Q3 2025 Gilat Satellite Networks Ltd Earnings Call
Hello.
Hello. Yeah.
I would like to connect to the guideline satellite networks, please.
Yes, what is your name, please?
David Brown.
And your phone number, please.
And, uh, let me get it because I don't know it by heart.
It's plus one, two. One, two, 9603697.
960.
I'm sorry, can can
can you tell me please de the phone number at the last
Yeah.
Yes, yes, yes. Plus 1, 2, and 2. 960-3697.
Yes.
And you are from ayera.
Yes.
Thank you very much.
Thank you.
Satellite programs are clearly translating directly into new orders and growing opportunities during the quarter. We announced a $66 million private placement from institutional and accredited investors. This demonstrates the confidence of the investment community in Gilat's strategy and performance, providing additional support to fuel our next phase of growth.
At the end of the quarter, we had a very strong cash position with 155 million in cash.
And example of our efforts to create a Competitive Edge in our first to Market integration of AI into our Network management system. This marks.
An important step in bringing AI driven Automation, and intelligence to satellite network operations, allowing customers to manage their network with greater efficiency and insight. It reflects our commitment to Innovation and our active role in shaping the future of intelligent subcon solutions.
We expect to introduce additional AI capabilities as we progress with our road map development.
Third quarter revenues reached $117.7 million, a 58% increase year-over-year. Adjusted EBITDA was $15.6 million, 46% above the same quarter last year.
Now, on to the Business Review. Gilat Defense continues to invest in sales, marketing, and R&D resources to support Business Development. Gilat is front and center, actively engaging with customers across North America, Europe, and Asia Pacific. Our unique advantage lies in the combined strength of Gilat, DataPass, WStream, and Stellar Blue. This collaboration enables us to deliver comprehensive SubCom solutions.
That supports the full spectrum of Defense operations during the quarter. Gilad defense received over 14 million dollars in orders.
Through a prime contractor for its decade terminals, from the U.S. Army and the Department of Defense, we are broadening our presence across key defense programs. In Israel, Gilat Defense strengthens its relationship with the Israeli Ministry of Defense through a new multi-million dollar contract for the delivery and integration of satellite communication systems and services.
With a robust pipeline, trusted, partnership and proven execution. We are well, positioned to capture additional opportunities as Global demand for secure, Satellite Communication continued to rise.
Turning to our Commercial Business, the third quarter delivered strong results, driven by new wins, continued adoption of our next generation platforms, and steady execution across major programs.
This results reflects both, the rapid evaluation, evolution of the satellite communication market, and gilat ability to deliver technology and performance.
Our customer require.
Operators worldwide are investing in flexible, multi-orbit ground networks that can seamlessly support fixed broadband, mobility, and government applications.
Gilat Skye for platform remains central to this transformation. Combining scalability, reliability, and advanced network management, we are virtualized software-defined ground infrastructure.
During the quarter, gilat receipts, 42 million in orders from a leading global satellite operators for Sky 4 for use across multiple applications mainly in Flight connectivity.
Environment.
The man continued to build for gilad's ISC Solutions as Airlines and system. Integrators expand adoption of our technology for Next Generation, aircraft connectivity.
Recently, we received an order of approximately $7 million to supply IFC equipment. This order demonstrates the growing trust of leading aviation partners in Gilat to deliver reliable, high-performance connectivity for IFC.
During the quarter gilad signed the Strategic partnership agreement and received an initial order for Skye for for a leading satellite. Operator in Asia, Pacific region. Supporting both p and cellular back all connectivity.
Together, this win highlights strong market confidence in our technology and reinforces our position as a key enabler of multi-orbit broadband connectivity worldwide.
Elat was awarded more than $60 million in orders for a leading satellite operator for its Stellar Blues Side Window East IFC terminal, which has about 300,000 community flight hours and approximately 350 terminals. Already deployed, the Side Window continues to set new benchmarks for performance, reliability, and passenger experience.
