Gilat Satellite Networks Ltd. (GILT) Q2 2023 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Gilat Second Quarter 2023 Results Conference Call. All participants are at present in listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded August 8, 2023. By now, you should have all received the company’s press release. If you have not received it, please contact Gilat Investor Relations team at EK Global Investor Relations at 1-646-688-3559 or view it in the news section of the company’s website, www.gilat.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?

Thank you, Operator. Good morning, and good afternoon, everyone. Thank you for joining us today for Gilat’s second quarter 2023 results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today, August 8 as a webcast on Gilat 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 on this earning call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. 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 materially from 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 to do so. More detailed information about risk factors can be found in Gilat’s reports filed with the Securities and Exchange Commission. With that, let me turn to introductions. On the call today are Mr. Adi Sfadia, Gilat’s CEO; and Mr. Adi -- Mr. Gil Benyamini, Gilat’s CFO. I would now like to turn over the call to Adi Sfadia to begin.

Thank you, Ehud, and good day to everyone. I want to thank you for joining us today for our second quarter of 2023 earnings call. The second quarter of 2023 was another strong quarter in which we showed strong year-over-year revenue growth. Our growth was broad across multiple business areas and totaled 22% above the same quarter last year. Adding to that, we significantly improved our profitability. We more than tripled our GAAP operating income year-over-year and had an adjusted EBITDA of $9.2 million, which is 74% higher than the adjusted EBITDA of the second quarter last year. As you can imagine, I’m very pleased with the results of the second quarter and the first half of 2023. Looking ahead, we are increasing our revenue and profitability expectations for the full year 2023. We expect revenues of between $265 million to $285 million, GAAP operating income of between $18 million to $22 million and adjusted EBITDA of between $33 million to $37 million. 2023 continues to demonstrate a strong and profitable year for Gilat. I will now focus on our business achievements and opportunities in the quarter. The massive industry activity in the new area of satellite communications continues to fuel Gilat’s growth engines, which revolved around very high throughput satellites and non-geostationary satellite constellations. Like in the last several quarters, also this quarter, we received millions of dollars of orders from our strategic partners, the satellite operator. Network expansion and delivery of SkyEdge IV and Aquarius VSATs are taking place globally in support of multiple applications, such as in-flight connectivity, cellular backhaul and enterprise. In our SSPA product line, I’m pleased to report on continued successful engagement in a major project with significant potential for large NGSO constellation. We are on track and moving to production in the third quarter of this year. I’m excited to report that in our important growth engines of in-flight connectivity, we are making significant progress with two important new strategic partnerships. First, as we recently announced, we signed an agreement with a new strategic partner, Satcom Direct to develop and supply new rule to low-profile electronically steered antennas to operate over OneWeb’s LEO constellation. Satcom Direct is a leading provider of fully integrated end-to-end global satellite communication solutions. Their solutions are in use today in over 7,000 aircraft. They are dedicated to delivering Satcom connectivity to business and government aviation worldwide. During the quarter, we received the first order value of tens of