Gilat Satellite Networks ((GILT)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Gilat Satellite Networks’ recent earnings call painted a picture of robust growth tempered by operational challenges. The company reported significant revenue increases, particularly in its commercial and defense segments, driven by strategic contracts and a strong performance in Peru. Despite facing hurdles such as decreased gross margins and production ramp-up issues with Stellar Blu, the overall sentiment was optimistic, with expectations of continued growth.
Significant Revenue Growth
Gilat Satellite Networks showcased impressive financial performance in the second quarter, with revenues reaching $105 million, marking a 37% increase compared to the previous year. A substantial portion of this growth, $36 million, was attributed to their recent acquisition, Stellar Blu.
Commercial Segment Expansion
The commercial segment experienced remarkable expansion, with revenues climbing to $69.1 million from $43.4 million the previous year, representing a 59% increase. This surge was primarily driven by the contributions from Stellar Blu.
Strong Performance in Peru
Gilat’s operations in Peru demonstrated solid growth, securing more than $60 million in new orders from Pronatel. This indicates a robust expansion in regional network infrastructure projects.
Defense Division Growth
The defense division of Gilat secured significant contracts, including over $8 million from the Israeli Ministry of Defense and a $7 million initial order from the U.S. Army, with potential for further expansion up to $70 million.
Virtualized SkyEdge IV Platform Contract
Gilat signed a $40 million contract for its SkyEdge IV platform, marking a strategic shift towards cloud-native environments and enhancing its technological offerings.
Gross Margin Decrease
The company’s GAAP gross margin saw a decline in the second quarter of 2025, dropping to 30.4% from 34.7% in the previous year. This was primarily due to the ramp-up of Stellar Blu and the amortization of purchased intangibles.
Stellar Blu Ramp-Up Challenges
Stellar Blu faced production ramp-up challenges, with vendor component issues slowing progress. This impacted margins and led to a failure in meeting the first earn-out milestone.
Cellular Backhaul Market Slowness
The earnings call noted a slowdown in the cellular backhaul market, with fewer new RFPs and customer extensions, affecting the overall market dynamics.
Forward-Looking Guidance
Gilat Satellite Networks provided an optimistic forward-looking guidance, projecting a full-year revenue of $435-$455 million, indicating a 46% growth at the midpoint. The adjusted EBITDA guidance was set at $50-$53 million, reflecting a 22% growth. Despite current challenges, particularly with Stellar Blu, the company remains focused on improving margins and capitalizing on significant orders in both the commercial and defense sectors.
In summary, Gilat Satellite Networks’ earnings call highlighted a period of significant growth, driven by strategic acquisitions and contracts. While challenges such as decreased margins and production issues with Stellar Blu were acknowledged, the overall sentiment remains positive, with strong future growth potential anticipated.