Gilat Satellite Networks Ltd. Aktie

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Second Quarter 2026 Results Conference Call. [Operator Instructions].

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. Sanjay Hari of Alliance Advisors IR. Mr. Hari, would you like to begin, please?

Thank you, Hila, and good morning, everyone. Thank you for joining us for Gilat Satellite Network's 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.

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 engine, 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 the 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 system that provide mobility, rapid deployment and operation 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 War. This award highlights continued demand for Gilat Defense's resilient multi-orbit connectivity solutions and services and reinforce Gilat Defense role as a trusted provider in the U.S. market.

Gilat Defense received multimillion dollar order to supply SATCOM terminals to 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 reinforce our expanding role in the European Defense market.

During the quarter, we made important progress in product innovation for unmanned platforms. During Eurosatory, 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 a ground segment expertise, PSA portfolio and customer relationship 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 operators 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 continue to advance during the quarter. Through integration partners, Boeing will offer Line-fit installation capability, helping accelerate deployment time lines and reduce the cost and operational disruption associated with retrofit programs. We are progressing well towards full certification, an important step in making Sidewinder ESA terminal Commercially available as Line-fit options. Deliveries of the first units are expected in Q4 this year.

In parallel, we have begun the process to line fleet 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 lines 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 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 discussion on several significant project expansion 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 million 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 strategy. 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 continued 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 reflects 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.

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 In-Flight Connectivity vertical.

Revenues for the Defense segment in the second quarter of '26 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 less favorable deal mix in the Commercial segment, partially offset by higher gross margin in Peru segment.

GAAP operating expenses in Q2 '23 were $32.6 million compared with $26.2 million in Q2. The increase was primarily attributable to an earn-out provision related to the acquisition of DataPath, which 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 or a diluted income per share of $0.10 compared with GAAP net income of $9.8 million or 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 is 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 or a diluted income per share of $0.20 compared with a non-GAAP net income of $12 million or 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 revenue. 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 timing. We ended the quarter with a strong liquidity position of $159 million, comprised of cash, cash equivalents, restricted cash and short-term deposits.

DSO was 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 million to $520 million, representing 13% growth year-over-year at the midpoint. We expect an adjusted EBITDA of between $61 million to $66 million, 19% growth at the midpoint and continued margin expansion.

Importantly, we are maintaining this outlook despite of unfavorable movements in the Israeli shekel versus the U.S. dollar, which are expected to increase our operating expenses in the second half of '26.

That concludes my financial review. We would now like to open the call for questions. Operator, please go ahead.

[Operator Instructions]

The first question from Louie DiPalma of William Blair.

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?

So indeed, Hughes over the years were a significant competitor of Gilat, mainly on the geo side, but they are 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.

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?

So generally speaking, it's going to support all the Ka constellation from GEO satellites through Telesat LEO and mPOWER Ka. It can be installed on several types of, 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.

Okay. And how small of unmanned aerial vehicles can be antenna support? Does it go as small as Group 3 drones? Or are the drones needed to be much larger?

No, it's from small to medium UAVs.

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

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

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

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, a nice growth over the previous quarter. The Stellar Blu revenues are part of the Commercial revenues and since the Commercial revenues is an 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 one.

Next question is from Chris Quilty of Quilty Space.

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

I don't remember the exact number. I think it's around 600 units, slightly more than 600 units are installed and operated.

Chris, 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 the installation is dependent on their timeline and their agreement with the airlines.

Got you. 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.

I know that they are working hard to and run 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.

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

We are not engaged directly with the airlines. Most of the engagement is 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 upfront. We know that they are bidding on some very large opportunities that can drive significant revenue growth in the future.

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?

Yes. So 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.

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.

Yes, 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 yes, it was better than expected.

Understand. And on the SkyEdge IV 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?

No. The way we work with our customers that 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.

Got you. 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?

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 satellites, especially Sovereign satellites. We do see a lot of traction around sovereign networks or sovereign countries that want to launch sovereign LEO constellations, small constellations to support their needs. A lot of countries understand that they need solution 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 a full-blown LEO constellation.

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.

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 in the end, we will cover both of the models. Generally speaking, we want to be attractive in terms of swap and cost.

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?

Yes. So this is mainly needs for deliveries in the second half of the second year. So 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 a stabilization during the second half of the year.

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 the backlog, and we expect to consume it in the next two to three quarters.

Got you. 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?

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 the Defense, we received some very nice orders, including development of new products. We expect to see that growth in the future. And on the Commercial side, the focus used to be IFC and today is mainly SSPA to LEO gateways. And we work with two out of the three out of the four constellations that are available today.

So are these KA or Ku?

Ka.

Next question is from Koh of Ryan Koontz.

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'd point out on the Defense side of the business?

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 Iranian 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 Data past history, after such operations, they see a lot of business growth on the [Indiscernible]. 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 munition. We believe this is a significantly growing segment in the near future.

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

So last year, if you remember, Ryan, we signed around Q3 the expansion project of about $85 million, which about half of it is onetime 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 in kind of recurring revenue.

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

I think today, they are cycling globally. I think that there are several countries that 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.

The next question is from Sergey Glinyanov from Freedom Broker.

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

Sergey. So, I would say that there are two, 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 million 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 retaining the same EBITDA margins that we had at the beginning of the year in the guidance throughout the whole year.

The next question is from Gunther Karger of Discovery Group.

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?

Comtech is going to be placed mainly on the Defense side. The revenues is 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 6 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.

Yes. And the comment is that the founders 11 would be very proud of what you have done with the company.

There are no further questions at this time. Mr. Benyamini, would you like to make a concluding statement?

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. Thank you. This concludes Gilat's Second Quarter 2026 Results Conference Call.

Thank you for your participation. You may go ahead and disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's First Quarter 2026 Results Conference Call. [Operator Instructions] Following the management's following presentation, instructions will be given for the question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded, May 13, 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 Hurry of Alliance Advisors IR. Mr. Hurry, would you like to begin, please?

Thank you, Haila. Good morning, everyone. Thank you for joining us for Gilat's Satellite Networks Earnings Conference Call for the first 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 on certain global economic conditions, reductions in revenues 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 its supply of raw materials and components due to business conditions, global conflicts, weather or other factors not under the company's control.

The company cautions investors to not place undue reliance on forward-looking statements, which reflect the company's analysis 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 its latest quarterly report.

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 now to Gilat's CEO, Adi Sfadia. Please go ahead, Adi.

Thank you, Sanjay, and good day, everyone. Thank you for joining us today to discuss Gilat's first quarter results. I am pleased to report that we opened the year with solid execution across the business, reflecting strong performance. Our results underscore the competitiveness of our portfolio across the satellite communication landscape and strong year-over-year revenue growth and profitability.

Satellite operators and government customers advanced next-generation programs from VHTS satellites to NGSO constellations. We are seeing our capabilities to translate into new orders expanding customer engagement and growing opportunities. This momentum is closely tied to the progress we continue to make in technology development as we invest in advanced and interoperable system designed to support the evolving requirements of next-generation satellite communication networks.

During the quarter, Gilat Defense conducted a live demonstration of its virtualized SATCOM gateway modem architecture, a satellite 2026 in Washington, D.C. in collaboration with Amazon AWS, FCS, Space & Defense and the WAVE Consortium. The demonstration show cast a flexible cloud-based and software-defined gateway architecture designed to improve scalability, resiliency and agility for defense and government networks and represent a significant step forward in our future SATCOM gateways will be deployed and operated.

In parallel, we successfully conducted a 5G nonterrestrial network demonstration, highlighting how satellite systems can integrate with future 5G-based architectures. Together, this milestone reflects our continued investment in technology solutions that will support next-generation satellite and hybrid networks across both commercial and defense markets.

