Q2 2025 Gilat Satellite Networks Ltd Earnings Call
Ladies and gentlemen, thank you for standing by the call Will begin shortly.
Ladies and gentlemen, thank you for standing by. Welcome to Gil Lots, second quarter 2025 results conference call, all participants aren't present in listen-only mode. Following Management's, formal, presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded August 26th.
2025 by now, you should have all received the company's press release. If you have not received it, please view it in the news section of the company's website www.gala.com. I would now like, to hand over the call to Mr. Alex, v Alta of Alliance, advisors IR Mr. Vialto, would you like to begin, please?
Thank you, operator. And good data everyone. Thank you for joining us for gilot. Satellite networks earnings conference call for the second quarter of 2025
With us on today's call are Mr. ADI, Sevilla, gilot CEO. And Mr. Gil benyamini gilat CFO.
The earnings press release was issued earlier today. If anyone has not received a copy, I invite you to visit the company's website at Gilat.com, where you'll find the release in the Investor Relations section.
4, turning the call over to management. I'd like to remind everyone that some statements made. During the conference call contain forward-looking statements based on current expectations. Actual results could differ materially from these projected. As a result of period's risks and uncertainties, the potential risks and uncertainties could cause actual results to differ materially include uncertain, global economic conditions, reductions in revenues from Key customers, delays or reductions in us and foreign military. Spend acceptance of our new products on global basis and disruptions or delays in our supply of raw, materials and components due to business conditions, Global conflicts,
Weather or other factors not under our control.
The company cautious in that cautions, investors not to place undue Reliance on forward-looking statements which reflect the company's analysis. Only as of today's date, the company undertakes. No obligations publicly update bold looking statements to reflect subsequent events or circumstances.
Further information on these factors and other factors could affect Kilo's. Financial results are included in the company's filings with the SEC, including the latest quarterly report on Form 10-Q.
In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and that differ from GAAP. These non-GAAP measures should be considered supplemental to, or corresponding with, GAAP figures.
With that I would now like to turn the call over to gilot CEO ID. Please go ahead.
Thank you Alice and good day everyone. Thank you for joining us today to discuss the last second quarter 2025 results. Please note. That we are hosting a Bob's Point presentation on our website. With all the data, we will discuss today. The second quarter is not only shows strong performance, but also validates our growth strategy across each of our growth engines.
what is in 2025 remains on capturing the growing opportunities emerging from our acquisition of Stellar blue earlier this year and investing in the last defense, to better positions to drive Revenue growth in 2026,
These drivers, along with our strong presence in the HD and MGSO constellations, continue to fuel our growth and strengthen our market leadership.
Second quarter revenue is reached 105 million a 37 increase which includes about 36 million dollars in revenues from adjusted image. That was 11.8, million 17%.
Least expected Grandpa process of about 1.5 million dollars, excluding steroid loss. I just said, for the second quarter was about 13.3 million. Dollars representing a 32% year-over-year increase.
Stellar Blues yearly performance remains on track with Revenue, expectation of between 120 and 150 million.
Now, on to the Business Review, in the second quarter, our defense division continued to sell the foundation for future growth.
Continuing geopolitical session and shifting priorities are promoting governments to increase their defense spending and allocate more of their budget to secure satellite Communications.
This is generating increased interest in clinical Solutions and we love this is well positioned to meet this involving operational needs.
We are seeing active engagement from customers across multiple growing North America, Europe, and Asia Pacific.
The last difference is also extending our Global equipment by leveraging Topline synergies between gilas data pass and waste stream by offering of solutions to different customers.
In the second quarter over 8 million dollars were ordered by the Israeli Ministry of Defense demonstrating the strong value of our technology and the applicability of our solutions to diverse Mission requirements.
During the second quarter, we were awarded a contract to provide field service and technical services in support of the U.S. Army. This contract includes an initial order of more than $7 million, with an option to extend the program for up to 5 years, potentially reaching estimated orders of up to $670 million.
With a clear strategy, a growing Global presence and an unwavering focus on Mission critical connectivity. The last defensive position for substantial growth and long-term impact in this essential sector.
General to our Commercial Business.
