Lyntris (LYNX) Q3 2026 earnings review
Lyntris sales nearly double, but production costs squeeze gross profit
Lyntris, a maker of military radar hardware and command software, grew fast as its key defense programs entered production. Revenue rose 90% from a year ago, and upfront customer payments lifted free cash flow to $79 million. Chief executive Brian Morrison pointed to a contract backlog that passed $1 billion, while the full-year plan leaves fourth-quarter sales growing about 77% by our math.
| Sales from businesses owned a year ago | +89% total revenue $194.4M, +90.4% from a year ago |
|---|---|
| Contract backlog | $1,013M +113% since the start of the year |
| Free cash flow | $79.5M -$3.8M a year ago |
| Full-year revenue outlook | $623–630M middle of the range: 61.1% growth |
⚖️ Verdict: 🟢 Bullish
The story got better because flagship air and missile defense radars moved from development into production, locking in orders through 2028 while IPO proceeds and cash flow cut net debt in half. One caution: direct production costs took a bigger share of revenue, cutting gross margin by nearly 5 percentage points, and the full-year plan points to a narrower profit margin in the fourth quarter than a year ago.
The question now is whether scaling up radar hardware permanently lowers profit margins or only hurts during early production runs. If initial setup costs caused the dip, factory margins will recover as volumes build; if hardware contracts pay less than software, margins will stay compressed. Fourth-quarter gross margin and the 2027 outlook will tell.
🐂 Bull Case
Radar Production Drove 90% Revenue Growth
Lyntris makes hardware and software that connect military sensors to weapons. Its largest unit, Air and Missile Defense, carried the third quarter after standing still in the first half of the year. Chief executive Brian Morrison said customers are buying Lyntris gear for the speed and connectivity that modern threats require.
The company cited "embedded growth across flagship radar programs accelerating into full and low-rate production". It won additional production orders for LTAMDS, an army air-defense radar, and qualified a hardware assembly for SPY-6, a navy radar system.
- Air and Missile Defense sales: $83.4 million, up 153.8% from a year ago after growing 0.1% in the first half by our math
- Space ISR (intelligence, surveillance and reconnaissance) and Resilient Communications sales: $56.8 million, up 107.9% from a year ago
- Sales from businesses owned a year ago: up 89%, accounting for almost all of the 90.4% total revenue growth
Moving from development into production locks in multi-year factory work, because the LTAMDS orders give the group visibility through 2028. What to watch: fourth-quarter revenue by segment when full-year results arrive. It will show whether radar production stays near $83 million a quarter.
Backlog Passed $1 Billion on New Orders
Backlog is the value of awarded contracts Lyntris has not yet turned into revenue. That reserve more than doubled in the first nine months of 2026 to $1,013 million. In the third quarter alone, the defense contractor added $89 million to its backlog even while shipping $194.4 million of work.
By our math, that means customers signed $283.4 million of new contracts during the quarter, or $1.46 of new orders for every dollar of sales. New wins included space payload awards and ground antennas for lunar company Intuitive Machines. What to watch: year-end backlog next quarter. A rise above $1,013 million would show orders still outpace the faster production rate.
Upfront Customer Payments Turned Cash Flow Positive
Lyntris generated $79.5 million of free cash flow in the third quarter, reversing a $3.8 million cash burn a year ago. For the first nine months, free cash flow reached $108.3 million, or 24.9% of revenue by our math.
Upfront customer billings drove much of the cash inflow, because deferred revenue on the balance sheet jumped from $30.0 million at year-end to $79.3 million, while unpaid bills in accounts payable rose by $26.3 million. Capital spending stayed low at $4.6 million, or 2.4% of sales. What to watch: fourth-quarter operating cash flow. As factories build out those prepaid orders, cash generation will drop toward underlying profit.
🐻 Bear Case
Production Costs Cut the Gross Margin
The company credited "effective cost controls and economies of scale on higher revenues" for lifting its Adjusted EBITDA margin — profit before interest, taxes, depreciation and one-offs — by 0.1 percentage points to 14.7%. The income statement shows that factory margins actually moved the other way.