Production is ramping up, and we expect increased deliveries with improved margins in the coming quarters. Gas is still a blue and continues to collaborate closely with its partners to secure new fleet wins and expand its global reach. The growing pipeline in our commercial business continues to benefit from demand momentum and expanding customer adoption across key markets.
Combination of major satellite operators' awards. Going IFC demand and the integration of Stellar Blue testified to gaps in leadership in next-generation connectivity, positioning us well for continued growth into 2026.
The last Peru delivered strong results. This quarter was marked by an additional award of $25 million for an expansion project from Ponat.
This is on top of the 60 million dollar projects, awarded to us.
That was reported at the beginning of the quarter for a quarterly total of 85 million.
The new Awards will extend high speeds connectivity to additional public institutions, including school, health centers, and police stations as well as public Wi-Fi. Hotspot further advancing peruse digital inclusion goals,
The impact of this project goes beyond connectivity, supporting access to education, healthcare, and public safety, while creating the infrastructure needed for future broadband expansions.
The project implementation is progressing on schedule and we continue to anticipate additional large rfps and follow-on orders for Network, expansions and renewals in the coming quarters.
The experience and expertise gained in Peru, are also being applied globally, align us to replicate successful models, and accelerate digital inclusion programs in other markets.
I am pleased to say that we continue to have a strong backlog and a healthy pipeline of opportunities in all divisions.
On the strength of our results here to date, improved visibility and business momentum, we are resetting our full-year guidance. We are narrowing our revenue range to between $445 million to $455 million for a higher revenue growth rate of approximately 47% at the midpoint.
We've also narrowed our adjusted DB guidance range, now targeting $51 million to $53 million for a higher growth rate of approximately 23% at the midpoint.
Demand, of course, in our key markets is accelerating, and the strategic initiatives we have implemented are delivering measurable results.
Continue to develop opportunities as Government expand investment in Mission critical secure satellite Communications.
Our Focus remains on converting, the growing pipeline into new Awards in the United States and Allied countries.
In the commercial division, we are seeing broader adoption of, our multi, orbit sky for platform as operator. Scale the Next Generation networks and invest in advanced broadband and IFC applications.
The last and blue is making steady progress as production increases and new fleet swings are secured further, strengthening our position in the global aviation connectivity market.
In Peru project is a huge execution remains on track and we continue to expect additional rfps and follow on awards from panel and other public programs.
Sorry.
The operational expertise developed in Peru continues to serve.
As the foundation for similar. Digital inclusion initiatives globally.
Ating, our diversified growth engines across Defence, commercial, and Peru.
That is actively strengthening its competitive edge through technological leadership in multi-orbit connectivity and the integration of Sky for and AI.
With a growing backlog, a robust pipeline of opportunities, particularly in the IFC market, and a strong balance sheet that is well positioned.
For sustained profitable growth and continued leadership in the global satcom market.
And with that, I will hand over the call over to gilvin CFO Gil. Please go ahead. Thank you. Add
Good morning and good afternoon to everyone. Before I dive into the numbers, I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis.
I will now walk through our financial highlights for the third quarter of 2025.
As I did mention, we delivered a strong third quarter, demonstrating continued execution across our strategic priorities and building momentum into the remainder of the year.
In terms of our financial results for the sales quarter, revenues for Q3 2025 were $117.7 million, representing 58% growth compared to $74.6 million in Q3 2024. Importantly, our organic growth quarter over quarter was 19%. In terms of revenue breakdown by segment, Q3 2025 revenues for the commercial segment were $73 million compared to $33 million.
8 million in the same quarter last year.
The 116th growth percent growth was primarily driven by the in-flight connectivity. Vertical reflecting both the contribution from Stella Blue and organic expansion.
Q3 25 revenue for the different segments. Were 24.1 million compared to 31 million in the same quarter last year.
Decrease primarily reflect the transition from a to mature programs to new programs and initiatives that are currently in the ramp up phase. We secured a number of meaningful orders and awards that are expected to convert to revenues over the coming quarters. As a reminder, our defense business is inherently Project based with deliveries and revenue recognition occurring over time looking ahead. We expect to see growth in this segment as these newer programs continue to scale,
Revenues, uh, for Peru in Q3 255, where 20.6 million more than double than the 9.8 million in Q3 24. The increase was driven by higher revenues related to the new upgrade projects in 4 of the 6 regions in which we operate as well as increased equipment deliveries.
