Full Year 2023 Gilat Satellite Networks Ltd Earnings Call
Operator: www.gnid.com Music music music music music music music Ladies and gentlemen, thank you for standing by. The conference will begin shortly. The conference will begin shortly. The conference will begin shortly. Ladies and gentlemen, thank you for standing by. Welcome to Gilat's fourth quarter 2023 results conference call. All participants are present in listen only mode.
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Ladies and gentlemen, thank you for standing by the conference will begin shortly.
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Operator: Following management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded February 26th, 2024. By now, you should have all received the company's press release. If you have not received it, please contact Gilat's investor relations team at EKGlobalInvestorRelations at 1-646-688-3559 or 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. Ehud Heldt of EKGlobalInvestorRelations. Mr. Heldt, would you like to begin?
Thank you.
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Ladies and gentlemen, thank you for standing by and welcome to the last fourth quarter of 2023 results Conference call. All participants are present in listen only mode. Following management's formal presentation instructions will be given for the question and answer session for operator assistance.
During the conference. Please press Star Zero as a reminder, this conference is being recorded February 26th 2024.
Ehud Heldt: Yeah, good morning and good afternoon, everyone. Thank you for joining us today for Gilat's fourth quarter 2023 Results Conference call-in webinar. The recording of this call will be available beginning at approximately noon Eastern time today, February 26, as a webcast from Gilat's website for a period of seven days. Also, please note that investors are urged to read the forward-looking statement in Gilat's earnings report. With the reminder that statements made on this early call, I don't know. It's very complicated, and may be deemed before looking stated within the meaning of the Private Security Litigation Form Act of 1998.
By now you should have all received the Companys press release, if you have not received it please contact allots Investor relations team at U K Global Investor Relations at 16466883559 or view it in the news section of the company's website www dot to lock that com I would now.
Like to hand over the call to Mr. Odell.
Global Investor Relations, Mr Health would you like to begin.
Yeah. Good morning, everyone. Thank you for joining us for the last fourth quarter of 2023 results conference call and webcast.
A recording of this call will be available beginning at approximately.
The time today February 26.
We've got some drags from fear to fit it in.
Also please note.
Ehud Heldt: All such forward-looking statements, including statements regarding future financial operation results, involve risks, uncertainties, and contingencies, many of which are beyond the control of Gilat, which may cause actual results to die prematurely from anticipation. Gilat is under no obligation to update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise, and the company expressly disclaims any obligation to update or alter them. More detailed information about risk factors can be found in Gilat's report, Filinger's Securities and Exchange Program. And with that said, let's return to the action, to the introductions.
To read the forward looking statements.
With a reminder that statements made on this.
Got it.
Or contacts.
Before.
The meeting of the private Securities Litigation Reform Act of 1995.
All such forward looking statements.
Regarding future financings.
Involve risks uncertainties and contingencies many.
And many of which are beyond the control of them do not.
Cause actual results of debt maturity from anticipated results.
And under no obligation to update or alter these forward looking statements.
As a result of new information future events or otherwise.
And the company expressly disclaims any obligation to do so.
More detailed information about risk factors can be found in beauty that supports filing with the securities and Exchange Commission.
And with that said.
Actually two introductions on the call today.
Adil Fadil: On the call today are Mr. Adil Fadil, Gilat CEO, and Mr. Gilbert Yamini, Gilat CFO. I would now like to turn the call over to Adil. Adil, we're ready to begin. Thank you, Ehud, and good day to everyone.
Thank you.
And if they give me give me.
Peaceful.
Now I'd like to turn the call over to Andy D. We're ready to begin.
Thank you and good day to revenue.
Adil Fadil: I want to thank you for joining us today to discuss our fourth quarter and full year 2023 results. Before discussing the quarter's business results, I want to re-emphasize my comments from the previous quarter that Gilat is a strong global company with operations and development centers worldwide. Our operations remain unaffected by the recent events in Israel.
I want to thank you for joining us today to discuss our fourth quarter and full year 2023 results.
Before discussing the quarter's business results I want to reemphasize my comments one of the previous quarter.
Strong global company with operations in development centers worldwide.
Operations remains unaffected by the recent events of Israel.
Adil Fadil: Now let's move to the business review for the first quarter of 2023 and the full year results. We are very pleased with our fourth quarter and full-year results for 2023. We ended 2023 with strong Q4 results. We are reporting fourth quarter revenues of $75.6 million, bringing us to a full-year revenue of about $266.1 million, which is year-over-year growth of 11%. Most importantly, we are particularly proud of the strong improvement in our profitability across the board, with a 4.25% adjusted EBITDA of about $9.4 million, bringing us to a fully adjusted EBITDA of $36.4 million, which represents a significant year-over-year growth of 44%. This is a solid demonstration of the operating leverage inherent in our business model combined with the more favorable revenue mix sold during this year.
Now, let's move to the business review of the fourth quarter of 2023, and the full year results.
Yes, we are very pleased with our fourth quarter and 2023 full year results.
We ended 2023 with stroke Q4 results, we are reporting fourth quarter revenues of $75 6 million.
Bringing us with full year revenues of about $366 1 million, which is year over year growth of 11%.
Most importantly, we are particularly proud of the strong improvement in automotive the ability across the board.
Fourth quarter, adjusted EBITDA was about $9 $4 million, bringing.
Bringing us with full year, adjusted EBITDA was $36 4 million.
Which represent a significant growth of 44%.
He was a solid demonstration of the operating leverage inherent in our business model combined with a more favorable revenue mix.
During this year.
