Mercury Systems (MRCY) Booked $660 Million. Why Did its Shares Fall More than 10% After Hours?

Mercury Systems reported a record $660 million in bookings for its fiscal fourth quarter, up 93.1% from the previous year. However, the company's shares fell more than 10% after hours, closing at $105.00 and trading around $92.50 in after-hours trading. While revenue rose 6.1% to $289.8 million, adjusted earnings per share missed estimates, declining from $0.47 to $0.37.

The company's backlog exceeded $1.9 billion, with approximately $1 billion expected to convert into revenue over the next 12 months. Despite strong demand, Mercury Systems expects a significant cash flow gap between bookings and actual revenue, as well as a reduction in free cash flow to 35% of adjusted EBITDA, below its long-term target.