millions of dollars. This agreement has additional potential of several tens of millions of dollars over the next few years. The development of an ultra-low profile ESA terminal will enable Gilat to increase its press by entering new market segments such as IFC for business jets, as well as connectivity for government and military aviation. This first ESA project is an important turning point and an important future growth engine as we enter the new promising and growing ESA market. Second, we are expanding our IFC business with another strategic partnership receiving this quarter the first multimillion-dollar orders from Tier 1 aerospace system integrator. We will support next-generation IFC equipment to reinforce our industry-leading position as a premier supplier of SSPA for the IFC marketplace. Following the signature of the agreement to acquire DataPath Inc. at the end of the previous quarter, we are progressing in obtaining the necessary regulatory approvals. Together with DataPath, we submitted the required notices with CFIUS and other U.S. agencies, and we already received an answer of several sets of questions. Conditioned upon the process satisfactory conclusion, we anticipate that the closing of the transaction will occur during Q4. During the second quarter, we booked multimillion dollars of orders in defense market. This includes an additional order of our antennas demonstrating confidence in our strategic partnership with a leading UAV customer. Furthermore, we received initial orders for our SkyEdge IV Aquarius modems from two leading defense system integrators in the U.S. These are the first step in establishing a significant channel for Gilat next-generation modems based on the U.S. Government demand. In cellular backhaul, another strategic growth engine, we continue expanding our global presence with multimillion-dollar orders. I’m pleased to say that the SkyEdge IV our next-generation platform is continually chosen by the satellite operators to provide cellular backhaul services. This is in addition to receiving orders from new and existing mobile network operators that are expanding their network based on SkyEdge to see our current leading cellular backhaul platform over satellite. An important example is in Mexico where Gilat was awarded millions of dollars to connect hundreds of 4G sites in the CFE Telecommunications and Internet for All initiative led by the -- by a Mexican federal agency. Within -- with this -- within this framework, global satellite operators are working with Gilat to provide the best available solution. Gilat leading technology and local presence are instrumental in addressing the special deployment requirements of the federal agency. In Peru, we made progress this quarter in the Amazonas region where we concluded the construction of about 75% of the access network nodes. We are moving towards finishing the construction of the networks this year, in line with the recent extension that we received from Pronatel for the implementation of this project. In the Ica region, we passed the acceptance and moved to the operational phase. This is the fifth region in operation out of six awarded to Gilat. To conclude, we had a strong quarter in which we showed strong revenue growth and significantly improved profitability, demonstrating the leverage in our business model. In addition, we had a strong booking with some very important strategic deals, especially with our IFC business, which is one of our key growth areas. The recent significant achievements are not only important achievements for this quarter, but there is a huge stepping stone for further expansion in the existing I -- exciting IFC market as we embark on future growth engine and enter into the new promising ESA market. I’m optimistic about our ability to continue our growth and improve profitability path in the coming quarters, as reflected in our increased revenues and profitability guidance. And with that, I hand over to Gil Benyamini, our CFO. Gil, please.

