Q1 2024 Gilat Satellite Networks Ltd Earnings Call
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Operator: Ladies and gentlemen, thank you for standing by. The call will begin shortly.
Ladies and gentlemen, thank you for standing by your call will begin shortly.
Operator: Ladies and gentlemen, thank you for standing by. The call will begin shortly.
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Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to <unk> first quarter 'twenty 'twenty four 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.
Operator: [inaudible]
Operator: Ladies and gentlemen, thank you for standing by. Welcome to Gilat's first quarter 2024 results conference call. All participants are 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 on May 8th, 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.ekglobalinvestorrelations.com. I would now like to hand over the call to Mr. Ehud Helft of EK Global Investor Relations. Mr. Helft, would you like to begin, please?
Operator: This conference is being recorded May eight 2024.
Ehud Helft: Now you should have all received the Companys press release, if you have not received it please contact <unk> Investor Relations team at U K Global Investor Relations at 16466885, 59 or view it in the news section of the company's website at Www.
Ehud Helft: <unk> Dot com I would now.
Operator: Now like to hand over the call to Mr. Ehud Helft of Ek Global Investor Relations. Mr. Hal would you like to begin please.
Ehud Helft: Yeah, good morning, and good afternoon, everyone. Thank you for joining us today for Gilat's first quarter 2024 results conference call and webcast. A recording of this call will be available beginning at approximately noon eastern time today, May 8, as a webcast on Gilat's website for a period of 30 days. Also, please note that investors are urged to read the forward-looking statements in Gilat's earnings release, with a reminder that statements made about these earnings that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Ehud Helft: Good morning, and good afternoon, everyone. Thank you for joining us.
Ehud Helft: Today for the first quarter of 2024 with a conference call and webcast.
Ehud Helft: And quoting on this call will be available.
Ehud Helft: It's really annoying.
Speaker Change: Hey, a J.
Ehud Helft: A webcast on the website for it.
Ehud Helft: Also please note that investors are urged to read the forward looking statements.
Ehud Helft: We never mind.
Ehud Helft: Uh huh.
Ehud Helft: Okay.
Ehud Helft: Any forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Ehud Helft: All such forward-looking statements, including statements regarding future financial operating results, involve risks, uncertainties, and contingencies, many of which are beyond the control of Gilat and which may cause actual results to differ prematurely from those anticipated results. 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. With that said, let me turn to the introductions. On the call today are Mr. Adi Sfadia, Gilat CEO, and Mr. Gil Benyamini, Gilat CFO.
Ehud Helft: All such forward looking statements.
Ehud Helft: Statements regarding future financial operating results involve risks uncertainties and contingencies.
Adi Sfadia: Naval for each of you on the call.
Ehud Helft: Okay.
Ehud Helft: Actual results could actually maturity from June.
Speaker Change: Got it.
Ehud Helft: You've actually done an 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 do so.
Ehud Helft: More detailed information about risk factors can be found.
Ehud Helft: Oh, it's filed with Securities and Exchange Commission.
Speaker Change: With that introduction.
Speaker Change: Today, I'm going to tell you, but yeah, <unk> CEO and Mr. He's been here many of the legacy.
Ehud Helft: Cool.
Ehud Helft: I would note I think they're all very closely.
Ehud Helft: Alright.
Adi Sfadia: Thank you, Ehud, and good day to everyone. I want to thank you for joining us today for our first quarter of 2020 Fall Earnings Call. We are pleased with the results of the first quarter, which starts 2024 well and is in line with our expectations for the year. The first quarter of 2024 showed strong 29% year-over-year revenue growth, including the contribution of revenues from our recent acquisition, DataPass, and a solid level of organic growth, which was broad across multiple business areas.
Adi Sfadia: Thank you and good day to everyone.
Adi Sfadia: Thank you for joining us today for our first quarter of 2020 foot and ankle.
Adi Sfadia: We are pleased with results of the first quarter, which start 2020 full well and is in line with our expectation for the year.
Adi Sfadia: The first quarter of 2024 showed strong 29% year over year revenue growth, including the contribution of the revenues from our recent acquisition data bus and a solid level of organic growth, which was broad across multiple business areas. There.
Adi Sfadia: The broad interest and good performance are due to continued market interest in our solution and advancements in the satellite communication space. I also want to highlight, in particular, that our strategic partnership with the major satellite operators also strongly supported the growth in our business during this quarter. We are pleased with DataPath's contribution to the quarter's results. DataPath contributed about 17% to the top-line growth and positive adjusted EBITDA. We are already demonstrating our ability to leverage the capabilities of DataPath and WaveStream, our two U.S.-based subsidiaries, which I will explain further when discussing our recent activities in the defense sector. In terms of the overall bottom line, we improved adjusted EBITDA profitability over Q1 of last year, which itself was a very strong quarter with a favorable revenue mix by 11% year-over-year.
Adi Sfadia: The broad interest and good performance was due to continued its growing market interest in our solution and advancement in the telecommunications space I also want to highlight in particular with our strategic partnership with a major satellite operators.
Adi Sfadia: So strongly supported the gross that's doing this quarter.
Adi Sfadia: We are pleased with data bus contribution to the quarter's results data for skin contributed about 17% so their top line growth and positive adjusted EBITDA.
Adi Sfadia: We are already demonstrating our ability to leverage the capabilities of data bus and waste stream.
Adi Sfadia: U S based subsidiaries, which I will explain further when discussing our recent activities in the defense cyclical.
Adi Sfadia: In terms of overall bottom line, we improved our adjusted EBITDA profitability over Q1 of last year.
Adi Sfadia: Which itself was a very strong walk in with a favorable revenue mix by 11%.
Adi Sfadia: Looking ahead, we are very much on track, and as such, we are reiterating the guidance we gave at the beginning of the year, which Gil will summarize shortly. Now, let's move to the business review for the first quarter of 2024. In the Very High Throughput Satellite, the VHTS, and the Non-Geostationary Satellite, the NTSO Constellation Business Segment, we continue to lead the market and grow our business with all-around multi-million dollar orders from our strategic partners, the satellite operators, which mainly include SES and Intelsat, among others.
Adi Sfadia: Looking ahead, we are very much on track and as such we are reiterating the guidance we gave at the beginning of the year.
Gil: <unk> summarized shortly.
Adi Sfadia: Now, let's move to the business review of the first quarter of 2024.
Adi Sfadia: In the very high suite with charter like the V HTS and the non geostationary satellite the MTS. So constellation business segment, we continue to lead the market and go out of business all on a multi million dollar orders from our strategic partners. The satellite operators, which mainly includes Ses and Intelsat and won't got.
Adi Sfadia: This is driven by increasing demand for Gilat Sky Platforms as satellite operators expand their networks and deliver a wider range of applications to a growing number of users. During the last few months, we have been awarded more than $30 million in community orders from several satellite operators to expand their global networks utilizing Gilat SkyH2C and SkyH4 multi-orbit multi-service capabilities. Overall, we are enjoying an increase in the pace of deployment and installation for both gateway hubs and terminals across Empire and all other SES geo-satellites.
Adi Sfadia: Yes.
Adi Sfadia: This is driven by increasing demand for sky to block swaps as satellite operators to extend their networks and deliver a wider range of application to a declining number of users.
Adi Sfadia: During the last few months, we have been awarded more than $30 million in community of orders from several of our satellite operators to expand our global networks utilizing Skype to sea and Sky full multi orbit multi service capabilities. Overall, we are enjoying an increase in the pace of deployment and installation.
Adi Sfadia: For both gateway hubs and determined the course empower and all other SCS Geo satellites.
Adi Sfadia: In addition, our early subsidiary in the United States, WaveStream, is successfully delivering SSPA to a new NGSO operator for its gateway deployments. We believe this success positions us well as the main SSPA supplier to this operator and potentially to receive a large share of their future business, which is worth tens of millions of dollars. Additional orders from this NGSO operator are expected during 2024. Our increased focus on the defense market segment is already bearing fruit.
