Gilat Satellite Networks (NASDAQ: GILT) reported second-quarter fiscal year 2026 revenue of $122.7 million, a 17% year-over-year increase, driven by strong performance across its defense, commercial, and Peru segments. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 31% to $15.4 million, reflecting improved operating leverage.

The company also announced a definitive agreement to acquire most of Comtech’s Satellite and Space Communications segment, a move expected to more than double Gilat Defense revenues and strengthen its U.S. presence. The transaction is subject to regulatory approvals, including HSR and CFIUS, and is expected to close by year-end.

Financial Performance

Revenue for the quarter grew from $105 million in Q2 2025. The Commercial segment contributed $83 million, up 20% year-over-year, primarily due to inflight connectivity (IFC) vertical revenues. Defense segment revenue reached $22.5 million, a 12% increase from $20 million in the prior year period. The Peru segment posted $17.2 million in revenue, an 8% rise from $15.9 million.

GAAP gross margin remained stable at 30%, consistent with the previous year but lower than Q1 2026 due to a less favorable deal mix in the Commercial segment. This was partially offset by higher margins in the Services segment. Non-GAAP gross margin stood at 32%, down slightly from 33% in Q2 2025.

GAAP operating income fell to $4.7 million from $5.7 million in Q2 2025, impacted by an earn-out provision related to the Datapath acquisition recorded in general and administrative expenses. Consequently, GAAP net income decreased to $8.1 million ($0.10 per diluted share) from $9.8 million ($0.17 per diluted share).

Non-GAAP operating income rose 35% to $12.6 million from $9.3 million. Non-GAAP net income increased to $15.6 million ($0.20 per diluted share) from $12 million ($0.21 per diluted share). The divergence between net income growth and diluted earnings per share reflects a higher share count following $166 million raised in late 2025.

What the Numbers Show

Adjusted EBITDA margin expanded by 140 basis points to approximately 12.6% from 11.2% in Q2 2025. This margin expansion occurred despite GAAP operating expenses rising 24% to $32.6 million from $26.2 million. The discrepancy highlights that the increase in GAAP expenses was driven largely by non-cash or non-operational items (the Datapath earn-out), while underlying operational efficiency improved, allowing adjusted profitability to outpace revenue growth significantly.

Balance Sheet and Cash Flow

The company used approximately $1.9 million in operating cash during the quarter, primarily due to working capital needs associated with second-half deliveries. Days sales outstanding (DSOs) were 110 days, excluding Peru construction activity, remaining within expected ranges. Liquidity stood at $159 million as of June 30, 2026, comprising cash, cash equivalents, restricted cash, and short-term deposits. Shareholders’ equity totaled $545 million, up from $536 million at the end of Q1 2026.

Business Updates

In the Defense sector, Gilat secured an $11 million order from the U.S. Department of Defense for SATCOM terminals and field services, alongside a multi-million dollar order from a European Ministry of Defense. The company also introduced the Viper Ka UAV terminal for unmanned ISR applications.

The Commercial segment saw over $20 million in orders for SkyEdge platforms and $43 million for Sidewinder ESA terminals from a leading IFC service provider. Boeing line-fit certification activities continue, with first unit deliveries expected in Q4 2026. Airbus line-fit availability processes have also begun.

In Peru, infrastructure upgrades were completed in three regions, transitioning to operational phases. The company noted that recent Stellar Blue milestone payments were not met due to qualification criteria, ending earn-out obligations for that acquisition.

Guidance

Gilat reaffirmed its full-year 2026 guidance, expecting revenue between $500 million and $520 million (13% growth) and adjusted EBITDA between $61 million and $66 million. Management noted that unfavorable Israeli shekel movements against the U.S. dollar are expected to increase operating expenses in the second half, offsetting some margin expansion potential.

Gilat Satellite Networks (NASDAQ: GILT) unit Gilat DataPath has secured a contract worth more than $32 million from the US Pentagon. The order is for DKET systems, with deliveries expected over the next 12 months.

The award marks a significant expansion of Gilat DataPath's long-standing DKET activity. It strengthens Gilat Defense's position in larger and more complex US mission-critical communications programs.

Order Details

DKET Systems operate across Ku, Ka and X-band networks. The platforms are designed for rapid transport and deployment at alternate locations. They help customers maintain continuity of operations and restore high-capacity communications in dynamic operational environments.

Strategic Context

Nicole Robinson, President of Gilat DataPath, stated that the award demonstrates the increasing importance of relocatable ground infrastructure in modern defense communications. She noted that mobility becomes a strategic advantage when critical connectivity needs to be established or restored quickly and reliably.

Robinson added that their proven transportable gateway solutions give customers the flexibility to rapidly enable and sustain communications wherever operational requirements demand.

The order reinforces Gilat Defense's role as a trusted provider of advanced military communications solutions. It highlights the company's ability to deliver resilient, transportable capabilities that address evolving operational demands on today's battlefield. The deal also supports Gilat's continued growth in strategic defense communications programs across the US and allied markets.