Gilat's Defense-First Pivot: Comtech Acquisition and Stellar Blu 'Free Run' Mark a New Chapter

Strong Q2 with 17% revenue growth, but the strategic narrative is the pending Comtech deal and the end of earn-out obligations on Stellar Blu.

GILT · Earnings Call · 2026-08-05

Gilat Satellite Networks delivered a strong second quarter, with revenues up 17% to $122.7 million and adjusted EBITDA up 31% to $15.4 million. But the real story is the company's aggressive shift toward defense, highlighted by the pending acquisition of Comtech's satellite and space communications business and the freeing of Stellar Blu from earn-out constraints.

Defense Ambition: The Comtech Acquisition

The most consequential development this quarter is the definitive agreement to acquire most of Comtech's Satellite and Space Communications segment. As CEO Adi Sfadia stated:

During the quarter, we announced a significant strategic milestone with the signing of a definitive agreement to acquire most of Comtech's Satellite and Space Communications segment. The transaction is expected to expand our position in mission-critical Defense and Satellite Communications, strengthen our U.S. presence, broaden our technology portfolio and more than double Gilat Defense revenues.
Adi Sfadia, Chief Executive Officer · 2026-08-05

This move fits a clear pattern: Gilat Defense has been a primary growth engine, and this acquisition accelerates that trajectory. Management expects the deal to close towards the end of the year, subject to HSR and CFIUS approvals. In the meantime, the company continues to win orders: $11 million from the U.S. Department of War and a multimillion-dollar order from a European Ministry of Defense. These wins underscore the Comtech acquisition logic—combining complementary portfolios to chase larger, more resilient contracts. The defense segment itself grew 12% year-over-year to $22.5 million, but the more telling metric is the expected 40% second-half growth over the first half, as CFO Gil Benyamini noted: "our forecast for the Defense is as we presented, and we definitely see a much higher H2 in the Defense compared to H1." (component_hash: 9125863658684685763) That outlook is supported by backlog and delivery schedules. This is the culmination of a strategy the company articulated earlier this year: “Our main focus is on the defense... we want to increase our market presence both in the US, but we are also focusing on Europe.” — Adi Sfadia, Chief Executive Officer · 2026-02-10

Stellar Blu: From Earn-Out to Organic Flywheel

The other major narrative is the maturation of the Stellar Blu IFC business. The company failed to meet the June strategic milestone, but that failure has a silver lining: it terminates the earn-out obligation. As Adi Sfadia explained:

The last milestone of Stellar Blu was to sign a strategic agreement. The milestone was until June 2026. We didn't meet... So basically, we paid $99 million for the Stellar Blu acquisition. And now we are free from earn-out obligations and working on cost reductions and large deployment with our customers.
Adi Sfadia, Chief Executive Officer · 2026-08-05

This removes a significant overhang and lets Gilat focus purely on operational performance. The Sidewinder ESA terminal is being deployed at scale: a record quarter with “more than 200 terminals we delivered this quarter” — Adi Sfadia, Chief Executive Officer · 2026-08-05 and over 600 installed and operating. The company also received $43 million in orders for Sidewinder from a leading IFC service provider, and progress continues on the Boeing and Airbus line-fit programs. The SkyEdge platform remains a foundation for next-generation networks, with over $20 million in orders from a global satellite operator. The commercial segment grew 20% year-over-year to $83 million, driven primarily by IFC. CFO Gil Benyamini noted the record deliveries and said, "it's a combination of the deliveries of the sidewinders that Adi mentioned, the record delivery and hubs and other network equipment." (component_hash: 5120081653804437989) That momentum is expected to continue as line-fit units begin shipping in Q4. The improvement in Stellar Blu's profitability has been a recurring theme; earlier this year, management noted, “We expect them to do better performance this year. They reached the threshold of EBITDA, so now they are profitable.” — Adi Sfadia, Executive (likely CFO or similar) · 2026-05-13

Financials and Guidance: Growth with a Heavy Dose of Working Capital

Financially, Q2 was solid but not flawless. Revenue growth of 17% was accompanied by adjusted EBITDA margin expansion of 1.4 points to 12.6%. However, GAAP operating income declined due to a one-time earn-out provision for DataPath. CFO Gil Benyamini explained, "The increase was primarily attributable to an earn-out provision related to the acquisition of DataPath, which was recorded in GAAP G&A expenses." (component_hash: 8239004563652827650) Non-GAAP operating income grew 35% to $12.6 million. Cash flow was a modest negative at -$1.9 million, driven by working capital needs for the second-half ramp. Management expects this to stabilize. The balance sheet remains strong with $159 million in liquidity and $545 million in shareholders' equity. The company reiterated its full-year guidance: revenues of $500–520 million and adjusted EBITDA of $61–66 million, despite expected $3–5 million of FX headwinds from the shekel. Looking ahead, the market backdrop remains favorable. The bankruptcy of Hughes creates opportunities, as Adi Sfadia noted, "over there, we see opportunity to penetrate." (component_hash: 364045752880082602) And the broader trend toward mobility applications and multi-orbit networks plays into Gilat's strengths. The Defense segment is poised for acceleration, and the IFC business is hitting its stride. The Comtech acquisition, if completed, will transform Gilat's defense footprint and position it among the top players in mission-critical SATCOM.