Adi Sfadia: In addition, our wholly owned subsidiary in the United States waste stream.
Adi Sfadia: Successfully delivering SBA to our newest and GSO operator voice gateway deployments. We believe this success positions us well as the main SSP a supplier to these operational and potentially to receive the lion's share of their future business, which is worth tens of millions of dollars.
Adi Sfadia: Additionally, all of this from this NGL. So operator are expected during 2024.
Adi Sfadia: Our increased focus on the defense market segment is already bearing fruit.
Adi Sfadia: The acquisition of Datapath was completed in November of last year, and Q1 was the first full quarter consolidating the revenues into our defense sector under the Satellite Network Sector. We recently announced several new projects that were awarded to DataPath and WaveStream. DataPass received multiple orders during the first quarter, totaling more than $15 million from the U.S. Department of Defense for DICT 3421 terminals.
Adi Sfadia: The acquisition of database was completed in November of last year.
Adi Sfadia: In Q1 was the first full quarter of consolidating the revenues into our defense sector.
Adi Sfadia: Under the satellite networks segment.
Adi Sfadia: We recently announced several new projects to do in order to data bus and waste streams.
Adi Sfadia: Data bus received multiple orders during the first quarter totaling more than $15 million from the U S Department of defense for a ticket 30 for 'twenty one.
Adi Sfadia: This market-leading solution is a transportable SATCOM hub that delivers the operational flexibility, capacity, connectivity, and control required to ensure connectivity anywhere in the world. Following last quarter's announcement that the U.S. Army awarded WaveStream a $20 million contract for the Sustain Anytime, Anywhere Satellite Connectivity Program, we've already received the following orders for more than $12 million. We are providing a 50-watt K-A band SSPA for the long-term sustainment of thousands of mobile satellite transportable terminals, which enables continuous communication on-the-post solution across diverse climates and hard conditions around the globe.
Adi Sfadia: This market leading solution is a transportable satcom hub to deliver the operational flexibility capacity connectivity and control required to ensure connectivity anywhere in the globe in the world.
Adi Sfadia: Following last quarter announcement that the U S Army awarded waste in a 20 million dollar contract.
Adi Sfadia: For the sustained anytime anywhere satellite connectivity for gum, we've already received the follow on orders for more than $12 million. We are providing a 50 watt hey, Ben SSP as for the long term sustainment of thousands of more of a satellite task order will kill me knows which enables a continuous communication on the postal.
Adi Sfadia: <unk> of course diverse climates, and our conditions around the globe.
Adi Sfadia: This order demonstrates Gilat's ability to leverage the capabilities of our two U.S.-based subsidiaries. We also received a multi-million dollar Defense Satellite Connectivity Project order from a leading governmental defense organization. This order included Gilat's CH4 platform and Taurus-M modems to augment the defense organization's advanced satellite communication capabilities. In addition, a leading defense organization selected Gilat to develop a next-generation software-defined modem for SADCO on the move and SADCO on the post, military applications valued at millions of dollars.
Adi Sfadia: This order demonstrates <unk> ability to leverage the capabilities of our two U S based subsidiaries.
Adi Sfadia: We also received a multimillion dollar a defense satellite connectivity project order from a leading governmental defense organization. This order include Gila Sky's fault platform and towers and modems to augment the defense organizations advanced satellite communications capability.
Adi Sfadia: In addition, a leading defense organizations selected <unk> to develop a next generation software defined model for Susquehanna the move and suck on deposit military applications valued it's millions of dollars.
Adi Sfadia: We continue to make great progress in the mobility sector, demonstrating solid EuroGrid growth, developing more products, adding more customers, and supporting more verticals. During the first quarter, we made significant progress in developing our electronically stereo antenna for GEO and LEO. Initial tests of GEO proved that the antenna design meets the intended specifications for commercial aviation.
Adi Sfadia: We continue to take to make great progress in the mobility sector, demonstrating solid growth developing more products and more customers are supporting no verticals during.
Adi Sfadia: During the first quarter, we made significant progress in developing our electronic steering antenna for Geo and Leo.
Adi Sfadia: Initial guest on a Geo approved dental design meets the intended specifications and commercial for commercial aviation.
Adi Sfadia: Gilat is to further meet and exceed the performance of existing flat panel antennas while supporting two satellite beams simultaneously. Safran Passenger Innovations selected Wavestream to develop, qualify, and produce a new line of KU-Band power supply unit products to support their KU-Band ESA, bolstering Gilat's growth in the IFC market. In addition, we received orders for the Taurus modem from Safran for the Airbus HBC Plus program, as well as from a leading IFC service provider that expands Gilat IFC's footprint into the business aviation and government markets.
Adi Sfadia: July East offers that meet and exceed the performance of existing flat panel.
Adi Sfadia: Supporting to start that Ibm's simultaneously.
Adi Sfadia: Cellphone passenger innovation selected waste stream to develop qualify and produced a new line of Ku bet far supply unique products to support the Ku band Isa <unk>.
Adi Sfadia: Bolstering the large growth in the IFC market.
Adi Sfadia: In addition, we received orders for the Taurus modem from Susquehanna for the Airbus HBC plus program as well as from a leading IFC service providers that expense Gila to IFC footprint into the business aviation and government markets.
Adi Sfadia: In our enterprise business segment, our customers worldwide continue to depend on us to enhance their business, and new opportunities continue to arise. We are witnessing a significant surge in social inclusion projects globally. These projects aim to bridge the digital divide and empower under-served communities by providing access to essential services such as education, health care, and economic opportunities. Communication is the cornerstone of social inclusion, and satellite communications stand out as the key to achieving widespread connectivity that overcomes the limitations of terrestrial alternatives. We received a $3 million follow-on order for a public Wi-Fi service in Latin America. This project highlights once again the importance of social inclusion projects aimed at bridging the digital divide.
Adi Sfadia: In our enterprise business segment, our customers worldwide continue to depend on us to enhance the business and new opportunities continue to arise.
Speaker Change: Oh interesting.
Adi Sfadia: <unk> search and social inclusion projects globally.
Adi Sfadia: These projects aim to bridge the digital divide.
Adi Sfadia: And in bar Empire under served communities by providing access to essential services, such as education health care and economic opportunity.
Adi Sfadia: Communication is the cornerstone of social inclusion inclusion and satellite communications stand out as the key achieving widespread connectivity that to persist superpests the limitation of terrestrial identity readers.
Adi Sfadia: Steve is $3 million follow on order for a public Wi Fi services in Latin America. This project highlights once again, the importance of social inclusion project.
Adi Sfadia: At bridging the digital divide.
Adi Sfadia: During the quarter, we also received a significant order for an additional social inclusion project in Brazil. This program will expand Wi-Fi services across the country and require thousands of additional VISA systems from Gilat over the coming years. In Peru, we are pleased to announce the completion of the construction and implementation of the sixth regional project for PRONATEL in the Amazonas region. We are now in the acceptance process, and expect it to be operational later this year.
Adi Sfadia: During the quarter. We also received a significant order for an additional social inclusion project in Brazil. This program will expand Wi Fi services across the country and require thousands of additional visa two steps from gilead over the coming years.
Adi Sfadia: Infill, we are pleased to announce the completion of the construction and implementation of the fixed region regional project for point of sale.
Adi Sfadia: The Amazonas region, we are now in the acceptance process and expect to be operational later. This year. In addition, we are progressing in building the $17 million expansion project and the Amazonas region.
Adi Sfadia: In addition, we are progressing with building the $17 million expansion project in the Amazonas region, expecting to finish the expansion before the end of the year, and furthermore, in Peru. We are expecting additional progress in the next few months, which includes the maturity of several large RFPs with Puerto Rico and the Peruvian government, as well as several project extensions.
Adi Sfadia: Expecting to finish the expansion before the end of the.
Adi Sfadia: Furthermore, we.
Adi Sfadia: We all expect expecting additional focus in the next few months. This includes the maturity of several of our large RFP as we spun out there on the Peruvian government.
