Gilat Satellite Networks (GILT) Q3 2026 earnings review
Gilat's defense sales jump, but commercial delays cut its outlook
Gilat Satellite Networks, a maker of satellite ground gear and plane Wi-Fi antennas, grew its military business while its commercial and Peruvian sales shrank. Total third-quarter sales slipped 1% to $116 million, though excluding a Peruvian project lull, sales rose 10% by our math. Chief executive Adi Sfadia cut the full-year revenue target by $45 million, and by our math the new plan points to a 16% revenue drop in the fourth quarter.
| Revenue excluding Peru (by our math) | +9.9% total revenue -1.2% from a year ago |
|---|---|
| Defense segment revenue | $36.9M +53.2% from a year ago |
| Adjusted EBITDA | $17.6M +12.8% from a year ago |
| Full-year revenue outlook | Cut $45M middle of the range: 3.0% growth |
⚖️ Verdict: 🔴 Bearish
The story got worse because commercial delays and low-earth-orbit rivals forced a deep cut to the annual sales plan. Sfadia said low-earth-orbit operators are taking share from Gilat's traditional satellite customers, while contract talks delayed plane antenna deliveries. The good news: Defense sales jumped 53% as earlier orders finally shipped, and upfront customer deposits stopped falling.
The question now is whether the commercial slowdown is a brief contract delay or permanent share loss to rivals like Starlink. If it is just timing, the delayed plane antenna and Peruvian orders will lift 2027 sales alongside the Comtech defense purchase; if rivals are taking the market, commercial sales will keep shrinking. Fourth-quarter Commercial revenue and the 2027 outlook will tell.
🐂 Bull Case
Defense Backlog Converted Into 53% Revenue Growth
Gilat's Defense division sells satellite dishes, amplifiers and mobile ground stations to military customers. Because government contracts take six to nine months to turn into deliveries, a major worry was whether early-year orders would arrive in time to lift second-half sales.
They did in the third quarter. Defense sales rose 53.2% from a year ago to $36.9 million, up from $22.5 million last quarter, and the Israeli satellite equipment maker announced over $40 million in new US military awards.
Meanwhile, the planned $157.5 million purchase of Comtech's satellite and space communications unit remains on track to close by year-end. Chief executive Adi Sfadia expects the deal to "more than double defense revenues in 2027", and the new $99 million convertible debt raise gives the business $260 million in cash to pay for it, though merging a large US contractor still carries execution risk.
What to watch: closing confirmation for the Comtech deal by year-end and fourth-quarter Defense revenue. Another quarter near $37 million would prove the standalone military business can grow before the acquired unit joins.
Higher Gross Margin Offset A Bad-Debt Hit
Profitability improved even as total sales dipped 1.2% to $116.2 million. Cost of revenues — the direct cost of making equipment and running networks — fell by 5.6 percentage points of sales, lifting gross margin to 35.1% from 29.5% a year ago.
That manufacturing cushion absorbed higher overhead. General and administrative expenses rose 2.5 percentage points of sales to 8.3%, while other operating expenses added $3.2 million. "Due to cost and pricing discipline, these results were achieved despite weaker currency conditions and bad debt write-offs resulting from Hughes Network Systems’ Chapter 11 filing," Sfadia said. Adjusted EBITDA — operating profit before depreciation, stock pay and one-offs — still rose 12.8% to $17.6 million.
What to watch: fourth-quarter Adjusted EBITDA margin, which the full-year outlook puts at 12.0% by our math against 15.1% this quarter. Clearing 13% would show the third-quarter margin gains were not a one-off mix shift.
Operating Cash Flow Turned Positive As Advances Stabilised
For two quarters, Gilat's forward indicators and cash generation pointed down. Customer advances and deferred revenue — upfront cash from buyers for equipment not yet delivered — dropped 35% in the second quarter, and operations burned cash for three straight quarters.
Both trends stabilised this quarter. Current customer advances and deferred revenue rose $2.8 million from June to $53.0 million, arguing against the fear that aviation customers had finished drawing down their pre-funded orders. Operating cash flow turned positive at $4.3 million, leaving $2.6 million in free cash flow after capital spending. The concern is only fading rather than gone because nine-month operating cash flow remains negative $9.8 million.
What to watch: customer advances and operating cash flow in the fourth quarter. Another rise in upfront payments alongside positive cash flow would confirm the working-capital drain is over.
🐻 Bear Case
Low-Earth-Orbit Rivals And Aviation Delays Cut The Outlook
For the past year, Gilat pitched its Commercial division — which sells ground equipment to satellite operators and Sidewinder antennas for in-flight connectivity (IFC), or plane Wi-Fi — as its main growth engine. In the third quarter, Commercial sales fell 4.4% from a year ago to $69.7 million, down from $83.0 million in the second quarter.
- Full-year revenue outlook: cut by $45 million at the middle of the range, to $455–475 million
- Fourth-quarter revenue implied by the outlook: $115.6 million by our math, down 15.6% from a year ago
- Commercial third-quarter revenue: $69.7 million, down 16.0% from last quarter
Sfadia gave two commercial reasons for the cut. "In IFC, we rescheduled certain terminal deliveries while working through commercial terms that are important to program profitability," he said. He also cited "delays in LEO and GEO satellite development and launches" — referring to low-earth-orbit and geostationary satellites — and acknowledged that "vertically integrated LEO providers gain market share from traditional GEO providers." Because rivals like Starlink build their own ground gear and sell directly to airlines, Gilat's traditional satellite-operator customers are ordering later and pushing back on aviation terminal terms.
