Gilat Satellite Networks (NASDAQ:GILT) released second-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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Summary

Gilat Satellite Networks reported strong financial performance for Q2 2026 with revenues of $122.7 million, reflecting a 17% year-over-year growth, and adjusted EBITDA of $15.4 million, up from $11.8 million the previous year.

The company announced a strategic acquisition of Comtech’s Satellite and Space Communications segment to enhance its defense and satellite communications capabilities, expected to close by year-end.

In the Defense sector, Gilat secured significant contracts, including $11 million from the U.S. Department of Defense and a multi-million dollar order from the European Ministry of Defense for SATCOM terminals.

The Commercial segment saw robust growth driven by the SkyEdge platforms and IFC business, with over $20 million in orders from a global satellite operator and $43 million from a leading IFC service provider for Sidewinder ESA terminals.

Gilat reaffirmed its 2026 guidance, anticipating revenues between $500 million and $520 million and adjusted EBITDA of $61 to $66 million, citing strong market demand and a solid backlog.

The Peru segment continued to show operational progress, completing key infrastructure upgrades and transitioning to the operational phase in several regions.

Management highlighted a healthy pipeline and backlog, with ongoing demand for multi-orbit and resilient connectivity solutions across various sectors.

Full Transcript

OPERATOR

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's second quarter 2026 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 star zero. As a reminder, this conference is being recorded August 5, 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. Stan Jay Harry of Alliance Advisors IR. Mr. Harry, would you like to begin? Please.

Stan Jay Harry, Alliance Advisors, Investor Relations

Thank you, Hila, and good morning, everyone. Thank you for joining us for Gilat Satellite Networks' earnings conference call for the second quarter of 2026. With us on the call today are Mr. Adi Sfadia, Gilat's CEO, and Mr. Gil Benyamini, Gilat's Chief Financial Officer. 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 revenue from key customers, delays or reductions in U.S. and foreign military spending, acceptance of the Company's new 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, and other factors not under their control.

The Company cautions investors to not 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, including the latest reports.

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'd like to turn the call over now to Gilat's CEO, Adi Sfadia. Please go ahead, Adi.

Adi Sfadia, CEO

Thank you, Sanjay, and good day, everyone. Thank you for joining us today to discuss Gilat's second quarter 2026 results. I am pleased to report that Gilat delivered a strong quarter. During the second quarter, we continued to strengthen our position, advance important strategic initiatives, and execute successfully across our defense, commercial, and Peru businesses. Second quarter revenues reached $122.7 million, representing 17% year-over-year growth, and adjusted EBITDA reached $15.4 million compared with $11.8 million in the same quarter last year.

For the first half of 2026, revenue reached $233.1 million and adjusted EBITDA reached $30.5 million. Overall, the first half of the year demonstrates continued progress across our strategic growth engines: Defense and IFC. During the quarter we announced a significant strategic milestone with the signing of a definitive agreement to acquire most of Comtech's Satellite and Space Communications segment. The transaction is expected to expand our position in mission-critical defense and satellite communications, strengthen our U.S. presence, broaden our technology portfolio, and more than double Gilat Defense revenues. The closing of the transaction is expected towards the end of the year and is subject to several regulatory approvals such as HSR and CFIUS and other customary closing conditions. Now, on to the business review. I will start with Defense. Gilat Defense continued to build momentum, supported by increasing global demand for mission-critical SATCOM solutions that can operate reliably in dynamic, mobile, and contested environments.

Recent conflicts have highlighted the importance of communication systems that provide mobility, rapid deployment, and operational continuity across land, sea, air, and space domains, driving increased demand for resilient and deployable SATCOM capabilities. These evolving operational requirements align well with our defense portfolio and the operational and sales capabilities we have built. During the quarter we received important awards that demonstrate our growing defense activity in both the United States and Europe.

In the United States, Gilat Defense received orders totaling $11 million to supply SATCOM terminals and field services to the U.S. Department of Defense. This award highlights continued demand for Gilat Defense's resilient multi-orbit connectivity solutions and services and reinforces Gilat Defense's role as a trusted provider in the U.S. market. Gilat Defense received a multi-million dollar order to supply custom SATCOM terminals to the European Ministry of Defense.