First quarter revenues reached $110.5 million, 20% year-over-year revenue growth and first quarter adjusted EBITDA reached $15.1 million, almost double the same quarter last year. Overall, the first quarter reflects continued traction and position us well for the remainder of the year. Now on to the business review. I will start with the defense business. We are seeing a significant increase in interest for transportable and portable SATCOM solutions, driven by the growing importance of mobility, rapid deployment and operational flexibility.

As militaries and government users increasingly operate in dynamic and contested environments, the value proposition of highly mobile resilient SATCOM solutions continue to strengthen. This demand translates into meaningful orders during the quarter. In February, we announced a $16 million order from a European Ministry of Defense for our DKET transportable solutions reinforcing our leadership in high-performance rapidly deployed systems.

These orders also reflect increased penetration into the European market driven in part by the evolving geopolitical environment and higher defense readiness requirements across the region. In Israel, we continue to strengthen our relationship with the Ministry of Defense. During the quarter, we announced an order of $9 million, further expanding the deployments of our solution and reinforcing our long-term strategic partnerships.

The order includes next-generation defense modems build for mission-critical operations to ensure reliable connectivity across a wide range of operational scenarios. During the quarter, we received an order for over $7 million for our new EnduroStream solid-state power amplifiers to support the U.S. defense program. EnduroStream delivers reliability and operational resilience required for mission-critical environments as defense customers transition away from legacy technologies.

Also in the United States, we continue our long-standing support of the U.S. Army. During the quarter we received an order for approximately $6 million for field and technical services reflecting the continued reliance on Gilat Defense to support mission-critical SATCOM operations and ensure system availability in the field.

Our defense pipeline remains strong, supported by sustained global demand and our continued investment in R&D, advanced system architectures and customer engagement. Turning to our commercial business. In the first quarter, our commercial business continued to show solid performance, supported by ongoing customer engagement and steady execution across our programs and satellite operators and service providers move forward with next-generation network.

They are increasing focus on platforms that offer scalability, flexibility and multi-orbit support for our mobility applications. Gilat remains well positioned within this evolving landscape. In-flight connectivity remains one of our key growth engines. Demand for IFC continues to increase, driven by airline expectations for consistent high-performance connectivity, growing passenger usage and the industry's transition towards NGSO and multi-orbit networks. This environment strongly aligns with Gilat technology road map and product portfolio.

As of today, we have delivered approximately 750 Sidewinder ESA terminals, of which more than 570 are already installed and in service. During the quarter, Boeing and Gilat reached an important key in-cabin milestone to offer Sidewinder ESA terminal as a Line-fit solution available to airlines and IFC service providers.

Certification is on track and deliveries of the first units are expected in Q4 this year. In addition, we are starting a process to achieve a Line-fit availability with Airbus. During the quarter, we announced $39 million in orders for our Sidewinder ESA terminal. These awards reinforce the market's confidence in its performance, low profile design and multi-orbit capability.

We have also expanded our ESA portfolio with the ESR 2030, which is now commercially available. ESR 2030 is designed to support commercial and defense applications over the OneWeb LEO constellation complementing our Sidewinder offering and broadening our addressable market. With growing interest in LEO services, we believe ESR 2030 position us well to support new programs and as operators move from network deployment towards commercial service.

We also received a multimillion dollar order from a leading IFC integrator for solid-state power amplifiers to support connectivity solutions on commercial aviation aircrafts. Across the industry, operators are operating grounded infrastructure to support a wider range of services across multiple orbits.

SkyEdge IV is built for this shift, providing a scalable software-defined platform that enable efficient management of complex multiservice satellite networks. A recent example is our strategic multimillion dollar partnership with Nelco in India to deploy SkyEdge IV in support of India's first Ka-band service deployment using the JSAT-N2 HTS satellite.

India represent an important growth market for Gilat in the central part of our expectation expansion strategy in the Asia Pacific region. The deployment will enable scalable, high-performance connectivity across multiple services, including IFC, cellular backhaul and enterprise connectivity, delivering the performance and flexibility required for Ka deployments. Overall, the commercial pipeline remained healthy, supported by continued IFC demand alongside longer-term investments in advanced satellite networks architectures.

Our Peru business continued to execute very well with strong operational progress across our national connectivity programs. We expect to complete that upgrade project that we have announced a few quarters ago, ahead of schedule in the second quarter of 2026, demonstrating Gilat Peru's ability to deliver large-scale complex infrastructure projects reliably and on time.

These results strengthen our position as a trusted partner for national digital inclusion initiative and provide a solid foundation for continued activity in the region. We expect additional large RFPs and follow-on orders during the year.

I am pleased to say that we continue to have a strong backlog and a healthy pipeline. Therefore, we feel comfortable reiterating our 2026 annual guidance. We expect 2026 revenues of between $500 million and $520 million and adjusted EBITDA of between $61 million to $66 million.

Technology development remained a core pillar of our strategy across defense and commercial markets. During the quarter, we advanced software-defined system capabilities that enable more scalable and resilient satellite networks while also continuing our work on integrating satellite network with future 5G NTN frameworks.

Together, these efforts support next-generation satellite system serving defense, mobility and commercial applications. Demand across our core markets continue to develop favorably, and our strategic focus on mobility, multi-orbit architectures and next-generation systems is translating into tangible momentum across our business.

Gilat Defense continued to see strong customer interest as defense and government organizations expand investment in mobile resilient SATCOM capabilities. We continue to see growing engagement across the United States, Europe and Israel, supported by a robust pipeline and ongoing investment in advanced architectures that address evolving defense requirements. IFC remain one of our key growth engines supported by increasing airline demand and continued adoption of ESA based solutions.

We continue to maintain a strong balance sheet and financial flexibility while remaining disciplined in our capital allocation. Mergers and acquisitions continue to be a key element of our defense and long-term growth strategy with a focus on opportunities that complement our core technologies, strengthen our defense portfolio and support sustainable value creation.

Overall, we delivered a solid start to 2026, validating the strength of our diversified portfolio across our business. With growing backlog and healthy pipeline and a continued investment in technology leadership, Gilat is well positioned to sustain growth and create long-term value.

And with that, I will hand over the call to Gil Benyamini, 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 in both GAAP and non-GAAP basis. I will now walk through our financial highlights for the first quarter of 2026.

As Adi mentioned, we delivered a strong first quarter with 20% revenue growth, margin expansion and a significant increase in profitability reflecting continued execution across all three segments and continued momentum into 2026. Revenues for the first quarter were $110.5 million, representing a 20% growth compared with $92 million in Q1 '25. The growth was driven by all three segments. The revenues for the commercial segments in Q1 '26 were $72.8 million compared with $64.2 million in the same quarter last year.

The 13% growth year-over-year was primarily driven by the in-flight connectivity vertical. Revenues for the Defense segment in the first quarter of '26 were $25.4 million, 10% higher than $23 million in the same quarter last year. And Q1 '26 revenues for Peru segment were $12.3 million compared with $4.8 million in Q1 '25.

The increase was mainly driven by the higher revenues related to the new upgrade projects in four of the six regions in which we operate, reflecting the continued expansion of our long-term Peru programs, which provide multiyear recurring revenue streams.

Our GAAP gross margin in Q1 '26 was 34% compared with 31% in Q1 '25. The increase is primarily attributable to a favorable deal mix as well as better margins Stellar Blu. GAAP operating expenses in Q1 '26 were $33.3 million compared with $31.1 million in Q1 '25. As a result, we delivered a significant improvement in profitability with GAAP operating income of $4.4 million compared to a loss of $2.7 million in Q1 '25, representing a year-over-year swing of $7.1 million.

GAAP net income in Q1 '26 was $5.2 million or diluted income per share of $0.07 compared with GAAP net loss of $6 million or a diluted loss per share of $0.11 in Q1 '25. The improvement was driven by the higher operating income as well as higher financial income associated with our stronger net cash position and lower tax expenses.