Q2 was a milestone quarter during my strong booking strategic win and considered as adoption of our next Generation Satellite Communication platform.
Our momentum reflects both the accelerating transformation of the industry and the last success in aligning, the technology and solutions with the needs of our customers.
1 of the most significant announcement. This quarter was the signing of a 40 million dollar contract for a virtualized sky, 12 platform.
This Landmark agreement, not only demonstrates, the trust of our customers based in gilad but also highlighting critical industry shift in our satellite. Communications infrastructure is being deployed
visualization and pars operators to move to Cloud, native software defined environments designed for scale. Agility and ability with net generation satellite. Evolving to a software only Cloud platforms Elevate, the last positioning with higher value improved margins. And provide the option to sell to a platform as a service business model.
During the second quarter, we announced over 47 million dollars in orders from P1 satellite operators. This orders underscore the surging demand for gilad multi with ground Technologies.
By increasing demand for ISC Solutions and the widespread adoption of Geo Neo and Leo architectures.
Operators are making substantial investments in ground systems that can seamlessly maintain connectivity. The cost covers a range of use cases, including fixed problems, mobility solutions, and critical government services.
This call is also send multiple regions and program sites, including both Network extensions, and new deployments highlighting, the global relevance of our technology and the growing trust in our platform to support Mission critical services.
Moving on to Stellar group, we announced receiving 27 million dollars in orders from our Stellar group portfolio.
with more than 150,000 communities like ours and deployment of over 225 terminal, 11 is exceeding it for performance, reliability and user experience
Production ramped up is processing slowly, and we expect to see more units delivered in Q3 and Q4 this year, who is better? Margins.
Standard view continues to set up new continues to work closely with his partner to secure new Fleet. With we are confident, this apples will help positive results soon.
Differentiated technological portfolio. We believe gilat is well, positioned for continuous growth in our Commercial Business.
QT was an outstanding quarter for highlighted by the award of more than $60 million in New Orleans. As a reminder, these orders were delayed last quarter.
Their Awards.
Are for upgrading the regional Network infrastructure. That was originally awarded to us in 2016, bringing high speed internet to more than 800 public institutions, including schools, Healthcare, and police stations across more than 280 localities.
This award reflects Gil's, continuous partnership with the program of state, and our long-standing commitment to digital digital inclusion demonstrating, once again, the key role in not to play in delivering meaningful Nationwide. Impact
Digital inclusion is a key priority worldwide, and the expertise developed by The WHO in Connection in collecting remote and understanding communities is now being leveraged in other regions around the world, allowing us to replicate Google models and accelerate General, similar watches globally. We still expect to receive several large RFIDs and orders from existing project extensions and renewals in the coming few quarters.
I'm pleased to say that we continue to have a strong backlog and a healthy pipeline of opportunities in all the business,
On the strength of our results, today we see an improved availability and business momentum. We are reaching our full year guidance. We are narrowing our revenue range to $435 million.
Million for the higher Revenue growth rate of approximately. 46% at the midpoint, we also narrow the adjusted divide again this way. Now targeting between 50 to 53 million dollars for a higher growth rate of approximately 22% at the midpoint,
The last remains strategically well positioned for sustained growth supported by strong demand for secure. High performance connectivity across commercial and advanced markets.
It starts like networks involved, expanding in capacity, shifting to multi, Geo, me, and Leo, architectures. And moving towards software, defined infrastructure. Our portfolio is uniquely equipped to meet this emerging requirements with the scalability. Flexibility and reliability. Our customers. Expect
The last defense continue with the focus world map and expanding sales resources to broaden engagement and awareness of our technological expertise. And our role in supporting the mission. Clinical satellite connectivity needs of government and defense agencies in the US and AI countries.
In our commercial division, we are meeting the growing industry demand for virtualized software-defined grounding structure that enables more agile, scalable network deployments. Our multi-orbit platform is delivering service connectivity across GIO and LEO constellations, positioning Gilat as a key enabler of next-generation satellite networks.
At the same time, gap size is a terminal confused to gain traction with ongoing progress in integration and certification, because of multiple aviation statements.