Adi Sfadia: Well as several project extensions, we are very pleased with the strong pipeline and fuel for the rest of the.
Adi Sfadia: We are very pleased with the strong pipeline in Peru for the rest of the year. To conclude, I am pleased with our results for the first quarter, which included the contribution of the revenues of our recent acquisition data path, in addition to a solid level of organic growth, which I attribute to the growing interest in our solutions in the satellite communication market and, particularly, our strategic partnership with the major satellite operators.
Adi Sfadia: To conclude I am pleased with our results for the first quarter, which included the contribution of the revenues of our recent acquisition data path. In addition to a solid level of organic growth, which I attribute to the growing interest in our solutions and divestment in the satellite communication market and particularly our strategic partnership with a major satellite.
Adi Sfadia: <unk>.
Adi Sfadia: We continue to lead with our next-generation platform, the SkyH4, which supports multiple orbits, verticals, and applications, including our strategic markets of mobility, solar vehicles, and defense. During the first quarter, we made significant progress in developing our electronically steerable antenna for GEO and LEO and expanded our ISP footprint into business, aviation, and government markets. We have also delivered our SSPAs to a new NGSO operator for its gateway deployments and are seeing increasing opportunities in this line of business. We have a strong pipeline and expect the materialization of important deals over the coming months. With that, I hand over to Gil Benyamini, our CFO. Gil, please.
Adi Sfadia: We continue to lead with our next generation platform, the Skype for which supports multiple orbits verticals and applications, including our strategic markets of mobility cellular backhaul and defense.
Gil Benyamini: During the first quarter, we made significant progress in developing our electronically <unk> antenna for jewelry, Lille and expanded the IFC foot footprint into business aviation and government markets. We have also delivered <unk> to a new engine. So operator fluids gateway deployments and are seeing increasing opportunities in.
Gil Benyamini: This line of business we.
Gil Benyamini: We have a strong pipeline and expect the materialization of important deals over the coming months.
Gil Benyamini: I hand over to <unk> our CFO.
Gil Benyamini: Thank you, Adi. Good morning and good afternoon to everyone.
Gil Benyamini: Thank you Heidi and good morning, and good afternoon to everyone.
Gil Benyamini: I would like to remind everybody that our financial results are presented on both a gap and a non-gap basis. We regularly use supplemental non-gap financial measures internally to understand, manage, and evaluate our business and make operating decisions. We believe these non-gap financial measures provide consistent and comparable measures to help investors understand our current and future operating performance. Non-gap financial measures mainly exclude, if and when applicable, the effect of non-cash stock-based compensation expenses, amortization of purchased extension bills, lease incentive amortization, other integration expenses, one-time changes in deferred tax assets, other operating income net, and the income tax effect on the relevant adjustments.
Gil Benyamini: I would like to remind everybody that our financial results are presented on both GAAP and non-GAAP basis, we regularly use supplemental non-GAAP financial measures internally to understand manage and evaluate our business and make operating decisions.
Gil Benyamini: 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 the effect of noncash stock based compensation expenses amortization of purchased extends your bills lease incentives.
Gil Benyamini: Amortization, either integration expenses, one time changes of deferred tax assets other operating income snacks and income tax effect on the relevant adjustments. The reconciliation table in our press release highlights this data and our non-GAAP information presented exclude these out.
Gil Benyamini: The reconciliation table in our press release highlights this data, and our known gap information presented excludes these items. I will now move to our financial highlights for the first quarter of 2024. Overall, as Adi mentioned earlier, we are very pleased with a strong start to 2024.
Gil Benyamini: We reported a 29% year-over-year growth in revenue. This was driven by 12% organic growth, as well as by our recent acquisition data pack, which contributed 17% to our growth. Our GAAP growth margin was 38%, and our adjusted EBITDA reached $9.3 million, 11% growth over Q1 last year. We are optimistic about our prospects in the quarters ahead, and as Adi mentioned earlier, we reiterate our guidance for 2024, which I'll cover later.
Gil Benyamini:
Gil Benyamini: I will now move to our financial highlights for the first quarter of 2024th overall.
Gil Benyamini: Overall as we mentioned earlier, we're very pleased with the strong start of 2024, we reported a 29% year over year growth in revenue. This was driven by a 12% organic growth as well as by our recent acquisition data pack, which contributed 17% to our growth our GAAP gross margin was 30.
Gil Benyamini: 8% and our adjusted EBITDA reached $9 3 million.
Gil Benyamini: 11% growth over Q1 last year.
Gil Benyamini: We are optimistic about our prospects in our quarters to have and as we mentioned earlier, we reiterate our guidance for 2024, which I'll cover later in terms of our financial results in more detail.
Gil Benyamini: In terms of our financial results in more detail, revenues for the first quarter were $76.1 million, 29% higher than those for the first quarter of last year, which were $59 million. The improvement was driven by growth in the satellite network segment and was comprised of organic sources and from acquisition of data paths which we closed in the middle of Q4 last year. We also demonstrated solid growth in the network infrastructure and services business segment.
Gil Benyamini: Revenues for the first quarter were $76 1 million, 29% higher than the first quarter of last year, which were $59 million.
Gil Benyamini: The improvement was driven by growth in the satellite network segment and was comprised of organic sources and from acquisition of data fact, which we closed in the middle of Q4 of last year.
Gil Benyamini: We also demonstrated solid growth in the network infrastructure and services business segment.
Gil Benyamini: In terms of revenue breakdown by segments, Q124 revenues of the satellite network segment were $46.8 million compared to $33.5 million in the same quarter last year. Q124 revenues of the integrated solutions segment were $11.6 million compared to $12.9 million in the same quarter last year. G-124 revenues of the network infrastructure and services segment were $17.7 million compared to $12.5 million in the same quarter last year. The increase was derived from higher construction revenues as well as increased services revenue.
Gil Benyamini: In terms of revenue breakdown by segment Q1, 'twenty four revenues of the satellite network segment were $46 8 million compared to $33 5 million.
Gil Benyamini: Same quarter last year.
Gil Benyamini: Q1, 'twenty four revenues of the integrated solutions segment were $11 6 million compared to $12 9 million in the same quarter last year Q1, 'twenty four revenues of the network infrastructure and services segment were $17 $7 million compared to $12 5 million in the same quarter last year.
Gil Benyamini: <unk> was derived from higher construction revenues as well as increasing the services revenue.
Gil Benyamini: I would now like to summarize our first quarter results, both GAP and non-GAP results. Our gap gross margin for Q1-24 was 36.9% compared to 41.9% in the same quarter last year. The reduction in our gross margin was mainly due to a particularly favorable product and services mix that we experienced in Q1 of last year. In addition, and as we mentioned in the past, data path gross margins are slightly lower than Gilat's average, which impacts the overall gross margin in the current quarter and will continue to do so going forward. As we discussed in previous calls, analyzing Gilat's results on a quarter-by-quarter basis is problematic since they can be significantly affected by our revenue and product costs.
Gil Benyamini: I would now like to summarize our first quarter, both GAAP and non-GAAP results. Our GAAP gross margin for Q1, 'twenty four was 36, 9% compared to 41, 9% in the same quarter last year.
Gil Benyamini: The reduction in our gross margin was mainly due to particularly favorable product and services mix that we experienced in Q1 of last year. In addition, and as we mentioned in the past data path gross margins are slightly lower than <unk> average, which impacts the overall gross margin in the current quarter and will continue to do so.
Gil Benyamini: So going forward.
Gil Benyamini: As we discussed in previous calls analyzing the last result on a quarter by quarter basis as problematic as they can be significantly affected by our revenue and product mix.
Gil Benyamini: I note that the gross margin in the trailing four quarters was 38.2%, similar to 38.5% in the trailing four quarters that ended on March 31st, 2021. Gap operating expenses in Q1'24 were $22.7 million, an increase of $5 million versus the same quarter last year. In Q1 of last year, we had a one-time cash income of approximately $3 million due to Foreign Arbitration 1 in Peru. Additionally, this quarter we also have an impact of approximately $0.7 million of amortization of purchased intangibles and other acquisition-related expenses. These impacts are included only in the GAP number.