These terminals are designed to meet unique operational requirements, combining ruggedized hardware with advanced multi-orbit operability to deliver resilient communications in challenging environments. This award reflects the continued recognition of Gilat's field-proven technologies and reinforces our expanding role in the European defense market. During the quarter we made important progress in product innovation for unmanned platforms. During URUSA 3 we introduced the Viper Ka, our UAV Ka-band ESA terminal designed to support unmanned ISR and tactical UAV applications.

The Viper Ka ESA terminal is designed for resilient multi-orbit connectivity, supporting operations across multi-orbit satellite constellations and delivering secure, low-latency communications with low SWaP for mission-critical unmanned operations. Overall, our defense business continues to gain momentum, supported by growing demand in both the U.S. and Europe and continued investment in technologies that address evolving defense requirements. With the closing of the acquisition of Comtech Satellite and Space Communications in parallel, we believe Gilat Defense will be equipped to pursue even larger opportunities and support the growing demand for secure, resilient mission-critical connectivity. Turning to our Commercial business. Our commercial business continued to show strong progress during the second quarter, particularly around our SkyEdge platforms and IFC portfolio. Satellite operators and IFC service providers are moving towards more flexible, scalable, and multi-orbit architectures, and Gilat has the ground-segment expertise, ESA portfolio, and customer relationships needed to support this transition.

Our SkyEdge platforms remain a key foundation for next-generation satellite networks. During the quarter we received more than $20 million in orders from a leading global satellite operator, awarded mainly for our SkyEdge platforms and services. We expect to see additional demand for our SkyEdge platforms as operators continue to deploy next-generation constellations and upgrade their ground infrastructure. In IFC, the Sidewinder ESA terminal is progressing into large-scale deployment.

During the quarter we received $43 million of orders from a leading IFC service provider for Sidewinder ESA terminals, with deliveries for both line fit and retrofit. These awards support continued growth in our mobility business and further validate Sidewinder's role in next-generation multi-orbit IFC architectures. The Boeing line fit program and certification activities continued to advance during the quarter. Through integration partners, Boeing will offer line fit installation capability, helping accelerate deployment timelines and reduce the cost and operational disruption associated with retrofit programs.

We are progressing well towards full certification, an important step in making the Sidewinder ESA terminal commercially available as a line fit option. Deliveries of the first units are expected in Q4 this year. In parallel, we have begun the process toward line fit availability with Airbus and received an order as part of this effort, further expanding the long-term opportunity for Sidewinder across the commercial aviation market. Overall, our commercial business continues to benefit from growing demand for multi-orbit connectivity across both network infrastructure and mobility applications.

With continued traction for our SkyEdge platforms, strong momentum for Sidewinder, and progress on both Boeing and Airbus line fit programs, we believe we have a strong foundation for additional growth opportunities as the market continues to evolve. Our Peru business continues to execute well, with solid operational progress across our social inclusion programs. We completed work in the first three regions of our infrastructure upgrade program, and we moved to the operational phase, in parallel with the supervision activity in Cusco expected to be completed during the third quarter.

These milestones continue to demonstrate Gilat Peru's ability to deliver large-scale communication projects efficiently and reliably. We continue to advance discussions on several significant project expansions while actively pursuing additional large-scale opportunities that support Peru's ongoing investment in social inclusion and nationwide connectivity. I am pleased to say that we continue to have a strong backlog and a healthy pipeline. Therefore, we are reiterating our 2026 annual guidance.

We expect 2026 revenues of between $500 million and $520 million and adjusted EBITDA of between $61 and $66 million. The satellite communications market continues to benefit from growing demand for resilient connectivity, mobility applications, and multi-orbit networks. We continue to see favorable market dynamics across our Defense and IFC growth engines supporting our long-term growth strategies. Gilat Defense continues to be one of our primary growth engines.

We are seeing increasing investment in defense communication across the U.S., Europe, and other allied markets, supported by ongoing demand for advanced SATCOM solutions. We believe our portfolio and continued focus on innovation provide a strong foundation for future growth. Our commercial business continues to benefit from the industry transition towards multi-orbit networks and next-generation mobility services. We see continued opportunities for our SkyEdge platforms as operators expand network capacity and capabilities, while Sidewinder remains a strong contributor to the growing demand for advanced IFC solutions.

Our second quarter results reflect continued execution across the business and reinforce our confidence in the opportunities ahead. Backlog and pipeline during the second half of the year support our full-year outlook and reinforce our confidence in the long-term growth opportunities across the business. And with that I will hand over the call to Gil Benyamini, our CFO. Gil, please go ahead.

