Transcript: Gilat Satellite Networks Q1 2026 Earnings Conf...

On Wednesday, Gilat Satellite Networks (NASDAQ:GILT) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

Gilat Satellite Networks Ltd reported strong financial performance for 2025, with Q4 revenue at $137 million, up 75% year over year, and full-year revenue at $451.7 million, up 48%. Adjusted EBITDA for Q4 was $18.2 million, a 50% increase from the previous year.

Strategic initiatives included expansion in the defense sector, with significant growth in order bookings and a new market segment in Earth Observation. The commercial segment saw robust performance driven by in-flight connectivity (IFC), with major orders for the SkyEdge 4 platform.

The company provided positive guidance for 2026, expecting revenues between $500 and $520 million and adjusted EBITDA between $61 and $66 million. Strategic focus areas include mergers and acquisitions, particularly in defense, and expanding the SkyEdge4 customer base.

Operational highlights included significant orders in Peru and advancements in IFC technology, with production ramping up for next-generation aircraft connectivity solutions.

Management expressed confidence in continued growth across all segments, supported by a strong backlog and strategic investments, including a $100 million equity placement in Q4 2025.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's fourth quarter 2025 results conference call. All participants are at present in listen-only mode. Following the management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press 0. As a reminder, this conference is being recorded February 10, 2026. By now, you should have all received the company's press release.

If you have not received it, please view it in the news section of the company's website, www.gilat.com. I would now like to hand over the call to Mr. Sanjay Harry of Alliance Advisors IR. Mr. Harry, would you like to begin?

Sanjay Harry, Alliance Advisors IR

Thank you, Hila, and good morning, everyone. Thank you for joining us for Gilat Satellite Networks Ltd's earnings conference call for the fourth quarter and full year 2025. With us on today's call are Mr. Adi Svadia, Gilat's CEO, and Mr. Gil Benyamini, Gilat's Chief Financial Officer. The earnings press release was issued earlier today, and if anyone has not yet received a copy, I invite you to visit the company's website, www.gilat.com, where you'll find the release in the Investor Relations section.

Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of the company's products on a global basis, and disruptions or delays in the company's supply of raw materials and components due to business conditions, global conflicts, weather, or other factors not under its control. The company cautions investors not to place undue reliance on forward-looking statements, which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances.

Further information on these factors and other factors that could affect Gilat's financial results is included in the company's filings with the Securities and Exchange Commission. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I would like to turn the call over to Gilat's CEO, Mr. Adi Svadia. Please go ahead, Adi.

Thank you. Sanjay and good day everyone. Thank you for joining us today to discuss Gilat's fourth quarter and full year 2025 results. I am pleased to report that we closed both the quarter and the year with strong performance. The fourth quarter capped a very solid 2025 reflecting consistent execution across our commercial, defense and Peru businesses as well as continued strategic progress. 2025 was a year of significant acceleration of our revenue growth.

Fourth quarter revenue reached $137 million, up 75% year over year, and full year revenue rose to $451.7 million, up 48% with 6% year over year organic growth. Adjusted EBITDA also saw significant growth with the fourth quarter reaching $18.2 million, 50% above the same quarter last year. The full year adjusted EBITDA hit $53.2 million, 26% growth year over year. Overall, 2025 was a good and successful year for the company. Now on to the business review.

I will start with the Defense. Military forces are increasing their dependence on resilient satellite connectivity to support mobility, real-time intelligence, and operations in contested environments. This shift favors suppliers with proven scalable systems, strong track records, and the ability to leverage commercial technology to the defense market, all of which are attributes of Gilat Defense. Gilat Defense is gaining steady demand from long-term defense programs, ongoing upgrades, and consistent SATCOM spending, giving the business clear visibility into future growth.

This strengthens Gilat's broader defense portfolio and supports the company's ability to capture a larger share of the growing market that values the capabilities we provide. In 2025, our defense business delivered strong year-over-year growth in new order bookings, expanding customer engagement, and our addressable market. We achieved a record year for Gilat defense sales driven by increased demand from U.S. and allied defense customers for transportable high-performance SATCOM solutions.

