Ladies and gentlemen, thank you for standing by. Welcome to Gilat Satellite Networks Ltd.'s Fourth Quarter 2025 Results Conference Call. All participants are at present in listen-only mode. Following the management's formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press 0. As a reminder, this conference is being recorded on February 10, 2026. 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.gilat.com. I would now like to hand over the call to Mr. Sanjay Harry of Alliance Advisors IR. Mr. Harry, would you like to begin, please?

Thank you, Hilla, and good morning, everyone. Thank you for joining us for Gilat Satellite Networks Ltd.'s earnings conference call for the fourth quarter and full year 2025. With us on today's call are Mr. Adi Sfadia, Gilat's CEO, and Mr. Gil Benyamini, Gilat's Chief Financial Officer. The earnings press release was issued earlier today, and if anyone has not yet received a copy, I invite you to visit the company's website, www.gilat.com, where you'll find the release in the Investor Relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of the company's products on a global basis, and disruptions or delays in the company's supply of raw materials and components due to business conditions, global conflicts, weather, or other factors not under its control. The company cautions investors to not place undue reliance on forward-looking statements, which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Gilat's financial results is included in the company's filings with the Securities and Exchange Commission. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I would like to turn the call over to Gilat CEO, Mr. Adi Sfadia. Please go ahead, Adi.

Thank you, Sanjay, and good day, everyone. Thank you for joining us today to discuss Gilat Satellite Networks Ltd.'s fourth quarter and full year 2025 results. I am pleased to report that we closed both the quarter and the year with strong performance. The fourth quarter capped a very solid 2025, reflecting consistent execution across our commercial, defense, and Peru businesses, as well as continued strategic progress. 2025 was a year of significant acceleration of our revenue growth. Fourth quarter revenue reached $137 million, up 75% year over year. Full year revenue rose to $451.7 million, up 48% with 6% year-over-year organic growth. Adjusted EBITDA also saw significant growth, with the fourth quarter reaching $18.2 million, 50% above the same quarter last year. The full year adjusted EBITDA hit $53.2 million, a 26% growth year over year. Overall, 2025 was a good and successful year for the company. Now on to the business review. I will start with the defense. Military forces are increasing their dependence on resilient satellite connectivity to support mobility, real-time intelligence, and operations in contested environments. This shift favors suppliers with proven scalable systems, strong track records, and the ability to leverage commercial technology to the defense market, all of which are attributes of Gilat Defense. Gilat Defense is gaining steady demand from long-term defense programs, ongoing upgrades, and consistent Satcom spending, giving the business clear visibility into future growth. This strengthens Gilat's border defense portfolio and supports the company's ability to capture a larger share of the growing market that values the capabilities we provide. In 2025, our defense business delivered strong year-over-year growth in new order bookings, expanding customer engagement, and our addressable market. We achieved a record year for Gilat Defense sales, driven by increased demand from U.S. and allied defense customers for…

Thank you, Adi. Good morning and good afternoon to everyone. Before I dive into the numbers, I would like to remind everyone our financial results are presented both on a GAAP and non-GAAP basis. I will now walk through our financial highlights for 2025. As Adi mentioned, we delivered a strong quarter and year, demonstrating continued execution across our strategic priorities and building momentum into 2026. In terms of our financial results, revenues for the fourth quarter were $137 million, representing a 75% growth compared with $78.1 million in Q4 2024. Importantly, our organic growth quarter over quarter was 28%. For the full year, revenues totaled $451.7 million, reflecting 48% growth from $305.4 million in 2024. The growth was primarily driven by the in-flight connectivity vertical. In terms of the revenue breakdown by segment, Q4 2025 revenues for the Commercial segment were $75.1 million compared with $37 million in the same quarter last year. 103% growth was primarily driven by the in-flight connectivity, mainly reflecting the contribution from Stellar Blue. Q4 2025 revenues for the Defense segment were $33.3 million, 14% higher than $29.4 million in the same quarter last year. Q4 2025 revenues for the Peru segment were $28.5 million compared with $11.8 million in Q4 2024. The increase was driven primarily by higher revenues related to new upgrade projects in four of the six regions in which we operate. Our GAAP gross margin in Q4 2025 was 28% compared with 40% in Q4 2024. The decrease is primarily attributable to lower margins at Stellar Blue as production ramps up, as well as an additional $2.9 million of amortization of purchased intangibles expenses related to the acquisition. GAAP operating expenses in Q4 2025 were $25.3 million compared with $18.3 million in Q4 2024. The increase was primarily driven by…

Thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. If you've connected via Zoom, please use the raise hand button located at the bottom of your screen. Your questions will be pulled in the order they are received. Please stand by while we pull for your questions. The first question is from Ryan Koontz of Needham and Company. Please go ahead.

Thanks. Appreciate the question. Nice quarter, guys. On the defense side, you know, given kind of some of the puts and takes been going on with the US budget process and how you're thinking about this year. Maybe can you update us on your visibility as it relates to the defense market both in the US and any international traction you might have? Thank you.

Hi, Ryan. On the visibility to defense, generally when we are entering a year, we have between 50% to 60% of the revenues already in backlog from the guidance. So we have relatively good visibility. We have some large projects that we are working on that can secure the year during the first half of the year. We don't see any effect of the recent shutdown in the US administration. We see increased budget and a lot of traction both in the US, in Israel, and in Europe when a defense organization requires satellite connectivity.

That's great. Thanks. And maybe shifting gears to IFC a bit. Can you update us on your roadmap there for line fit? I know you've been looking forward to that and maybe an update on the competitive landscape in IFC.

Sure. So on the line fit, as we said in the past calls, we are progressing with Boeing line fit. We expect to pass certification during the first half of the year and start delivering in the third quarter. So it seems promising and on track. With Airbus, we are in initial phases. So it takes some time and probably will drag us to next year. But this is based on initial expectations. So we didn't expect revenues from Airbus line fit in 2026. The competitive landscape stayed, give or take, the same. There is a lot of traction. Both SES and Panasonic have decent awards. Not everything is published yet. So we do see their forecast and we do expect some large orders coming in the first half of the year, hopefully, this quarter. As I said in my script, most of the guidance is already covered with the backlog that we have, that we received mostly in 2025. So all the orders that we expect to get during 2026 probably will be recognized in revenues in 2027.

That's terrific. Thanks. Maybe just touching on Peru. I know that business can be a bit lumpy. I know that they have an election plan coming up. Can you maybe talk to the kind of cadence how you expect the Peru business to unfold this year?

Sure. So in Peru, during 2025, we got an award for upgrading four regional networks that we maintain. We are in discussion with the government to upgrade the remaining two networks. We believe that we'd be able to close it before the election in the second quarter. In parallel, there are a lot of internal discussions in Peru of very large RFPs for Internet connectivity, both terrestrial and satellite in Peru. So we expect to participate in those RFPs. A lot of traction in Peru. We don't believe that the election will cancel any of those RFPs. Probably, we'll see most of the RFPs during the first quarter and during the fourth quarter of the year.

Really helpful. Thanks. I'll get back in the queue.

Thanks. Bye.

The next question is from Sergey Glinyanov of Freedom Broker. Please go ahead.

Good morning, gentlemen. So you provided pretty positive guidance for defense, and you mentioned a new area of expanded operations in earth observation solutions. But could you put some colors on these contracts and its margin profile? Could it be a significant driver for defense revenue this year, and do you expect defense order acceleration in Q1 compared to Q4? Thank you.