Gil Benyamini, Chief Financial Officer

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 second quarter of 2026. As Adi mentioned, we delivered a strong second quarter with 17% year-over-year revenue growth and 31% year-over-year growth in adjusted EBITDA. Growth was broad-based across all three segments and adjusted EBITDA grew faster than revenues, demonstrating solid operating leverage.

In terms of our financial results, the revenues for the second quarter were $122.7 million, representing a 17% growth compared with $105 million in Q2 25. The revenues for the Commercial segment in Q2 26 were $83 million compared with $69.1 million in the same quarter last year. The 20% growth year over year was primarily driven by revenues from the inflight connectivity vertical. Revenues for the Defense segment in the second quarter of 2026 were $22.5 million, 12% higher than $20 million in the same quarter last year.

Q2 26 revenues for the Peru segment were $17.2 million, 8% higher than $15.9 million in Q2 25. Our GAAP gross margin in Q2 26 was 30%, in line with the same quarter last year. The decrease in the gross margin compared to Q1 26 is mainly attributed to a less favorable deal mix in the Commercial segment, partially offset by higher gross margins in the Services segment. GAAP operating expenses totaled $32.6 million compared with $26.2 million in Q2 25.

The increase was primarily attributable to an earn-out provision related to the acquisition of Datapath and was recorded in GAAP G&A expenses. As a result, GAAP operating income was $4.7 million compared to $5.7 million in Q2 25. GAAP net income in Q2 26 was $8.1 million for a diluted income per share of $0.10, compared with GAAP net income of $9.8 million, or a diluted income per share of $0.17 in Q2 25. Turning to non-GAAP results, our non-GAAP gross margin in Q2 26 was 32% compared with 33% in Q2 25, the decrease primarily attributable to a less favorable deal mix in Defense and the Peru segment, partially offset by improved margins in the Commercial segment. Non-GAAP operating expenses for the quarter were $26.3 million compared with $25.2 million in Q2 25. Non-GAAP operating income in Q2 26 was $12.6 million, 35% higher than $9.3 million in Q2 25. The non-GAAP net income in Q2 26 was $15.6 million for a diluted income per share of $0.20, compared with a non-GAAP net income of $12 million for income per share of $0.21 in Q2 25. The difference between the growth in the net income and the diluted earnings per share reflects the higher diluted share count due to $166 million raised in the last trimester of 2025.

Adjusted EBITDA reached $15.4 million, 31% higher than Q2 25, reflecting strong operating leverage on higher revenues. Adjusted EBITDA margin expanded to approximately 12.6% compared with approximately 11.2% in Q2 25, an improvement of 1.4%. Moving to the balance sheet and cash flow, during the quarter we used approximately $1.9 million in operating cash, primarily reflecting working capital. We ended the quarter with a strong liquidity position of $159 million, comprised of cash, cash equivalents, restricted cash, and short-term deposits.

DSOs were 110 days excluding Peru construction activity and remain within our expected range. Our shareholders' equity as of June 30, 2026 totaled $545 million compared with $536 million on March 31, 2026. Looking ahead, based on our backlog, pipeline and expected delivery plan, we are reiterating our full year 26 guidance. Revenues are expected to be between $500 to $520 million, representing 13% growth year over year. At the midpoint, we expect an adjusted EBITDA of between $61 to $66 million, 19% growth at the midpoint and continued margin expansion.

Importantly, we are maintaining this outlook despite unfavorable movements in the Israeli shekel versus the U.S. dollar which are expected to increase our operating expenses in the second half of 2026. That concludes my financial review. We'd 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 have a question, please press star one. If you wish to cancel your request, please press star two. Your questions will be queued in the order received. Please stand by while we poll for your questions. The first question is from Louis De Palma of William Blair. Please go ahead.

Louis De Palma, Analyst at William Blair

And Gil, good afternoon. Over the years, Hughes has been referenced as one of your larger competitors. Do you see any impact from the bankruptcy in terms of potential opportunities or strategic activity? Thanks.

Adi Sfadia, CEO

So indeed, Hughes over the years were a significant competitor of Gilat, mainly on the GEO side, but also the sole provider of OneWeb modems. Hughes is also a customer of Gilat. We sell them SSPAs. We also buy from them modems to integrate with our Sidewinder multi-orbit ESA antenna. We do have a small debt from them, a few hundred thousand, really insignificant, based on the indication we got from them that they said that they have intention to pay all their debt and continue business as usual.