Adil Fadil: I am pleased with our Q4 achievements in the IFC and Defense Verticals. In the IFC, we managed to gain two new awards from strategic customers that extended our product portfolio. In the Defense Vertical, we ended the year with important wins for our Sky Edge 4 system, SSPA, transportable hubs, and the first order for our next-generation military Model. The fourth quarter was also a strong quarter for operations in Peru, with a more than $17 million award from Puanatel to expand the Amazonas Regional Project.
I am pleased with our Q4 achievements and the IFC in defense verticals.
If we manage to gain during your awards from strategic customers.
That extended our product portfolio and the defensive vertical we ended the year with important with <unk> systems.
Disposable hubs and the first orders for our next generation military mode.
The fourth quarter was also a strong quarter for our operations in Peru, with a more than $17 million awards were not there to extend Amazonas regional projects.
Adil Fadil: Looking back over the years, we've progressed with our strategy to be the partner of choice for satellite operators by winning and extending key strategic VHDS and NGSO deals. We have also progressed significantly with our strategy to expand our market share in the defense vertical with the acquisition of Datapath in the United States, which we believe will be a significant long-term growth asset for Gilat. We extended our market leadership in the in-flight connectivity vertical and our dominance in the satellite-based, cellular-backward vertical.
Looking back over the year as we progress with our strategy to be the partner of choice for the satellite operators.
But winning and extending key strategic ph D. S. And then just showed you.
You also progress significantly with our strategy to expand our market share in the defense, where because we've acquisition data processing in the United States, which we believe will be a significant long term growth assets.
We extended our market leadership in the in flight connectivity become.
Dominance in the stuff that I see a little better than that because we.
Adil Fadil: We continue to release new exciting products in all of our business lines. Overall, 2023 represents a key growth year from both a strategic and financial perspective, and over the next few minutes, I will summarize our progress. Our solid revenue growth and strong adjusted EBITDA performance in 2023 were due to the continued growing market interest in the satellite communication sector, specifically for our solution. Looking ahead to 2024, we expect another year of top-line and profit growth. Our guidance for 2024 is as follows. We expect revenues of between $305 million and $325 million, representing approximately 18% year-over-year growth at mid-term. We expect an adjusted EBITDA of between $40 million and $44 million, representing yield and yield growth of 15% at the mid-year. Our acquisition of DataPass was concluded in mid-November.
We continue to release, new exciting products to all of our business lines. Overall 2023 represents a key growth year from both a strategic and financial perspective and over the next few minutes I will summarize our progress.
Solid revenue growth and strong adjusted EBITDA performance in 2023.
The continued growing market interest in the satellite communications sector, specifically for our solutions.
Looking ahead to 2024, we expect another year of top line and profit growth our guidance for 2024 is as follows we expect revenues of between $305 million.
$325 million, representing approximately 18%.
Growth at the midpoint.
We expect adjusted EBITDA between $40 million to $44 million, representing yoga really rules of 15% at the midpoint.
Optimization of data festivals concluded in mid November.
Adil Fadil: The acquisition is a major milestone in Gilat's strategic initiative to increase its presence in the growing defense communication market powered by satellite communications. It allows us to better penetrate the United States Department of Defense and government sectors as well as into another international government and defense market. Datapath is a U.S.-based system integrator and market leader in secure communication systems services and end-to-end solutions for mission-critical operations over satellites. Datapath and Gilat bring strong competencies and synergies in system engineering, software development, and mechanical engineering. DataPath is a key enabler for the U.S. DOD and government mission-critical systems to provide and maintain its sub-consistencies, such as portable and transportable ground stations and related services.
Physician is a major milestone.
Strategic initiatives to increase its presence in the growing defense communication market.
Talking about connectivity.
Allows us to better penetrate into the United States Department of defense and government sectors as well as into another international government and defense markets.
They surpassed the U S based system integrator and the market leader in secure communication systems services and end to end solutions for mission critical operations over satellite.
They give us and developed a strong competency and as soon as your system Engineering software development and mechanical engineering.
Data is a key enabler to the U S Vod and government, Michigan political system.
And then Jay Satcom systems, such as Foldable, and transportable gas stations and related services.
Adil Fadil: I'm happy to say that we already see a good level of business progress at DataPass, as witnessed by booking more than $20 million since we closed the acquisition in mid-November until today. Looking at some of the other market verticals we support, in the Very High-Throughput Satellite, the VHTS, and the Non-Geostationary Satellite, the NGSO, Constellation Business, we continue to lead with follow-on multimillion- Furthermore, we are competing for additional large-scale opportunities for next-generation MIO and LEO platforms and user terminals. This platform signals the digital transformation of ground systems to the cloud, 5G, and TN, and the staged transition to all software offerings. Network expansions and deliveries of Gilat Multi-Orbit Next-Generation Platforms, CH4, are taking place globally to support multiple applications such as in-flight connectivity, cellular back-on, enterprise, and social inclusion. 2023 was another record year for Gilat of Ecosolution over Satellite.
I'm happy to say that we already see a good level of business progress dataset.
As witnessed by booking with more than $20 million since we closed the acquisition in mid November until two days.
Looking at some of the other market as well because we support in.
In the very high throughput satellites V HTS and the non geostationary satellite and GSO constellation business. We continue to lead with full on multi million dollar holders, who are strategic partners for meal and Geo networks. Furthermore, we are completing an additional large scale opportunity for lead generation meal.
Your platforms.
And user telling us this platform figured out the digital transformation of <unk>.
One system and <unk> system to the cloud <unk>.
And the state's transition to all software offering.
What extensions and deliveries of Gilad.
Next generation platform Skype for I was taking.