Hi, Sergey. So I'll start with a general comment on the defense. We saw in revenues relatively small growth year over year. It's mainly due to the previous shutdown of the US administration that caused some delays in orders. We didn't lose any deal, but because some of the revenues are recognized based on project progress, and if the order arrives late, we are unable to recognize revenue. So we'll see it in 2026. We did see very nice more than 35% year-over-year growth in orders getting in. As for the earth observation, it typically has the same margin profile that we see on those kinds of deals, which is give or take the average of Gilat, between, I would say, 30% to 40%.

Great. Thank you. That's all from me.

The next question is from Louie DiPalma of William Blair. Please go ahead.

Great. Adi and Gil, good afternoon. Hi, Louie. How are you?

Excellent. I'm following the private placement, what areas of M&A are you targeting?

That's a very good question. So first of all, we are open to we are not limiting ourselves to a specific segment, but our main focus is on the defense. On one hand, we want to increase our market presence both in the US, but we are also focusing on Europe. There is a lot of business in Europe, a lot of budget, especially because of the Russian Ukraine war and conflict between the Trump administration and the European countries. So they want to control their own destiny and increasing their investment in defense. And we see also a lot of traction in secure satellite communication. So we are targeting companies over there. Our main focus is to bring businesses, not to buy technology, and we'll continue to look for companies with great potential. It's something that can be significant to the company's revenues. So it could be with revenues of $50 million and above or maybe $100 million and above. And it should be accretive as soon as possible. It's not that we are not we will not buy a company that needs a turnaround, and we know how to do that. We did that in DataPath. We bought a company with less than $40 million in revenues, and close to breakeven, and now it's almost double their revenues. We're also looking to expand our addressable market in adjacent markets, for example, radar solutions, electronic warfare, and things like that. But it will be something that we are considering. We are doing internal work to define exactly where we want to focus. But also, we might be opportunistic here. In addition, we invested in the past in a startup with unique technology, a company called Crossroads, and we'll continue to look for unique technologies, either a minority investment or taking control. But it's not something that is going to change the overall financials of the company.

Great. And secondly, did Stellar Blue attain the second milestone related to the $120 million in new backlog by December?

So, no, they didn't attain the airline milestone. They achieved around slightly above half of it. A very large order that we are expecting to get slipped into 2026. We know that it's being processed. We expect to get it, if not by the end of this quarter, so early next quarter. It's not affecting our revenues for 2026 because revenues for 2026 are already in the backlog. There is a nine to twelve months lead time on the main components of the terminal. So we are pretty close for 2026. We can affect it here and there, but not materially. The order that we are expecting should be delivered mainly in 2027. And since we need to deliver it based on customer needs, if it will arrive today or within two months, it's not really a big issue from our perspective. I would like to emphasize that from our perspective, the risk of delivery and the risk of new business is mitigated. We see the very good acceptance of the antennas in the market, the very good quality, the availability of more than 95%. More than 420 aircraft are connected and more than 500 delivered in 2025. So we know for a fact that the risk that we wanted to mitigate are mitigated. We do expect to see future growth.

And what was Stellar Blue's revenue in 2025, and what is the general projection for growth in 2026?

So revenues for 2025 were about $127 million within the range that we gave between $120 million to $150 million. Today, Stellar Blue is, in 2026, closely integrated with Gilat's business. It's hard to break the P&L. We do expect from a revenue perspective to see a double-digit growth in unit deliveries.

And one final one. Did you previously indicate that you made progress with Airbus for the inclusion of Sidewinder into its line fit program?

So we do have an agreement together with SES to bring the Sidewinder to be line fit with Airbus. SES will be able to install the terminal within Airbus premises. It's not yet part of the official Airbus plan of the HBC plus.

Great. Now that is still seems fairly positive. Thanks.

I agree. Thank you, Louie. See you soon.

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

I just want to a little bit on Stellar Blue. I think the other the next set of milestones, say, for targeting those with the large strategic contracts. I think those are separate from the large order just mentioned. Which is more of a commercial customer. Can you give us an update on how they're progressing on some of those strategic orders?