Gil Benyamini: I note that the gross margin in the trailing four quarters was 38, 2% similar to 38, 5% during the trailing four quarters ended March 31st 2023.
Gil Benyamini: Yeah.
Gil Benyamini: GAAP operating expenses in Q1, 'twenty four were $22 7 million.
Gil Benyamini: The increase of $5 million.
Gil Benyamini: Same quarter last year in Q1 of last year, we had a one time cash income of approximately $3 million.
Gil Benyamini: For an arbitration one in Peru. This quarter, we also have an impact.
Gil Benyamini: Approximately <unk> 7 million of amortization of purchased intangibles and other acquisition related expenses.
Gil Benyamini: These impacts are included only in the GAAP numbers.
Gil Benyamini: I also note that this quarter we have operational expenses related to data path which we did not have in the first quarter of last year. Gap operating income for the quarter was $5.4 million compared to $7 million in the same quarter last year. Gap net income in the first quarter was $5 million, or $0.09 per diluted share. This is compared to a gap net income of $5.6 million, or diluted earnings per share of $0.10, in the same quarter last year.
Gil Benyamini: I also note that this quarter, we have operational expenses related to the data path, which we did not have in the first quarter of last year.
Gil Benyamini: GAAP operating income for the quarter is $5 4 million compared to $7 million in the same quarter last year.
Gil Benyamini: GAAP net income in the first quarter was $5 million or <unk> <unk> per diluted share. This is compared to a GAAP net income of $5 6 million.
Gil Benyamini: Our diluted earnings per share of 10 cents in the same quarter last year.
Gil Benyamini: Moving to non-GAAP results, our non-GAAP gross margin for Q1 2024 was 37.8% compared to 42% in the same quarter last year. (Inaudible) Non-GAAP operating income for the quarter improved to $6.6 million compared to $5.3 million in the same quarter last year. Non-GAAP net income in the first quarter was $6 million, or diluted earnings per share of $0.11. This is compared with $3.8 million, or diluted earnings per share of $0.07, in the same quarter last year.
Gil Benyamini: Moving to non-GAAP results, our non-GAAP gross margin in Q1, 24 was 37, 8% compared to 42% from the same quarter last year.
Gil Benyamini: <unk> was.
Gil Benyamini: For the same reasons I mentioned earlier non-GAAP operating expenses in Q1, 'twenty four was $22 2 million compared with $19 $5 million in the same quarter last year.
Gil Benyamini: Greece was mainly due to the consolidation of data.
Gil Benyamini: non-GAAP operating income for the quarter improved to $6 6 million compared to $5 3 million during the same quarter last year.
Gil Benyamini: non-GAAP net income in the first quarter was $6 million or diluted earnings per share of 11.
Gil Benyamini: As compared with $3 8 million or diluted.
Gil Benyamini: Diluted earnings per share of <unk>.
Gil Benyamini: In the same quarter last year.
Gil Benyamini: Adjusted EBDA for the quarter improved to $9.3 million, an increase of 11% compared with adjusted EBDA of $8.4 million in the same quarter last year. Moving to our balance sheet, as of March 31st, 2024, our total cash and cash equivalents and restricted cash net of short-term debt were $98.5 million, compared with $95.3 million on December 31st, 2023 and compared to $89.7 million as In terms of cash flow, we generated $4.2 million from operating activities during the first quarter of 2024, and net repayment of loans was $2.7 million.
Gil Benyamini: Adjusted EBITDA for the quarter improved to $9 3 million, an increase of 11% compared with adjusted EBITDA of $8 $4 million in the sample to last year.
Gil Benyamini: Moving to our balance sheet as of March 31, 24, our total cash and cash equivalents and restricted cash net of short term debt were $98 5 million compared.
Gil Benyamini: Compared with $95 3 million on December 31, 23, and coffee compared to $89 7 million as of March 31, 23 in terms of cash flow, we generated $4 2 million from operating activities. During the first quarter of 'twenty, four and net repayment of flow.
Gil Benyamini: <unk> was $2 7 million.
Gil Benyamini: Dsos, which exclude receivables and revenues.
Gil Benyamini: Our tourists network construction project in Peru were 76 days higher than the previous quarter DSO, which was of 64 days. This kpis is within our normal range of 60 to 90 days.
Gil Benyamini: Our shareholders equity as of March 31, 2004 totaled about $281 million compared with $275 million at the end of December 'twenty three.
Gil Benyamini: Looking ahead, we reiterate our guidance for the year, our expectation remains for revenues of between $305 million to $325 million representing year over year growth of 18% at the midpoint GAAP operating income of between $15 million to $19 million.
Gil Benyamini: And adjusted EBITDA of between $40 million to $44 million.
Gil Benyamini: Representing year over year growth of 15% at the midpoint.
Gil Benyamini: DSOs, which exclude receivables and revenues, of our terrestrial network construction project in Peru were 76 days, higher than the previous quarter DSO, which was 64 days. This KPI is within our normal range of 60 to 90 days. Our shareholders' equity, as of March 31st, 2024, totaled about $281 million, compared with $275 million at the end of December. Looking ahead, we reiterate our guidance for the year. Our expectations remain for revenues of between $305 to $325 million, representing year-over-year growth of 18% at the midpoint, gap operating income of between $15 to $19 million, and adjusted EBITDA of between $40 to $44 million, representing year-over-year growth of 15%. That concludes my financial review. I would now like to open the call and would be happy to take your questions. Operator, please.
Speaker Change: That concludes my financial review I would now like to open up the call and we'd be happy to take your questions. Operator. Please thank you.
Operator: Ladies and gentlemen, at this time, we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, kindly lift the handset before pressing the numbers.
Speaker Change: Ladies and gentlemen at this time, we will begin the question and answer session. You will have a question. Please press star one if you wish to cancel your request. Please press star two.
Operator: Using speaker equipment currently with the handset before pressing the numbers.
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. Please go ahead.
Speaker Change: <unk> will be pulled in the order. They are received please standby while we poll for your questions.
Operator: The first question is from Ryan Koontz of Needham. Please go ahead.
Ryan Koontz: Thanks for the question and nice results, particularly in the infrastructure business. I wanted to unpack the networks business a little bit if we could there in terms of your product mix, how that's shifted now with Datapath. And how do you think about that mix going forward with regard to, I mean, I guess maybe the best way to segment it would be defense versus commercial, and how do you see that evolving as the year goes forward between defense and commercial? Sounds like defense is... particularly strong for you, but I would like to hear your thoughts on it.
Ryan Koontz: Alright, thanks for the question.
Ryan Koontz: And are you a nice results, particularly there out of the infrastructure business I wanted to unpack the networks business, a little bit if we cut there and in terms of your product mix, how that shifted now with dealt with data path.
Ryan Koontz: And how you think about that mix going forward with regards to I mean, I guess, maybe the best way to go.
Ryan Koontz: <unk> segment, it would be defense versus commercial.
Ryan Koontz: And you know how do you see that evolving as the year goes forward between defense and commercial sounds like defenses.
Ryan Koontz: Particularly strong for you, but would like to hear your thoughts on it. Please thank you.
Adi Sfadia: I think it's a bit too early for us to provide such a disclosure. We are not there yet between commercial and defense. But I agree that defense is getting more and more traction. We had a very strong booking quarter, booking to ship in defense. It's usually not in the same quarter; it's over time. So most of the orders that we received were, of course, factored already into our guidance, but we expect to deliver them in the coming 18 to 24 months.
Speaker Change: I think it's a it's a bit too early for us to provide such a disclosure we are not there yet.
Adi Sfadia: Commercial and defense, but I agree with the defense is getting more and more traction we had.
Adi Sfadia: Very strong bookings quarter.
Adi Sfadia: But.