Our GAAP gross margin in Q3 2025 was 30% compared to 37% in Q3 2024. The decrease is primarily attributable to lower margins. It's still a blur as production ramps up, as well as the amortization of purchased intangibles related to the acquisition.
Gap. Operating expenses in Q3 2025 were $27.2 million compared to $20.9 million in Q3 2024. The increase was primarily driven by the addition of Stella Blue and the amortization of acquired intangible assets.
As a result.
Gap. Operating income in Q3 2025 was $7.5 million, compared to GAAP operating income of $6.7 million in Q3 2024.
gaap net income in Q3
25 was $8.1 million, or a diluted income per share of $0.14, compared to GAAP net income of $6.88 million, or a diluted income per share of $0.12, in Q3 2025.
Moving to non-GAAP results, non-GAAP gross margin in Q3 2025 was 32%, compared to 38% in Q3 2024. Non-GAAP operating expenses in Q3 2025 were $24.7 million, compared to $20.2 million in Q3 2024.
Non-GAAP operating income in Q3 2025 was $12.8 million compared to $8.3 million in Q3 2024.
The non-GAAP net income in Q3 2025 was $11.8 million, or a diluted income per share of $0.19, compared to a net income of $8.1 million, or income per share of $0.14 in Q3 2024.
24.
Adjusted DBA in Q3 2025 was $15.6 million compared to an adjusted DBA of $10.7 million in Q3 2024.
From leading institutional and accredited investors in Israel, on January 25, we secured a $100 million credit line from a bank consortium, of which $60 million was used to finance the acquisition of Stella Blue. The company also generated more than $28 million in cash from operating activities during this quarter.
As of September 30th, 2025, 2500 155 million, or approximately 94.6 million net of loans, compared to 5.5 million on June 30th, 2025.
DSL excludes receivables and revenues from our terrestrial network construction projects in Peru, where the duration is 63 days, similar to the previous quarter.
Our shareholders' equity as of September 30, 2025, totals $391 million, compared with $316 million on June 30, 2025.
Looking ahead, reflecting our strong performance and visibility into the remainder of the year, we're narrowing our guidance range and raising the guidance midpoints for both revenues and EBITDA.
Revenue.
It is now expected to be between $400 million and $455 million, representing an overall year growth of 47%, and the midpoint.
The adjusted, EBA is expected to be between 51 and 53, million representing year-over-year growth of 23% at the mean point.
That concludes my financial review. I would not like to open the call for questions. Operator, please go ahead.
Thank you, ladies and gentlemen. At this time, we will begin the question-and-answer session. If you have a question, please press *1. If you wish to cancel your request, please press *2. Your questions will be pulled in the ordinary field. Please stand by; we will be pulling for your questions.
The first question is from Ryan Coons of Medium. Please go ahead.
Great. Thanks for the questions. Uh, real nice quarter, guys. Congrats! I wanted to ask about Stellar Blue and how we should think about that trajectory. You know, where are we now on gross margins at this point in time, and um, you know, what sort of uh...
Uh improvements you think it can make in gross margin, you know, over the over the coming quarters and uh as well as you know, I also want to ask about the product cycle for this version of Sidewinder. Um you know how how long do you think that lasts before you really need kind of an Next Generation product and in production? Thank you.