In Peru, we play a vital role in expanding access to digital inclusion services, strengthening public infrastructures, and supporting human national connectivity growth. Our local president and trusted partnership with the Pian State remain key this year, as we close the digital divide in underserved regions. We are very happy with the progress we are making across the company and remain focused on addressing our priorities.
Deepening customer customer relationships.
And delivering meaningful results as we support the involving need of the rapidly changing water, communication Market.
That I will hand over the call to Gilman. Please go ahead. Thank you. Good morning and good afternoon to everyone.
Before I dive into the numbers, I would like to remind everyone that our financial results are presented, both on gas and non-gaap based.
I will now walk through our financial highlights for the second quarter of 2025.
As I did mentioned we're very pleased with our second quarter performance. We closed the second quarter and the first half of the year, the delivering sustained improvements in our results. Giving us strong momentum going forward. In terms of our financial results revenues for the second quarter were 105 million 37% increase compared to 76.6 million in Q2 24.
in terms of Revenue breakdown by segments,
5 revenue for the commercial segment, where 69.1 million compared to 43.4 million in the same quarter last year. The 59% increase was primarily due to the contribution of self Loop, which we acquired in early January this year generated 36 million which was partially offset by the termination or activity in Russia in 2024.
Due to 25 revenues for the 10th segment for 20 million. Similar to the second quarter last year, 225 of the Peru segments were 15.9 million compared to 13.9 million in Q2 24.
Our Gap growth margin in 2225, decreased to 30.4% compared to 34.7% in Q2 24. The decrease is primarily due to lower margins and still a blue as it ramps up up production as well as a motivation of purchase intangibles.
Gap. Operating expenses in Q2 25, where 26.2 million compared to 23.8 million in Q2, to 24. The increase is primarily due to consolidation of the blue
Motivation of purchased intangible partially offered by other income, which includes processes from an arbitration that were were recognized in Q2 25.
As a result Gap operating income in q25, was 5.7 million compared to gaap operating income of 2.8 million in Q2 24.
Gaap net income in q25 was 9.8 million or a diluted income per share of 17% compared to gaap. Net income of 1.3 million or D diluted income per share of 2 cents in Q2 24.
Moving to our non-GAAP results. Our non-GAAP gross margin in Q2 2025 decreased to 32.9% compared to 36.98% in Q2 2024.
Non-GAAP operating expenses in Q2 2025 were $25 million, compared to $20.9 million in Q2 2024.
The non Gap operating income in Q2, 255 was 9.3 million compared to 7.3 million in Q2 to 24.
Non-gaap net income include to 25 with 12 million, for a diluted income per share of 21 cents compared to a net income of 5.6 million or income per share of 10 cents in Q2 24.
Adjusted ibida in Q2. 25 was 11.8 million compared to an adjusted debe. De of 10.1 million to 24 our Q2, 25 organic adjusted DB like excluding Stella Blue losses was approximately 13.3 million a 32% increase compared with Q2 24?
Moving to our balance. Sheets on January 6, 255 the company secured, their 100 million. Credit line from bankruptcy, from which we utilize 60 million dollars, to finance the acquisition of sales.
As a result as of June 30th 2525 total Cash Cash, equivalents in the 60 cash were 65.4 million or approximately 5.5 million. Net of long compared to 3.8 million on March. 31st, 2525 in terms of cash flow. We provided 5.1 million from operating activities in Q2 255.
DSO. We include receivables and revenue of our terrestrial Network construction projects in Peru where 60 days a decrease from 75 days in previous quarter, our shareholders Equity as of June 3025 totaled to 316 million compared with 300 million as March 31st 2525
Looking ahead, as Audi mentioned, we're narrowing our guidance range and raising the guidance midpoint for 2025 revenue. Abduct revenue is now expected to be between $435 million and $465 million, representing year-over-year growth of 46% at the midpoint. The adjusted EBITDA is expected to be between $50 million and $53 million, representing year-over-year growth of ...
22% at the meeting point.
West concludes my financial review. I would now like to open the call for questions. Operator, please.
Thank you, ladies and gentlemen. At this time, we will begin the question and answer session.
If you are dialing in, please press *1; if you've connected via Zoom, please use the Raise Hand button located at the bottom of the screen.