Turning to non-GAAP results. Our non-GAAP gross margin in Q1 '26 was 36% compared with 32% in Q1 '25. Non-GAAP operating expenses for the quarter were $26.8 million compared with $24.1 million in Q1 '25 and non-GAAP operating income in Q1 '26 was $12.5 million compared with $5.2 million in Q1 '25. The non-GAAP net income in Q1 '26 was $13.6 million or a diluted income per share of $0.18 compared with net income of $1.8 million or income per share of $0.03 in Q1 '25.

The adjusted EBITDA reached $15.1 million, nearly doubling year-over-year, reflecting strong operating leverage on higher revenues. Moving to our balance sheet and cash flow. Over the past several quarters, we significantly strengthened our balance sheet and liquidity position. During the quarter, we used approximately $12.2 million in operating cash, primarily driven by working capital timing while generating approximately $15 million over the trailing 12 months.

We ended the quarter with a strong liquidity position of $171 million, comprised of cash, cash equivalents, restricted cash and short-term deposits. DSOs were 112 days, excluding Peru construction activity and remain within our expected range.

During the quarter, we reached an agreement with the former shareholders of DataPath to satisfy the share linked component of the earnout associated with our 2023 acquisition of the company before the end of 2026. Under the original terms, this component called for Gilat to issue up to 3.1 million shares tied to DataPath performance from 2024 through 2026.

Under the agreement with the former shareholders of DataPath, we issued a total of 2.5 million shares in full satisfaction of the portion of the earnout at an average price of $15.45 per share. The remaining bonus earnout component capped at $9 million in cash or shares per Gilat discretion is unchanged and continues to be evaluated each quarter based on the performance against agreed targets to reach settlement by the end of 2026.

Our shareholders' equity as of March 31, '26 totaled $536 million, compared with $500 million on December 31, 2025, resulting mainly from issuance of shares for DataPath earnout and net earnings.

Looking ahead, based on our strong backlog and visibility, we are reiterating our full year '26 guidance. Revenues are expected to be between $500 million to $520 million, representing 13% growth year-over-year at the midpoint. We expect an adjusted EBITDA of between $61 million to $66 million, 19% growth at the midpoint.

That concludes my financial review. I would now like to open the call for questions. Operator, please go ahead.

Thank you. Ladies and gentlemen, at this time, we will begin the question-and-answer session. [Operator Instructions]. The first question is from Ryan Koontz, Needham & Company.

Great. Maybe starting with the Commercial segment here. It sounds like Stellar Blu is executing pretty well. You talked about better margin improvements. How are you seeing the overall demand environment for the Stellar Blu products? What's behind some of the gross margin improvements? And how are you thinking about this business kind of over the medium term and into next year? How is the visibility looking relative to backlog, et cetera?

Ryan, Stellar Blu is performing well. We are providing explicit guidance on Stellar Blu, but we can say that -- we see nice year-over-year growth. We expect them to do better performance this year. They reached the threshold of EBITDA. So now they are profitable. Gross margin is a bit better and will mainly because of sharpening the supply chain. We replaced one of the units with internal units, which provide better margins. And we do expect margins to be much better towards the end of the year, once we started delivering Line-fit units.

Great. And those Line-fit, is that starting initially with Boeing there?

Correct. With Boeing, we passed the in-cabin certification, waiting to the full certification, probably, if not by the end of the quarter, early Q3, and we expect to deliver first units during Q4, if not earlier than that.

And then maybe continuing on commercial. Relative to SkyEdge IV, you had a nice win in India here as well as the demo for the virtualized with AWS. How are you thinking about that transition from kind of hardware to a software-based platform? Any updates you can share with us about how you think that business evolves over the next year or two.

I think year or two, it's a short term. So I'm not sure we'll see significantly involvement in the year or two. SkyEdge IV is a software-defined platform, meaning at day 1, you get give or take, all the hardware you need for the gateway and all the upgrades and expansion is done through software licenses.

Moving to commercial of the shelf hardware and running on virtualized platform, I guess it's three to four years now, and it's combined together with the plans of shifting away from DBS 2x to 5G NTN.

Perfect. Makes sense on that. And then maybe shifting to defense. Any other color you can provide, you talked about some traction with other countries. Is this for the mobility products you talked about? Or is that more of a U.S. a U.S. need for your mobility defense products?

I think it's a combination of the two. I think that everyone understands, especially now after the war with Iran that mobility solution, portable and transportable solution are crucial. We saw that some of the U.S. gateways over the Middle East got hit and they will need to replace them.

And we believe that the replacement will be done with mobility solution, so you can move the gateway on a daily basis to another place and give you some kind of advantage. DataPath is the leader with that such a product portfolio. We're already starting to see significant order for our transportable solution, $16 million in Europe, which is also a very big market that is growing and our presence over there is very important, and this penetration to new MoD is crucial for our future growth.

And also, we see a lot of traction in Israel. So all in all, we believe that the defense -- the strong pipeline will drive at the end, a significant booking year. It's important to remember that there is a time between booking to revenues. In the defense, it's typically projects, and it takes six to nine months from the order until you deliver the product. And in some cases, if it's a big project, it can take much more than that. So we are very optimistic about our growth in defense in '26 and more in '27.

Next question is from Chris Quilty of Quilty Analytics.

Adi, just to follow up. You were saying six to nine months from booking to ship -- are you seeing any changes or any indications here in the U.S. where the administration is really pushing hard on moving quickly. Do you see any possibility of that order to ship gap closing over time?

It really depend on its lead time and inventory. If we will understand that -- there is a big demand for quicker turnaround, we can do that. We do hold the inventory, but those units are highly expensive and sometimes are made to build based on a unique requirements. So it's not that easy. But definitely, if we with the negotiation with the customer, if we understand that, we have the ability to expedite.

Great. And when you talk about the uptick in portable solutions, is it fair to assume that that's all coming out of the DataPath portfolio of products? .

The portable and portable solutions are mainly from DataPath products, but we do see also a very nice business to our modem solutions. And we do hope to be able to penetrate to the DoW and the U.S. Army with our modem, the SkyEdge IV modems and highly resilient defense volume.

Got you. And staying on defense, I mean, you mentioned demos with Amazon AWS and SES. I know on the Amazon side, you do some hardware into Amazon LEO, but what is the connection with Amazon AWS.

The main idea is to run our gateway on AWS platform. And this is the demonstration that we showcased in satellite in D.C. that we can do that. And of course, we need to tailor the solution based on AWS and customer requirements. But I think that the demo reflects our ability to cooperate with AWS cloud.

And is it fair to assume this is a virtualized platform.

Correct. It's virtualized platform. We are running our gateway modem on the AWS platform, which connects to a standard modem at the end user side.

Very good. I guess, back on the traditional Geo side of the business, it appears that both Airbus and California space have now kind of gotten their act together with regard to the next-gen software-defined satellites. I think the first ones are going up next year. So at what point do you start to see an uptake in equipment to support those systems.

Typically, we are getting orders, give or take 6 to 12 months before the satellite launch. And the deployment really depends on the customer readiness to get the equipment and to deploy it in the gateways. We believe we will start getting large part of those orders this year. I'm not sure we'll need to deliver everything this year, but some of it is factored within our guidance already.

Great. Gil, the gross margins were nice in the quarter. Obviously, that was a little bit mix and a little bit Stellar Blu, on the Stellar Blu side, it's profitable, but you were shooting for 10% EBITDA exiting 25, didn't happen. Do you have a sense of where in '26 you expect to hit that milestone.

So as Adi mentioned, Stellar Blu is now fully integrated into Gilat with the operations team and R&D team and so on. I guess that if we would go back and measure it as a stand-alone company would be very close to that. But we don't do it anymore. So it's less relevant. But we definitely see this improvement a long time. Of course, with the Line-fit deliveries that, as Adi mentioned, expected to start at the last quarter of this year. It will also give another improvement to the gross margins and to the EBITDA margin of this activity.

