Gilat Satellite Networks ((GILT)) has held its Q1 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Gilat Satellite Networks painted a mixed picture for investors and analysts alike. While the company showcased impressive year-over-year revenue growth and promising developments in its Defense and Commercial segments, these positive aspects were overshadowed by challenges in the Peru segment, a decrease in gross margin, and a reported net loss. The acquisition of Stellar Blu, although showing potential, raised concerns due to its impact on margins and the net loss reported.
Record Revenue Growth
Gilat Satellite Networks reported a record revenue growth in Q1 2025, with revenues reaching $92 million, marking a 21% increase year-over-year. This growth was primarily driven by the acquisition of Stellar Blu and robust demand in the Defense segment, highlighting the company’s strategic expansions and market penetration.
Stellar Blu Acquisition Impact
The acquisition of Stellar Blu significantly contributed to the company’s top line, adding $25 million in revenue. Expectations for Stellar Blu’s annual revenue range between $120 million and $150 million, indicating its potential to be a substantial revenue driver for Gilat in the coming years.
Defense Segment Expansion
Gilat’s Defense segment saw significant expansion, with the company being awarded over $5 million for US Department of Defense and international projects. Additional contracts totaling $44 million for various defense-related technologies and services further underscore the segment’s growth trajectory.
Commercial Aviation Advances
In the Commercial Aviation sector, Intelsat’s installation of the Sidewinder ESA on over 150 aircraft, achieving 70,000 flight hours, marked a significant milestone. Panasonic’s certification of the Sidewinder ESA further boosted market validation, enhancing Gilat’s position in the aviation market.
Peru Segment Revenue Decline
The Peru segment faced challenges, with revenue declining to $4.8 million from $17.7 million in Q1 2024. This decrease was attributed to project delays and slower progress in existing projects, highlighting operational challenges in this region.
Decrease in Gross Margin
The company’s GAAP gross margin decreased to 30.9% from 36.9% year-over-year. This decline was primarily due to lower margins in the Stellar Blu and Peru segments, raising concerns about profitability.
GAAP Operating Loss
Gilat reported a GAAP operating loss of $2.7 million, a significant drop compared to a GAAP operating income of $5.4 million in Q1 2024. This shift reflects the financial challenges the company is currently navigating.
Net Loss in Q1
The company reported a GAAP net loss of $6 million, or a loss per share of $0.10, compared to a GAAP net income of $5 million, or $0.09 per share, in Q1 2024. This net loss underscores the financial hurdles faced during the quarter.
Forward-Looking Guidance
Looking ahead, Gilat is strategically positioned for growth, with strong demand in its Defense and Commercial segments. The company reported an adjusted EBITDA of $7.6 million for the quarter, with Stellar Blu contributing to the top line but incurring an adjusted EBITDA loss. Excluding this loss, the adjusted EBITDA was $11.2 million, a 20% year-over-year increase. Stellar Blu is expected to generate between $120 million and $150 million in revenue for the year and to reach a 10% adjusted EBITDA margin run rate in the second half. A healthy backlog covers nearly 80% of the annual revenue guidance of $415 million to $455 million, indicating a positive outlook.
In summary, Gilat Satellite Networks’ earnings call highlighted a mix of growth and challenges. While the company achieved record revenue growth and made strides in its Defense and Commercial segments, it faced setbacks in the Peru segment and reported a net loss. The acquisition of Stellar Blu presents both opportunities and challenges, with its impact on margins being a focal point. Looking forward, the company remains optimistic about its growth prospects, backed by strong demand and a robust backlog.