Taking place globally to support multiple applications such as in flight connectivity.
Beckman enterprise social inclusion.
1023 was another local deal for Gila to our virtual solution over something like that.
Adil Fadil: We received a renewal and extension of a contract of approximately $20 million from P1 M&O in the United States. We are continuing this multi-year agreement as an end-to-end managed service provider of satellite-based cellular backhaul and emergency response for this long-term leading customer. We remain the leading global 4G cellular backhaul solution provider, demonstrating unparalleled technology delivery and operation capability. Our superior technology enables a smooth transition to 5G backhaul over multi-orbit constellations and VHGS satellites.
We received a renewal and extension of the contract of approximately $20 million do you want them and know in the United States.
We are continuing this multiyear agreement as end to end managed service provider will subsidize best Illinois, Beckman and emergency response for this long term leading customers.
We remain the leading global food you fill a bedroom overstuffed like solution provider, demonstrating unparalleled technology delivery and operation capabilities.
Superior technology enabled a smooth transition transition to <unk> backhaul over multi orbit constellation in which the.
The HTS satellites.
Adil Fadil: During the fourth quarter, Gilat SES and one of the largest MNOs in the world demonstrated the operation of the SkyScore platform for 5G cellular backhaul on NEO Constellation that delivered more than 600 megabits per second speed directly to the user's hands. In mobility, we are progressing both in the ISP and cruise verticals. We see growth potential with new operators and system integrators globally. Our WaveStream subsidiary is making significant progress with two new awards from strategic customers, one very large system integrator and another large IFT terminal manufacturer that is extending its portfolio to also support IFT terminals at Xeri. Earlier in the year, we won a strategic Nissa deal for the business aviation market with Satcom Direct, and we are optimistic about the growth of this market.
During the fourth quarter.
SCS and one of the largest in windows in the world demonstrated the operation of the Sky Sports lots, one five <unk> zero backward on MEO constellation that delivers more than 600 Megabits per second street directly to the answers.
Mobility, we'll talk listening boasting an ISP and cruise vertical.
We see growth potential with new operational and system integrators globally.
Wasting subsidiaries is making significant progress with two new awards from strategic customers. One of the very large system integrator and another large IFC terminal manufacturer that is extending its portfolio to also support ISP.
Very.
Earlier in the year, we won a strategically with the business aviation market. We saw some data and we are optimistic about the growth of this market.
Okay.
Adil Fadil: As I have just mentioned, we are putting significant focus on the defense market segment, and database acquisition is a prime example. We are seeing good progress in this area, and expect this extra focus will bear fruit soon. We expect our database revenues to exceed $45 million in 2024. We recently announced that the U.S. Army awarded our U.S.-based subsidiary, WaveStream, a $20 million contract for the Sustain Anytime, Anywhere satellite connectivity program. We will provide an additional 50-watt Ka-band box for the long-term sustainment of thousands of mobile satellite transportable terminals, enabling continued communication on-the-pulse solutions across diverse climates and harsh conditions around the globe.
As I have just mentioned we are putting significant focus on the defense market segment and they did this acquisition is a prime example.
We are seeing good progress in this area and expect this extra focus newbuild fleets and we expect our data bus revenues to exceed $45 million in 2024.
We recently announced that the U S Army awarded a U S based subsidiary wasting it $20 million contract for the sustained anytime anywhere satellite connectivity program, we would provide an additional 50 watt <unk> box.
Just a statement with thousands of mobile stuff that I spoke to was definitely not.
Enabling our continued communication on deposit solutions across diverse climates in the harsh conditions around the globe.
Adil Fadil: We also received a multi-million dollar order for our SkyH4 system from a leading military government organization. This is the first order we have received for our SkyEdge4 platform in the defense. This high floor can potentially become an important part of the next century's battlefield. We are embarking on developing a next-generation military modem to succeed our GLT product. This modem will use state-of-the-art resilience waveform to allow secure communication anywhere. In addition, through Wavestream, we're introducing a new high-power SSPA product line called Endurance. The Endurance Buck is a hot-swappable rack-mount design that can cover multiple commercial and military frequency bands with a switchable up-converter.
We also received a multimillion dollar whole builds of our skies for assistance from a leading military government organization.
This is the first although we have received for our skies for platform or the defense it does because of.
The Sky sport and potentially become an important part of the Netcentric battlefield.
Yeah.
We embarked on developing a next generation military modem to succeed our GNP product line. This is more than we use state of the art resilience waveform to allow secure communication anyway.
In addition, we are introducing a new high for SBA product line called endurance.
They're doing a spark is hot Swappable Rec model design that can cover multiple commercial and military frequency bands with a switchable upfront burden.
We believe that the endurance product lines will take market share on the current products based on Pwc Ey technology installed based in future upgrades.
Adil Fadil: We believe that the Endurance product line will take market share from the current products based on the TWTA technology installed base and future upgrades. Our enterprise customers worldwide continue to depend on us to enhance their business, and new opportunities continue to arise. The industry is facing intense competition from start to finish.
Our enterprise customers worldwide continue to depend on us to enhance the business and new opportunities continue to arise the industry is facing intense competition from stone.
Adil Fadil: To overcome this challenge, we are working with our partners to explore the multi-service capabilities of our deployed platforms and use common network infrastructure to support their enterprise customers. We already see initial business from this approach and expect more in 2024. In Peru, we are progressing with the construction of the Amazonas network.
Overcome this challenge we are working with our partners to explore the multi service capabilities.
Well deployed platforms and use common network infrastructure to support the enterprise customers.
You already see any initial business some discipline and expect more in 2024.