Thank you, Adi. Good morning and good afternoon to everyone. I would like to remind everyone that our financial results are presented in both GAAP and non-GAAP basis. We regularly use supplemental non-GAAP financial measures internally to understand, manage and evaluate our business and to make operating decisions. 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 the effect of stock-based compensation, amortization of purchase intangibles, lease incentive amortization, litigation income or expenses income related to trade secrets claims, restructuring and reorganization costs, merger, acquisition and related litigation income or expenses, impairment of held-for-sale assets, other expenses, income tax effects on adjustments, one-time changes of deferred tax assets and one-time tax expense related to the release of historical track trust earnings. The reconciliation table in our press release highlights this data and our non-GAAP information presented exclude these items. I will now move to our financial highlights for the second quarter of 2023. Overall, as Adi mentioned earlier, we are very pleased with the strong second quarter of 2023. We’re reporting a 22% year-over-year growth in revenue and an improvement in profitability. Non-GAAP gross margin was 38% and our adjusted EBITDA reached $9.2 million, higher by 74% compared to Q2 last year. Given the strong performance in H1 2023 and the robust pipeline we see ahead of us, we decided to increase our revenue targets for the year, as well as our GAAP operating profit and adjusted EBITDA guidance, which I will cover later. In terms of our financial results. Revenues for the second quarter were $67.6 million, 22% higher than those of the second quarter of last year. The improvement was driven by growth in the Satellite Network segment, mainly from the in-flight connectivity, cellular backhaul and enterprise verticals. In terms of revenue breakdown by segments, Q3 revenues of the Satellite Network segment were $40.7 million, compared to $26.9 million in the same quarter last year. The significant increase mainly resulted from large deals delivered this quarter to our strategic customers in the in-flight connectivity market, as well as a high volume with our enterprise as cellar backhaul customer base. Q2 2023 revenues of the Integrated Solutions segment were $12.7 million, compared to $15.7 million in the same quarter last year. Q2 2023 revenues of the Network Infrastructure and Services segment were $14.2 million, compared to $12.9 million in the same quarter last year. I would now like to summarize our second quarter both GAAP and non-GAAP results. Our GAAP gross margin in Q2 2023 grew to 37.8%, compared to 35.6% in the same quarter last year. The improvement in our gross margin was mainly due to a particularly favorable product and services revenue mix recognized this quarter, the high level of revenue. Please be aware that the revenue margins and profitability may fluctuate between quarters as an outcome of the actual revenue, volume and filming. GAAP operating expenses in Q2 2023 were $20.1 million in the quarter or 30% of revenue, compared with $18.3 million or 33% of revenue in the same quarter last year. GAAP operating income for the quarter improved to $5.5 million, compared to $1.5 million in the same quarter last year. GAAP net income in the second quarter was $4.3 million or diluted earnings per share of $0.08. This is compared to a GAAP net income of $0.5 million or diluted earnings per share of $0.01 in the same quarter last year. Moving to the non-GAAP results. Our non-GAAP gross margin in Q2 2023 improved to 37.9%, compared to 35.6% in the same quarter last year. Non-GAAP operating expenses in Q2 2023 were $19.6 million, compared with $17.4 million in the same quarter last year. And non-GAAP operating income for the quarter improved to $6.1 million, compared to $2.4 million in the same quarter last year. Non-GAAP net income in the second quarter was $4.9 million or diluted earnings per share of $0.09. This is compared with a non-GAAP net income of $1.4 million or diluted earnings per share of $0.03 in the same quarter last year. Adjusted EBITDA for the quarter was $9.2 million, an improvement of 74%, compared with an adjusted EBITDA of $5.3 million in the same quarter last year. Moving to our balance sheet. As of June 30, 2023, our total cash and cash equivalents, including restricted cash, were $87.8 million, compared with $89.7 million on March 1, 2023, and compared to $71.5 million as of June 30, 2022. We do not hold any debt. The decline in cash compared to the previous quarter was due to a voluntary payment of $10.3 million for the release of historical tax cost earnings, which completed a total one-time payment of approximately $12.5 million for that purpose. The company chose to take advantage of the temporary Israeli tax relief that expired in November 2022 and to pay significantly reduced tax rate to allow in the future certain actions such as distribution of dividends, share buyback or acquisition of foreign companies without paying an additional substantial corporate tax. In terms of cash flow, we generated $2 million from operating activities during the second quarter of 2023. Excluding the mentioned $10.3 million one-time tax payment, we generated about $12.3 million from operating activities this quarter. DSOs, which excludes receivable and revenues of our terrestrial network construction project in Peru were 63 days, lower than previous quarter DSO, which were of 77 days. The decrease was impacted by an increase in revenues, alongside the decrease in receivables due to a higher collection in the quarter. Our shareholders’ equity as of June 30, 2023 totaled about $255 million, compared with $250 million at the end of March 2023. Looking ahead, as I already mentioned, we’ve increased our revenue guidance, GAAP operating income and EBITDA guidance for the year. Our expectations are even stronger than previously anticipated and show strong three with revenue of between $265 million to $285 million, representing a year-over-year growth of 15% at the midpoint. GAAP operating income of between $18 million to $22 million, representing year-over-year growth of 101% at the midpoint. And adjusted EBITDA of between $33 million to $37 million, representing year-over-year growth of 39% at the midpoint. That concludes my financial review. I would now like to open the call and we’ll be happy to take your questions. Operator, please?