Chris, I think it's important to mention that we do -- we start investing in next-generation ESA technology and terminals. So R&D expenses is shifting towards Stellar Blu, which is now part of Gilat antenna and Terminal subdivision and then correlation and the integration between the commercial business and Stellar Blu is tightening on a daily basis. Another positive news, I think that Stellar Blu is starting to sell their solutions also to defense application. It's not big yet, but we do expect them to have more than $10 million business with defense this year.

That's great. And I know you did have in the original purchase agreement and earn-out agreement, some large strategic wins that were part of that -- how is that stuff shaping up? Is it still on the horizon here, maybe not on the time zone or time line that you were targeting?.

Yes. So we do have significant progress with one of the strategic deal that initially we thought we would be able to close faster. It's progressing slower than expected. We do expect to close it within the coming year in 2026. I'm not sure we'll be able to close it before the end of June. And I'm not sure that the first order will be more than $35 million, but definitely the potential can be north of $100 million.

The next question is from Mr. Sergey Glinyanov of Freedom Broker.

You provided a really great work on your gross margin side, so my question is, recently you tap on NTN solution. And I'm wondering, do you see any solution demands on your 5G NTN solution, have this trend with better visibility?

We do see a lot of traction in the market on 5G NTN and OneWeb Gen 2 and Gen 1.5 is talking about 5G modems. IRIS² is talking about 5G modems. And also other small LEO start-ups are talking on 5G modems. And here and there, also Geo players are talking about 5G modems.

I think that the overall requirement in the market is not mature enough, so we do -- we already started the work on 5G network, mainly the main building blocks. But in order to launch it, we need to tightly work with one of our big customers, and we hope to close something within the coming year.

What do you expect, well, when the market conditions would be ready for a full deployment of these [ techno ].

5G NTN full deployment. I guess right now, the first -- the most advanced is IRIS². So I guess it's four to five years from today.

Okay. Got it. And a little bit about Peru. Your statement about this segment, should we think the most part of revenue leading towards second half of 2026.

We do expect to get large awards in Peru. And once we get it, revenue will kick, kick in. So I guess, the second half of the year should have a higher revenue than the first one. But in general, Peru can be very -- the revenue can be very volatile because of the nature of the business over there. It's usually implementation of network when you see relatively high revenues in short time and then recurring revenue over a period of 3, 5 and sometimes 10 years.

And I would add to that. I think that one of the most important things or takeaways about Peru is that the base level of the recurring revenues of Peru this year is higher than it feels to be in previous years, and the construction and implementation are boosting it for the next year. So you can see that we're in a much better position over there.

The next question is from Louie DiPalma of William Blair.

Adi and Gil, I was wondering -- what is the potential timing of the Airbus partnership with the Stellar Blu system, how long do you think that will take to materialize? Will it be similar to the time line with the Boeing?

I think it will be slightly faster than the time line with Boeing because we gained some knowledge and some of the testing are equivalent, so we can use the qualification and test that we have done. Of course, the documentation is totally different, and we need to rewrite some of them. But the knowledge we gain through the Boeing process definitely give us a head start with Airbus.

And do you have any sense for the timing should it take? Should we be thinking 2027, 2028, what is your thoughts there?

I would say that we expect to finish the certification process early in 2027 and shipped first units second half of 2027.

Great. And earlier in the call, did you mentioned that you should ship the first units to Boeing in the fourth quarter of this year.

Correct.

Great. And my second question, also relating to the Stellar Blu development. I think for the past year you've been working on like the multi-beam technology. And it would also seem that like the broader in-flight connectivity industry is looking for multiband technology, so a terminal that can communicate both in Ka-band and Ku-band. What is the progress for these initiatives? And how far away are we from having Stellar Blu multibeam or for multiband.

So multi-beam is mainly dependent on cheap availability and customer requirements. I think today, with LEO constellation, especially with Terrasat in service hopefully within the coming 18 months. Ku-ka antenna Ku and Ka that will do. LEO has high potential.

We are already looking to introduce technologies either internally or with a third party, cooperation with third parties. I think availability for such antenna is between two to three years, including development cycle and certification cycle. And I think it will be in line with the future service launch of the IFC service providers.

[Operator Instructions] There are no further questions at this time. Mr. Benyamini, would you like to make a concluding statement?

I want to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak with you on our next call. Thank you very much, and have a great day.

Thank you. This concludes Gilat's First Quarter 2026 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Fourth Quarter 2025 Results Conference Call. [Operator Instructions] 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've 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 Herry ] of Alliance Advisors IR. [ Mr. Herry ], would you like to begin, please?

Thank you, Hilla, and good morning, everyone. Thank you for joining us for Gilat Satellite Networks Earnings Conference Call for the fourth quarter and full year 2025. With us on today's call are Mr. Adi Sfadia, 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 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. 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 Sfadia. 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'm 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 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 organization prioritize flexibility, rapid deployment and resilient connectivity across diverse operational environments. The fourth quarter marked 2 important milestones for the business.

First, we expanded into a new market segment, Earth Observation, with an approximately $10 million order for a direct downing 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 environment. 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 increased 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 solution.

Turning to our Commercial business. Demand for advanced IFC continues to accelerate, fueled by free WiFi growing passenger expectations for high-bandwidth applications and increasing adoption of NGSO and multi-orbit architectures across the aviation ecosystem. This trends align directly with Gilat's strength and long-term strategy. Our Commercial business delivered a strong fourth quarter and solid 2025, reflecting continuing -- continued wins, growing customer adoption and consistent performance across our key programs. As satellite operators accelerating investment in next-generation networks, our platform continued to be selected for the scalability, flexibility and ability to support multi-orbit mobility-driven services.

SkyEdge IV 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 our multi-orbit platform, primarily supporting IFC services. During the fourth quarter, we added 2 new SkyEdge IV 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 SkyEdge IV's role as a core platform for large-scale next-generation satellite networks. We also strengthened our presence in Asia Pacific with the SkyEdge platform order for approximately $11 million from a leading regional satellite operator to provide services over VHTS 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 BUCs. These units will be deployed as part of next-generation IFC solutions to be installed on commercial aircraft.

Stellar Blu is now fully integrated into Gilat's operations, and we are benefiting from cross-company synergies. Gilat Stellar Blu plays a key role in our IFC leadership position with enhanced offering 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. As of year-end, we have a significant backlog that will be delivered in 2026 and beyond based mostly on order 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 multimillion dollar order for our Sidewinder ESA terminal from a large global avionics company, underscoring the advantage of our 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, position 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 Pronatel for the upgrade of 4 regional networks. These awards clearly reinforce Gilat's Peru 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 WiFi 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 million and $520 million. We expect adjusted EBITDA to be between $61 million 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 significantly strengthened balance sheet. We are entering 2026 with a strong momentum across the company. In Defense, we will focus on driving revenue growth throughout 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 SkyEdge IV 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 our continued technology leadership in multi-orbit connectivity and development of advanced 5G NTN capabilities. Mergers and acquisition 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 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 milestone 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 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 '24. 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 '25 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 Stellar Blu. Q4 '25 revenues for the Defense segment were $33.3 million, 14% higher than $29.4 million in the same quarter last year. Q4 '25 revenues for the Peru segment were $28.5 million compared with $11.8 million in Q4 '24. The increase was driven primarily by higher revenues related to new upgrade projects in 4 of the 6 regions in which we operate.

Our GAAP gross margin in Q4 '25 was 28% compared with 40% in Q4 '24. The decrease is primarily attributable to lower margins at Stellar Blu 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 '25 were $25.3 million compared with $18.3 million in Q4 '24. The increase was primarily driven by the consolidation of Stellar Blu expenses, amortization of acquired intangible assets and stock-based compensation mainly related to acquisitions.

As a result, GAAP operating income in Q4 '25 was $13 million compared with GAAP operating income of $12.8 million in Q4 '24. GAAP net income in Q4 '25 was $8.8 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 $0.21 in Q4 '24. The decrease in net income mainly reflects higher financing costs associated with the loan taken to finance Stellar Blu acquisition, together with higher tax expenses during the quarter.