We are progressing with the construction of the Amazonas vessels, we aim to deliver the network deployment and moving to fully operational during the second quarter since 2020.
Adil Fadil: We aim to deliver the network to PRONATEL and move into fully operational mode during the second quarter of 2025. During the last quarter, we received more than $17 million in expansions to the Amazonas network from Pronatel, expanding the network deployment, including a service agreement for 10 years to address the growing needs of the Internet in additional parts of the Amazonas region. The expansion will include connectivity to 35 new localities and dozens of new public institutions, including schools and health centers.
During the last quarter, we received more than $17 million of expansions to them across network is one of them expanding their network deployment, including a service agreement for 10 years to address the growing needs of Internet.
Additional parcels Donaldson us region.
The expansion will include connectivity to 35, new localities and dozens of new public institutions, including schools and health centers.
Adil Fadil: We are expecting additional progress in Peru over the next few months. This includes the maturity of several large program RFPs, which were born back then in the Peruvian government, and several project extensions. To conclude, I'm happy with our strong progress from a strategic perspective and a financial one in 2025. We continue to lead with our next generation platform in the growing satellite connectivity market. Our SkyH4 platform, which supports multiple orbits and verticals, including our strategic markets of mobility, cellular backup, and defense, is making great inroads and is seeing strong and growing traction among existing and new customers.
We are expecting additional brokers in Peru over the next few months. This includes the maturity of stood at a large program of Rfps.
One again on the Peruvian government and.
Instead of a project extensions to.
To conclude I'm happy with our strong progress will bolster strategic perspective, and a financial one and 2023, we continue to lead with our next generation platform and the <unk> satellite connectivity market.
Surgical platform, which supports multiple orbits and verticals, including our strategic markets and mobility cellular backhaul and defense.
Great inroads and seeing strong and growing traction among existing and new customers.
Gil Benyamini: In particular, we are very excited about the new potential in our defense business, especially given the closing of the data trans-acquisition and our next generation military Model initiative. We continue to secure new opportunities for our SSPI business, and I have seen increasing opportunities in this line of business. Obi-Wan, As we move into 2024, we believe it will be a year in which many opportunities in the LEO vertical will turn into wins and others. We have a strong pipeline and expect the materialization of important deals over the coming months and quarters. And with that, I hand over to Gil Benyamini, our CFO. Gil, please.
We are very excited about the new potential in our defense business, especially given the closing of the database acquisition and all that.
Generation military mode of initiatives.
We continue to secure new opportunities for our SBA business.
Especially in the IFC vertical and are seeing increasing opportunities in this line of business.
Overall.
As we move into 2020 full we believe it will be a year in which many opportunities of the yogurt because we've done it.
We have a strong pipeline and expect the materialization of important deals.
Over the coming months and quarters.
And with that I hand.
Over to <unk> CFO.
Gil Benyamini: Thank you, Adi. Good morning and good afternoon to everyone. I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis. We regularly use supplemental non-gap financial measures internally to understand, manage, and evaluate our business, and to make operating decisions. We believe these non-gap financial measures provide consistent and comparable measures to help investors understand our current and future operations. Non-GAAP financial measures mainly exclude, if and when applicable, the effect of non-GAAP stock-based compensation expenses, amortization of purchased intangibles, amortization of intangible assets related to acquisition transactions, lease incentive amortization impairment of health for sale assets other expenses one-time changes of deferred tax assets one-time tax expense related to release of historical tax draft earnings other operating expenses or income and income tax effect on the relevant agenda, The Reconciliation Table in our press release highlights this data, and our non-GAP information presented excludes this data.
Thank you Abby good morning, and good afternoon to everyone I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis.
We regularly use supplemental non-GAAP financial measures internally to understand manage and evaluate our business and to make operating decisions. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating performance.
non-GAAP financial measures, mainly exclude if and when applicable to the effect of noncash stock based compensation expenses amortization of purchased intangibles amortization of intangible assets related to acquisition transactions.
Lease incentive amortization impairment of held for sale assets. Other expenses, one time changes of deferred tax assets, one time tax expense related to release of historical stock dropped earnings.
Other operating expenses or income and income tax effect on the relevant adjustments. The reconciliation table in our press release highlights this data and our non-GAAP information presented excluding these items.
Gil Benyamini: I will now move on to our financial highlights for the fourth quarter of 2023, followed by our full year 2023 highlights. Overall, as I mentioned earlier, we're very pleased with our performance in 2020. We ended the year with a continued improvement in our results, and especially a strong year-over-year improvement in revenue and profits. I am pleased to say that, despite the macroeconomic headwinds and geopolitical challenges, our performance shows that we have been able to mitigate most of these issues without a significant impact on our profits.
I'll now move on to our financial highlights for the fourth quarter of 2023, followed by our full year 2023 Islands overall as I mentioned earlier, we're very pleased with our performance in 2023, we ended the year with a continued improvement in our results and especially the strong year over year improvement in revenue and profit.
I am pleased to say that despite the macroeconomic headwinds and geopolitical challenges. Our performance shows that we have been able to mitigate most of these issues without a significant impact on our profitability and even though 2024 medical things known potential macro challenges challenges ahead.
We believe that we're well positioned to overcome these challenges and continue to improve our financial performance as we move through 'twenty.
This was a significant quarter for the last as we closed the strategic acquisition of data path, which we believe will accelerate our growth.
Gil Benyamini: And even though 2024 may contain some potential macro challenges, we believe that we're well-positioned to overcome these challenges and continue to improve our financial performance as we move through 2020. This was a significant quarter for Gilat as we closed the strategic acquisition of data paths, which we believe will accelerate our growth. In terms of our financials, revenues for the fourth quarter will work out to $75.6 million, 4% higher than those of the fourth quarter of last year, which were $72.6 million. Data Pass Acquisition, which closed on November 16th this year.