This system continued to gain traction as defense organizations prioritize flexibility, rapid deployment, and resilient connectivity across diverse operational environments. The fourth quarter marked two important milestones for the business. First, we expanded into a new market segment, Earth Observation, with an approximately $10 million order for a direct downlink solution. This system enabled rapid acquisition of satellite imagery and data directly from space to a transportable ground terminal supporting near real-time intelligence and situational awareness in remote or contested environments.

Our transportable platform provides fast deployment, resilient and reliable operation. Also in the fourth quarter, we saw continued traction in Israel, securing significant orders across our defense portfolio and expanding the deployment of our solutions in the region. Our decision to shift more resources into Gilat Defense, expand the sales team, and increase R&D investment are now clearly strengthening Gilat's position in the defense market. Our defense pipeline remains strong, supported by sustained global demand for secure, resilient SATCOM solutions.

Turning to our commercial business, demand for advanced IFC continues to accelerate, fueled by free Wi-Fi, growing passenger expectations for high-bandwidth applications, and increasing adoption of NGSO and multi-orbit architectures across the aviation ecosystem. This trend aligns directly with Gilat's strength and long-term strategy. Our commercial business delivered a strong fourth quarter and solid 2025, reflecting continued wins, growing customer adoptions, and consistent performance across our key programs as satellite operators accelerate investment in next-generation networks.

Our platform continued to be selected for its scalability, flexibility, and ability to support multi-orbit mobility-driven services. Sky Edge 4 remained a central growth driver throughout the year. During the fourth quarter, we received a $42 million order from a leading global satellite operator for a multi-orbit platform primarily supporting IFC services. During the fourth quarter, we added two new SkyEdge customers in Asia Pacific. We continue to expand deployments with leading satellite operators as they invest in flexible software-defined ground networks.

These awards reinforce SkyEdge4's role as a core platform for large-scale next-generation satellite networks. We also strengthened our presence in Asia Pacific with a SkyEdge platform order for approximately $11 million from a leading regional satellite operator to provide services over VHDS satellites supporting multiple commercial applications. In addition, we received more than $16 million in orders for Gilat Wavestream Gateway Solid State Power Amplifiers to support LEO Constellations, highlighting growing traction for our solutions as LEO networks move from deployment into operational phases.

Airlines and system integrators expanded the adoption of our IFC technology for next-generation aircraft connectivity. During the fourth quarter, we received a $7 million order for Gilat Wavestream Aerostream Bucks. These units will be deployed as part of next-generation IFC solutions to be installed on commercial aircraft. Stellar Blue is now fully integrated into Gilat's operations, and we are benefiting from cross-company synergies. Gilat's Stellar Blue plays a key role in our IFC leadership position with enhanced offerings that drive further growth for ESA in the IFC sector.

Production is ramping up, and during the quarter, we delivered approximately 190 terminals, and we expect increased deliveries with improved margins in the coming quarters. At Ovrant, we have a significant backlog that will be delivered in 2026 and beyond, based mostly on orders received during 2025. To date, more than 420 aircraft are online with our ESA terminal, and cumulatively over 1 million passengers are being served each week with our modems and ESA solutions.

Continuing this progress, we received a multi-million dollar order for our Sidewinder ESA terminal from a large global avionics company, underscoring the advantage of a high-performance, lightweight, low-profile configuration that is compatible with both GEO and LEO satellite constellations. Overall, our commercial pipeline remains strong as operators transition to multi-orbit architectures to support additional services, positioning us well for continued growth into 2026.

Moving to Peru, Gilat Peru delivered exceptional results during the year, closing more than $85 million in agreements from Ponatel for the upgrade of four regional networks. These awards clearly reinforce Gilat Peru's role as a key technology and solution partner for large-scale national connectivity initiatives. These projects, which are progressing ahead of schedule, are advancing Peru's digital inclusion objectives by enabling public Wi-Fi hotspots and high-speed connectivity to public institutions such as schools, health centers, and police stations.