Cost of revenue, the direct cost of building hardware and delivering software, climbed 4.8 percentage points to 77.8% of sales. That pushed gross margin down from 27.1% a year ago to 22.2% by our math. Lyntris kept operating profit growing only because selling, general and administrative overhead fell 3.8 points to 14.6% of revenue.
Furthermore, by our math the full-year outlook points to a fourth-quarter Adjusted EBITDA margin of 15.7%, down 5.1 points from 20.8% in the fourth quarter of 2025. Low-rate initial radar production carries heavier unit costs than mature programs. What to watch: fourth-quarter gross margin. Another drop below 22% would show hardware production is diluting profitability as it scales.
A Lower Tax Assumption Lifted Adjusted Profit
Lyntris reported $17.0 million of net profit excluding one-offs, or $0.15 per share, while GAAP net loss stood at $3.0 million. To reach that adjusted figure, the company added back $20.7 million of pre-tax expenses, including $7.4 million for retiring old debt, $4.9 million of stock compensation and $4.4 million of acquisition costs.
It also changed how it taxes those add-backs. Footnote 9 notes that "In our prior filings with the SEC, we used a blended federal and state statutory rate of 25% for all periods presented". This quarter it used a 3.4% tax rate, which added $4.5 million, or $0.04 per share by our math, to adjusted profit. What to watch: acquisition and stock compensation costs in the fourth quarter. They will show whether these add-backs shrink after the IPO.
👓 Other Themes
IPO Cash and New Debt Cut Leverage
Morrison said that "With a stronger balance sheet following our IPO, we are investing to deliver on our customers’ most urgent missions". Lyntris raised $67 million from its August initial public offering and signed a new $200 million term loan and $100 million credit line. Together with operating cash, that cut net debt from $265.6 million at year-end to $109.5 million, lowering net debt to 1.2 times trailing 12-month Adjusted EBITDA.
💲 Other KPIs
Deferred revenue — cash customers have paid for work not yet delivered — rose 164.0% from $30.0 million at the end of 2025. The $49.3 million increase over the first nine months outpaced the 54.9% rise in year-to-date revenue and supplied more than 40% of the company's operating cash flow.
Weighted average diluted shares rose 12.4% from 100.4 million a year ago after the defense group sold 5.7 million new shares in its August initial public offering. Total shares outstanding reached 115.9 million at the end of September, up from 104.4 million at the end of 2025, which will spread fourth-quarter earnings across a larger base.
Sales in the maritime unit grew 29.4% from a year ago on allied nation demand for command-and-control software and sensors. That slowed from 52.0% growth across the first nine months of 2026, making maritime the slowest of the three segments this quarter as radar and space programs took the lead.
🔮 Guidance
New. The first full-year plan since going public calls for about 61.1% revenue growth at the middle of the range. By our math, that leaves $187.6–194.6 million for the fourth quarter, or 77.3% growth from a year ago at the middle of the range, down from 90.4% in the third quarter.
New. The plan puts full-year Adjusted EBITDA up 53.8% at the middle of the range, representing a 15.4% margin. By our math, that leaves $29.2–30.7 million for the fourth quarter, up 33.5% from a year ago at a 15.7% margin, down from 20.8% in last year's fourth quarter.
❓ Key Questions
Why did gross margin drop nearly 5 points in Q3?
Cost of revenue jumped from 72.9% of sales a year ago to 77.8% as radar programs entered production. Management did not say whether low-rate initial hardware contracts carry structurally lower margins than the maritime software mix.
Why does the outlook imply a 5-point Q4 margin drop?
By our math, the full-year plan leaves fourth-quarter Adjusted EBITDA margin at 15.7%, down from 20.8% in the fourth quarter of 2025, even though implied fourth-quarter revenue is 77% higher.
How much of the $1,013 million backlog ships in 2027?
Lyntris said LTAMDS radar orders extend visibility through 2028, but it did not disclose what share of the $1,013 million backlog is funded or scheduled for delivery over the next 12 months.
When will acquisition and integration costs stop?
The company excluded $4.4 million of acquisition and integration costs in the third quarter and $10.5 million over nine months, while revenue growth was 89% from businesses owned a year ago.