I suspect that some of the customers will have uncertainty to work with a company under Chapter 11, especially customers that require long-term development efforts and long-term service needs. And over there we see opportunity to penetrate.

Louis De Palma, Analyst at William Blair

Great, that is helpful. And at the recent defense industry conference you announced the Ka-band Viper antenna as part of your RAYSAT subsidiary. What Ka-band constellations should that antenna support and what are the major applications that you envision seeing the greatest demand for the antenna? Thanks.

Adi Sfadia, CEO

So generally speaking, it's going to support all the Ka constellations from GEO satellites through Telesat LEO and mPOWER Ka. It can be installed on several types of UAVs and, also Amazon, by the way. It can be installed in several types of UAVs and support all the relevant applications that those UAVs are required to do.

Louis De Palma, Analyst at William Blair

Okay, and how, I guess how small of unmanned aerial vehicles can the antenna support? Does it go as small as Group 3 drones or are the drones needed to be much larger?

Adi Sfadia, CEO

No, it's from small to medium UAVs.

Louis De Palma, Analyst at William Blair

Excellent. And on another topic, I was wondering, can you provide an update on the Stellar Blue milestone payments such that I think there were different milestones, perhaps it related to the line fit or strategic partnerships for this year. But can you provide an update?

Gil Benyamini, Chief Financial Officer

Definitely. So the last milestone of Stellar Blue was to sign a strategic agreement. The milestone was until June 2026. We didn't meet, although we signed important agreement during the quarter with the Airbus line fit, it didn't meet the qualification in the agreement to meet the earn-out requirement. So basically we paid $99 million for Stellar Blue, $98 million for the Stellar Blue acquisition, and now we are free from earn-out obligations and working on cost reductions and large deployment with our customers.

Louis De Palma, Analyst at William Blair

Great. And what was the—are you able to share what was the revenue for Stellar Blue in the quarter or just the growth for Stellar Blue relative to last year?

Gil Benyamini, Chief Financial Officer

I can share that this quarter was a record quarter in terms of the number of terminals that we delivered. More than 200 terminals we delivered this quarter. Nice growth over the previous quarter. Stellar Blue revenues are part of the Commercial revenues and since the Commercial revenues is integrated segment, it's hard to break the information. This quarter we have a book to revenue ratio on the terminal side that was higher than 1.

Louis De Palma, Analyst at William Blair

Thanks. That's it for me.

Adi Sfadia, CEO

Thank you, Louis.

Gil Benyamini, Chief Financial Officer

Thank you, Louis.

OPERATOR

Next question is from Chris Quilty of Quilty Space. Please go ahead.

Chris Quilty, Analyst at Quilty Space

Thanks. Just as a follow up on that, do you know how many terminals are actually installed and operating now?

Adi Sfadia, CEO

I don't remember the exact number. I think it's around 600 units, slightly more than 600 units are installed and operated. I think it's important to emphasize that the installation is to our customers, not up to us. We delivered significantly more units than that and installation depends on their timeline and their agreement with the airlines.

Chris Quilty, Analyst at Quilty Space

Gotcha. And do you know, are the installation times compressing? Because typically these would take a long period of time and I think Starlink is doing these in a matter of hours nowadays.

Adi Sfadia, CEO

I know that they are working hard to install. It really depends on the aircraft availability and maintenance windows. I think that they are about to finish the second large order in the next few months.

Chris Quilty, Analyst at Quilty Space

Understand. And are you moving closer or still in negotiations with any other airline customers that you think are likely before end of the year?

Adi Sfadia, CEO

We are not engaged directly with the airlines. Most of the engagement done through our partners, SPS and Panasonic. We know that they got several awards that we are not allowed to expose and in some cases they don't share with us all the opportunities up front. We know that they are bidding on some very large opportunities that can drive significant revenue growth in the future.

Chris Quilty, Analyst at Quilty Space

Great. Gil, just a question on the segment growth here. If I look at your prior forecast for the Defense segment, I think it's got to grow about 40% in the second half over the first half. Is that still a good trajectory for the Defense segment? And I guess same for the other two segments, still tracking on the beginning of the year forecast or has it shifted?