Hi Ryan. Uh, thank you for the greetings. Um, so SBS is progressing. Uh, very nicely production is ramping up. Uh, we still behind, uh, targeted gross margin as the, uh, the first phase of production, uh, incur higher expenses than we originally expected. Uh, we do believe that, uh, doing uh,
Next year, we will see significant improve in, the gross margin, that will be combined with the orders for a line fit on top of the retrofit that we are delivering today. Um, as you can see, we announced, UH, 60 million orders which are also included initial orders for a line with units. So we believe that. Once we start delivering those units, we'll see a significantly uh, better gross margins in parallel. The cost reduction efforts are starting to Bear fruits
uh, not as fast as we expected, but we we see the seeds of it and we believe that the next year, we'll see even a higher reduction in in costs
Uh, in terms of revenues, it was the close to 30 million dollar this quarter. Um, and overall Stellar blue was, uh, slightly, uh,
uh,
uh,
slightly losing, we expect them to be, uh, profitable starting, uh, Q4
Uh, on the Next Generation product, you know, it's um, we haven't announced anything yet. But uh, we are definitely working both on uh,
AKA version and of course as everyone we are considering also version to include coup and Ka with the introducing Leo in in Ka, it might be also appealing offering as well.
That's great. Really, really nice to hear that. Um, and on the, on the Peru front, you know, you talked about these 85 million in in orders is, is most of that incremental to your, uh, ongoing, um, kind of maintenance contract there or is that also a renewal of that maintenance, uh, ongoing rate? Yeah. The, the 85 million awards that we received in, in doing the last few months is, uh, upgrades, uh, for additional projects. So it's on top of the existing, uh, business that we have with with product. It's not, it's not a renewal those projects. Uh, the original projects are about to be renewed um, in 4 to 7 years. Time it depend on the every region when it shift to operation and those projects includes both upgrading the network.
And the maintenance contract until the end of the period. So some of them are for 4 years, some for 5, and some for more.
We do expect several.
Uh, other projects, not necessarily related, but some are also related to those projects in the coming uh few quarters. Uh, it will be renewals of uh um smaller projects in scope and uh, renewals of services that we provide, uh, to operators on top of the networks that we bought, uh, build in Peru.
In addition, we expected the government will uh release several new rsps in the coming. Uh few quarters. It's it's delayed for more than 6 months but we do expect them to release them in the coming few months. Next year is an election year in Peru so we do expect it to be released. Uh, so that won't be announced before uh, before the election but again it's it's Peru. We we can't control the government. So we are waiting.
Really helpful and then, uh, on the, uh, defense business, uh, any impact you're seeing on, uh, on bookings or, you know, product acceptance from the, from the shutdown, last 45 days.
Uh, to be honest, yes, uh, as everyone we see, uh, uh, you know, we are not getting orders because of that. Uh, but we don't believe that anything is, uh, is canceled. It's just delayed in new orders, uh, and probably might cause a small delay, uh, between the quarters in 2026 because there is a lead time from uh, the day. We get the orders but we don't we don't consider it. Now, it's a big impact on our guidance and forecast.
Got it.
And Gil, any impact from, uh, from FX from the strong from the shackle versus dollar, uh, in the quarter. Um, hi Ryan. So, uh, know um, this quarter, um, we hardly had any impact. Um, we do hedge uh, the the shackle, got it, you know, looking uh looking forward. So, uh, this, uh, this effect, uh, uh, if uh, will will encounter encounter it, it will only be in the second half of 2026.
Got it. I think that's all we got for now. Thank you, guys. Thank you, Ryan. See you soon.
The next question is from Luis. Dana of William Blair, please go ahead.
and,
Feel good afternoon, and congrats on the guidance raised.
And the recent awards. Um, my first question is, how many?
Stellar Blue Sidewinder, aircraft are online. Now, I believe last quarter you indicated there were 225 planes flying with the system. I was also wondering how the antenna is performing.
In the field, in terms of connecting with the website, is the performance similar to what Starlink is achieving? Thanks?
Hi Louise. Um,
000 uh, flight hours.
Uh, the feedback that we are getting both from the customers and from the airline is that performance is very good. They are very happy with the performance with a very stringent SLA.
The antennas and, you know, the 1st, you know, the it's limited by the modem. So uh we are G bringing give or take close to 200 megabit per second, uh, on 1 Webb, uh, we can bring more, but it depend on on the satellite, um, and I think that, you know, it's more than than what you need in the aircraft. So I think that the service is at least in power. It's not better than stalling.