Adi Sfadia: Book to shipping the defense, it's usually not in the same quarter. It's.
Adi Sfadia: Over time, so most of the orders that we received we are of course factored already into our guidance, but we expect to deliver them along the coming eight.
Adi Sfadia: 18 to 24 months.
Adi Sfadia: We are in the initial stages, but as a rule of thumb, we said at the beginning of the year that data pass revenues would be around $45 million, so if you add satellite networks and integrated solution defense revenues, overall defense revenues this year should be above $60 million.
Adi Sfadia: We are in the initial stages, but.
Adi Sfadia: Just a rule of thumb, we said at the beginning of the year.
Adi Sfadia: Data pass revenues will be around $45 million. So if you add.
Adi Sfadia: Satellite networks and integrated solution defense revenues.
Adi Sfadia: Overall defense revenues this year should be.
Adi Sfadia: $60 million.
Ryan Koontz: Great, that's really helpful. Thanks, Adi. And in terms of the IFC market, can you maybe update us on your thoughts overall and how you see that segment developing? Sounds like you have had some orders or some new wins and a lot of excitement in that category. Can you maybe expand on your kind of broader thoughts about the IFC opportunity for you? Yeah.
Speaker Change: Great. Thanks, that's really helpful. Thank city and in terms of the IFC market.
Ryan Koontz: Maybe update us on your thoughts overall on how you see that segment developing sounds like you had some orders or some new wins and a lot of excitement in that category can you maybe expand on your kind of broader thoughts about the IFC opportunity for you.
Adi Sfadia: We see a lot of traction in the IFC. We managed to receive several orders for several new programs, where in some cases, the service provider will have dual solutions, so they are adding Gilat modems and solutions into the overall solutions. In those cases, they will usually use IntelSat, IntelSat... We are progressing with the electronically steerable antenna development that we received an award for Satcom Direct.
Adi Sfadia: So we see a lot of traction in the IFC, we manage to a few several orders for silver.
Adi Sfadia: Several new programs. We're in some of the cases the service provider, we will have a dual solution so adding dealers.
Adi Sfadia: Modems and solution into the overall solutions.
Adi Sfadia: <unk>.
Adi Sfadia: In those cases, they will usually use Intel.
Adi Sfadia: Intercept.
Adi Sfadia: Yes.
Adi Sfadia: The service.
Adi Sfadia: Service, but on the aircraft you would have several.
Adi Sfadia: The modems.
Adi Sfadia: We are progressing with that.
Adi Sfadia: Electronically <unk> antenna development that we received an award for Satcom direct in general we see a lot of traction in the eastern market. This is a very growing segment. It seems like that the shift from.
Adi Sfadia: In general, we see a lot of traction in the ESA market. [inaudible] will significantly push our growth in the next few years. In addition, we have several auxiliary products, new products, like the power supply unit that we are providing to Safran for their HBC Plus Airbus solution. So overall, we see a lot of traction in the market. We are still getting a lot of orders for SSPA for the old versions of the terminals, but now we also see a lot of potential with ESA worldwide.
Adi Sfadia: Flat panel.
Adi Sfadia: And mechanical steered to Asia is now becoming much more.
Adi Sfadia: Effective because of the ability to use one word.
Adi Sfadia: <unk> constellation.
Adi Sfadia: So we are seeing a lot of traction in this area and we believe it will significantly.
Adi Sfadia: Push our growth in the next.
Adi Sfadia: A few years. In addition, we are having several agility.
Adi Sfadia: Product new products like the power supply unit that we have.
Adi Sfadia: Providing to slide four.
Adi Sfadia: Dale.
Adi Sfadia: H B C plus Airbus solution.
Adi Sfadia: So overall, we see a lot of traction in the market still getting a.
Adi Sfadia: And a nice order for SBA.
Adi Sfadia: For the oil.
Adi Sfadia: As of the Domino's, but now we see also a lot of potentials with visa worldwide.
Ryan Koontz: God, and pardon me for not knowing, but the ESA product; is that a relatively new product for you that you don't have a meaningful revenue stream from today?
Speaker Change: Got it and pardon me for not knowing as the Easter.
Ryan Koontz: The product has had a.
Speaker Change: Is that a relatively new product for you that you don't have a meaningful revenue stream for them today.
Adi Sfadia: Correct. Gilat and Issa are episodes that have been on for several years, probably more than 10.
Ryan Koontz: <unk>.
Adi Sfadia: Jim.
Adi Sfadia: Please look for several years.
Adi Sfadia: Probably more than than we were the leader in electronically steered antenna for different applications and IFC at the beginning.
Adi Sfadia: We were the leader in electronically steered antennas for different applications than IFC at the beginning. And in 2023, we got an award from Satcom Direct to develop a unique business aviation and government aviation electronically steered antenna that will support a one-web constellation. And in parallel, we are developing a LEO and a GEO, an electronically steered antenna that will be available slightly after the Satcom Direct antenna is available. We expect that Satcom Direct will contribute to 2025 revenues. Right now, we are in a development.
Adi Sfadia: In 2023, we got an award from Satcom direct to develop <unk>.
Adi Sfadia: <unk>.
Adi Sfadia: So the Asian and.
Adi Sfadia: And government aviation.
Adi Sfadia: Electronically steered antenna.
Adi Sfadia: It will support.
Adi Sfadia: One.
Adi Sfadia: Constellation and in parallel we are developing.
Adi Sfadia: Okay.
Adi Sfadia: Jill.
Adi Sfadia: Electronically steered antenna, which will be available slightly after the <unk>.
Adi Sfadia: Ill come direct antenna will be available we expect.
Adi Sfadia: And the Satcom direct will contribute to 2025 revenues.
Adi Sfadia: Now we are developing phase.
Ryan Koontz: That's really helpful. I'll pass it on for now. Thank you for your answers. Thank you, Ryan. See you soon.
Speaker Change: Got it that's really helpful. I'll pass it on for now. Thank you. Thanks cancers. Thank you.
Ryan Koontz: Sure.
Operator: The next question is from Chris Quilty of Quilty Space. Please go ahead.
Ryan Koontz: The next question is from Chris Quilty of Quilty space. Please go ahead.
Christopher David Quilty: Thanks. I wanted to follow up on that IFC question. I think you mentioned in your script that you had won a FISJET program. Can you just elaborate on that? I can't remember you playing in that market previously. And was this for SSPA or antenna products? Okay.
Christopher David Quilty: Alright, Thanks, I wanted to follow up on that IFC question I think you mentioned in your script.
Speaker Change: Good morning.
Christopher David Quilty: Please jet program.
Christopher David Quilty: Can you just elaborate on that I can't remember.
Christopher David Quilty: Playing in that market previously in phase four.
Speaker Change: This is P. A R antenna product.
Adi Sfadia: Okay, so... As you may remember, SATCOM Direct is the main player in the business of aviation. And with them, we signed the ESA development project for business jets. So, you know, we started to play in this market segment a year ago. And recently, we received another order from a leading service provider for our tourist modems, for a service provider that will use Intersat services.
Christopher David Quilty: Okay.
Christopher David Quilty: No.
Adi Sfadia: As you May remember Satcom is the main player in the business aviation and with them, we signed the ESR development project.
Adi Sfadia: Project full.
Adi Sfadia: Business jet so we started to play in this.
Adi Sfadia: The end market segment, a year ago and recently, we received another order from a leading service provider.
Adi Sfadia: Tourists modems.
Adi Sfadia: For a service provider that will use and Intelsat.
Adi Sfadia: Salaries.
Christopher David Quilty: Got it. So this is a SkyEdge 2C or a 4?
Adi Sfadia: Got it. So this is a sky age two or four.
Adi Sfadia: It can be a combination of the Taurus modems for IFC, and it can work both on Sky-H2C and Sky-H4.
Christopher David Quilty: It can be a combination of the dollars motors for IFC can both on Skype to see in Scottsville.