Thank you. [Operator Instructions] The first question is from Ryan Koontz of Needham & Company. Please go ahead.

Hi. Congrats on the nice quarter. It’s nice to be on the call. I want to ask about the strength in the Satellite Networks segment. Obviously, really great results there and thanks for the color on the prepared remarks. It sounds like IFC was a big contributor there. But can you help us understand maybe what’s going on inside that IFC segment there. Is this primarily driven by the ESAs or the amplifier business and what sort of customers are driving the strength here in the second quarter?

Hi, Ryan. It’s -- the strength in the IFC is mainly related to the baseband and modems that goes to Intelsat commercial aviation. The ESA agreement, it’s a very strategic and important agreement, but it’s, I would say, future growth engine, it’s required, give or take, year and a half, 18 months of development and then certification. So I won’t expect significant revenues before 2025. We also have decent revenues from SSPA. This is mainly goes to companies like Honeywell. But this quarter, it was mainly the baseband equipment.

Got it. And as far as your comments -- that’s really helpful. Thank you. And as far as your commentary around kind of moving down into the smaller plan market. Again, is that a near-term driver that’s driving this year’s results or is that also more of an opportunity for the future? I guess that your small form factor, ESAs sounds like maybe that’s a 2025 opportunity?

It’s mainly the 2025 revenue. The opportunities is already fruitful. We just need to develop and start to deliver, but it’s a 2025 revenue stream. But this is the first step into the business jet. We have other solutions that we expect to see -- to sell, but it will take time.

That’s great. I’m sure that’s a market that’s lightly penetrated with high performance systems. So it sounds like a great opportunity.

And based on NSR, there is a potential of more than 15,000 aircraft for broadband connectivity on the business jets and it’s -- from our perspective, it’s a huge opportunity. Satcom Direct has more than 7,000 aircraft connected not only to broadband, but in general. So I think the opportunity with Satcom Direct is very high and also the overall market opportunity is very big.

That’s great. Thanks for that. And it sounds like backhaul is also pretty strong in the quarter and you had some new agreement signs and new orders coming in. Is this primarily a systems business that you’re selling there with SkyEdge that’s driving that strength?

Correct. Cellular backhaul is an important growth engine for us. We are the partner of choice for both SES, Intelsat and other large satellite operators that are using our equipment, both on SkyEdge II-c and soon also over SkyEdge IV. And we are working with the largest MNOs worldwide. Today, we have about 40% market share on the overall cellular backhaul market and if you exclude 2G and 3G and focus on 4G and Advance, we have more than 75% market share.

Great. And specifically, going back to your comments, just circling back on the last previous topic around IFC and what you’re doing with Satcom there. Can you remind us where OneWeb is in the rollout of IFC today?

I think OneWeb is starting to provide global service. On the IFC, they are not a service provider rather provide the capacity and some services to service providers. I know that several service providers bought capacity from OneWeb. So Satcom Direct is engaged with them, Intelsat is engaged with them and also HNS is engaged with them. So it feels like that their IFC capacity sale is going to increase in the next few quarters.

Great to hear. And lastly, just on the gross margin, great progress year-over-year and a step down sequentially. Can you remind us maybe some of the product mix that’s driving the gross margin change there, both year-over-year and sequentially?

Yeah. So, first -- hi, Ryan. You have to remember that our gross margin fluctuates according to the product mix and volume. Naturally, IFC related products have a higher gross margin and then we have the cellular backhaul down in the list. We have the enterprise-related products and we almost don’t sell any consumer-related products and they have lower gross margins associated with them. If you look at the gross margin trend over time, you can see an overall increase in the last few years in the gross margin of the company. On top of that, we have the Peru business where we are shifting from construction to operation and the operation revenues are associated with higher gross margins than the construction that we’re expecting to end sometime in the next few quarters.

Ryan, I would add that the SkyEdge IV the next-generation platform is more software-based and hardware-based and we expect that it will drive our margins higher in the next few quarters once we will see more and more deployment of SkyEdge IV. So we provide initial hardware and later on most of the operator expansions will be done by software only without the need of additional expense in hardware.

Got it. Really helpful. Thanks, Adi. Thanks, Gail, and nice quarter.

Thank you, Ryan. See you soon.

The next question is from Chris Quilty of Quilty Analytics. Please go ahead.

Hi, Adi. Just to follow up on that question. Can you remind me, is Intelsat going forward with the 2C or the 4?

Both. Intelsat, when they acquired Gogo, they got the largest global network of Sky-2C and for IS 4G, they acquired our SkyEdge IV system. In addition, we are providing them our Taurus Modem that can reach to 400-megabit per second that can serve both platform. So it’s backward compatible with Sky-2C and they can move it between the systems. So from their perspective, it’s a one management system and one modem that can shift between the systems. We hope that the SkyEdge IV will be active very soon over North America.

Got you. And so they’ve got four software-defined satellites on order. Do you feel good about your position on there? Are they still making a decision about what they’re doing with the new satellites?