Looking ahead, we see this progress continuing. We expect additional large RFPs and follow-on orders during 2026, positioning Peru as an important contributor to Gilat's long-term growth in large national digital inclusion programs. Our backlog is growing with a strong, healthy, and diverse pipeline of opportunities in each of our divisions. As such, we expect another year of top-line and profit growth. We expect 2026 revenues to be between $500 and $520 million.

We expect adjusted EBITDA to be between $61 and $66 million. To summarize, 2025 was a strong year for Gilat, marked by a good fourth quarter, record performance in key segments, meaningful customer wins, and a significantly strengthened balance sheet. We are entering 2026 with strong momentum across the company. In defense, we will focus on driving revenue growth through business development, R&D investment, and portfolio expansion. Further strengthening our position, we intend to pursue opportunities in government and sovereign communication programs worldwide.

In commercial, we will continue to drive adoption of our IFC product portfolio and expand our offering for next-generation aircraft connectivity, further strengthening our leadership position in IFC. We will also focus on expanding our SkyEdge4 customer base. In Peru, we plan to expand our footprint by participating in new digital inclusion initiatives and network expansion projects. Building on our proven execution and local presence, Gilat is accelerating its competitive advantage through continued technology leadership in multi-orbit connectivity and development of advanced 5G NTN capabilities.

Mergers and acquisitions will be a key strategic focus, with primary emphasis on defense-related capabilities that complement our existing strengths. Gilat entered 2026 with a strong balance sheet and with an additional $100 million equity placement in the fourth quarter, bringing total capital raised in 2025 to $166 million. This investment enhanced our ability to pursue strategic opportunities and build on the milestones achieved this year. I would like to thank our employees for their commitment and performance and our customers and partners for their continued trust, and with that, I will hand over the call to Gil, our CFO.

Gil, please go ahead. Thank you, Adi. Good morning and good afternoon to everyone. Before I dive into the numbers, I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis. I will now walk through our financial highlights for the fourth quarter of 2025. As Adi mentioned, we delivered a strong quarter and year, demonstrating continued execution across our strategic priorities and building momentum into 2026. In terms of our financial results, revenues for the fourth quarter were $137 million, representing a 75% growth compared with $78.1 million in Q4 2024.

Importantly, our organic growth quarter over quarter was 28%. For the full year, revenues totaled $451.7 million, reflecting 48% growth from $305.4 million in 2024. The growth was primarily driven by the in-flight connectivity vertical. In terms of the revenue breakdown by segment, Q4 2025 revenues for the Commercial segment were $75.1 million compared with $37 million in the same quarter last year. The 103% growth was primarily driven by the in-flight connectivity vertical, mainly reflecting the contribution from Sterling.

Q4 2025 revenues for the Defense segment were $33.3 million, 14% higher than $29.4 million in the same quarter last year. Q4 2025 revenues for the Peru segment were $28.5 million compared with $11.8 million in Q4 2024. The increase was driven primarily by higher revenues related to new upgrade projects in four of the six regions in which we operate. Our GAAP Gross margin in Q4 2025 was 28% compared with 40% in Q4 2024. The decrease is primarily attributable to lower margins at Stellar Blue as production ramps up, as well as an additional $2.9 million of amortization of purchased intangibles expenses related to the acquisition.

GAAP operating expenses in Q4 2025 were $25.3 million compared with $18.3 million in Q4 2024. The increase was primarily driven by the consolidation of Stellar Blue expenses, amortization of acquired intangible assets, and stock-based compensation mainly related to acquisitions. As a result, GAAP operating income in Q4 2025 was $3.13 million compared with GAAP operating income of $12.8 million in Q4 2024. GAAP net income in Q4 2025 was $8.88 million or a diluted income per share of $0.13 compared with GAAP net income of $11.8 million or diluted income per share of $0.00 in Q4 2024.

The decrease in net income mainly reflects higher financing costs associated with a loan taken to finance the Stellar Blue acquisition together with higher tax expenses during the quarter. Moving to Non-GAAP results, our non-GAAP Gross margin in Q4 2025 was 31% compared with 40% in Q4 2024. Non-GAAP operating expenses in Q4 2025 were $26.6 million compared with $21.9 million in Q4 2024. The increase was primarily driven by the consolidation of Stellar Blue operating expenses.