Moving to non-GAAP results. Our non-GAAP gross margin in Q4 '25 was 31% compared with 40% in Q4 '24. Non-GAAP operating expenses in Q4 '25 were $26.6 million compared with $21.9 million in Q4 '24. The increase was primarily driven by the consolidation of Stellar Blu operating expenses. Non-GAAP operating income in Q4 '25 was $15.2 million compared with $9.7 million in Q4 '24, and non-GAAP net income in Q4 '25 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 '24. The adjusted EBITDA in Q4 '25 was $18.2 million, a 50% increase compared with an adjusted EBITDA of $12.1 million in Q4 '24. 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 '25, we also repaid an outstanding $60 million loan that had originally financed the acquisition of Stellar Blu. In the fourth quarter of '25, we used about $6.3 million of cash on operating activities. And on the full year basis, we generated approximately $21 million of operating cash flow in 2025.

As a result, as of December 31, '25, 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, '25, totaled $500 million compared with $391 million on September 30, '25, resulting mainly from the capital raise and earnings.

Looking ahead, reflecting our strong backlog and our visibility into '26, we expect 2026 revenues of between $500 million and $520 million, representing 13% growth year-over-year at the midpoint. We expect an adjusted EBITDA of between $61 million and $66 million, a 19% growth at the midpoint. We expect 2026 Commercial segment revenues of between $315 million to $335 million, 16% growth at the midpoint, Defense segment revenues of between $115 million to $130 million, a 22% growth at the midpoint and revenue of Peru segment of between $60 million to $65 million, an 11% decrease at the midpoint due to lower construction revenue in 2026 and shift to operation phase compared to '25.

That concludes my financial review. I would now like to open the call for questions. Operator, please go ahead.

[Operator Instructions] The first question is from Ryan Koontz of Needham & Company.

On the Defense side, given kind of some of the puts and takes been going on with the U.S. 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 U.S. and any international traction you might have?

Ryan, on the visibility of Defense, generally, when we are entering a year, we have between 50% to 60% of the revenues are already in backlog from the guidance. So we have a relatively good visibility. We have some large projects that 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 U.S. administration. We see increased budget and a lot of traction both in the U.S., in Israel and in Europe when defense organization requires satellite connectivity.

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

Sure. So on the linefit, as we said in the past calls, we are progressing with Boeing linefit. 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 linefit in 2026.

Competitive landscape stayed, give or take, the same. There are 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 backlog that we have that we received mostly in 2025. So all the orders that we expect to get during '26 probably will be recognized in revenues in 2027.

That's terrific. 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 that you expect the Peru business to unfold this year?

Sure. So in Peru, during last -- during 2025, we got award of upgrading 4 regional networks that we maintain. We are in discussion with the government to upgrade the remaining 2 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 discussion 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 will see most of the RFPs during the first quarter and during the fourth quarter of the year.

The next question is from Sergey Glinyanov of Freedom Broker.

So you provide pretty positive guidance for Defense. And you mentioned new area to expand the operations in Earth Observation solution. But could you put some color 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?

Sergey, so I'll start with a general comment on the Defense. We saw in revenues a relatively small growth year-over-year. This is mainly due to the previous shutdown of the U.S. 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 arrive 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 kind of deals, which is give or take the average of Gilat between, I would say, 30% to 40%.

The next question is from Louie DiPalma of William Blair.

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

That's a very good question. So first of all, we are open to -- we are not limiting ourselves to a specific segment, but our main focus is on the Defense. We -- on one hand, we want to increase our market presence, both in the U.S., 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 the 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 could 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 a 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 breakeven, and now it's almost double the revenues.

We're also looking to expand our 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 start-up with unique technology, a company called Crosense, 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.

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

So no, they didn't attain the earnout milestone. They achieved around slightly above half of it. Very large order that we are expecting to get slipped into 2026. We know that it's being processed. We expect to get it, if not by the end of this quarter, so early next quarter. It's not affecting our revenues for 2026 because revenues for 2026 are already in the backlog. There is 9 to 12 months lead time on the main components of the terminal. So we are pretty close for 2026. We can affect it here and there, but not materially.

The order that we are expecting should be delivered mainly in 2027. And since we need to deliver it based on customer needs, if it will arrive today or in 2 months, it's not really a big issue from our perspective. I would like to emphasize that from our perspective, both the risk of delivery and the risk of new business is mitigated. We see the very good acceptance of the antennas in the market, a very good quality, the availability of more than 95%. More than 420 aircraft are connected and more than 500 delivered in 2025. So we know for a fact that the risk that we wanted to mitigate are mitigated, and we do expect to see future growth.

And what was Stellar Blu's revenue in 2025? And what is the general projection for growth in 2026?

So revenues for '25 were about $127 million within the range that we gave between $120 million to $150 million. Today, Stellar Blu is in 2026 are closely integrated with Gilat business. So it's hard to break the P&L. We do expect that from a revenue perspective to see a double-digit growth in unit deliveries.

And one final one. Did you previously indicate that you made progress with Airbus for the inclusion of Sidewinder into its linefit program?

So we do have an agreement together with SES to bring the Sidewinder to be linefit. And with Airbus, SES will be able to install the terminal within Airbus premises. It's not yet part of the official Airbus plan of HBCplus.

The next question is from Chris Quilty of Quilty Space.

I just wanted to follow up a little bit on Stellar Blu. I think the other -- the next set of milestones they were targeting the large strategic contracts. I think those are separate from the large order you just mentioned, which is more of a Commercial customer. Can you give us an update on how they're progressing on some of those strategic orders?

Chris, you're a bit disconnected. Can you repeat the question, please?

The question was whether you've made any progress with Stellar Blu on some of the strategic opportunities that they're pursuing?

Okay. So you're referring to the third earn-out. We are making some progress with one company that we cannot name yet. It's progressing well. I don't know if we'll be able to close everything by the end of the milestone, which is by June, but it seems promising. We are progressing. I want to remind you that it's not just signing the agreement. It has some technical condition as well. It needs to come with a minimum order commitment of at least $35 million with a gross profit, which is significant, almost double the gross profit that the original units booked and come with a relatively significant down payment. The discussion with the customer seems like applying to those conditions, but it's still in early stages. So I cannot comment if it will be closed or not.

Understand. And would those products require significant changes in manufacturing or design? And where do you currently stand in the production rate?

So those future products might require significant design. A lot of our products and a lot of our design changes are approved relatively quick because Stellar Blu expertise is with those certification and working based on qualification by similarity. But in some of the cases, we are offering a different variation of the terminal with a cheaper design. It really depends on the customer.

In terms of production, we said at the beginning of the year that we expect to reach to 60 to 70 units per month. So we reached this run rate. During the fourth quarter, we delivered 190 full terminals, including -- on top of it, we delivered some spare parts. We can increase this production rate with relatively small capital investment. But right now, this production rate is, give or take, in line with customer expectations for deliveries. During the year, we delivered more than 500 units. In Q4, it was a record quarter in terms of deliveries.

Understand. And should we expect the deliveries to be relatively even across the year? Or is there a seasonal pattern to that?

No. In 2026, we expect it to be linear across the year. Of course, it can be small changes between the quarters, but we expect it to be linear.

Understand. And staying on IFC, do you have an update on the ESR2030 terminal. I think that was supposed to be starting early this year for delivery. Is that still on track? And maybe more broadly, what are your evolving thoughts on what is the sweet spot of the flat panel antenna market, both in terms of FANS or single beam, dual beam, where are you taking it in the new product direction?

So in terms of the ESR2030, we passed qualifications, and we expect to start delivering production units probably second half of the year. It really depends when Gogo is ready to accept them. We know that Gogo is promoting the terminal and already have some small awards that they want to install those antennas. So I think it's on track for the year.

