Mercury Systems Inc. (NASDAQ: MRCY), a leading provider of aerospace and defense solutions, witnessed a remarkable pre-market surge of 16.73% on Tuesday following the release of its impressive fiscal Q1 2025 earnings results.

The company reported a 13% year-over-year increase in revenue to $204.4 million, driven by robust demand across its product portfolio. Notably, bookings soared 29% to $247.7 million, resulting in a strong book-to-bill ratio of 1.21. This bolstered Mercury Systems' backlog, which reached a record level of over $1.3 billion, up 16% compared to the prior year, providing solid visibility into future revenue streams.

While the company faced near-term margin pressures due to higher manufacturing adjustments and inventory reserves, resulting in a gross margin of 25.3%, down from 27.9% in the prior year, its adjusted EBITDA improved year-over-year to $21.5 million. Furthermore, Mercury Systems made significant progress in reducing net working capital by $97 million, enhancing financial efficiency.

According to CEO William Ballhaus, the company has successfully transitioned from the development stage to full-rate production on key programs like the common processing architecture. This shift is expected to unlock further growth opportunities and help reduce unbilled receivables in the coming quarters.

"We have moved past the challenges associated with these programs and are now ramping up towards full-rate production," Ballhaus stated during the earnings call. "With the resources and capital in place, we are well-positioned to capitalize on the strong demand and deliver sustainable growth."