDITED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| July 3, | June 27, | |||||
| 2026 | 2025 | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 214,306 | $ | 309,099 | ||
| Accounts receivable, net | 69,222 | 109,588 | ||||
| Unbilled receivables and costs in excess of billings, net | 285,760 | 278,475 | ||||
| Inventory | 366,968 | 332,920 | ||||
| Prepaid income taxes | 2,258 | 457 | ||||
| Prepaid expenses and other current assets | 34,925 | 27,639 | ||||
| Total current assets | 973,439 | 1,058,178 | ||||
| Property and equipment, net | 108,413 | 101,440 | ||||
| Goodwill | 942,419 | 938,093 | ||||
| Intangible assets, net | 175,820 | 210,611 | ||||
| Operating lease right-of-use assets, net | 47,713 | 52,264 | ||||
| Deferred tax asset | 67,188 | 69,016 | ||||
| Other non-current assets | 7,784 | 5,162 | ||||
| Total assets | $ | 2,322,776 | $ | 2,434,764 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 91,041 | $ | 79,116 | ||
| Accrued expenses | 32,991 | 35,264 | ||||
| Due to factoring facility | 391 | 7,879 | ||||
| Accrued compensation | 54,537 | 51,321 | ||||
| Deferred revenues and customer advances | 149,565 | 126,797 | ||||
| Total current liabilities | 328,525 | 300,377 | ||||
| Income taxes payable | 3,487 | 4,046 | ||||
| Long-term debt | 441,500 | 591,500 | ||||
| Operating lease liabilities | 45,829 | 52,738 | ||||
| Other non-current liabilities | 5,977 | 12,642 | ||||
| Total liabilities | 825,318 | 961,303 | ||||
| Shareholders’ equity: | ||||||
| Preferred stock | — | — | ||||
| Common stock | 596 | 590 | ||||
| Additional paid-in capital | 1,333,410 | 1,287,478 | ||||
| Retained earnings | 152,222 | 181,895 | ||||
| Accumulated other comprehensive income | 11,230 | 3,498 | ||||
| Total shareholders’ equity | 1,497,458 | 1,473,461 | ||||
| Total liabilities and shareholders’ equity | $ | 2,322,776 | $ | 2,434,764 | ||
| MERCURY SYSTEMS, INC. | ||||||||||||||||
| UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||
| Net revenues | $ | 289,782 | $ | 273,106 | $ | 983,622 | $ | 912,020 | ||||||||
| Cost of revenues(1) | 201,199 | 188,338 | 702,457 | 657,526 | ||||||||||||
| Gross margin | 88,583 | 84,768 | 281,165 | 254,494 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative(1) | 47,848 | 37,714 | 175,031 | 154,412 | ||||||||||||
| Research and development(1) | 16,157 | 11,913 | 59,736 | 67,647 | ||||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | 38,904 | 42,849 | ||||||||||||
| Restructuring and other charges | 348 | (15 | ) | 5,939 | 7,216 | |||||||||||
| Acquisition costs and other related expenses | 375 | 1,331 | 1,275 | 1,997 | ||||||||||||
| Total operating expenses | 74,118 | 61,218 | 280,885 | 274,121 | ||||||||||||
| Income (loss) from operations | 14,465 | 23,550 | 280 | (19,627 | ) | |||||||||||
| Interest income | 1,541 | 1,367 | 7,723 | 3,607 | ||||||||||||
| Interest expense | (6,524 | ) | (8,026 | ) | (29,590 | ) | (33,430 | ) | ||||||||
| Other (expense) income, net | (1,689 | ) | 1,926 | (7,302 | ) | (974 | ) | |||||||||
| Income (loss) before income tax provision (benefit) | 7,793 | 18,817 | (28,889 | ) | (50,424 | ) | ||||||||||
| Income tax provision (benefit) | 6,995 | 2,447 | 784 | (12,520 | ) | |||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673 | ) | $ | (37,904 | ) | ||||||
| Basic net earnings (loss) per share | $ | 0.01 | $ | 0.28 | $ | (0.50 | ) | $ | (0.65 | ) | ||||||
| Diluted net earnings (loss) per share | $ | 0.01 | $ | 0.27 | $ | (0.50 | ) | $ | (0.65 | ) | ||||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 59,552 | 58,924 | 59,460 | 58,746 | ||||||||||||
| Diluted | 61,259 | 59,540 | 59,460 | 58,746 | ||||||||||||
| (1) Includes stock-based compensation expense, allocated as follows: | ||||||||||||||||