As for the future road map, the antenna currently doesn't support simultaneously dual beams. The plans that the next generation of the product will support dual beam. But usually, it comes with customer demand. So it's really what matters to the customer, fast time to market or he has the time to wait for a new version of antenna with dual beam capabilities.

Great. And I assume based on the earlier or the delay in the large order, the backlog probably gets below 1,000. Where do you expect it to finish out, say, maybe by midyear and end of the year?

It's good question. We typically do not disclose the number of units that we have in backlog. I can say that at year-end, we are give or take, at the same level that we were at the beginning of the year, maybe slightly below. We do expect to finish the year with backlog that will cover us for at least 2027 and beyond.

The next question is from Gunther Karger of Discovery Group.

Excellent year, excellent quarter. Congratulations. My question is, we haven't heard in a long time about high-speed ground transport like high-speed rail. There was a project underway, I think, in China on that. Any updates on that -- in that area?

Indeed, I remember the project in China. I think it was 10 years ago when I just arrived to Gilat. It was promising back then. But since then, we didn't see a lot of traction. We do have here and there some terminals that we are selling for fast trains around the world, but it's in limited numbers. And right now, it's not our main focus.

[Operator Instructions] There are no further questions at this time. Mr. Benyamini, would you like to make a concluding statement?

Thank you. I want to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak with you on our next call. Thank you very much, and have a great day.

Thank you. This concludes Gilat's Fourth Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's Third Quarter 2025 Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded, November 12, 2025. 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 Ms. Jody Burfening of Alliance Advisors IR. Ms. Burfening, please go ahead.

Thank you, Hilla, and good morning, everyone. Thank you for joining us for Gilat Satellite Networks earnings conference call for the third quarter of 2025. 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. Potential risks and uncertainties could cause actual results to differ materially include global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of our new products on a global basis and disruptions or delays in our supply of raw materials and components due to business conditions, global conflicts, weather or other factors not under our control.

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, including the latest quarterly report on Form 10-Q.

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

Thank you, Jody, and good day to everyone. Thank you for joining us today to discuss Gilat's third quarter of 2025 results. Please note that we are posting a PowerPoint presentation on our website with all the data we will discuss today.

The third quarter of 2025 was a strong quarter for Gilat and showed strong revenue, including solid organic growth and adjusted EBITDA performance. Our competitive edge across the satellite communication landscape and success in next-generation satellite programs is clearly translating directly into new orders and growing opportunities.

During the quarter, we announced a $66 million private placement from institutional and accredited investors. This demonstrates the confidence of the investment community in Gilat's strategy and performance, providing additional strength to support our next phase of growth.

At the end of the quarter, we had a very strong cash position, [indiscernible] an example of our efforts to create a competitive edge in our first-to-market integration of AI into our Network Management System. This marks an important step in bringing AI-driven automation and intelligence to satellite network operations, allowing customers to manage their network with greater efficiency and insight. It reflects our commitment to innovation and our active role in shaping the future of intelligent SATCOM solutions. We expect to introduce additional AI capabilities as we progress with our road map development. Third quarter revenues reached $117.7 million, a 58% increase year-over-year. Adjusted EBITDA was $15.6 million, 46% above the same quarter last year.

Now on to the business review. Gilat Defense continued to invest in sales, marketing and R&D resources to support business development. Gilat Defense is front and center, actively engaging with customers across North America, Europe and Asia Pacific. Our unique advantage lies in the combined strengths of Gilat DataPath, Wavestream and Stellar Blu. This collaboration enable us to deliver comprehensive SATCOM solutions that supports the full spectrum of Defense operations.

During the quarter, Gilat Defense received over $14 million in orders through a prime contractor for its DKET terminals from the U.S. Army and the Department of Defense, broadening our presence across key defense programs. In Israel, Gilat Defense strengthened its relationship with the Israeli Ministry of Defense through a new multimillion dollar contract for the delivery and integration of satellite communication systems and services.

With a robust pipeline, trusted partnership and proven execution, we are well positioned to capture additional opportunities as global demand for secure satellite communication continue to rise.

Turning to our Commercial business. The third quarter delivered strong results driven by new wins, continued adoption of our next-generation platforms and steady execution across major programs. These results reflect both the rapid evolution of the satellite communication market and Gilat's ability to deliver technology and performance our customers require.

Operators worldwide are investing in flexible multi-orbit ground networks that can seamlessly support fixed broadband mobility and government applications. Gilat's SkyEdge IV platform remains central to this transformation, combining scalability, reliability and advanced network management via virtualized software-defined ground infrastructure.

During the quarter, Gilat received $42 million in orders from a leading global satellite operator for SkyEdge IV for use across multiple applications, mainly in-flight connectivity. These systems will expand the worldwide deployment of our platform and strengthen Gilat's position as a preferred choice for next-generation connectivity in multi-orbit environment. Demand continued to build for Gilat's IFC solutions as airlines and system integrators expand adoption of our technology for next-generation aircraft connectivity.

Recently, we received an order of approximately $7 million to supply IFC equipment. This order demonstrates the growing trust of leading aviation partners in Gilat to deliver reliable, high-performance connectivity for IFC. During the quarter, Gilat signed a strategic partnership agreement and received an initial order for SkyEdge IV from a leading satellite operator in Asia Pacific region, supporting both fixed and cellular backhaul connectivity.

Together, these wins highlight strong market confidence in our technology and reinforce our position as a key enabler of multi-orbit broadband connectivity worldwide. Gilat was awarded more than $60 million in orders from a leading satellite operator for its Stellar Blu's Sidewinder ESA IFC terminal. With about 300,000 community flight hours and about 350 terminals already deployed, the Sidewinder continued to set new benchmarks for performance, reliability and passenger experience.

Production is ramping up, and we expect increased deliveries with improved margins in the coming quarters. Gilat Stellar Blu continues to collaborate closely with its partners to secure new fleet wins and expand its global reach. The growing pipeline in our Commercial business continued to benefit from demand momentum and expanding customer adoption across key markets. Combination of major satellite operators awards, growing IFC demand and the integration of Stellar Blu testify to Gilat's leadership in next-generation connectivity, positioning us well continued growth into 2026.

Gilat Peru delivered strong results this quarter, marked by an additional award of $25 million for an expansion project from Pronatel. This is on top of the $60 million projects awarded to us that was reported at the beginning of the quarter for a quarterly total of $85 million. The new awards will extend high-speed connectivity to additional public institutions, including schools, health centers and police stations as well as public Wi-Fi hotspots, further advancing Peru's digital inclusion goals. The impact of this project goes beyond connectivity, supporting access to education, health care and public safety while creating the infrastructure needed for future broadband expansion. The project implementation is progressing on schedule, and we continue to anticipate additional large RFPs and follow-on orders for network expansions and renewals in the coming quarters. The experience and expertise gained in Peru are also being applied globally, allowing us to replicate successful models and accelerate digital inclusion programs in other markets.

I am pleased to say that we continue to have a strong backlog and a healthy pipeline of opportunities in all divisions. On the strength of our results year-to-date, improved visibility and business momentum, we are resetting our full year guidance. We are narrowing our revenue range to between $445 million to $455 million for a higher revenue growth rate of approximately 47% at the midpoint. We've also narrowed our adjusted EBITDA guidance range, now targeting $51 million to $53 million for a higher growth rate of approximately 23% at the midpoint. Demand across our key markets is accelerating and the strategic initiatives we have implemented are delivering measurable results.

Gilat Defense continued to develop opportunities as government expand investment in mission-critical secure satellite communications. Our focus remains on converting the growing pipeline into new awards in the United States and allied countries.

In the Commercial division, we are seeing broader adoption of our multi-orbit SkyEdge IV platform as operators scale their next-generation networks and invest in advanced broadband and IFC applications.

Gilat Stellar Blu is making steady progress as production increases and new fleet wins are secured, further strengthening our position in the global aviation connectivity market.