In terms of our financial results.
Revenues for the fourth quarter were seven.
$75 6 million, 4% higher for those of the fourth quarter of last year, which were $72 6 million.
Data past acquisition, which closed on November 16 of this year.
Contributed modestly to our quarterly revenue in line with expectations.
For the year revenues were $266 $1 million up 11% versus $239 8 million in 2022.
The improvements were driven by growth in all of our segments and mainly from the ph D S and NGL, so IFC and cellular backhaul vertical.
In terms of revenue breakdown by segment Q4, 2023 revenues of the satellite network segment were $53 $5 million compared to $36 4 million in the same quarter last year.
Gil Benyamini: Contributed modestly to our quarterly revenue in line with. For the year, revenues were $266.1 million, up 11% versus $229.8 million in 2020. The improvements were driven by growth in all of our segments, and mainly from VHDS and NGSO, IFC, and cellular backup virtualization. In terms of revenue breakdown by segment, Q4 2023 revenues of the satellite network segment were $53.5 million compared to $36.4 million in the same quarter last year. Q4'23 revenues of the integrated solution segment were $9.5 million compared to $16.3 million in the same quarter last year. The decline was mainly due to transformation theories between strategic and large projects; Q4 revenues of the network's infrastructure and services segment were $12.6 million compared to $19.9 million in the same quarter last year. The decline was mainly due to deliveries that slipped to 2020.
Q4, 'twenty three revenue of the integrated solutions segment were $9 5 million compared to $16 3 million.
Same quarter last year.
Climb was mainly due to transformation periods between strategic and large projects in this segment.
Q4 revenues of municipal infrastructure services segment were $12 6 million compared to $19 9 million in the same quarter last year.
The decline was mainly due to deliveries to slip.
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I would now like to summarize our fourth quarter results first one on a GAAP basis, and then I'll cover the non-GAAP numbers.
Our GAAP gross margin in Q4 23 remains similar to the last year 38, 2%.
GAAP operating expenses in Q4 23 were $26 million.
In the quarter compared with $21 6 million going to same quarter last year. The increase is mainly due to higher R&D expenses in Q in order to support our current and future growth.
GAAP operating income for the quarter was $2 $9 million compared to $6 1 million during the same quarter last year GAAP net income in the fourth quarter was $3 4 million or <unk>.
Diluted income per share was <unk> <unk>. This is compared to GAAP net loss of $6 million or a loss per share of <unk> 11 in the same quarter last year.
Moving to non-GAAP results, our non-GAAP gross margin in Q3 improved to 39, 1% compared to 38, 3% in the same quarter last year.
non-GAAP operating expenses in Q4, 23 was $23 $4 million compared with $3 7 million in the same quarter last year.
non-GAAP operating income in Q3 was $6 1 million compared to an operating income of $7 $1 million in the same quarter last year.
non-GAAP net income in the fourth quarter was $6 5 million or diluted income per share of <unk> 11.
This is compared with net income of $7 9 million or income per share of 14 to the same quarter last year.
Gil Benyamini: I would now like to summarize our fourth quarter results, first on a GAAP basis, and then I'll cover the non-GAAP. Our DAP growth margin in Q4'23 remained similar to last year, 38.2%. Gap operating expenses in Q4-23 were $26 million in the quarter, compared with $21.6 million in the same quarter last year.
Adjusted EBITDA for the quarter was $9 $4 million compared with an adjusted EBITDA of $10 1 million in the same quarter last year.
The year, adjusted EBITDA was $36 $4 million compared with an adjusted EBITDA of $25 2 million in 2020.
Moving to our balance sheet as of.
December 31, 2023, our total cash and cash equivalents and restricted cash net of loans were $95 $3 million compared with $103 million on September 32023, and compared to $87 1 million in December 31st 2022.
The reduction is mainly due to $5 7 million.
Gil Benyamini: The increase is mainly due to higher R&D expenses in Qt in order to support our current Qt team. Gap operating income for the quarter was $2.9 million, compared to $6.1 million in the same quarter last year. Gap net income in the fourth quarter was $3.4 million, or diluted income per share of $0.06.
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That's it.
Vision and $9 $5 million of debt, we assumed as part of the acquisition agreement.
In terms of cash flow, we generated $10 million from operating activities during the fourth quarter of 2000.
<unk>, III, dsos, which exclude receivables and revenues of our terrestrial network construction project to Peru, with 63 days lower than the previous quarter, DSO, which were 75 days.
Gil Benyamini: This is compared to Gafnet's loss of $6 million, or a loss per share of 11 cents, in the same quarter. Moving to non-GAAP results, our non-GAAP gross margin in Q4-23 improved to 39.1% compared to 38.3% in the same quarter last year. Non-GAAP operating expenses in Q4-23 were $23.4 million, compared with $20.7 million in the same quarter last year.
<unk> was impacted by both the increase in revenue as well as a decrease in receivables due to higher collections in the last quarter our.
Our shareholders equity as of December 31st 2023, total to about $175 million compared with $244 million at the end of 'twenty two.
Looking ahead as we already mentioned, we're expecting a strong 2024 with revenue of between $305 million to $325 million.
Presenting year over year growth of 8% at the midpoint.
Operating income of between 15 and $19 million.
Adjusted EBITDA of between $40 million to $44 million year over year growth of 50% at the midpoint.