What to watch: Commercial segment revenue and Sidewinder contract announcements in the fourth quarter. A second quarter of falling Commercial sales would show that low-earth-orbit competition is permanently shrinking the commercial base.
Share Dilution Turned A 21% Profit Rise Into Lower EPS
Gilat's operating profit growth is not reaching individual shareholders because the share count keeps rising. After raising $164 million in private stock placements late last year and issuing stock to settle an acquisition payout for its DataPath subsidiary, the diluted share count excluding one-offs rose 34.2% from a year ago to 81.7 million.
As a result, net income excluding one-offs rose 21.3% to $14.3 million, but profit per diluted share fell from $0.19 to $0.18. On a reported basis, diluted profit per share dropped from $0.14 to $0.11. This quarter the group also issued $100 million of five-year convertible notes at a 60% conversion premium, which avoids immediate stock issuance but adds potential dilution later.
What to watch: diluted earnings per share in the fourth quarter and the 2027 outlook once Comtech closes. The Comtech acquisition must add enough cash profit to outpace the 34% higher share count.
Peru Delays Halved Segment Sales And Shifted Revenue To 2027
Gilat's Peru division builds and operates government-funded rural internet networks across six regions. Last year, the unit received $85 million in upgrade awards that temporarily inflated third- and fourth-quarter revenue, creating a hard comparison for the second half of 2026.
Even allowing for that comparison, third-quarter Peru sales dropped 53.6% from a year ago to $9.6 million, down from $17.2 million in the second quarter. Exclude Peru, and Gilat's remaining sales grew 9.9% from a year ago by our math instead of falling 1.2%. "In Peru, agreements reached later than anticipated shifted some expected revenue into 2027," Sfadia said, even though the company signed $42 million in new Peruvian contracts recently.
What to watch: fourth-quarter Peru revenue against last year's $28.5 million peak. How much of the new $42 million in orders converts in early 2027 will show whether these government projects remain a reliable profit source.
Risks this quarter didn't answer
Three standing concerns from prior quarters received no new figures in the third-quarter earnings release and depend on the conference call or annual filing.
- Boeing factory-installed antenna timeline: first Sidewinder deliveries were due in the fourth quarter after earlier slips; the release did not mention Boeing and noted rescheduled aviation deliveries.
- Stellar Blu standalone performance: revenue, unit delivery rates and profit margins for the acquired aviation antenna unit remain undisclosed inside the Commercial segment.
- Total order backlog: management announced individual contracts but gave no consolidated or segment backlog figure to compare against the $45 million revenue outlook cut.
💲 Other KPIs
Uncollected customer bills rose 7.1% from last quarter and 34.1% from the end of 2025, even though third-quarter revenue fell 5.2% from the second quarter. Rising receivables absorbed $7.8 million of operating cash this quarter and $30.0 million over the first nine months, despite write-offs from the Hughes Network Systems bankruptcy.
Unsold equipment and parts in stock edged down 4.3% from June's $65.5 million peak, releasing $2.8 million in cash during the third quarter. However, inventory remains 37.9% higher than at the end of 2025 because the satellite group built stock earlier in the year and then rescheduled certain aviation terminal deliveries.
Total cash and deposits rose by $101.1 million from June after Gilat collected $99.0 million in net proceeds from its five-year convertible notes. Subtracting the $96.2 million convertible debt carrying value and a $2.0 million loan leaves $162.1 million in net cash by our math, before paying the remaining $147.5 million for Comtech.
🔮 Guidance
Cut. The middle of the full-year range dropped by $45 million, slowing planned annual growth from 13% to 3.0% by our math. After $349.4 million in the first nine months, the new outlook leaves $115.6 million for the fourth quarter at the middle of the range, down 15.6% from last year's Peru-boosted fourth quarter because of aviation rescheduling, satellite launch delays and late Peruvian contracts.
Cut. Gilat kept the $61 million floor but trimmed the top of the range by $3 million, lowering the middle of the range from 19% annual growth to 16.6% by our math. That leaves $13.9 million for the fourth quarter, down 23.5% from a year ago and equal to a 12.0% margin, down from 15.1% in the third quarter.
❓ Key Questions
How much of the $45 million cut came from each segment?
Gilat previously gave full-year revenue ranges for Commercial ($315–335 million), Defense ($115–130 million) and Peru ($60–65 million). The third-quarter release cut the total target by $45 million without updating the segment ranges, leaving unclear how much was aviation versus Peru.
What commercial terms held up in-flight connectivity terminal deliveries?
Chief executive Adi Sfadia said Gilat rescheduled aviation terminal deliveries while negotiating terms needed for program profitability. Investors need to know whether airline partners are pushing for lower Sidewinder antenna prices or delayed payment schedules.
Are the first factory-installed Boeing antennas still shipping in Q4?
Management previously committed to delivering the first factory-installed Sidewinder units to Boeing in the fourth quarter of 2026. The release did not mention Boeing, and those higher-margin units are the main driver for 2027 aviation profitability.
How large was the Hughes Network Systems bad-debt write-off?
Sfadia noted that third-quarter profit absorbed bad-debt write-offs from the Hughes Chapter 11 bankruptcy, while other operating expenses jumped by $3.2 million and uncollected receivables still rose to $115.3 million. Disclosing the exact write-off and remaining exposure would clarify underlying overhead costs.