Adi Sfadia, CEO

Yes. So you know our forecast is based on firm backlog and delivery schedule and pipeline. And the forecast for the Defense is as we presented and we definitely see a much higher H2 in the Defense compared to H1. And this is again aligned with the backlog and expected book-to-ships in the second half of the year.

Chris Quilty, Analyst at Quilty Space

And the same Commercial segment was—yeah, and the Commercial segment was better than I had forecast in Q2, but I assume that's primarily hardware shipments related, with the large number of terminals shipped.

Adi Sfadia, CEO

Yeah, it's a combination of the deliveries of the Sidewinders that Adi mentioned, the record delivery, and hubs and other network equipment that might shift a bit to the right or to the left, and yeah, it was better than expected.

Chris Quilty, Analyst at Quilty Space

Understand. And on the SkyEdge 4 platform, are you yet seeing any early pull from your customers? Have a lot of software-defined satellites on orbit. I think we're looking towards next year for the delivery of those systems. Or do you not expect to see firm orders until satellites are on orbit?

Adi Sfadia, CEO

The way we work with our customers, in some cases they advance orders, they want to be ready when the satellite is in orbit. We do expect to get some large orders from our existing customers and new customers. There are several satellites that are planned to be launched next year and in some cases we are in competition process and in some cases we expect to get the orders.

Chris Quilty, Analyst at Quilty Space

Gotcha. And on the broader commercial landscape, you've kind of seen verticals like cellular backhaul cycle up and cycle down. Are you seeing any trends on the commercial side of the market worth noting?

Adi Sfadia, CEO

Nothing new. The focus today on the commercial side is mainly on the IFC and maritime. On the mobility, we do see a lot of traction around small and micro GEO satellite, especially on the sovereign satellites. We do see a lot of traction around sovereign networks, or countries that want to launch sovereign LEO constellations, small constellations, to support their needs. A lot of countries understand that they need solutions both on the GEO side and on the LEO side.

No doubt that GEO, in terms of sovereign network, is much cheaper, but some of the countries would like to have full blown LEO constellation.

Chris Quilty, Analyst at Quilty Space

Got it. Just to circle back to the UAV opportunity, is that product priced for more longer-duration strategic platforms, or is there something that you can price more in the expendable category, which has been primarily the trend?

Adi Sfadia, CEO

I think at the end the product will be customized per customer and per platform, and the pricing will be based on the customer-specific configuration. So I think at the end we will cover both of the models. Generally speaking, we want to be attractive in terms of SWaP and costs.

Chris Quilty, Analyst at Quilty Space

Got you. Gil, just real quick, the working capital—some of the accounts seem larger this quarter. Were there any sort of unusual moves, and fair to assume we'll see that turn into more cash flow in the back half of the year?

Gil Benyamini, Chief Financial Officer

Yes. So this is mainly needs for deliveries in the second half of the year. You can see it, for instance, in the inventory and so on, and of course it also affected cash. As I said, we had some working capital needs, and we do expect to see stabilization during the second half of the year.

Adi Sfadia, CEO

Chris, revenue grew significantly this quarter over the same quarter last year. And at the end, when you grow revenue, you need to invest in working capital. And as Gil said, we do expect to see continued growth, and this is one of the reasons we increased our inventory—to shorten lead time. Everything is against backlog, and we expect to consume it in the next two to three quarters.

Chris Quilty, Analyst at Quilty Space

And finally, just on the Amplifier product line—I know it's kind of buried within defense now—but you had a bunch of new products come out last year. Are you seeing any traction there? Like if we were tracking that business in the old way, are we looking for sort of double-digit growth there this year?

Adi Sfadia, CEO

We expect to see decent growth. It's both on the commercial side and the defense side. To be honest, these days the commercial side is bigger than the defense side. In defense we received some very nice orders, including development of new products. We expect to see that growth in the future. On the commercial side, the focus used to be IFC and today is mainly SSPA to LEO gateways. And we work with two of the three, out of the four constellations that are available today.

Chris Quilty, Analyst at Quilty Space

So are these Ka or Ku?

Adi Sfadia, CEO

Ka for both. Right now it's Ka.

Chris Quilty, Analyst at Quilty Space

Got it. All right, thank you, gentlemen.

Adi Sfadia, CEO

Thank you. Thank you, Chris.

OPERATOR

Next question is from Ryan Coons of Needham & Company. Please go ahead.