Gil Benyamini: No gap operating income in Q4-23 was $6.1 million compared to an operating income of $7.1 million in December. Non-GAAP net income in the fourth quarter was $6.5 million, or diluted income per share of $0.11. This is compared with net income of $7.9 million, or income per share of $0.14, in the same quarter last year. For the year, Adjusted EBITDA for the quarter was $9.4 million compared with an adjusted EBITDA of $10.1 million in the same quarter last year. Moving to our panel. As of December 31, 2023, our total cash and cash equivalents and restricted cash net of loans was $95.3 million, compared with $100.3 million on September 30, 2023 and compared to $87.1 million on December 31, 2023.
This concludes my financial review I would now like to open the call for questions.
Yes.
Thank you ladies and gentlemen at this time, we will begin the question and answer session. If you have a question. Please press star one if you wish to cancel your request. Please press star two if you are using speaker equipment pardon me with the handset before pressing the numbers.
Questions will be called in the order. They RFP. Please standby, while we poll for your questions.
The first question is from Ryan Koontz of Needham and company. Please go ahead.
Alright, thanks for the question.
Let's see some housekeeping person expect with respect to Q4.
Assume the gaps step up in G&A, there was maybe related to acquisition expenses that correct.
Some of it is acquisition expenses.
Some of it.
I mean.
Really it is acquisition expenses, yes.
Okay. Thanks.
And now on the guidance for 24 can you maybe walk us through some of the puts and takes on some of the segments.
Gil Benyamini: The reduction is mainly due to $5.7 million that was used for the data acquisition and $9.5 million of debt we assumed as part of the acquisition. In terms of cash flow, we generated $10 million from operating activities during the fourth quarter of 2023. This was impacted by both an increase in revenue as well as a decrease in receivables due to higher collection in the last year.
Are you still expecting in the ballpark of $50 million from data path and are there any other.
Other major programs or segments of the business that are contributing to the upside or or when you talked about the macro caution which areas of the business. You think are most affected there.
Yeah.
In general we expect to.
Growth in all four business segments, we don't provide the.
The guidance by segment, but we do expect growth in all of our segments both organic.
Operator: Shareholders' equity as of December 31, 2023 totaled about $275 million, compared with $244 million at the end of 2020. Looking ahead, as Adi already mentioned, we're expecting a strong 2024 with revenue of between We're presenting year-over-year growth of 18% at the midpoint. Gap Operating Income of between $15-$19 million and Adjusted Dividend of between $40-$44 million, representing year-over-year growth of 15% at the moment. That concludes my financial review. I would now like to open the call for... Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star one. If you wish to cancel your request, please press star two. If you're using speaker equipment, kindly lift the handset before pressing the numbers.
Of course, inorganic Zika path as I mentioned the data path.
<unk> contributed.
Relatively modest amount in 2023 in the last six weeks of the year next year, we expect about 45.
As I mentioned from some data path and of course as it is the first year of <unk>.
Acquiring it we applied some conservative assumptions over that as well and rich.
Guidance.
Okay, that's fair.
And any updates for us on some of the big drivers there for your business, whether its the Mayo opportunities or some of the IFC programs, they're attached to anything you can share there.
Operator: Your questions will be polled in the order they are received. Please stand by while we poll for your questions. The first question is from Ryan Koontz of Needham and Company. Please go ahead.
Get investors excited about the story.
Yeah I think.
Ryan Koontz: Hi, thanks for the question. Let's see, with some housekeeping first with respect to Q4, I assume the gap step up in G&A there was maybe related to acquisition expenses, is that correct? South it is acquisition expenses, and South it, I mean, mainly it is acquisition expenses.
The main progress is that.
Those are several rfps that we are competing on.
In the in all of this we believe that the.
Awards decision.
It's going to be towards the mid <unk> for some of them towards the mid of the second quarter and full sometimes at the end of the year.
Gil Benyamini: Okay, thanks. And on the guidance for 24, can you maybe walk us through some of the puts and takes on some of the segments? Are you still expecting in the ballpark of $50 million from Datapath? And are there any other major programs or segments of the business that are contributing to, you know, upside or cop-cop? We talked about macro caution; which areas of the business do you think are most affected there?
<unk>.
In fact, all of our game.
The Barbican is all of them, having a new rfps for new technology.
Technology and existing technology, and we expect most of it to mature doing doing day in and some of them. We are the incumbents. So we feel comfortable and then some.
Especially on the deal and why the web.
Gil Benyamini: So in general, we expect growth in all of our business segments. We don't provide guidance by segment, but we do expect that growth in all of our segments, both organic and... Global Manager for acquiring it. We applied some conservative assumptions over that as well and reached our conclusion. Okay, that's fair.
Iris.
Squared in Europe.
Competing against.
Sure.
Other companies, but we believe that the.
We have a superior technology and the potential from each and every opportunity over there.
With millions of dollars and can change the future of Gila.
Adil Fadil: And any updates for us on, you know, some of the big drivers there for your business, whether it's some of the Leo opportunities or some of the IFC programs you're attached to, anything you can share there that would, you know, get investors excited about the story. Yeah, I think, um, the main progress is that those several RFPs that we are competing on are still in progress. We believe that the awards or decisions are going to be for some of them towards the mid of the second quarter and for some towards the end of the year.
That's great to hear so it sounds like you're not baking in those assumptions into your 24 guidance any of these changes and Youre correct.
It can be.
Nation of the two.
The ongoing business with.
Strategic fallen snow is baked into our guidance.
Okay.
We are having a discussion with them and we understand what is Dell a forecast and putting our assumption on top of it.