Please stand by while we pull for your questions.
The first question is from Ryan Kuhn of Neiman Co. Please, go ahead.
Great. Thanks for the question. Um, I wanted to ask about the ramp Stellar blue obviously, um, doing well there. Um, you know, how are you feeling about the second half ramp? Um your ability to meet customer demand and then from a margin perspective. Um improving margins on Stellar blue, can you give us an rough idea of
Where those margins are, you know, at today and we expect them to be at the end of the year and particularly on a non-gaap basis would be really helpful. Thank you.
Hi Ryan, good to hear from you again. Um, so uh, I think that the
Production ramped up in instead of Louis World listening, as you remember. Last what we said that there is 1, uh specific component that uh, our vendors of struggling with. So um we are seeing better the results uh uh, in the third quarter and our internal solution is in a certification stages and we'll be ready uh, for shipment of the end of this quarter. So we definitely see a ramp up, um, in a stellar blue, a bit to deliver in the third quarter and even more in the for
To give you.
So, um,
our margins are ramping up bit lower than expected. Uh, mainly due to, uh, the components there, uh, challenge. Um, we see them ramping, we started the year still at the low rate, uh, uh, you know, um, days and now we're moving to, uh, regular production phase. So, I guess that, uh, we'll see towards, uh, uh, the third and even more in the fourth quarter. And in the beginning of next year, we'll see a more material Improvement in the in the margin of the product.
Great, that that's helpful. Thank you. And then on your, uh, your virtualization win for, uh, Sky Edge 4, you know, uh, what's, what's the Fulfillment model look like there? You know, are you just shipping software to cot's, Hardware? Are you having to ship appliances with that? And then how do you think about?
Pricing and utilization. There is it. Do you sell licenses? Can it be sold on a
on a, uh,
consumption base or even a subscription-based model. What what's what's happening with uh, the virtualized, uh, sketch for please?
so the, the initial order that we received is the
basically to, uh,
um, operate our software on a cloud commercial of the Shelf, uh, equipment. So it will be, uh, from revenue cooking. It will be a licensed sales or, or a carpet, the 1 time sale, plus the ongoing, uh, maintenance services. Um, uh, future updates will be also, a soft, your own, the overall, uh, business is that of the price give or take the same price as if we sell the hardware. But in this case, the customer need to bring it's all all. But in most of the cases, most of the customers will prefer to, uh, build their own private Cloud. But, uh, it will be able also to run it on a, a public Cloud. Um, we also have a flexible several flexible business models, including um, where we uh,
Build the the cloud for the customer find out licenses and do some kind of platform of the service or subscription based or consumption based model based on our history in most of the customers at the end wants to to buy in a capex mode but we have open for recurring Revenue, business model as well.
That's great. Thanks, thanks for that. Maybe we just 1 last question on. Uh, Peru. Um,
Are, are there any major uh, you know, decisions uh, coming in the next uh in the second half of this year uh that that you think can improve that business uh, Top Line.
yes, I I think that um,
Uh were delayed at least from late December uh and will help us uh rapid up peruse revenues in 2025 but we do expect another amount to order in the next, uh, few weeks. So the next 2 months and in addition there are several large rsps that are expected to be issued in by the Peruvian government and we expect to participate um in in those rfps and even if we take some of them it will help us to generate significant growth in in the last.
Great. Thanks for all that. That's all the questions I have.
The next question.
The next question is from Louie. De Palma of William. Blair, please go ahead.
Honey and Gil. Good afternoon.
Hi, how are you?
great, what are the main contributors to the improved Outlook that weren't in the the prior guidance or the the different assumptions and
Should we assume that?
The new programs that you've won in terms of the revenue carry over into 2026.
Can you repeat the first question? You were a bit disconnected?
What are the main contributors to the improved? Um, guidance?
Okay, so, uh, the main contributor, you know, we started the year with the relatively...
