Gilat reiterates 2025 guidance for $415M–$455M revenue while ramping Stellar Blu production

Earnings Call Insights: Gilat Satellite Networks Ltd. (GILT) Q1 2025

Management View

• Adi Sfadia, CEO, highlighted that Q1 2025 is the first quarter operating under the newly aligned organizational structure, stating, "Q1 revenues reached $92 million, a 21% increase year-over-year. Adjusted EBITDA was $7.6 million." He noted, "Q1 2025 was the first quarter we included Stellar Blu's results in our financial results. Stellar Blu contributed about $25 million to our top line and incurred an adjusted EBITDA loss of about $3.6 million." Excluding this loss, adjusted EBITDA was $11.2 million, up 20% year-over-year.

• Sfadia emphasized the impact of global macroeconomic challenges, explaining that the company "proactively initiated adjustment to our raw material sourcing several months ago... strategically shifting from higher to lower tariff countries and to the US." He also stressed the positive market response to the new Gilat Defense Division and detailed new contract wins: "During Q1, Gilat Defense was awarded over $5 million to support critical connectivity for the US DoD and international defense forces," and additional contracts in Asia and for the UAV market.

• Sfadia announced, "We are highly optimistic that these products will be adopted to serve on GEO, MEO and LEO constellations for critical government applications."

• In Commercial, he reported $15 million in orders from satellite operators for SkyEdge IV and high-performance SSPAs, and highlighted the success of Stellar Blu's Sidewinder ESA, which has now been installed on more than 150 aircraft.

• CFO Gil Benyamini stated, "Revenue for the first quarter were $92 million, 21% increase compared to $76.1 million in Q1 '24. The increase was led by the Commercial segment due to the acquisition of Stellar Blu, combined with the growth in the Defense segment and offset by lower revenue in the Peru segment."

Outlook

• The company reiterated 2025 annual guidance: "projected revenue between $415 million and $455 million, representing year-over-year growth of 42% at the midpoint. Adjusted EBITDA is expected to be between $47 million and $53 million, represented year-over-year growth of 18% at the midpoint," according to CFO Benyamini.

• Sfadia added, "Stellar Blu's yearly performance remains on track, with revenue expectation of between $120 million and $150 million. We also expect Stellar Blu to reach a 10% adjusted EBITDA margin run rate during the second half of the year."

Financial Results

• Q1 revenue was reported at $92 million. Commercial segment revenue was $64.2 million, Defense at $23 million, and Peru at $4.8 million.

• GAAP gross margin decreased to 30.9% from 36.9% in Q1 '24, primarily due to "lower margins in Stellar Blu as it ramps up production as well as amortization of purchased intangibles and lower gross margins in Peru," said Benyamini.

• GAAP operating expenses rose to $31.1 million, with a GAAP net loss of $6 million or a loss per share of $0.10. Non-GAAP net income was $1.8 million or $0.03 per share. Adjusted EBITDA was $7.6 million. The company used $6.6 million for operating activities in Q1, mainly to support the working capital needs of Stellar Blu. Total cash and cash equivalents and restricted cash were $64.3 million as of March 31st, 2025.

Q&A

• Louie DiPalma, William Blair: Asked about European defense spending benefits. CEO Sfadia replied, "We are seeing a lot of traction from Europe defense increased budget. Nothing yet materialized, but we are seeing a lot of demand requests for RFPs and things like that."

• DiPalma: Asked about Boeing line-fit milestones. Sfadia answered, "There are some adaptation to the terminal and now we are in the certification process. So it seems like that within the next two or three quarters, we'll get this qualification and we'll be ready."

• DiPalma: On Peru revenue linearity, Sfadia noted, "We do expect Peru revenue run rate to be $45 million to $50 million. This quarter it was relatively low because several large projects that are about to be renewed, the renewal was delayed, and we expect to have it hopefully in Q2 and if not in early Q3."

• Ryan Koontz, Needham & Company: Asked about Stellar Blu integration and go-to-market resources. Sfadia responded, "I think we have internally enough resources to achieve our goals. I think we have a strong backlog that covers most, if not all of our market guidance."

• Sergey Glinyanov, Freedom Brokers: Inquired about Sidewinder production. Sfadia stated, "We are expecting by the end of the year, before the end of the year to reach to about 100 units per month."

• Omri Efroni, Oppenheimer: Sought clarification on Boeing certification and earn-out structure. Sfadia clarified, "This specific deal with Boeing was signed before we signed the acquisition. So it's not part of the earn-out."

• Chris Quilty, Quilty Space: Queried about the timing and size of large gateway orders and LEO opportunities. Sfadia shared, "OneWeb Gen 2 is right now on halt until Eutelsat will better understand the synergies between OneWeb and IRIS²."

Sentiment Analysis

• Analysts directed questions toward risk areas such as European defense opportunities, integration and production ramp at Stellar Blu, certification milestones, and Peru revenue timing. The tone was neutral to slightly cautious, especially around timing of certifications and revenue realization.

• Management maintained a confident and optimistic tone in prepared remarks, with Sfadia repeatedly expressing optimism in growth engines and confidence in achieving guidance, but displayed more measured, detailed responses during Q&A, especially on areas with timing uncertainty.

• Compared to the previous quarter, the management tone remains confident but with added caution regarding external factors and operational execution risks, while analysts showed consistent interest in execution and integration risks.

Quarter-over-Quarter Comparison

• The company maintained its annual revenue and adjusted EBITDA guidance from the previous quarter.

• Q1 revenue increased compared to Q1 '24 and Q4 '24, largely due to the inclusion of Stellar Blu. However, GAAP gross margin and net income declined, reflecting integration and ramp-up costs.

• Strategic focus sharpened on defense (with new division), continued investment in R&D and sales, and production scaling in commercial aviation connectivity.

• Analysts' questions in both quarters focused on Stellar Blu execution, defense pipeline, and regional business dynamics. Management's confidence regarding growth engines and backlog coverage was maintained, but with more detailed discussion of integration and certification risks.

Risks and Concerns

• Sfadia identified macroeconomic turmoil and shifting international trade policies as challenges but noted, "Recognizing trends early, we proactively initiated adjustment to our raw material sourcing several months ago."

• Peru revenue continues to face timing uncertainty due to project renewals and government negotiations.

• The company cited supply chain issues affecting Stellar Blu component deliveries, but management is working on internal alternatives and expects resolution by end of Q2 or early Q3.

Final Takeaway

Gilat Satellite Networks enters 2025 with momentum from significant revenue growth and the integration of Stellar Blu, supporting increased guidance for the year. The company is pursuing expanded defense and commercial opportunities, while closely managing integration challenges, supply chain risks, and project timing uncertainties. Management remains confident in achieving full-year targets, underpinned by strong backlog coverage, new product launches, and proactive strategies to navigate external market volatility.

Read the full Earnings Call Transcript