Excellent. Um, and for my second question, um,
you discussed on on the earnings call.
Two different SkyEdge orders that you won, each worth more than...
$40 million. Um, are you able to provide...
The applications for these awards and are there others in the pipeline just because these awards seem much larger than your traditional skies for deployments? Thanks. Yeah. Um,
In general, as you know, the sky for is a multi-application platform. So with the same platform, you can serve several applications the main application for the orders are in-flight connectivity. Uh, so it's a to increase the existing customer deployment globally, uh, with the sky for insight, uh, connectivity, uh, application.
Great. But for those orders, they don't
Um, they're not on the same planes as um the Stellar blue Sidewinder, right? They would be on
Can be on the same can be on the same plane. Okay. You know the Sidewinder is is a multi orbit antenna. So on on, for example, on the FCS, the old Intel s, the old Google you have today with side window, they're both gilat modem and 1 with 1 with modem.
Right.
Yes, that seems like an opportunity in the future for you to definitely add. Um,
Gilot modems to a a future.
Successor.
1 Webb constellation since it seems Superfluous to have 2 different modems on the same plane.
Yep. Yeah, the industry is, uh, it wants to have a virtualized or, uh, several ways from that will run on the same hardware. It's something that, uh, everyone wants, and then Gilat.
H is the ability, of course to deliver, uh, things like that. Uh, based on the road map and the relevant, uh, customers. Uh, in addition this quarter, we announced that we signed a strategic, uh, agreement with an asian-pacific, uh, operator for Skye for. So we added another, uh, customer to the Skye form.
Platform. Uh, and over there, the focus will be uh
Fixed, um, application. And I would say, especially cellular backal.
Great. And, um,
my my third question for the um, the 60 million Stellar blue order, you mentioned how
For some of the installations. Um, it will support. I think you said line fit, um, correct but what what is what is the timing of
when the, um, the factory installations with, with Boeing will will start
So we are progressing. We expect to get some of the simplification before the end of the year that will allow.
Uh, um.
Email cross the installation and some, uh, at the beginning of next year. So we'll be able to uh uh have a full installation towards mid mid mid next year.
Great. So by by the middle of
on my, um, my fourth and, and final question as it relates to the, the Stellar blue, um, milestones
I believe.
You know, one of the milestones. Um, the second one was...
about attaining $120 million in new Stellar Blue backlog by the end of
2025, and I know you received that that 60 million order, but do you expect to um,
That Milestone to be hit.
Uh this is a good question. You know, we are um,
The.
I don't know, Milestone is until uh give or take mid December. Uh, we are in advanced negotiation to get a very large order from 1 of our customers. Um, and, uh,
You know, we want the the order as soon as possible. So there is a a decent chance that uh we will need to uh we'll be able to to achieve the Milestone and and pay the amount
Still need to comply with several commercially customer, commercially requirement and relevant gross, profits and things like that. But in general, we are on track.
Okay, great. Thanks.
Thanks.
The next question is from Chris cruelty of cruelties place. Please go ahead.
Uh, thanks guys, had a couple of follow-up on IFC in Stellar blue. Um uh revenues were down sequentially and obviously you're you're ramping production, but is that more timing of orders or is there a seasonality component? And should we expect, you know, revenues to continue to ramp or again is their seasonality in Q4?
Um,
In general. We are the the delivering mainly
Mainly determiners. But even there there are some auxiliary and avionics that is a 1-time per quarter. So it might create some bumps doing the quarters uh in general, the last 2 quarters uh production is is is stable. Uh we are we managed to overcome the supply chain issues that we had with the 1 of the components. So we do expect to ramp up our production uh in Q4 we can deliver around.
70 to 80 units per month and we are on track to to reach that um,
I believe that the next year will be able to deliver, uh, slightly more than than that
Good. And I think you had originally talked about a 100 a month, you know, earlier this year is that the, the target for 26, um, something like that. Yeah, in in subject, of course, for backlog and orders, but, uh, something like that. Uh, this is what our Target for next year.