Adil Fadil: In fact, all of our large partners are having new RFPs for new technology and existing technology, and we expect most of it to mature during the year. In some of them, we are the incumbent, so we feel comfortable, and in some, especially in LEO, OneWeb, and Iris Square in Europe, we are competing against several other companies, but we believe that we have a superior technology, and the potential from each and every opportunity over there is hundreds of millions of dollars and can change the future of Gilat Satellite. Here, it's great to hear you.
On the legal on the legal path, even if we get once we get the award.
It's a nice little several years of development. So the effect in 2024 will be minimal and then I'm going to have around three years of developed and developed.
The platform, it's a completely new platform and then we start king.
A significant top line contribution.
Okay, Great that's helpful and.
Adil Fadil: So it sounds like you're not baking in those assumptions into your 24-guidance, any of these changes in your current business. It's a combination of the two. The ongoing business with our strategic partners is baked into our guidance. In a way, we are having a discussion with them, and we understand what their forecast is, and we are putting our assumptions on top of it.
In terms of Peru in the network infrastructure business.
How is that how is that tracking as far as your expectations for for twenty-four I know youre not guiding bye bye.
Quantitatively, but.
You can share with us about how the program is progressing well.
Adil Fadil: On the Leo part, even if we get the award, it's a matter of several years of development. So the effect in 2024 will be minimal, and then we'll have around three years of developing the platform. It's a completely new platform, and then we'll start seeing a significant top-line contribution. Okay, great, that's helpful.
If we ever do it regionally Amazonas networks that we are in.
In the final stages.
In acceptance drove the bulk of their network and about to finish the second part of the network.
During Q1, and we expect to deliver the network installed operational phase by the end of the second quarter, The New award of the $17 million.
Adil Fadil: And in terms of Peru and the network infrastructure business, how is that tracking as far as your expectations for 24? I know you're not guiding quantitatively, and you can share with us about how the program is progressing. So we have the original Amazon off network that we are in the final stages. We are in the acceptance process for part of the network and about to finish the second part of the network during Q1, and we expect to deliver the network and start the operational phase by the end of the second quarter. The new world of the 17 million comprises around 60% of construction, which should be carried until early next year, and then an additional 10 years of operation. As a rule of thumb, we expect Peruvian revenues to modestly grow in 2024 over 2023 results.
Comprised of around 60%.
Construction, we should add.
Carried until early next year, and then additional 10 years of operation.
The one of them, we expect to get a little revenues too.
Modestly.
Growth in 2020 for the 2023 our results.
Okay.
Really helpful. Thank you I'll get back in queue.
The next question is from Chris Quilty of Quilty space. Please go ahead.
Well thanks for all that I think is the first time, you've really talked about the opportunity with Iris square or has that been previously in some of your expectations.
No we are talking about for quite some time.
Last quarter.
We said.
We received the eligibility we have a very large in order to be eligible to participate in that program you need to have.
Adil Fadil: Okay. That's really helpful, Adi. Thank you. I'll get back to you. The next question is from Chris Quilty of Quilty Space. Please go ahead.
And to be a European company and we have.
Chris Quilty: Thanks, gentlemen. Filingeri, Ryan Koontz, Gilat Satellite. Now, we have been talking about Iris for quite some time. Last quarter we said that we received the eligibility, we have a very large, in order to be eligible to participate in the program, you need to be a European company, and we have a significant operation in Europe, and we are strengthening our operation in Europe, and we expect to continue and increase our operation in Europe. We have a large operation in Bulgaria, we are building a large operation in Madrid in Spain. The Irish started to launch several RFIs and RFPs, and we started to answer them, but I think it's in the initial stages, and it will take time until the final RFP and award will occur.
A significant operation in Europe.
We strengthen our operations in Europe, and we expect to continue and increase our operation we have a large operation in Bulgaria.
Building, a large operation in Madrid in Spain.
Reciprocated, the ability and Dan.
I wish a started to non cigarette.
Al if I average fees and we started to answer them.
I think it's you name it.
Israel stages, and it will take time and until.
Until the final RFP and award winning will occur I suspect it won't happen before the end of this year.
Chris Quilty: I suspect it won't happen before the end of this year. Gotcha, and when you were referring earlier to a three-year development time frame, was that referring to the Iris Squared program, or was that one of the other NGSO programs? I think, as a rule of thumb, developing a new platform and not an enhancement to an existing platform is usually around three years. Now there is a request in the market to shift to the cloud; there is a request in the market to move to virtualization, virtual modems, SDR modems, and 5G NPN. So shifts like this require a lot of development, and the rule of thumb is around three, maybe four years.
Gotcha, and when you were referring earlier to a three year development timeframe was that referring to the Irish squared program or was that one of the other in GSO programs you were.
I think as a rule of thumb developing a new platform and what they mentioned an enhancement to existing blood flow is usually around three years.
No.
The request in the market to shift to cloud there is a request in the market.
You move to virtualization virtual more than the Alamo dams, five GNP and so the shift like this require a local development and they would've done with their own.
Maybe four years.
Adil Fadil: Understand, so this is essentially the replacement, future replacement for SkyEdge 4. You know, if you talk to the product team, they will say no, but for Iris, it will be a totally new platform, and for OneWeb Gen 2, it will be a totally new platform. For our large satellite operator partners, at the first stage, it will be a significant enhancement to the existing platform, shifting more and more capabilities into the public cloud, and later on, there will also be a shift to 5G, I understand. And I think last quarter you mentioned the possible beginning of a rollout with one of your NGSO customers.
Understand so this is essentially the replacement future replacement for Sky edge for.
You know if you would talk to the product again that will say no but.
I basically be a totally new platform from one of the Gen. Two it will be a totally new platform.