A relatively high range of the guidance, uh, because of the acquisition of state of blue and the unknown, in this acquisition today we have much better visibility. Both to sell a blue and Gila the last recent, uh, Business Awards. The significant award that we announced and the back of that we have, including the opportunities that we feel comfortable in our pipelines. Gave us the
the assurance that we can increase our guidance from the
Yeah. Now as for the second question, some some of the some of the awards that recently received will be dragged as well into due to into into 2026 and some with even further like Peru, which is
building the network or upgrading the network and then another 4 to 5 years of recurring services.
Fantastic. And, um, you discussed, I believe you said that there are now...
225.
Um, Stellar Blue Sidewinder terminals that have.
Been deployed, which I assume means our, our flying, um,
What is the, the backlog? Now, for, for future shipments. It seems that you've won and you announced and you discussed on today's call several new contracts and you had
original contracts with American Airlines.
Um, Air Canada. And I I believe also Alaska Airlines. So what is
The backlog or what was the backlog at the end of the quarter?
Uh so um so we it's not updated that we are providing on a quarterly basis but we acquired still a blue. We said that we have, um, close to a slightly below 1,000 aircraft in backlog. So you could do the math. Um, we have additional
Awards. It's our customers already received but haven't placed a vo with, uh, with gilad. So we do expect to have a large orders in the next, uh, few weeks or or uh, coming quarter.
great, and also related to
Stellar blue. Um, what is the status of the different Milestone payments associated with the acquisition?
Okay. So, uh
I'll remind everyone that we have three types of our notes.
The first and last.
and was to reduce the,
Operational risk in the new product introduction risk. Uh still a new way to deliver 350. Uh,
Terminals. Before the end of the second quarter, which they failed the last failed to do. We delivered only 2205, uh, aircraft because of several reasons. But mainly because of the production ramped up and some vendors inability to deliver products on time. Uh, the so the first payment is not going to be paid. The secondary announced is to get all the new orders of starting to a range of between 120 to 140 million dollars. Um, and uh, it's until the end of the, the fourth quarter this year. And um, it's I think it's too early to tell if we will meet the end of the Milestone or not. Um, we do see a strong Pipeline with the
With the with our customers. Um, uh, so we do expect to get the significant amount of orders before the end of the before the end of the year. So, um, I believe that there is a very good chance that uh, Stella do will be able to meet, uh, the Milestone, of course, it need to be uh in the profitability that was set in the agreement. Uh, so the cost reduction initiative that we are taking including shifting, some of the production internally and developing some substitute product to a very expensive 1 needs to take uh needs to happen and we are on our way of of doing so the third area now is until mid 2026 and is signing uh, up to 4 strategic agreements. Each 1 is about 25 million dollars. Strategic agreements need to be uh, at least
35 million dollars of orders. It's significantly better profitability than the existing 1 and to be, uh, door opener to a new market. So it should be a, for example, Line Street with Airbus, uh, significant order from defense customers and, and other, uh, Tier 1 vendors in the market. Uh, we have a ongoing discussion with the
The several strategic customers but it's really too early to say. Um, there is a almost a year
Great and that is super helpful and and 1 final question. Um it seems that you tell us that has signed agreements to raise significant funding from different parties um to support
um, 1 Webb Gen 2 or the general 1 Webb constellation and what is your view of
How 1 Webb Gen 2 and Iris squared will proceed? Do you believe that?
1 website constellation and what are the potential opportunities for?
Gillot associated with um, both of these plants.
So, uh, we want to, you know, based on Google stuff in the last several quarters, they want to, uh, integrate the 1 of 2, and I, the school, together. It's the same as the, um, SCS with the Mio 100, uh, in the I Squared, because I is going to be a multi-constellation. Um, so we want to.
To tie together, um, and they won't take any decisions on 1 of Gen 2 before. They will know exactly what is going on with Iris Square. S for Iris Square. We received the first 5 quarters for the end user terminal. Um,
Uh and um, additional RFI will follow. And then our speed, we do believe that
Awards will be, uh, not before uh, media media next year. Um,
then I square is the I think is almost fully subsidized by the financed by the EU regulator and the 12 billion Euro, um,
Project, I think 40% or so comes from The Operators from uh, users got SPS. And this and the rest is coming from the European committee. Uh, All In All We believe, the file is square will be a bit delayed but they will launch the constellation and then 1 object 2 will follow
Great, and 1 final.