Non-GAAP operating income in Q4 2025 was $15.2 million compared with $9.7 million in Q4 2024, and non-GAAP net income in Q4 2025 was $13.4 million or a diluted income per share of $0.20 compared with a net income of $8.5 million or income per share of $0.15 in Q4 2024. The adjusted EBITDA in Q4 2025 was $18.2 million, a 50% increase compared with an adjusted EBITDA of $12.1 million in Q4 2024. For the full year, adjusted EBITDA was $53.2 million, a 26% increase compared with an adjusted EBITDA of $42.2 million in 2024.

Moving to the Balance Sheet and Cash Flow, over the past several quarters, we significantly strengthened our balance sheet and liquidity position. In September and December 2025, the company completed capital raises totaling $166 million from leading institutional and accredited investors in Israel. In December 2025, we also repaid an outstanding $60 million loan that had originally financed the acquisition of Stellar Blue. In Q4 2025, we used about $6.3 million of cash on operating activities and on a full-year basis, we generated approximately $21 million of operating cash flow in 2025.

As a result, as of December 31, 2025, total cash, cash equivalents, restricted cash, and short-term deposits were $185.4 million, or approximately $183.4 million net of loans compared with $95.6 million as of September 30, 2025. DSOs, which exclude receivables and revenue of our terrestrial network construction projects in Peru, were 88 days. Our shareholders' equity as of December 31, 2025, totaled $500 million compared with $391 million on September 30, 2025, resulting mainly from the capital raise and earnings.

Looking ahead, reflecting our strong backlog and our visibility into 2026, we expect 2026 revenues of between $500 and $520 million, representing 13% growth year over year. At the midpoint, we expect an adjusted EBITDA of between $61 and $66 million and 19% growth at the midpoint. We expect 2026 Commercial segment revenues of between $315 to $335 million, 16% growth at the midpoint, Defense segment revenues of between $115 to $130 million, a 22% growth at the midpoint, and revenue of the Peru segment of between $60 to $65 million, an 11% decrease at the midpoint due to lower construction revenue in 2026 and a shift to the operation phase compared to 2025. That concludes my financial review. I would now like to open the call for questions. Operator, please go ahead.

OPERATOR

Thank you, ladies and gentlemen. At this time, we will begin the question and answer session. If you're dialing in, please press Star one. If you've connected via Zoom, please use the Raise hand button located at the bottom of your screen. Your questions will be pulled in the order they are received. Please stand by while we pull through your questions. The first question is from Ryan Koontz of Needham and Company. Please go ahead.

Ryan Koontz, Needham and Company

Great, thanks. Appreciate the question. Nice quarter, guys. On the defense side, you know, given kind of some of the puts and takes been going on with the US budget process and how you're thinking about this year. Maybe can you update us on your visibility as it relates to the defense market both in the US and any international traction you might have? Thank you.

Sanjay Harry, Alliance Advisors IR

Hi Ryan, on the visibility to the defense, generally when we are entering a year, we have between 50 to 60% of the revenues already in backlog from the guidance. So we have relatively good visibility. We have some large projects we are working on that can secure the year during the first half of the year. We don't see any effect of the recent shutdown in the US Administration. We see increased budget and a lot of traction both in the US, in Israel, and in Europe when defense organizations require satellite connectivity.

Ryan Koontz, Needham and Company

That's great, thanks. And maybe shifting gears to IFC a bit. Can you update us on your roadmap there for line fit? I know you've been looking forward to that and maybe an update on the competitive landscape in IFC?

Sanjay Harry, Alliance Advisors IR

Sure. So on the line fit, as we said in the past calls, we are progressing with Boeing Line Fit. We expect to pass certification during the first half of the year and start delivering in the third quarter. So it seems promising and on track. With Airbus, we are in initial phases, so it takes some time and probably will drag us to next year. But this is based on initial expectations. So we didn't expect revenues from Airbus line fit in 2026. The competitive landscape stayed, give or take, the same.