I feel confident in our relationship with Intelsat. As today, we are -- probably the largest network that we own is not the largest together with ST Engineering there, we have the two largest networks. ST’s mainly the flex solution and as cellular backhaul and enterprise. I feel comfortable that in the next satellite, they were -- Gilat is a very strong candidate. Nothing is guaranteed, but I feeling very comfortable with our relationship and the solutions that we are providing for Intelsat. The fact that they have our solution deployed globally. It’s -- in a way, show a high stickiness to Intelsat.

And are you, at this point, all the baseband equipment deployed and you’re simply doing a per aircraft deployment or is there still more baseband to roll?

So almost every quarter, there is more basement to roll. Every time they buy more capacity, new transponder, new satellite, new gigabyte, they need to increase their baseband, every time every airline that offer free Wi-Fi, they need to acquire more capacity and need to increase the ground equipment. In parallel, they are rolling our Taurus Modems and replacing our Capricorn Aero modems from 200-megabit per second to 400-megabit per second and we expect that every few years, there will be a new rollout of modems.

Great. And where are you in the process? I mean, I think, SkyEdge II-c is going to be around for a while. But in terms of new orders and existing sales, where is that trending? I think the SkyEdge IV has only been on the market for, what, a year or year and half, I mean, are you still kind of like at 90%, 10% with old versus new or are you seeing a much quicker shift?

No. The shift is not that fast. The large satellite operators are shifting to SkyEdge IV, although in some cases, continue to buy SkyEdge II-c, but we see a lot of interest in the market and a lot of the regional satellites that are going to be launched and we are talking with the satellite operators and all the care is about the SkyEdge IV, those SkyEdge to see real and kicking and we have continued to develop features and provide service. So it will take several years until SkyEdge II-c will disappear. I remind you that Empower is based on SkyEdge IV and this is a new rollout. We expect them to start providing service towards the end of the year during Q4. So we are seeing a very large deployment of SkyEdge IV, but still, the majority of the business today is Empower is based on SkyEdge II-c. Usually it takes three years to four years to shift between the new platform -- from the old platform to the new one.

Great. I know SES has come out and publicly said there’s still planning deployment for the launch of Empower by the end of the year. But given the problems you’re having with the first four satellites, have you guys sort of backed off your assumptions? I mean, in this industry, the problems don’t tend to get solved as quickly as companies would like?

To be honest, currently, business as usual, we have a list of gateway to deploy together with SES. So it doesn’t affect our plans. When making forecasts, we factor a lot of upside and downside. So at the end, at this point, everything is factored to our updated guideline.

Okay. Gil, a question for you, and you may just say like, it’s the normal ups and downs in the quarter, but there was a lot of moving pieces on the balance sheet that were a little bit unusual. Just kind of looking through the contract assets there continue to be down. The trade payables were down significantly. Sequentially, you got a nice bump up in advance from customers or other current liabilities were cut in half. Is there a single simple explanation or is this just sort of the normal coming and going to the quarter?

So the one thing -- hi, Chris. The one thing that we had this quarter, which was a bit, I would say, unique with the payment of the tax that I mentioned, the $10.3 million that completed our $12 million tax payment for trust profits and this affected our other short-term liabilities. I would say that all other changes are in the normal course of business. We had a very, very strong collection this quarter and this affected the AR and DSO in a positive way, and other than that, everything is in the normal course.

Got you. And maybe just continuing that thought in terms of working capital trends through the balance of the year and the impact on cash flow. Do you expect any kind of a significant drawdown or buildup of working capital for contracts and customer rollouts or relatively unchanged from current levels?

I think that, in general, looking at the results this year, you can see quite a good correlation between the EBITDA and the cash flows from operating activities. Sometimes in Peru, we have milestones of payments, which are not 100% correlated to revenues, which are recognized according to percentage of completion. So there might be some bumps either way. But other than that, it should be pretty much correlated.

Great. I forget -- I think you did say in the announcement around the ESA and the Satcom Direct relationship. Is that initial antenna KU or KA and are there plans for both labors?

This specific flavor is the KU for OneWeb. We also have a demo unit of our KA solution. And for the future, we can offer any flavor that the customer wants. As a reminder, I said several times in the past, there is so much you can progress with the development of IFC antenna with other customers, because at the end, it really depends if it’s commercial or business jet, if it’s -- what is the band you want, what is the base split that you already had with the existing installed base. So you need the customer in order to tailor the solution.