Sure.
Thank, thank you. And 1 final 1, um, the
The Intel set sees merger recently closed, and I know it only closed a few weeks ago, but have you observed?
Any changes in?
customer Behavior as both SES, and an Intel that are
Fairly large customers of yours. And how would you assess the the impact of the deal?
Yeah. Um, so uh, we'll just add the 1. Small thing about Iris Square. I think it's a extremely important and very large opportunity for vilat. We have a decent EU 12 president which we give us the right qualification to participate in the program. And as such we received the RFI, so we do see the this is the top priority for the last 2, get in a world of as for leaders as an SDS manager. Um,
In this, I think there are 3 or 4 weeks into the merger. But what we see today is that, uh, the people that we used to work on both sides are are there and from customer perspective, uh, uh, the relationship are very strong, we keep on seeing uh a lot of the interest on both sides, both main discuss and from SCS for V equipment. Uh on the terminals, on the east side, on the sky is both sides and also on the sky to see for if like so we do expect to see a significant business from the combined
Company in the next few months.
Fantastic. Thanks everyone.
Thank you, sir.
The next question is from Omri efroni of Oppenheimer. Please go ahead.
Hi guys, and congrats to the great quarter. Um, I have a few questions about Stella Blue, as the other analysts.
Um, last quarter you said um the guidance was for Stella Blue from your revenue between 120 million dollars to 150 and a positive in the second half of 2025. So only to I only wanted to make sure that the guide is still intact. That's the first 1 and then for the follow-up I was wondering about if you can give someone some some will collo about the French Division and uh what are you seeing here? Uh
So, and what did you see? Um, from uh, from demand, especially from the Israeli defense Ministry and Europe. Thank you.
Okay so yes the the guidance will still it say in place 12150 million dollars in revenues. We do expect them to uh significantly reduce the the losses and to show you you saw
In the announcement that uh in my script. Uh I said that we reduce the losses from 3 and a half million dollar in the first quarter to 1 and a half million dollars this quarter. And we do expect them to progress quarter of the quarter and show positive on the second half of the year and even to be able to reach 10%, even the ratio at uh, towards the end of the, towards the end of the quarter, I'm not sure. It will be a full quarter because the end of the quarter 1, uh,
Will see this profitability from Stellar group.
As for the, um, we do see a lot of interest from, uh, several countries. Um, it's mainly discussions on capabilities and things like that. Um, we having a lot of proof of Concepts and demo sessions, not only in Europe and worldwide. Uh, in parallel, we are building ourselves on investing a lot of money in that to see the increasing in our. Also, in new product and solutions for the different 1 of them is our next Generation tactical model which will be 1 of the most advanced and resilience models um in the in the industry. Um, and in Israel, we announced several Awards as the we still have ongoing interests. Of course, I cannot get into specific. Uh, sometimes I don't know all the specifics because in, in some cases there is
Secured project. Uh, but we are progressing very well in all fronts. Also in the US, we, we announced several allowance orders on the service side, on the product side. Um, and and the there is a lot business going on that. We will see in the next, uh, quarter or
Got it. So um, just if I may just to be just to be clear, even with the component change from the other vendor, that is going to take place in the third in the end of the third quarter. Still the guidance of the Stella Blue acquisition, uh, is intact. Even if with with the new new complaint
Okay, great. Thank you. Uh, it's still staying in place most of the, most of the information that I'm, I'm giving you today. We knew in advance, when we gave the guidance at the beginning of the year, um, development and ramp up of production, sometimes they take time. Uh, but, uh, I think that we are processing, um, on a monthly basis and and we see the progress, you saw the significant reduction in the loss of this quarter and I'm sure that we will move to a positive during the second half of the, of the
Okay, thank you very much.
The next.
Question from Chris Quilty of Quilty Analytics. Please go ahead.
Uh, thanks, guys. I just wanted to follow up, uh, on the Stellar blue and the order front. I know that, uh, I think last quarter you were certified by Panasonic, uh, which is, I think 1 of your big lead customers. So uh fair to expect we should see something this quarter in terms of uh announcements.