| Cost of revenues | $ | 1,011 | $ | 446 | $ | 5,584 | $ | 1,205 | ||||||||
| Selling, general and administrative | $ | 9,319 | $ | 653 | $ | 29,197 | $ | 17,809 | ||||||||
| Research and development | $ | 1,586 | $ | 1,318 | $ | 6,351 | $ | 6,005 | ||||||||
| MERCURY SYSTEMS, INC. | ||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||
| Cash flows from operating activities: | ||||||||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673 | ) | $ | (37,904 | ) | ||||||
| Depreciation and amortization | 17,514 | 19,969 | 72,683 | 82,027 | ||||||||||||
| Other non-cash items, net | 23,846 | 6,953 | 61,336 | 26,627 | ||||||||||||
| Changes in operating assets and liabilities | (5 | ) | (5,217 | ) | (1,958 | ) | 68,101 | |||||||||
| Net cash provided by operating activities | 42,153 | 38,075 | 102,388 | 138,851 | ||||||||||||
| Cash flows from investing activities: | ||||||||||||||||
| Purchases of property and equipment | (13,588 | ) | (4,098 | ) | (34,301 | ) | (19,803 | ) | ||||||||
| Acquisition of assets and businesses, net of cash acquired | — | (4,543 | ) | (1,415 | ) | (4,543 | ) | |||||||||
| Proceeds from sale of manufacturing operations to Cicor Group | — | 6,246 | — | 6,246 | ||||||||||||
| Other investing activities | — | — | — | 4,600 | ||||||||||||
| Net cash used in investing activities | (13,588 | ) | (2,395 | ) | (35,716 | ) | (13,500 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||||||
| Proceeds from employee stock plans | 2,690 | 2,169 | 5,418 | 3,661 | ||||||||||||
| Payments for retirement of common stock | — | — | (15,001 | ) | — | |||||||||||
| Payments under credit facilities | (150,000 | ) | — | (150,000 | ) | — | ||||||||||
| Payments of deferred financing and offering costs | — | — | (3,156 | ) | (2,249 | ) | ||||||||||
| Net cash (used in) provided by financing activities | (147,310 | ) | 2,169 | (162,739 | ) | 1,412 | ||||||||||
| Effect of exchange rate changes on cash and cash equivalents | 1,251 | 1,428 | 1,274 | 1,815 | ||||||||||||
| Net (decrease) increase in cash and cash equivalents | (117,494 | ) | 39,277 | (94,793 | ) | 128,578 | ||||||||||
| Cash and cash equivalents at beginning of period | 331,800 | 269,822 | 309,099 | 180,521 | ||||||||||||
| Cash and cash equivalents at end of period | $ | 214,306 | $ | 309,099 | $ | 214,306 | $ | 309,099 | ||||||||
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. 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. 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.
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.
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.
| Fourth Quarters Ended | Twelve Months Ended | ||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | ||||||||||||
| Net income (loss) | $ | 798 | $ | 16,370 | $ | (29,673 | ) | $ | (37,904 | ) | |||||
| Other non-operating adjustments, net | 69 | (4,645 | ) | 2,963 | (7,742 | ) | |||||||||
| Interest expense, net | 4,983 | 6,659 | 21,867 | 29,823 | |||||||||||
| Income tax provision (benefit) | 6,995 | 2,447 | 784 | (12,520 | ) | ||||||||||
| Depreciation | 8,124 | 9,694 | 33,779 | 39,178 | |||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | 38,904 | 42,849 | |||||||||||
| Restructuring and other charges | 348 | (15 | ) | 5,939 | 7,216 | ||||||||||
| Impairment of long-lived asset | — | — | — | — | |||||||||||
| Acquisition, financing and other third party costs | 1,097 | 2,126 | 4,509 | 6,638 | |||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | 525 | 617 | |||||||||||
| Litigation and settlement expense, net | 1,820 | 4,062 | 13,451 | 13,010 | |||||||||||
| Stock-based and other non-cash compensation expense | 14,763 | 4,165 | 57,144 | 38,273 | |||||||||||
| Adjusted EBITDA | $ | 48,518 | $ | 51,269 | $ | 150,192 | $ | 119,438 | |||||||
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.