Got you. That was a dumb question because you did say one last. So it was KU. But the form factor, like the original east you guys were developing was more of a commercial aviation aperture, how much of that original development is just being parlayed into this, which I’m assuming is a smaller form factor for regional jets.

Yeah. It’s a significantly smaller form factor than commercial aviation. And the knowhow and the experience that we have for years will help us to accelerate the development and we have a very tight schedule. 3Everyone wants the terminal yesterday.

Got you. And who pays for and handles all the STCs for the different aircraft types. Is that you or Satcom Direct.

It is Satcom Direct. We provide the antennas and they are responsible for all the relevant certifications.

Great. Two final questions. One is, am I correct that, I think, you were originally hoping to get DataPath done in Q3 and it looks like it’s slipping a little bit. Are there any major issues you’re seeing there or just normal questions and answers coming back from the government?

I think it’s a normal answer and questions. It took us some time to file all the relevant documents to CFIUS because we have to gather a lot of information from shareholders that all more than 5% and it’s not an easy exercise for private investors to provide such information about themselves and their executives and directors. So it took us a bit more time than initially expected and because we are a public company, we couldn’t start the process before we announce. But once we submitted the files, we are getting a timely response from the CFIUS and other U.S. agencies, and we are answering almost in a matter of 48 hours. So it seems like progress as expected and we want to close as soon as we can.

Great. Final question on Integrated Networks. I think you said in your script that you expect initial delivery, I think, in Q3 for your NGSO customer to start shipping them power amplifiers, is that correct? And can we get some sort of -- well, I guess, it’s reflected in the guidance, but order of magnitude of where we expect Integrated Networks to maybe not for this year, but as we look out to next year, that starts to scale.

Yeah. I think it will start to scale mainly towards the second half of next year. We are moving to production. So up until now, we delivered some units, but it’s mainly, I would call it, handmade unit, is not for real production units. So we are moving to production. And a real scale depends on the customer deployment and I would expect it to be second half of next year with much larger deliveries over 2025 onwards.

Great. Thanks, guys. I don’t forget to say great quarter.

Thank you, Chris.

Thank you, Chris.

The next question is from Gunther Karger of Discovery Group. Please go ahead.

Yes. Thank you for taking the call. A couple of questions and a comment. Question one is, excuse me, regarding the DataPath acquisition, any comment on how this is going to be paid for stock, cash or combinations?

The DataPath acquisition is payed mainly in stock. We are taking on ourselves about $15 million of debt to banks and shareholders. And we are paying upon closing about $3 million in Gilat shares. And then there is an earn-out mechanism of up to additional $27 million that will be paid mostly with Gilat, about 10% or 20% can be paid in cash. It depends on some tax requirements of DataPath shareholders in the U.S. But I would say that, it’s mainly going to pay with Gilat shares.

Thank you. Second question, any comment on the defense and military sector?

Yes. This is a very -- it’s becoming more and more strategic. We are waiting for the closing of the acquisition, but we are making progress. We have several very large RFPs that we are building and we expect to get awards during the year. We increased our business with one of the UAV strategic partner or the additional units and we have an agreement with two U.S. local integrators who ordered our Aquarius Modems for -- to start integration and this is one of our channels into the DoD. We had a decent quarter. Still, the numbers are relatively low and we expect that once the acquisition of DataPath will close, we will increase significantly our defense presence.

Thank you. And my comment, yes, we followed a lot of time today, so I’m around Levinson [ph] and I have to tell you, you should be congratulated on growing the company and leading into the right direction and thank you very much, Gil and Adi.

Thank you for the compliment, Gunther. I’m looking to talk to you soon.

Thank you.

[Operator Instructions] There are no further questions at this time. Mr. Benyamini, would you like to make your concluding statement?

Yes. Thank you. 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 in our next call. Thank you very much and have a great day.

Thank you. This concludes Gilat’s second quarter 2023 results conference call. Thank you for your participation. You may go ahead and disconnect.