And additionally, um, you know where should we look for large follow-on orders are these done more directly with the airlines or do you have other partners you're working with?
Um, hi, Chris. Um, so yes, we did. We started to work with the certification with the Panasonic, uh, last quarter. We are about to finish them. Uh, we already received from Panasonic trial, the closing, uh, order of, uh, slightly below, uh, 100 aircraft. Um, and uh, we expect to see
additional order, uh, but you know, Panasonic in other customers. Uh,
Usually don't order in advance. Uh, they usually hold back to back and there is a about 9 months lead time. So, uh, and they have delivery schedules, that they are committing to the airline. So we do expect to get the in the coming, uh, few months all the on both, uh, interested. But I'm calling in to, we are working with, with other players in the market, but it's in early stages. So it's just do a little stuff.
Gotcha. Um, I think you also indicated, uh, you know, that with the SCS inul fat acquisition, do you think there was an advance of the clothes, you know, any activities, um, you know, hold up in orders as they process that that may have created a little near-term backlog, uh, of potential orders going into the back half of the year. Or did you just see normal purchasing activity by both entities?
House of helping them promoting, um, their services and our equipment and um, in in relatively large number of cases, the order comes back to back when they get the orders from their customers. So we know, we know the situation and and business is continuing as usual we do expect to to have a strong second up with with the the most company.
Right. Um, follow-up question, on the uh, Sky Edge 4 platform. And maybe a, a specific End Market in cellular backhaul, which, uh, seem to have slowed down in the last year to year and a half. Uh, are there any specific dynamics that you're seeing there? And how does the new virtualized platform, you know, help. Uh, if at all, in that, that particular Market?
So in general, I agree that in a state of the slowest in couples by the promise of the direct to device and um the real players that are also aiming this Market. What we see right now is significantly less, uh, newer fees and the customer extensions, uh, customers waiting for the 5gn and to see how it's going to, uh, being integrated with with the 5G.
over there today, um, dive to device cannot
Provide a speed that the standard vehicle can provide. Um we do have uh you know with existing customers, we do get uh follow on holders not in the same magnetic field that we show we saw in the past
Uh, we believe that it will take another, I would say several few quarters until the market will return to to know my um, on the silver back on. Um,
Skype for the virtual platform is just running the Skype for software over a cloud commercial of the sales of the Share story, um, equipment. It's not going to this is not in, in this space additional features, but we, it will allow operators to have the agility and flexibility that they need. And also with allowance to sell in a more compelling business model.
Understand, I think Jill you did. I hear you say that?
Customers.
Go ahead.
I was gonna say,
You mentioned that uh on those Sky Edge for sales that, you know, if customers are are generally making a capex acquisition, are you selling at the same price for the software only, as you would have, you know, software hosted on a piece of Hardware? Or is it, you know, something less than that? And how do we think about?
You know both uh Revenue growth would slow if if you're selling.
Software only for less, but margins would change. Are we going to see that impact? You know, putting aside Stellar blue in the model in 25 or is that more out into a 2627 impact?
So, uh, with respect to to, to pricing, there is no, um, prices are are similar uh, between uh, uh, the the capex, the hardware model and the uh, and the software model from our perspective. Uh, prices are are the same
Um, Can can you repeat the second? Uh, the second question please. The second from the marketing software. Yes. So so the effect on. Yeah. The second on the margins, uh, you know it's very positive because uh, once uh,
Once we develop the the software, um, it will be more like software uh uh kind of margins rather than Hardware 1.
Um, in the commercial segment. Uh, but
As you said a bit down, I think we see a gradual progress to the next few years and increased Commercial Business margin but uh the virtual platform will be ready uh 2 years from today. So uh the line we will will start to see towards uh let's say 200 and the end of 2027.
Got it. And final question on the amplifier wave stream business. I know there's still a large MgSO order out there. Any progress on moving on that?
And yes, the the local restaurant on, on this front. Um, we already received more than 30 million dollars, we are delivering in orders, we are delivering every quarter based on the customer needs, we do expect to get the additional orders in the next uh, few months. Uh, we see also around it also
Defense business that can be can be built. So we we expect also defense order to this specific constellation uh but it has its own uh base. It's not everything at 1 day.