The following table reconciles the most directly comparable GAAP financial measure to the non-GAAP financial measure.
| Fourth Quarters Ended | Twelve Months Ended | |||||||||||||||
| July 3, 2026 | June 27, 2025 | July 3, 2026 | June 27, 2025 | |||||||||||||
| Net cash provided by operating activities | $ | 42,153 | $ | 38,075 | $ | 102,388 | $ | 138,851 | ||||||||
| Purchases of property and equipment | (13,588 | ) | (4,098 | ) | (34,301 | ) | (19,803 | ) | ||||||||
| Free cash flow | $ | 28,565 | $ | 33,977 | $ | 68,087 | $ | 119,048 | ||||||||
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 tables reconcile the most directly comparable GAAP financial measures to the non-GAAP financial measures.
| Fourth Quarters Ended | ||||||||||||||
| July 3, 2026 | June 27, 2025 | |||||||||||||
| Net income and earnings per share | $ | 798 | $ | 0.01 | $ | 16,370 | $ | 0.27 | ||||||
| Other non-operating adjustments, net | 69 | (4,645 | ) | |||||||||||
| Amortization of intangible assets | 9,390 | 10,275 | ||||||||||||
| Restructuring and other charges | 348 | (15 | ) | |||||||||||
| Impairment of long-lived assets | — | — | ||||||||||||
| Acquisition, financing and other third party costs | 1,097 | 2,126 | ||||||||||||
| Fair value adjustments from purchase accounting | 131 | 131 | ||||||||||||
| Litigation and settlement expense, net | 1,820 | 4,062 | ||||||||||||
| Stock-based and other non-cash compensation expense | 14,763 | 4,165 | ||||||||||||
| Impact to income taxes(1) | (5,662 | ) | (4,576 | ) | ||||||||||
| Adjusted income and adjusted earnings per share | $ | 22,754 | $ | 0.37 | $ | 27,893 | $ | 0.47 | ||||||
| Diluted weighted-average shares outstanding | 61,259 | 59,540 | ||||||||||||
| (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. | ||||||||||||||
| Twelve Months Ended | ||||||||||||||||
| July 3, 2026 | June 27, 2025 | |||||||||||||||
| Net loss and loss per share | $ | (29,673 | ) | $ | (0.50 | ) | $ | (37,904 | ) | $ | (0.65 | ) | ||||
| Other non-operating adjustments, net | 2,963 | (7,742 | ) | |||||||||||||
| Amortization of intangible assets | 38,904 | 42,849 | ||||||||||||||
| Restructuring and other charges | 5,939 | 7,216 | ||||||||||||||
| Impairment of long-lived assets | — | — | ||||||||||||||
| Acquisition, financing and other third party costs | 4,509 | 6,638 | ||||||||||||||
| Fair value adjustments from purchase accounting | 525 | 617 | ||||||||||||||
| Litigation and settlement expense, net | 13,451 | 13,010 | ||||||||||||||
| Stock-based and other non-cash compensation expense | 57,144 | 38,273 | ||||||||||||||
| Impact to income taxes(1) | (29,592 | ) | (25,091 | ) | ||||||||||||
| Adjusted income and adjusted earnings per share(2) | $ | 64,170 | $ | 1.06 | $ | 37,866 | $ | 0.64 | ||||||||
| Diluted weighted-average shares outstanding | 60,737 | 59,203 | ||||||||||||||
| (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 a |