Christopher David Quilty: Gotcha, and these are all KU systems, and how much do you think that market can contribute to your overall IFC and commercial IFC business, I mean in terms of the relative scale of the opportunity?
Adi Sfadia: Gotcha and.
Christopher David Quilty: These are all key use systems and.
Christopher David Quilty: How how much do you think that market can contribute to your overall.
Christopher David Quilty: Commercial lines.
Christopher David Quilty: In terms of relative scale of the opportunity.
Adi Sfadia: I think that the overall opportunity in the business of aviation is... I see InterSat is playing there, SatComDirect is playing there, and others, and we are trying to penetrate more and more service providers. I think that in the next few years, we will see a shift from commercial aviation to business aviation, and it will drive additional growth.
Christopher David Quilty: I think that the overall.
Adi Sfadia: The opportunity in the business aviation is large.
Adi Sfadia: I see into such as playing Satcom direct is playing there and others and we are trying to penetrate more and more service providers I've seen this in the next.
Adi Sfadia: A few years, we will see.
Adi Sfadia: Shifting from commercial aviation to business aviation and to drive additional growth.
Christopher David Quilty: Elton, on the room question, the announcement of the acquisition or merger with IntelSat and SES, it's probably still a year and a half out, but what are your initial thoughts there? I know you've got presence with both operators.
Speaker Change: I understand.
Adi Sfadia: And in the room question, the announcement of the acquisition or merger with Intelsat and Ses.
Elton: But what are your initial thoughts here.
Christopher David Quilty: Operator.
Elton: Well this is a very good very good question I must say.
Adi Sfadia: This is a very good question, I must say. In general, both SES and InterSat are strategic partners with Gilat. Our equipment is deeply integrated with both of them. We have an Intelsat IFC platform, and so our backhoe solution is a strategic business for us and with SCS, both SCS M-Power, which recently launched its service, and SCS-17, and all the other satellites are working with Gilat, both SCS-2C and SCS-4 solutions.
Elton: And in general, both Ses and Intelsat or strategic partner with <unk>.
Adi Sfadia: Our equipment is deeply integrated with both of them we have intelsat.
Adi Sfadia: IFC platform in cellular backhaul solution is.
Adi Sfadia: It's strategic.
Adi Sfadia: Business for us and with Ses both.
Adi Sfadia: <unk>, which recently launched <unk> service.
Adi Sfadia: Ses 17, and all of them.
Adi Sfadia: Satellites are walking with Gila, both Sky Casino Skype for solution.
Christopher David Quilty: We expected this merger to happen; this time, the time from rumors to announcement was very fast; usually, it took months. We believe that the merger, once approved, will have a positive effect on Gilat and try to serve two new giants with their roadmap requirements. We'll have one customer with the roadmap requirements, and most of our focus will be on delivering for them. I think in the short term, definitely, they will continue to buy.
Adi Sfadia: We expected this to happen.
Christopher David Quilty: At this time.
Christopher David Quilty: The time from Boomers to announcement was very fast initially took months.
Christopher David Quilty: We believe that the messages and once approved we will have.
Christopher David Quilty: Positive effect on Gila and Willie will have one customer and instead of.
Christopher David Quilty: Being.
Christopher David Quilty: Trying to sell to new Jive, two giants with the roadmap requirements we have.
Christopher David Quilty: One customer with the roadmap requirements.
Christopher David Quilty: And most of our focus will be on delivery.
Christopher David Quilty: Delivering delivering for them.
Christopher David Quilty: I think in the short term.
Christopher David Quilty: Definitely there will continue to buy.
Christopher David Quilty: Both of them have plans. Intex has already committed to several new satellites, and SES is talking about new satellites, so they're willing to continue their plans. I don't think that the merger is to take a competitor out of the market, but rather to increase and make one plus one equal more than two. And for us, I believe it's an opportunity for future growth.
Christopher David Quilty: Both of them.
Christopher David Quilty: Yeah.
Christopher David Quilty: The plan's intercept already committed to several new satellite in SCS is talking about new satellites. So they're willing to continue the plan I don't think that the merger is to take out costs.
Christopher David Quilty: Competitor are there was a market rather to increase and make one plus one equals more than two.
Christopher David Quilty: And so whilst I believe it's the opportunity for future growth.
Christopher David Quilty: Great. Shifting gears, can you quantify? I don't think you have huge exposure to the maritime market, but it's pretty ugly out there with Starlink. I just wanted to see whether you have seen any impact on that business, or is it too small to matter?
Christopher David Quilty: Great.
Speaker Change: Shifting gears.
Christopher David Quilty: Can you quantify what I don't think you have huge exposure to the maritime market, but its pretty ugly out there whose darlene.
Christopher David Quilty: I just wanted to see whether you have.
Christopher David Quilty: Seen any impact on that business or is it too small to matter.
Christopher David Quilty: Yeah.
Adi Sfadia: First of all, it's too small to matter. We are newcomers to this market segment, and mainly serving the SCS cruise line. It's relatively not material, and from our perspective, regardless, we expect it to grow because it's very small in the initial phases, but definitely, we see more and more Starlink getting traction in this market.
Speaker Change: First of all it's too small to matter.
Adi Sfadia: E Commerce to do this.
Adi Sfadia: Market segment.
Adi Sfadia: Mainly serving SCS cruise line.
Adi Sfadia: Relatively.
Adi Sfadia: Not material and we.
Adi Sfadia: From our perspective, it regardless, we expect it to grow because it is very small in initial phases, but definitely we see more and more.
Adi Sfadia: Getting.
Adi Sfadia: Traction in this market.
Christopher David Quilty: Shifting gears back to Datapath, you've had a couple of announcements. I think when you closed Datapath last quarter, you had mentioned that post-closing, you picked up a $20 million order, and it seems like there's more. Is that still on track for, I think you quantified around $50 million a year run rate, or has it improved from there since post-acquisition?
Adi Sfadia: Great.
Adi Sfadia: The gears back to the data path.
Christopher David Quilty: Couple of announcements I think when you closed it last quarter you had mentioned that post closing you picked up a $20 million order and it seems like theres more.
Christopher David Quilty: Is that still on track for Dupont.
Christopher David Quilty: You've quantified around $50 million.
Christopher David Quilty: Run rate or how does it improve from there.
Christopher David Quilty: Post acquisition.
Adi Sfadia: So, we received several large orders through Datapath this quarter. And at the beginning of the quarter, or at the beginning of the year, we said that in 2024, we expect DataPass to be around $45 million in revenues. We decided to be a bit conservative because it's the first year of integration, and sometimes you have hiccups at the beginning. But I can say that the first quarter went well.
Speaker Change: Yes, So we received this quarter several large orders.
Adi Sfadia: Through data fast.
Adi Sfadia: And.
Adi Sfadia: At the beginning.
Adi Sfadia: At the beginning of the quarter or beginning of <unk>. We said that in 2024, we expect data to be around $45 million in revenues, we decided to be a bit.
Adi Sfadia: <unk> because it's the first steel.
Adi Sfadia: Integration.
Adi Sfadia: And sometimes you have a hiccup at the beginning I can say that the first quarter went well and we are on track of achieving.
Christopher David Quilty: We are on track to achieving those guidelines, and we expect to see significant growth in years to come. We are recruiting several people. U.S. defense presence: nothing that I can share now, but hopefully we will be able to share with everyone. And I think that defense, especially in the U.S., will be a significant growth engine for us.
Christopher David Quilty: Those guidelines.
Christopher David Quilty: And we expect to.
Christopher David Quilty: To see a significant growth in years to come.
Christopher David Quilty: Recruiting several.
Christopher David Quilty: Hey executives in order to strengthen.
Christopher David Quilty: U S defense presence.
Christopher David Quilty: Nothing that I can share now, but hopefully you will be.
Christopher David Quilty: We're able to share with everyone and I think that the defense, especially in the U S will be a significant growth engine for us.