Gotcha. And I think when you acquired Stellar blue, it had about a thousand, uh, in backlog, or is the backlog up, or are you working down the backlog from here or or where I should say, maybe where do you expect as you exit the year with large orders? You know, that you expect to close with the backlog? The up, or down from that time.
It it was slightly below a thousand unit in backlog, and, uh, we are give or take now, uh, at the same level that we were, because we received the large order at the beginning of Q3, and if, uh, the order that we are now negotiating will mature. I believe that we will end up the year with a even higher backlog than we enter the
Gotcha. And, and again, I know the original Target was exiting the year with 10%. I'm assuming, you're not going to hit that because you're you're behind with the component issue. Um, but you know, since you just raised ibaa, guidance, where across the portfolio? Did you make up the difference, uh, for Stellar blue coming up a little bit short? Yeah, so we, we do have a very nice, uh, uh, growth that we see in the commercial and also on the, on the Peru side.
Support future Business Development. And, uh, it seems on track. We saw very nice order order the this quarter. We hope that the shutdown will end soon and will see also additional orders as we expect the Q4 to be strong in Booking as well and we expect to see Revenue growth. Also next year,
Okay. You mentioned commercial and and specifically. So they are back all which has been sucking wind for the past year. It was it just a good quarter or do you see that that Trend in cellular backhaul? Starting to, to gather Steam?
It was a relatively small order on, on solar backward. The main growth on the commercial side is the is the, the IFC business that we have, um, and, and slightly on the, on the fixed side. But the the, the main growth engine is is IFC.
Gotcha and um, back to Stellar blue. Sorry. Um, there's the the third earnout is based upon the the 4 straight wins. Um, have they have you closed? Any of those or is the the fourth quarter, large order associated with that? And how do you feel, you know, still on track for for those uh, events.
So, uh, up until today, we haven't closed any strategic deals. Um, the large order is not associated with the new strategic deal. It will come from existing customers.
Um, we have, uh, you know, we started several uh, negotiation with the customers that can be, uh, considered a strategic deal. Um, I remind everyone that strategic deal is something like, uh, for example, uh, additional line fit, uh,
Agreement with minimum commitment of at least 35 million with a significant gross margin. Um, and uh, we are in initial stages of discussion. So, um, I can't predict right now uh if and how many contract will be signed until uh, mid June next year.
But no doubt the Strategic deals uh will increase significantly uh, addressable market. So it's something that uh, we invest a lot and uh, a lot of efforts are on that.
Right. Um few quick question, I know you you did a 6K when you filed for the private placement but I didn't see a 6K when it closed, is it fair to assume that all the terms in the original 6K were were the same for for the clothes? Yes. Yes. The money received 66 million.
Uh, net of slightly below a million dollar of costs.
Okay. And just to confirm, if you could give it later. But, uh, what was the closing share count? I just want to confirm that.
And, uh, I guess the other question was capex was up kind of big in the quarter. Was there anything specific going on there?
So so the the the closing share count is, uh, a little bit above 64 million.
Uh, and what was the second half story? I didn't hear it. Clearly, uh, capex.
The capex. So
I mean, capex is, uh,
Um, you know, going as usual. I mean, it's within the, uh, original planning, um, a little bit higher than last year but, uh, uh, as expected, so no, no, no real news over there.
Gotcha and maybe final 1 for you Gil. I mean obviously this was uh,
Stellar blue drag on the gross margins, which kind of ticked down below 30% for the first time in a while.
Where do you expect to sort of, I could say exit Q4. But you know, if we look at maybe 26 and I know you're not providing guidance, are we back more at the mid 30% gross margin as that product line picks up?
uh, and the cost reduction efforts will kick in uh,
We we may see even higher uh higher gross, margins uh looking further.
Very good.
Thanks great. Great results. Thank you. Thank you Chris.
Is there any additional questions? Please press star 1?
Standby or report for more questions?
There are no further questions at this time. Mr. Benny, would you like to make a conclusion statements?
Yes, I want to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak with you on our next call. Thank you very much and have a great day.
Thank you. This concludes the last third quarter, 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.