Right. Uh, and I lied because I do have 1 final question for Gil. There were a number of gyrations on the balance sheet between, you know, contract assets, inventories, long term receivables. Anything we should focus on there. And in terms of modeling,
Um, no, I think that, um, you know, oh, all the changes are mainly, um, in the, uh, in the working capital related to, um, deliveries. We have some, uh, some reduction in the inventory, uh, due to the timing of of deliveries between q1 and the and Q2, it's also affected the are, uh, of course. So. So the, the changes over there are relatively, uh, relatively large. But, uh, more than that, I wouldn't say that there is something new to take into account. Uh, when you model the compact,
So so no material changes in, you know, either the need or cash generation from working capital you know as we go through the balance of the year.
Um, no, you know, it always depends on the, um, on the uh, um, I would say foes, uh, that we get, uh, some of them like the Peruvian award that we just reported usually associated with Advanced, uh, payments. So, uh, I I would expect this to positively affect, uh, the balance sheet in the next, uh, quarter of 42. But, uh, this is something we, we use to see, uh, from time to time. So I wouldn't, uh, describe because as as unique, but uh, just the reflection of of orders and the timing on the balance sheet.
The great quarter guys. Keep up the good work.
Thank you, great.
The next question is from Gunther Karger of Discovery group. Please go ahead.
Uh, yes, thank you for taking the question. Uh, um, I have a comment, uh, rather than a question, uh, the first uh, I'm I'm particularly uh, um, uh, pleased with your uh, progress and and the defense business, which are long time ago. So it's always a big, a piece of growth business uh, and secondly is to uh, congratulate you on on, on performance. And that's my comment.
Thank you.
Thank you.
The next question is from Sergey glenos. Please go ahead.
Um, what is the primary reason for your...? Um, what is...? Uh, um,
Um, primary, um, effects for that Improvement of operation margin. Uh, if we exclude, uh, the effect from, uh, Stellar condition, uh, maybe you implemented some initiatives, that uh, May uh, that could uh, uh, reduce the cost.
so, uh, uh
I suggest, uh, first of all, uh, Stella Blue has the most, I would say substantial effect on the changes in the growth margin, uh comparing um, comparing this year and then previous year. Um and and we also got some improvements in the growth margin of of Stellar blue um to compared to q1. So I would say that this is 1 major driver of of the change. We also had some uh, better growth margin in Peru, uh, this quarter that also improved the, you know, the weighted, the, the weighted growth margin. Um, so, so both, uh, together, uh, created the a better growth margin and of course, you
know the, the the revenue mix also affects uh, the growth margin although there are no other, uh, you know, unique, uh, things to to discuss, but it can vary, um, in fluctuate between quarters,
Yeah, thank you. And, um, we continue the topic about your backlog, uh, it obtains probably more than 1 and a half million, uh, dollar of new orders or second quarter. Um, I guess that is pretty much in a year ago and only 27 million, uh, dollar for Stellar Bill Stellar blue antennas. Um, what is the backlog of volume in commercial and defense segments now and
the average exercise period is exclusive Stellar blue.
So, so I I did discussed, uh, Stellar glue before. Um,
About, uh, entering into the deal with about 1,000 antennas the, the nature of bills there are are not, uh, you know, a monthly, kind of bills, usually it comes in large batches. And as you mentioned, we're uh expecting to see some uh, pretty pretty soon uh with respect to the backlog of uh, of the commercial and the
Defense. So this is, uh, uh, this is the number that we don't share. I can, I can share with you that. Uh, we usually have, uh, uh, visibility for, uh, uh, for a year that we enter of at least 50% for, for, uh, the upcoming year and then some of the, uh, backlog is also relevant for, uh, for the years after so, without stating any numbers, uh, we have a decent amount of backlog that allows us, uh, to see a future growth.
Yeah, thank you. That's all from me.
Thank you so much.
There are no further questions at this time. Mr. Gil Benyamini, would you like to make your concluding statement?
Yeah, thank you. Uh, I would like 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 in our next call. Thank you very much and have a great day.
Thank you, this concludes Gil lot's. Second quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.
Goodbye.