In Peru, project execution remains on track, and we continue to expect additional RFPs and follow-on awards from Pronatel and other public programs. The operational expertise developed in Peru continues to serve as the foundation for similar digital inclusion initiatives globally.

In summary, we delivered another strong quarter, successfully validating our diversified growth engines across Defense, Commercial and Peru. Gilat is actively strengthening its competitive edge through technological leadership in multi-orbit connectivity and the integration of SkyEdge IV and AI. With a growing backlog, a robust pipeline of opportunities, particularly in the IFC market and a strong balance sheet, Gilat is well positioned for sustained profitable growth and continued leadership in the global SATCOM market.

And with that, I will hand over the call over to Gil Benyamini, 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 third quarter of 2025. As Adi mentioned, we delivered a strong third quarter, demonstrating continued execution across our strategic priorities and building momentum into the remainder of the year. In terms of our financial results, revenues for the third quarter were $117.7 million, representing 58% growth compared to $74.6 million in Q3 '24. Importantly, our organic growth quarter-over-quarter was 19%.

In terms of revenue breakdown by segment, Q3 '25 revenues for the Commercial segment were $73 million compared to $33.8 million in the same quarter last year. The 116% growth was primarily driven by the in-flight connectivity vertical, reflect both the contribution from Stellar Blu and organic expansion.

Q3 '25 revenue for the Defense segment were $24.1 million compared to $31 million in the same quarter last year. The decrease primarily reflects the transition from mature programs to new programs and initiatives that are currently in [indiscernible] phase. We secured a number of meaningful orders and awards that are expected to convert to revenues over the coming quarters. As a reminder, our Defense business is inherently project-based with deliveries and revenue recognition occurring over time. Looking ahead, we expect to see growth in this segment as these newer programs continue to scale.

Revenues for Peru in Q3 '25 were $20.6 million, more than double than the $9.8 million in Q3 '24. The increase was driven by higher revenues related to the new upgrade projects in 4 of the 6 regions in which we operate as well as increased equipment deliveries.

Our GAAP gross margin in Q3 '25 was 30% compared to 37% in Q3 '24. The decrease is primarily attributable to lower margins at Stellar Blu as production ramps up as well as the amortization of purchased intangibles related to the acquisition. GAAP operating expenses in Q3 '25 were $27.2 million compared to $20.9 million in Q3 '24. The increase was primarily driven by the addition of Stellar Blu and the amortization of acquired intangible assets. As a result, GAAP operating income in Q3 '25 was $7.5 million compared to GAAP operating income of $6.7 million in Q3 '24. GAAP net income in Q3 '25 was $8.1 million or a diluted income per share of $0.14 compared to GAAP net income of $6.8 million or a diluted income per share of $0.12 in Q3 '24.

Moving to non-GAAP results. Our non-GAAP gross margin in Q3 '25 was 32% compared to 38% in Q3 '24. Non-GAAP operating expenses in Q3 '25 were $24.7 million compared to $20.2 million in Q3 '24. Non-GAAP operating income in Q3 '25 was $12.8 million compared to $8.3 million in Q3 '24. The non-GAAP net income in Q3 '25 was $11.8 million or a diluted income per share of $0.19 compared to a net income of $8.1 million or income per share of $0.14 in Q3 '24. Adjusted EBITDA in Q3 '25 was $15.6 million compared to an adjusted EBITDA of $10.7 million in Q3 '24.

Moving to our balance sheet. We strengthened our balance sheet and liquidity during the last quarter. In September '25, the company raised $66 million from leading institutional and accredited investors in Israel. In January '25, we secured a $100 million credit line from a bank consortium, of which $60 million was used to finance the acquisition of Stellar Blu. The company also generated more than $28 million in cash from operating activities during this quarter. As a result, as of September 30, '25, total cash, cash equivalents and restricted cash were $155 million or approximately $94.6 million net of loans compared to $5.5 million on June 30, '25.

DSOs, which exclude receivables and revenues of our terrestrial network construction projects in Peru were 63 days, similar to the previous quarter. Our shareholders' equity as of September 30, '25 totaled $391 million compared with $316 million on June 30, '25.

Looking ahead, reflecting our strong performance and visibility into the remainder of the year, we're narrowing our guidance range and raising the guidance midpoint for both revenues and EBITDA. Revenue is now expected to be between $445 million and $455 million, representing year-over-year growth of 47% at the midpoint. The adjusted EBITDA is expected to be between $51 million and $53 million, representing year-over-year growth of 23% at the midpoint.

That concludes my financial review. I would now like to open the call for questions. Operator, please go ahead.

[Operator Instructions] The first question is from Ryan Koontz of Needham.

Really nice quarter, guys. Congrats. I wanted to ask about Stellar Blu and how we should think about that trajectory? Where are we now on gross margins at this point in time? And what sort of improvements you think you can make in gross margin over the coming quarters? And as well as I also want to ask about the product cycle for this version of Sidewinder. How long do you think that lasts before you really need kind of a next-generation product in production?

Ryan, thank you for the greetings. So [ SES ] is progressing very nicely. Production is ramping up. We're still behind the targeted gross margin. The first phase of production incur higher expenses than we originally expected.

We do believe that during next year, we'll see a significant improve in the gross margin that will be combined with orders for line fit on top of the retrofit that we are delivering to date.

As you can see, we announced $60 million orders, which also included initial orders for line fleet units. So we believe that once we start delivering those units, we'll see significantly better gross margins.

In parallel, the cost reduction efforts are starting to bear fruits, not as fast as we expected, but we see the seeds of it. And we believe that next year, we'll see even a higher reduction in costs.

In terms of revenues, it was close to $30 million this quarter. And overall, Stellar Blu was slightly losing. We expect them to be profitable starting Q4.

On the next-generation product, it's -- we haven't announced anything yet, but we are definitely working both on several new programs that will -- once we will be ready, we'll introduce several new ESA terminals. Our focus today is on the Ku new version and also targeting Ka version. And of course, as everyone, we are considering also a version to include Ku and Ka with introducing LEO in Ka, it might be also appealing offering as well.

That's great. Really nice to hear that. And on the Peru front, you talked about the $85 million in orders. Is most of that incremental to your ongoing kind of maintenance contract there? Or is that also a renewal of that maintenance ongoing rate?

Yes. The $85 million award that we received during the last few months is upgrades for additional projects. So it's on top of the existing business that we have with Pronatel. It's not a renewal. Those projects -- the original projects are about to be renewed in 4 to 7 years' time. It depends on every region when it shifts to operation. And those projects include both upgrading the network and maintenance contract until the end of the period. So some of them are for 4 years, some for 5 and some for more.

We do expect several other projects, not necessarily related, but some are also related to those projects in the coming few quarters. It will be renewals of smaller projects in scope and renewals of services that we provide to operators on top of the networks that we built in Peru.

In addition, in Peru, we expect that the government will release several new RFPs in the coming few quarters. It's delayed for more than 6 months, but we do expect to release them in the coming few months. Next year is an election year in Peru. So we do expect it to be released. So the awards will be announced before the election. But again, it's Peru, we can't control the government, so we are waiting.

Got it. Really helpful. And then on the [indiscernible], any impact you're seeing on bookings or product acceptance from the shutdown in the last 45 days?

To be honest, yes, as everyone, we see -- we are not getting orders because of that. But we don't believe that anything is canceled. It's just delayed in new orders and probably might cause a small delay between the quarters in 2026 because there is a lead time from the day we get the orders, but we don't consider it now it's a big impact on our guidance and forecast.

Got it. And Gil, any impact from FX from the shekel versus dollar in the quarter?

Ryan, so no, this quarter, we hardly had any impact. We do hedge the shekel looking forward. So this effect, if we will encounter it, it will only be in the second half of 2026.

The next question is from Louie DiPalma of William Blair.