Long satellite operators.
No.
The first stage, which would be a significant enhancement to the existing platform and shifting more and more capabilities into the public cloud.
And later on then we'd be a shift closer to two five.
Understand and I think last quarter, you had mentioned a possible beginning of a rollout during Q3 with one of your own GSO customers with that.
Adil Fadil: Did that rollout happen, or what's the progress there? The rollout hasn't started yet, the customer is expecting to launch service during 2026, and we expect to get production unit orders towards, let's say, before the end of the year. We do have a substantial amount of units that we need to deliver as part of the original order, and I can tell you that right now, our power amplifier is the only one that is working with the test satellite that this customer launched. Great. And a question for you, Gil, can you perhaps give us, perhaps, a ballpark of DNA?
That rollout happen or what's the progress there and expectations for incremental growth in 'twenty four.
So the rollout havent started yet.
The customer is expecting to launch service during 2026, and we expect to get.
Production unit orders towards let's say before the end of the year.
We do have a substantial amount of units that we need to deliver as part of the original all of them and I can tell you that right now.
Power amplifier is the only one that is working with the satellite this customer launched.
Great.
And a question.
Question for you Gil can you give us perhaps like a ballpark of.
D&A for this year with the data path acquisition.
Gil Benyamini: Here. Yes, we expect to see about $3 million of growth. Filingeri, Ryan Koontz, Gilat Satellite, And that's $8 million in total, or not in total. It's incremental, I mean it's included obviously in the guidance for the operating income, one of the reasons it decreased, it's incremental, and actually it is also affected, future-wise affected by the stock price of Gilat, so it might change as well, but currently, according to our expectations, it should be around $8 million. Players, or have you made, are you targeting inroads? Reader.
Yes.
We expect to see about.
$3 million of.
Depreciation plus about five.
$5 million of.
Stock base.
Related expenses.
To the deal.
So all in all it should be about $8 million in the gap.
Fences that we should expect to see next year.
With respect to distribution.
And that's 8 million in total or not incremental.
It's incremental.
Obviously in the guidance for the operating income one of the reasons, we see decreased incremental in <unk>.
Actually.
It is also.
Future really affected by the stock price of dealer might change as well, but a car.
Currently according to our.
Expectations, it could be around $8 million.
Understand.
When you look at the IFC market.
Do you see the best opportunities there or is that with existing players or have you made are you targeting in roads with.
Additional systems integrators.
So.
Adil Fadil: So, we see a lot of growth with existing partners and also using our platform to shift to other applications and take advantage of the fact that our platform is a multi-application platform. Nice business from several new customers on the SSPA side, but also on the network and on the modem side. Not a big one yet, but each one of them could become a significant revenue generator in the next several years.
We see a lot of growth with existing.
Nelson.
Also using our platform to shift to other application and take advantage the fact that Oh.
Our platform is a multi application platform we are seeing.
Nice business from us.
Several new customers on the SBA side, but also on the network and on the modern side not the big one yet, but each one of them can become a significant.
Revenue generator in the next.
Several years.
So we are seeing a lot of orders for the X.
Adil Fadil: We are seeing a lot of orders for SSPA, a lot of orders for auxiliary ISA, like Frequency Controlled Units and Power Supply Units and things like that. I remind you that earlier in the year we signed the agreement with SatCom Direct, and now we are in the development phase, but we expect to see the development phase of the software, and deliveries towards mid-next year, which will support revenue growth, especially in the IFC segment Great. And I guess the final question here is looking at. Data Path Acquisition that obviously brings along a higher level of backlog that you can identify.
The SBA.
For the full the Isa like frequently Quinton unit and power supply units and things like that and also.
The oldest promoting vascepa.
I remind you that the LDL, India, we signed the agreement with Satcom direct.
And now we are in the development phase, but we expect to see.
Deliveries.
Towards mid next year, which support.
Revenue growth, especially in the IFC.
Right and I guess final question here.
Looking at it.
Path acquisition that obviously brings along a higher level of backlog and perhaps.
Orders that you can identify if there are any intention to provide a little bit more details either book to bill backlog for that business on a go forward basis, Yeah, it's something that we're considering internally.
Chris Quilty: Is there any intention to provide a little... KELOLAND dot com. Bill backlogged for that. It is something that we are considering internally, and once we are able to share it, we will share it. And, oh, final question, Gil. I know you've provided this before, but I just want to make sure where Datapath is going to land. Satellite Filingeri, Ryan Koontz, Gilat Satellite. It's included under the Satellite Networks segment.
Once we will be able to share we'll share it.
Got you and final question Gil I know you've provided this before but I just wanted to assure.
Data path is going to land in terms of segment reporting.
It is included under the satellite networks segment results.
Right.
Gil Benyamini: Awesome, well, thank you, gentlemen. Thank you. If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2. Please stand by while we poll for more questions. There are no further questions at this time. Mr. Benjamini, would you like to make your 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 to you on our next call. Thank you very much and have a great day. Thank you. This concludes Gilat's fourth quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconnect. This is my life.
Awesome well, thank you gentlemen.
Thank you thank you Chris.
If there are any.
Any additional questions. Please press star one if you wish to cancel your request. Please press star two please standby, while we poll for more questions.
Okay.
There are no further questions at this time, Mr. <unk> would you like to make your concluding statement.
Yes, I want to thank you all for joining us on this call and for your time and attention and we hope to see you soon or speak to you at our next call. Thank you very much have a great day.
Thank you. This concludes <unk> fourth quarter 2023 results conference call. Thank you for your participation you May go ahead and disconnect.
Okay.
Okay.
Okay.
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