Ryan Coons, Analyst at Needham & Company

Thanks. Most of my questions have been answered here. Maybe in terms of the defense side, just another angle here: Is there much of a product mix shift going on compared to what you've seen in past years? Any trends you would point out on the defense side of the business?

Adi Sfadia, CEO

I think what we can say is that we see much more business around the tickets. The fact that the Middle Eastern situation—the fact that the Iranians took out of operation several fixed U.S. gateways around the Middle East—increased need for mobile gateways deployment. So we see a lot of traction around this, and based on past history, after such operations they see a lot of business growth. On the DCAS, we do see a lot of loitering munition and small ESA need for loitering munition.

We don't have a solution for that right now, but it's something that we are considering carefully and in discussion with several customers to customize our solutions to comply with the needs of loitering munitions. We believe this is a significantly growing segment in the near future.

Ryan Coons, Analyst at Needham & Company

That's great. And then maybe on the Peru side, what's that mix been like on recurring versus one-time build revenues there this year versus, say, last year?

Gil Benyamini, Chief Financial Officer

So last year, if you remember, Ryan, we signed around Q3 the expansion project of about $85 million, which about half of it is one time over about a year, so it's almost done by now. And the rest of revenues are kind of recurring revenues—not in the term of subscription—but it's a long-term service contract that we have over there to operate the networks and for some other long-term projects. So I can say that this quarter and going forward the majority of the revenues in Peru are kind of recurring revenues.

Ryan Coons, Analyst at Needham & Company

Great, thanks. Maybe one last question on IFC. You talked about working through your partners today. Are there particular geographies or types of aircraft where they're seeing the most traction with your Stellar Blue solution, your Sidewinder?

Adi Sfadia, CEO

I think today they are cycling globally. I think that there are several countries where IFC penetration is relatively low, and I think over there it represents the biggest opportunity. I think Asia-Pacific is a big opportunity, and of course Latin America.

Ryan Coons, Analyst at Needham & Company

Super helpful. Thanks, gentlemen.

Adi Sfadia, CEO

Thank you, Ryan.

OPERATOR

The next question is from Sergei of Sweden. Please go ahead. Good day.

Sergei

Adi, one question. How should we think about the margin in the second half? Because according to your guidance range, the positive scenario is 12.3% to be the margin for second half versus first-half margin at 13.1%. What are among the factors that could impact adversely, and what could you optimize to reach highest number in second half? Thank you.

Gil Benyamini, Chief Financial Officer

Okay. Hi, Sergei. So I would say that there are probably two trends. One, we expect to see higher revenues in the second half of the year and to have some leverage, which will positively affect the EBITDA margins. This is one side. Of course, mix and deliveries can shift a little bit to the right or left, but in general this is the trend. On the other hand, we do expect to see some additional $3 to $5 million of operating expenses in the second half due to the exchange rate between the U.S. dollar and the Israeli shekel and its effect on our expenses. So all in all, when we combine both, we are remaining with the same EBITDA margins that we had at the beginning of the year in the guidance throughout the whole year.

Sergei

Okay, thank you.

OPERATOR

The next question is from Gunther Carger of Discovery Group. Please go ahead.

Gunther Carger, Discovery Group

Yes, thank you. I have a question and a comment. The question is, where in Gilat do you expect the Comtech acquisition of the satellite business to be placed?

Adi Sfadia, CEO

Comtech is going to be placed mainly on the defense side. The revenues—70% to 80%—is defense and 20% to 30% commercial. So the defense will go with the defense and the commercial will go with the commercial. What we are acquiring is a set of six different business units, and we'll allocate the business units between the relevant segments. So the modem, for example, will be mainly under the defense business.

Gunther Carger, Discovery Group

Yes, thank you. And the comment is that the founders, the 11, would be very proud of what you've done with the companies. And thank you very much.

Adi Sfadia, CEO

Thank you.

Gil Benyamini, Chief Financial Officer

Thank you.

OPERATOR

If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. There are no further questions at this time. Mr. Minamini, would you like to make a concluding statement?

Adi Sfadia, CEO

I want to thank you all for joining us on this call and for your time and attention. We look forward to speaking with you again next quarter. Thank you very much, and have a great day.

OPERATOR

Thank you. This concludes the second quarter 2026 results conference call. Thank you for your participation. You may go ahead and disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.