Gil Benyamini: And final question for Gil, just looking at the OpEx, it looks like the last two quarters you've run around $25 million of OpEx, and obviously a partial quarter for Datapath and Q4, but there was also a pretty big step up in GNA here in the first quarter. I assume, was that timing related, or was that sort of $25 million a quarter off X a good run down?
Speaker Change: Great and final question for Gil just looking at the Opex It looks like the last two quarters, you've run around $25 million.
Gil Benyamini: Opex.
Gil Benyamini: And obviously a partial quarter of work a lot in Q4 data path in Q4.
Gil Benyamini: There was also a pretty big step up in G&A G&A here in the first quarter.
Gil Benyamini: I'm, assuming it was that.
Gil Benyamini: Timing related or was that.
Gil Benyamini: Sort of $25 million.
Gil Benyamini: Opex a good run rate.
Gil Benyamini: So, I can say that these Q1 OPEX expenses are representative ones, and this, of course, includes a full year of data path acquisition. You should also remember that in our GAP reports we include purchase price allocation expenses and some share-based compensation expenses related to the acquisition, and some of these expenses are volatile and may go up or down due to changes in Gilat's share price during
Gil Benyamini: So.
Gil Benyamini: I can say that this Q1 opex expenses are.
Gil Benyamini: Representative once.
Gil Benyamini: And this of course includes.
Gil Benyamini: Our full year of.
Gil Benyamini: Data paths.
Gil Benyamini: Data paths.
Gil Benyamini: Acquisition.
Gil Benyamini: You should also remember that in our GAAP report.
Gil Benyamini: We include.
Gil Benyamini: We include the purchase price allocation.
Gil Benyamini: Expenses and some share based compensation expenses related to the.
Gil Benyamini: Through the acquisition and some of these expenses.
Gil Benyamini: Our volatile in.
Gil Benyamini: May.
Gil Benyamini: I would go up or down.
Gil Benyamini: Due to changes in dealer share price during the quarter.
Gil Benyamini: No.
Gil Benyamini: This is of course relevant only in the GAAP reports.
Gil Benyamini: As the bottom line this quarter, representing the ongoing expenses and good luck.
Christopher David Quilty: Very good. Thanks for all the feedback and a great quarter.
Speaker Change: Alright, good thanks for all the feedback and great quarter.
Adi Sfadia: Thank you very much, Chris.
Speaker Change: Thank you very much Chris.
Operator: The next question is from Gunther Karger of Discovery Group. Please go ahead.
Adi Sfadia: The next question is from Gunther Karger of Discovery Group. Please go ahead.
Operator: Okay.
Gunther Karger: Yes, thank you for taking the call and congratulations on an excellent quarter. Two questions and one comment. Question number one has to do with satellite backhaul. Are there any new developments in that area? And the second question has to do with the status of high-speed trains because they seem to be evolving worldwide. Do you have any comment on those two points?
Gunther Karger: Yeah. So thank you for taking the call and congratulations on an excellent quarter.
Gunther Karger: Three.
Speaker Change: Two questions for a long time.
Gunther Karger: Question number one has to do with satellite backhaul.
Gunther Karger: Backhaul.
Gunther Karger: Any new developments.
Gunther Karger: And in that area with some kind of a second.
Gunther Karger: Question has to deal with.
Gunther Karger: They are still having trouble of high speed trains.
Gunther Karger: It seem to be evolving worldwide.
Gunther Karger: Any comment on those two questions.
Adi Sfadia: Hi Gunther, nice to speak with you again. On the cellular backhaul market, we continue to lead the market. We are seeing a lot of opportunities in 4G. We are starting to see some traction on 5G. Recently, we demonstrated, together with one of the largest MNOs in the world on SCS satellites, more than 1 gigabyte per second to the modem and more than 500 megabits per second to the handset.
Gunther Karger: So hi, Gunther nice to speak with you again, so on the cellular backhaul.
Adi Sfadia: We continue to lead the market we are seeing.
Adi Sfadia: A lot of opportunities in the <unk> and we are starting to see some traction on the <unk> recently, we developed we demonstrate.
Adi Sfadia: Together with one of the largest <unk> in the world.
Adi Sfadia: On Ses satellites.
Adi Sfadia: And more than one gigabyte per second to the modem in more than 500 megabits per second to the handset.
Adi Sfadia: Those are extremely high speeds, 5G speeds. So our equipment is ready, and we have initial sales, but we expect that 5G revenues will ramp up within, let's say, two years. You know, I have a saying that first you take Manhattan.
Adi Sfadia: Extremely high speeds the size.
Adi Sfadia: Speeds, so our equipment is ready.
Adi Sfadia: And.
Adi Sfadia: We have initial sales, but we expect that five G. So revenues will ramp up within let's say two years.
Adi Sfadia: Say that first you think Manhattan. So first you will have five G. In the Cps and only then.
Adi Sfadia: So first, you will have 5G in the cities, and only then will the operators handle rural connectivity. But what we see in the meantime is a lot of orders for 4G over there. Everyone wants to get a decent Internet speed, and we see a lot of deployment on 4G. You know, five or six years ago, there was a lot of traction around it, and then it's, um... Let's relax a bit.
Adi Sfadia: The operators will handle the <unk>.
Adi Sfadia: When activity, but what we see in the meantime is a lot of it.
Adi Sfadia: All of those on the <unk>.
Adi Sfadia: Over there.
Adi Sfadia: Everyone wants to be to get decent internet speed and we see a lot of deployment on the <unk> is full of high speed trains.
Adi Sfadia: <unk>.
Adi Sfadia: Five or six years ago it was.
Adi Sfadia: There was a lot of traction around it and then it's.
Adi Sfadia: Relaxed a bit we are delivering to.
Adi Sfadia: We are delivering to two high-speed train terminals, but I cannot say right now that I see a lot of traction and I expect it to be a significant growth engine, but we have the solution. Our electronically steered antenna will also be a solution that fits in with that, but if you remember six or seven years ago, the main problem was that not every antenna could fit on the train because of the vibration, so it's not that simple, but it's a market or market segment that we are following.
Adi Sfadia: Two high speed trains.
Adi Sfadia: But I cannot say right now that they see a lot of traction and I expect it to be a significant growth engine, but do we have the solution.
Adi Sfadia: Our electronically steered antenna will be also.
Adi Sfadia: So listen it will fit to that but if you remember six or seven years ago. The main problem was that.
Adi Sfadia: As Leon antenna can fit on the trend because of the vibration.
Adi Sfadia: Not that not that simple, but its a market global market segments that we are following.
Gunther Karger: You said you had another question? My comment is long-range. Having observed Gilat Suns from the beginning and through now, you should be congratulated on an excellent growth path and outlook for the future. Thank you very much. Thank you, Gunther, talk to you soon.
Speaker Change: You said you have another question.
Speaker Change: My comments.
Gunther Karger: Our long range.
Speaker Change: Having observed the kellogg's pumps and they'll be getting through now.
Gunther Karger: You should be congratulated excellent growth path and our outlook for the future. Thank you very much Avi. Thank you Ron.
Speaker Change: Talk to you soon.
Gunther Karger: Okay.
Operator: The next question is from Omri Efroni of Oppenheimer. Please go ahead.
Speaker Change: The next question is from Amit <unk> of Oppenheimer. Please go ahead.
Omri Efroni: Hi guys, thanks for taking the call. I have a bit of a question about the new constellations that are coming up. We have three of them that are really big. We're talking about Kuiper, Iris, and OneWeb. So I wanted to know if there was a bit of a timeline on which Gilat is supposed to get some answers about the products and services they're going to provide.
Operator: Okay.
Omri Efroni: Hi, guys. Thanks for taking my call.
Omri Efroni: I have a bit of a question about the new constellations that are coming up.
Omri Efroni: We have three of them that really big.
Omri Efroni: We're talking about the Kuiper Iras.
Omri Efroni: One way.
Omri Efroni: So I wanted to know.
Omri Efroni: A bit of a talking about.
Omri Efroni: Light that gilad as oppose.