Chris, you're a bit disconnected. Can you repeat the question, please?

The question was whether you've made any progress with Stellar Blue on some of the strategic opportunities that they're pursuing.

Okay. So you are referring to the third earn-out. We are making some progress with one company that we cannot name yet. It's progressing well. I don't know if we'll be able to close everything by the end of the milestone, which is by June, but it seems promising. We are progressing. I want to remind you that it's not just signing the agreement. It has some technical conditions as well. It needs to come with a minimum order commitment of at least $35 million with a gross profit, which is significant, almost double the gross profit that the original units booked had. And come with a relatively significant down payment. The pause in the discussion with the customer seems like applying to those conditions, but it's still in early stages. I cannot comment if it will be closed or not.

Understand. And would those products require significant changes in manufacturing or design? And where do you currently stand in the production rate?

So those future products might require significant design. A lot of our product and a lot of our design changes are approved relatively quickly because Stellar Blue's expertise is with those certifications, working based on qualification by similarity. But in some of the cases, we are offering a different variation of the terminal with a cheaper design. It really depends on the customer. In terms of production, we said at the beginning of the year that we expect to reach 60 to 70 units per month. So we reached this run rate. During the fourth quarter, we delivered 190 full terminals, including on top of it, we delivered some spare parts. We can increase this production rate with relatively small capital investment. But right now, this production rate is give or take in line with customer expectations for delivery. During the year, we delivered more than 500 units. In Q4, it was a record quarter in terms of deliveries.

Understand. And should we expect the deliveries to be relatively even across the year or there's a seasonal pattern to that?

No. In 2026, we expect it to be linear across the year. Of course, it can be small changes between the quarters, but it's expected to be linear.

Understand. And staying on IFC, do you have an update on, let's say, ESR 2030 terminal? I think that was supposed to be charging early this year for delivery. Is that still on track? And maybe more broadly, what are your evolving thoughts on what is the sweet spot of the flat panel antenna market both in terms of your, you know, fan or, you know, single beam, dual beam, where are you taking in the new product direction?

So in terms of the ESR 2030, we passed qualifications and we expect to start delivering production units probably in the second half of the year. It really depends when Gogo is ready to accept them. Know that Gogo is promoting the terminal and already have some small awards that they want to install those antennas. So I think it's on track for the year. As for the future roadmap, you know, the antenna currently doesn't support simultaneously dual beams. The plan is that the next generation of the product will support dual beam. But usually, it comes with customer demand. So it's really what matters to their customer. Fast time to market or he has the time to wait for a new version of the antenna with dual beam capabilities.

Right. And I assume based on the earlier or the delay in the large order, the backlog probably dipped below $1,000. Where do you expect it to finish out, say, maybe by midyear and then from here?

It's a good question. We do not disclose the number of units that we have in backlog. I can say that at year-end, we are give or take at the same level that we are at the beginning of the year, maybe slightly below. We do expect to finish the year with a backlog that will cover us for at least 2027 and beyond.

Great. Thanks for the update.

Thank you, Chris.

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

Yes. Thank you. Good morning. Excellent year, excellent quarter. Congratulations. My question is, we haven't heard in a long time about high-speed ground transport, like high-speed rail. There was a project on the way, I think, in China on that. Any updates on that in that area?

Indeed, I remember the project in China, I think it was ten years ago when I just arrived at Gilat, was promising back then. But since then, we didn't see a lot of traction. We do have here and there some terminals that we are selling for fast trains around the world, but it's in limited numbers. And right now, it's not our main focus. Thank you.

Thank you, Gunther.

If there are any additional questions, please press 1 or use the raise hand button. Please stand by when we pull for more questions. There are no further questions at this time. Mr. Benyamini, would you like to make a concluding statement?

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

Thank you. This concludes the Gilat Satellite Networks Ltd. 2025Q4 results conference call. Thank you for your participation. You may go ahead and disconnect.