Congrats on the guidance raise and the recent awards. My first question is, how many Stellar Blu Sidewinder aircraft are online now? I believe last quarter, you indicated there were 225 planes flying with the system. And I was also wondering, how is the antenna performing in the field in terms of connecting with the OneWeb constellation. Is the performance similar to what Starlink is achieving?

Louie, today, there are slightly more than 350 aircrafts connected. We deliver more units, but connected is 350 units with more than 300,000 flight hours. The feedback that we are getting both from the customers and from the airlines that is performance is very good. They are very happy with the performance with a very stringent SLA. The antennas, the OneWeb constellation, it's limited by the modem. So we are bringing, give or take, close to 200 megabit per second on OneWeb. We can bring more, but it depends on the satellites. And I think that it's more than what you need in the aircraft. So I think that the service is at least in part, if not better than Starlink.

Excellent. And for my second question, you discussed on the earnings call 2 different SkyEdge IV orders that you won that were each worth more than $40 million. Are you able to provide the applications for these awards? And are there others in the pipeline just because these awards seem much larger than your traditional SkyEdge IV [indiscernible]?

Yes. In general, as you know, the SkyEdge IV is a multi-application platform. So with the same platform, you can serve several applications. The main application for the orders are in-flight connectivity. So it's to increase the existing customer deployment globally with SkyEdge IV in-flight connectivity application.

Great. But for those orders, they don't -- they're not on the same planes as the Stellar Blu Sidewinder, right? It would be on...

Can be on the same plane. The Sidewinder is a multi-orbit antenna. So on -- for example, on the [ SES ], the old Intelsat, the old Gogo, you have today with Sidewinder both Gilat modem and OneWeb modem.

Right. Yes, that seems like in the future for you to definitely add Gilat modems to a future successor OneWeb constellation since it seems superfluous to have 2 different modems on the same plane.

Yes. The industry wants to have virtualized or several waveform that will run on the same hardware. It's something that everyone wants and then Gilat has the ability, of course, to deliver things like that based on the road map and the relevant customers.

In addition, this quarter, we announced that we signed a strategic agreement with an Asian Pacific operator for SkyEdge IV. So we added another customer to the SkyEdge IV platform. And over there, the focus will be fixed application, I would say, especially cellular backhaul.

Great. And my third question, for the $60 million Stellar Blu order, you mentioned how for some of the installations, it will support, I think you said line fit...

Correct.

But what is the timing of when the factory installations with Boeing will start?

So we are progressing. We expect to get some of the certification before the end of the year that will allow in aircraft installation and some at the beginning of next year. So we'll be able to have a full installation towards mid next year.

Great. So by the middle of 2026, that should start. Excellent. And my fourth and final question, as it relates to the Stellar Blu milestones, I believe one of the milestones, the second one was about attaining $120 million in new Stellar Blu backlog by the end of 2025. And I know you received that $60 million order, but do you expect to that milestone to be hit?

This is a good question. We are -- the earn-out milestone is until give or take mid-December. We are in advanced negotiation to get a very large order from one of our customers. And we want the order as soon as possible. So there is a decent chance that we'll need to -- we'll be able to achieve the milestone and pay the earnout. We still need to comply with several commercially -- customer commercially requirement and relevant gross profits and things like that. But in general, we are on track.

The next question is from Chris Quilty of Quilty Space.

I had a couple of follow-up on IFC and Stellar Blu. Revenues were down sequentially. And obviously, you're ramping production, but is that more timing of orders? Or is there a seasonality component? And should we expect revenues to continue to ramp? And is there seasonality in Q4?

In general, we are delivering mainly the terminals, but there are some auxiliary and avionics that is onetime per quarter. So it might create some bumps during the quarters. In general, the last 2 quarters, production is stable. We managed to overcome the supply chain issues that we had with one of the components. So we do expect to ramp up of production in Q4. We can deliver around 70 to 80 units per month, and we are on track to reach that. I believe that next year, we'll be able to deliver slightly more than that.

Good. And I think you had originally talked about 100 a month earlier this year. Is that the target for '26?

Something like that, yes, in subject, of course, for backlog and orders, but something like that is our target for next year.

Got you. And I think when you acquired Stellar Blu, it had about 1,000 in backlog. Or is the backlog up? Or are you working down the backlog from here? Or I should say, maybe where do you expect as you exit the year with large orders that you expect to close, would the backlog be up or down from that?

It was slightly below 1,000 units in backlog. And we are, give or take, now at the same level that we were because we received a large order at the beginning of Q3. And if the order that we are now negotiating will mature, I believe that we will end up the year with an even higher backlog than we entered the year.

Got you. And again, I know the original target was exiting the year with 10% EBITDA. I'm assuming you're not going to hit that because you're behind with the component issue. But since you just raised EBITDA guide, where across the portfolio did you make up the difference for Stellar Blu coming up a little bit short?

Yes. So we do have a very nice growth that we see in the Commercial and also on the Peru side that outperformed our EBITDA expectation. On the Defense, as we said at the beginning of the year, we significantly increased our investment, increased sales and marketing and the R&D investment in order to support future business development. And it seems on track. We saw a very nice orders this quarter. We hope that the shutdown will end soon, and we'll see also additional orders as we expect Q4 to be strong in booking as well, and we expect to see revenue growth also next year.

Okay. You mentioned Commercial and specifically cellular backhaul, which has been suck and wind for the past year. Was it just a good quarter? Or do you see that trend in cellular backhaul starting to gather steam?

It was a relatively small order on cellular backhaul. The main growth on the Commercial side is the IFC business that we have and slightly on the fixed side, but the main growth engine is IFC.

Got you. And back to Stellar Blu, sorry, there's -- the third earn-out is based upon the 4 strategic wins. Have they -- have you closed any of those? Or is the fourth quarter large order associated with that? And how do you feel still on track for those events?

So up until today, we haven't closed any strategic deal. The large order is not associated with a new strategic deal. It will come from existing customers. We have -- we started several negotiations with customers that can be considered a strategic deal. I remind everyone that the strategic deal is something like, for example, additional line fit agreement with minimum commitment of at least $35 million with a significant gross margin. And we are in initial stages of discussion. So I can't predict right now if [indiscernible] contract will be signed until mid-June next year. But no doubt the strategic deals will increase significantly our addressable market. So it's something we invest a lot and a lot of efforts are on that.

A quick question. I know you did a 6-K when you filed for the private placement, but I didn't see a 6-K when it closed. Is it fair to assume that all the terms in the original 6-K were the same for the close?

Yes. The money received $66 million, net of slightly below $1 million of costs.

Okay. And just to confirm, if you could a bit later, but what was the closing share count? I just wanted to confirm that. And I guess the other question was CapEx was up kind of big in the quarter. Was there anything specific going on there?

So the closing share count is a little bit above $64 million. And what was the second half? Sorry, I didn't hear it clearly.

CapEx.

The CapEx. So I mean CapEx is going as usual. I mean it's within the original planning, a little bit higher than last year, but as expected. So no real news over there.

Got you. And maybe final one for you, Gil. I mean, obviously, this was Stellar Blu drag on the gross margins, which kind of ticked down below 30% for the first time in a while. Where do you expect to sort of -- I could say, exit Q4, but if we look at maybe '26, I know you're not providing guidance, are we back more at the mid-30% gross margin as that product line picks up?

Yes. I believe that this would be a fair statement. We also have a burden in the gap of about 2% in our gross margin of depreciation of the backlog. So this will be gone sometime during the first half of '26 or maybe even before. And then we'll get this 2% in the gap as well. So I think that the mid-30s are a fair statement. And of course, as more line fits and the cost reduction efforts will kick in, we may see even higher gross margins looking further.

[Operator Instructions] There are no further questions at this time. Mr. Benyamini, would you like to make a concluding statement?

Yes. I want to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak with you on our next call. Thank you very much, and have a great day.

Thank you. This concludes Gilat's Third Quarter 2025 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.