Omri Efroni: To get some answers about the products and services.
Adi Sfadia: Okay, so, um... I'll start with Iris Square in Europe. They have initiated the RFI process, and we expect them to wrap up the information and move to the RFP process towards the second half of the year. I believe that awards will be expected not before the end of the year, probably the first half of 2025. We need to remember it's a European governmental project, 20-something countries, everyone has something to say, so I expect it to take some time.
Omri Efroni: Right.
Speaker Change: Okay. So.
Adi Sfadia: I'll start with Zeiss square in Europe.
Adi Sfadia: They initiated a refi.
Adi Sfadia: Process, and we expect them to.
Adi Sfadia: Rhapsody inflammation and moves to RFP process towards the second half of the year.
Adi Sfadia: I believe that.
Adi Sfadia: Awards is expected not before the end of the probably.
Adi Sfadia: The first half of 2025, we do remember it's a European.
Adi Sfadia: Governmental project.
Adi Sfadia: 20, something countries, everyone has something to say to what I expected.
Adi Sfadia: Some time one web.
Adi Sfadia: OneWeb, NextGen, or Gen2, the RFP is ongoing. Gilat is one of two shortlisted vendors for the ground segment. And as I said at the beginning of the year, we expect to have more insight towards the mid-year. They said that they would announce their award before the end of the second quarter. Usually, those kinds of... large RFPs tend to delay a bit, but definitely, they will take a decision. As for Project Kuiper, Amazon is planning to start the service in 2026.
Adi Sfadia: And next Gen of Gen. Two is.
Adi Sfadia: Dallas is.
Adi Sfadia: Ongoing Dillard. This is one of those two shortlisted.
Adi Sfadia: Vendors for the ground segment.
Adi Sfadia: And as I said.
Adi Sfadia: At the beginning of the year, we expect to have.
Adi Sfadia: Mobile insight towards the midyear.
Adi Sfadia: They said that they would announce the award before the end of the before the end of the.
Adi Sfadia: The second quarter, usually those kind of.
Adi Sfadia: Large.
Adi Sfadia: Peers tend to delay a bit but definitely it will take a decision this year.
Adi Sfadia: <unk>.
Adi Sfadia: Project K.
Adi Sfadia: Amazon is planning to start service in 2026.
Adi Sfadia: So I guess they will need to start equipping the hubs and gateways towards 2025. As we have said several times in the past, we are working with several NGSO players, some of whom we cannot name by name. For one of the large LEO constellations that we are supporting, we started to deliver SSPAs based on the initial order that we received two years ago, and we expect to get follow-on orders during, if not this quarter, probably next quarter. But the large deployment is expected towards 2025 and 2026, probably will be towards the end of the year.
Adi Sfadia: So I guess, they will need to start there.
Adi Sfadia: Equipping.
Adi Sfadia: The hubs and gateways.
Adi Sfadia: 2025.
Adi Sfadia: As we said several times in the past we are working with several others.
Adi Sfadia: Several.
Adi Sfadia: And she is still players some we cannot name by name.
Adi Sfadia: One of the allowance.
Adi Sfadia: Constellation that we're supporting we started to deliver.
Adi Sfadia: <unk> is based on the initial.
Adi Sfadia: Although that has been received.
Adi Sfadia: So as they grow and we expect to get full on all of those.
Adi Sfadia: If not this quarter, probably next quarter, but the large deployment is expected.
Adi Sfadia: Towards 2025 and 2026.
Adi Sfadia: Yes.
Adi Sfadia: Those will be.
Adi Sfadia: Probably will be towards the end of the.
Omri Efroni: I was wondering about the situation in Europe and how it's affecting the defense market, especially the SATCOM defense market, and whether you have some opportunities to buy and acquire some companies as you did with Datapath in the United States. I was wondering what you think about the European market.
Speaker Change: Okay, great. Thanks for the color.
Omri Efroni: I was wondering about the situation.
Omri Efroni: And I went to effect in the boat.
Omri Efroni: The defense market, especially about the Satcom defense market.
Omri Efroni: And that would be helpful. If we can do is to buy and acquired some companies.
Omri Efroni: Yes.
Omri Efroni: So I was wondering wondering how youre thinking about the European market.
Adi Sfadia: So, um, overall, I think that, um, you know... It's bad to say, but sometimes, war is doing good for business, and defense, in particular, a lot of traction around satellite communication. We saw a lot of news articles about SpaceX in Ukraine. So we see a lot of traction around satellite communication both in Europe and not only in Europe. But it's too early to quantify. It's not when you work with the government; it takes time; not everything is urgent as it seems in the news.
Omri Efroni: So overall I think that.
Adi Sfadia: No.
Adi Sfadia: It's best to say, but sometimes well is doing good for business.
Adi Sfadia: And defense in particular.
Adi Sfadia: You'll see a lot of.
Adi Sfadia: A lot of traction around satellite communication, we saw lots of news articles about the Spacex in Ukraine.
Adi Sfadia: So we see a lot of traction around satellite communication, both in Europe, but not only in Europe.
Adi Sfadia: But it's too early to quantify.
Adi Sfadia: When you work with government take time, not everything is urgent.
Adi Sfadia: In the news.
Speaker Change: We believe it.
Adi Sfadia: A long time.
Adi Sfadia: We believe long-term growth in defense will happen also in Europe. As for your second question, about, We are monitoring and reviewing a lot of opportunities, some of them are also in Europe, but there is nothing that is relevant to speak about right now. Once it is relevant, we'll let you know.
Adi Sfadia: Growth on the defense will happen also in Europe.
Adi Sfadia: As for your second question.
Adi Sfadia: <unk>.
Adi Sfadia: About.
Adi Sfadia: Acquisition. So we are monitoring and reviewing a lot of opportunities. Some of them are also in Europe.
Adi Sfadia: There is nothing too.
Adi Sfadia: It is relevant to speak right now once it will be relevant will.
Adi Sfadia: When will the device.
Omri Efroni: Okay, and last one for me, last year you said you wanted to hire about 200 people, so I'm wondering how it's going on and if the 200 employees are still part of the business plan.
Speaker Change: Okay and last one for me.
Omri Efroni: Last not last year.
Omri Efroni: He said if you want to hire about 200 people who are wondering how it's going on with.
Omri Efroni: <unk> hundred personnel.
Omri Efroni: Part of the business plan.
Adi Sfadia: I think we said that at the beginning of 2023, and it was relevant to 2023, when we recruited more than 150 people. We continue to recruit worldwide based on our needs. Once we get the large award that we spoke about, this will require additional significant headcount increases, but right now, we are recruiting only based on immediate needs. Okay, excellent. Thanks.
Omri Efroni: I think we.
Omri Efroni: We said that.
Adi Sfadia: At the beginning of 2023 and it was relevant to 2023, where we recruited more than 150 people. We continue to recruit worldwide based on based on our needs.
Adi Sfadia: Once we will get the larger awards that we spoke.
Adi Sfadia: Before this will require additional.
Adi Sfadia: Significant headcount increase.
Adi Sfadia: But right now we have a link.
Adi Sfadia: Looking only based on immediate needs.
Omri Efroni: Okay, excellent. Thanks for the conversation. Thank you.
Speaker Change: Excellent thanks for the question.
Omri Efroni: Yes.
Operator: If there are any additional questions, please press star 1. If you wish to cancel your request, please press star 2.
Omri Efroni: Is there 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.
Operator: Please stand by while we poll for more questions. There are no further questions at this time. Mr. Benyamini, would you like to make your concluding statement?
Operator: Okay.
Benyamini: There are no further questions at this time, Mr. <unk> 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 and we hope to see you soon or speak to you in our next call. Thank you very much and have a great day.
Gil Benyamini: 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 first quarter 2024 results conference call.
Operator: Thank you. This concludes Gilat's first quarter 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.
Speaker Change: Thank you. This concludes <unk> first quarter 2024, our results conference call. Thank you for your participation you May go ahead and disconnect.
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