Gilat Satellite Networks Ltd. Q4 FY2025 earnings call

Management Statement and Operational Highlights:

• Defense: Military forces are increasingly reliant on resilient satellite connectivity, and Gilat Defense is seeing steady demand from long-term defense programs, with a record year in 2025. It expanded into Earth Observation with a $10 million order and secured significant orders in Israel.
• Commercial: Demand for advanced IFC continues to grow. SkyH4 was a key growth driver, with a $42 million order from a global satellite operator and new customers in Asia Pacific. Gilat WaveStream Gateway and Airstream Bucks units also saw increased orders. Stellar Blue is integrated, with production ramping up and a significant backlog.
• Peru: Gilat Peru had exceptional results in 2025, closing over $85 million in agreements for network upgrades. It plans to expand its footprint in new digital inclusion initiatives.
• Strategic Focus: Mergers and acquisitions are a key focus, particularly on defense-related capabilities. The company also emphasized technology leadership in multi-orbit connectivity and 5G/TEN capabilities.

Segment Performance:

• Commercial: Q4 2025 revenues were $75.1 million, a 103% increase from the same quarter in 2024, driven by in-flight connectivity. Full year 2025 commercial revenue contributed to overall growth.
• Defense: Q4 2025 revenues were $33.3 million, a 14% increase year over year. 2025 saw record sales in defense, particularly from U.S. and allied defense customers for transportable SATCOM solutions.
• Peru: Q4 2025 revenues were $28.5 million, up from $11.8 million in Q4 2024, driven by higher revenues from new upgrade projects in four of the six regions where Gilat operates.

Guidance:

• Expect 2026 revenues to be between $500 million and $520 million.
• Adjusted EBITDA is expected to be between $61 million and $66 million.
• Commercial segment revenues projected to be between $315 million to $335 million (16% growth midpoint).
• Defense segment revenues between $115 million to $113 million (22% growth midpoint).
• Peru segment revenue between $60 million to $65 million (11% decrease midpoint) due to lower construction revenue and shift to operation phase.

Risks:

• Uncertain global economic conditions.
• Reductions in revenues from key customers.
• Delays or reductions in U.S. and foreign military spending.
• Disruptions or delays in supply of raw materials and components due to business conditions, global conflicts, weather, or other factors out of control.

Q: On the defense side, update on visibility in the US and international traction?

A: Adi Sfadia mentioned they have between 50%-60% of revenues already in backlog from guidance, no effect from US administration shutdown, and traction in US, Israel, and Europe.

Q: Update on IFC roadmap for line fit and competitive landscape?

A: Boeing line fit expected to pass certification in first half and deliver in third quarter; Airbus in initial phases. Competitive landscape has traction with SES and Panasonic, expecting large orders in first half.

Q: Cadence of Peru business unfolding in 2026?

A: Expect to close remaining network upgrade in Peru before election in second quarter, and participate in large RFPs for Internet connectivity in first and fourth quarters.

Q: Colors on defense contracts, margin profile, and Q1 order acceleration?

A: Defense revenues had small y/y growth due to US shutdown delays, but orders grew over 35% y/y. Earth observation contracts have margin profile 30%-40%.

Q: Areas of M&A targeting?

A: Main focus on defense, targeting companies in US and Europe, especially in secure satellite communication, and looking to expand into adjacent markets like radar solutions.

Q: Stellar Blue's revenue in 2025 and 2026 projection?

A: 2025 revenues ~$127 million within $120M-$150M range. 2026 expects double-digit growth in unit deliveries.

Q: Progress with Airbus for Sidewinder line fit?

A: Have agreement with SES to bring Sidewinder to Airbus premises, not yet part of official Airbus HBC+ plan.

Q: Stellar Blue's strategic orders progress?

A: Progressing well on one company, but technical conditions and minimum order commitments apply; not certain to close by June milestone.

Q: ESR 2030 terminal and flat panel antenna sweet spot?

A: ESR 2030 expected to start delivering production units in second half of 2026. Future roadmap includes dual beam capabilities depending on customer demand.

Q: Backlog outlook?

A: Backlog expected to cover at least 2027 and beyond, with no material dip expected.