There is a lot of traction. Both SES and Panasonic have decent awards. Not everything is published yet. So we do see their forecast and we do expect some large orders coming in in the first half of the year, hopefully this quarter. As I said in my script, most of the guidance is already covered with existing backlogs that we have, that we received mostly in 2025. So all the orders that we expect to get during 2026 probably will be recognized in revenues in 2027.

Ryan Koontz, Needham and Company

That's terrific. Thanks. Maybe just touching on Peru. I know that business can be a bit lumpy. I think they have an election plan coming up. Can you maybe talk to the kind of cadence how you expect the Peru business to unfold this year?

Sanjay Harry, Alliance Advisors IR

Sure. So in Peru during 2025, we got an award for upgrading four regional networks that we maintain. We are in discussion with the government to upgrade the remaining two networks. We believe that we'll be able to close it before the election in the second quarter. In parallel, there are a lot of internal discussions in Peru of very large RFPs for Internet connectivity, both terrestrial and satellite in Peru. So we expect to participate in those RFPs.

A lot of traction in Peru. We don't believe that the election will cancel any of those RFPs. Probably we'll see most of the RFPs during the first quarter and during the fourth quarter of the year.

Ryan Koontz, Needham and Company

Really helpful, thanks. I'll get back in a queue.

Sanjay Harry, Alliance Advisors IR

Appreciate it. Thank you, Ryan.

OPERATOR

The next question is from Sergei Glinianov of Freedom Brokers. Please go ahead.

Sergei Glinianov, Freedom Brokers

Good morning, gentlemen. So you provide pretty positive guidance for defense and you mentioned a new area to expand operations in Earth observation solutions. But could you put some colors on these contracts and its margin profile? Could it be a significant driver for defense revenue this year? And do you expect defense order acceleration in Q1 compared to Q4? Thank you.

Sanjay Harry, Alliance Advisors IR

Hi Sergei. So I'll start with a general comment on the defense. We saw in revenues relatively small growth year over year. This is mainly due to the previous shutdown of the US administration that caused some delays in orders. We didn't lose any deal, but because some of the revenues are recognized based on project progress, and if the order arrives late, we are unable to recognize revenue. So we'll see it in 2026. We did see very nice, more than 35% year over year growth in orders getting in.

As for the Earth observation, it typically has the same margin profile that we see on those kinds of deals, which is, give or take, the average of Gilat between, I would say, 30 to 40%.

Sergei Glinianov, Freedom Brokers

Great, thank you. That's all from me.

OPERATOR

The next question is from Louis Di Palma of William Blair. Please go ahead.

Louis Di Palma, William Blair

Great. Adi and Gil, good afternoon.

Sanjay Harry, Alliance Advisors IR

Hi, Louis.

Louis Di Palma, William Blair

Excellent. Following the private placement, what areas of M&A are you targeting?

Sanjay Harry, Alliance Advisors IR

That's a very good question. So first of all, we are open to, you know, we are not limiting ourselves to a specific segment, but our main focus is on the defense. On one hand, we want to increase our market presence both in the US, but we are also focusing on Europe. There is a lot of business in Europe, a lot of budget, especially because of the Russian Ukraine war and conflict between the Trump administration and European countries. So they want to control their own destiny and they are increasing their investment in defense.

And we see also a lot of traction in secure satellite communication. So we are targeting also companies over there. Our main focus is to bring businesses, not to buy technology. And we'll continue to look for companies with great potential. It's something that can be significant to the company's revenues. So it can be with revenues of $50 million and above or maybe $100 million and above. And it should be accretive as soon as possible. It's not that we are not.

We will not buy a company that needs turnaround and we know how to do that. We did that in Datapath. We bought a company with less than $40 million in revenues and close to break even and now it's almost double the revenues. We're also looking to expand the addressable market in adjacent markets, for example, radar solutions, electronic warfare, and things like that. But it will be something that we are considering. We are doing internal work to define exactly where we want to focus.

But also we might be opportunistic here. In addition, we invested in the past in a startup with a unique technology company called CrossSense. And we'll continue to look for unique technologies, either a minority investment or taking control. But it's not something that's going to change the overall financials of the company.

Louis Di Palma, William Blair

And secondly, did Stellar Blue attain the second milestone related to the $120 million in new backlog by the end of December?