Q4 2024 Summary
Published Feb 13, 2025, 6:16 AM UTC- Strong growth expected in the defense segment, with revenues projected to increase from $98 million in 2024 to $100 million to $110 million in 2025. This growth is driven by increased orders and awards, as Gilat leverages its expertise in supporting defense operations.
- Successful ramp-up of production at Stellar Blu, with 75 units delivered in Q4 2024 and positive customer feedback. This indicates strong potential for growth in the commercial segment, especially in In-Flight Connectivity (IFC), bolstered by the acquisition of Stellar Blu.
- Projected growth in the power amplifier business next year, as Gilat is pursuing large opportunities on the NGSO (Non-Geostationary Orbit Satellite) side.
- Declining revenues due to termination of activities in Russia and anticipated headwinds in Peru: The company faced a revenue decline from Russia, which used to contribute around $20 million per year. In 2024, they had approximately 50% of that (~$10 million), and in 2025, they expect a $10 million headwind due to the exit from the Russian market. Additionally, they anticipate delays in the renewal of some recurring contracts in Peru, which might push revenues down in 2025. ( , , , )
- Potential delays in securing contracts from the IRIS2 project: While initial discussions with the IRIS2 consortium have been positive, management expects delays in the project's timeline. Contracts and agreements might not be finalized until early 2026, and this timeline is considered aggressive, which could impact future revenue growth from this initiative. ( )
- Increased R&D spending may pressure profitability: The company plans significant investments in research and development, particularly in the defense segment and with the integration of Stellar Blu. This includes developing new modems, terminals, and electronically steered antennas. The increased R&D expenses, expected to be in the magnitude of a few million dollars, could affect margins and overall profitability. ( , )
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Revenue Guidance | FY 2025 | no prior guidance | $415 million to $455 million | no prior guidance |
Adjusted EBITDA Guidance | FY 2025 | no prior guidance | $47 million to $53 million | no prior guidance |
Stellar Blu Revenue Guidance | FY 2025 | $120 million to $150 million with anticipated EBITDA margin exceeding 10% | $120 million to $150 million | no change |
Defense Segment Growth | FY 2025 | no prior guidance | Grows from $98 million in 2024 to between $100 million and $110 million | no prior guidance |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Defense segment expansion and DoD opportunities | • Q1–Q3 2024: Emphasized strong momentum and multiple contracts (e.g., >$5M, $9M DoD orders) plus cross-selling via DataPath. | • Acquisition of DataPath (~$50M in 2024), ~$9M in new DoD orders, adapting SkyEdge IV for defense, aiming for 1–2 large awards. | Consistently mentioned with increasing traction; remains a key growth driver. |
DataPath integration | • Q1–Q3 2024: Integration seen as a major synergy driver in defense; cross-selling with Wavestream; steady revenue contribution. | • Now part of the new Gilat Defense division; leveraging DoD relationships, expecting more bookings in 2025 and revenue impact in 2026. | Recurring topic with deepening integration each quarter. |
Stellar Blu acquisition and commercial IFC growth | • Q1 2024: No acquisition mentioned; only IFC progress on ESAs and modems. <br>• Q2 2024: Stellar Blu expected to add $120–$150M in 2025, accretive to non-GAAP results. <br>• Q3 2024: Delayed closing, forecasting $25–$35M in Q4 revenue, strong ESA demand. | • Acquisition completed Jan 6, 2025; over 125 multi-orbit ESA aero terminals shipped; highest growth in IFC segment. | Growing focus on IFC with ESA solutions; large future potential for commercial aviation. |
R&D spending on advanced technologies (ESAs, modems, terminals) | • Q1–Q3 2024: Limited or general references; no detailed breakdown. Small fluctuations in R&D with mention of future ESAs and modem developments. | • Significant investment in defense-focused modems and ESA for UAV; shifting more budget toward defense and commercial aero expansions. | Reallocation toward military and ESA developments; heightened emphasis in Q4. |
NGSO power amplifier business | • Q1 2024: Delivering SSPAs to a new NGSO operator, expecting tens of millions in future orders. <br>• Q2 2024: Highlighted LEO gateway SSPAs; OneWeb Gen2, Iris Square potential. <br>• Q3 2024: Positioned for multi-orbit ESA/SSPA solutions. | • Still pursuing large NGSO amplifier deals, projecting growth in 2025; demand for Wavestream LEO gateway SSPAs noted. | Ongoing momentum and consistent pursuit of LEO/NGSO contracts. |
Exiting Russia | • Q1–Q2 2024: No mention. <br>• Q3 2024: Exiting the market, ~$10M annual revenue historically lost. | • Historically ~$20M from Russia, down to ~$10M in 2024, citing a key revenue decline. | Growing impact on revenue; exit is completed with notable headwinds. |
Recurring contract delays in Peru | • Q1–Q3 2024: No specific mention of delays, though Peru was highlighted for expansions and profitability. | • Cited delays in renewing some contracts, minor revenue impact expected in 2025. | Newly mentioned in Q4; potential short-term headwind but long-term optimism remains. |
Potential delays in IRIS2 | • Q1 2024: Called out complex European project; timeline could slip to 2025. <br>• Q2 2024: No mention.<br>• Q3 2024: 3–4-year development, no near-term product revenue. | • Timelines remain “very aggressive,” awards possibly in 2025–2026, risk of further delays. | Repeated caution on schedule; long horizon for revenue impact. |
Negative organic growth overshadowed by acquisitions | • Q1 2024: 12% organic growth reported, not negative. <br>• Q2 2024: -4% organic, offset by acquisitions. <br>• Q3 2024: -10% organic against +17% overall. | • No mention in Q4 about negative organic growth specifically. | Mentioned in Q2–Q3 but not reiterated in Q4. |
Shift from commercial to business aviation | • Q1 2024: Anticipated move toward business aviation, seeing growth potential. <br>• Q2 2024: Emphasized ESA solutions for biz-av but no clear shift. | • No mention in Q4 about shifting from commercial to business aviation. | Mentioned early in 2024; not emphasized recently. |
Competition from Starlink | • Q1 2024: Minimal threat in U.S. maritime/IFC segment, Gilat’s presence small there. <br>• Q2–Q3 2024: No mention. | • Starlink seen as indirect competition, but industry growth from free Wi-Fi benefits Gilat. | Re-emerges in Q4; Gilat views Starlink as an industry-wide factor rather than a direct threat. |
Amazonia region infrastructure | • Q1 2024: Completed six-region build in Peru, pending acceptance. <br>• Q2 2024: Construction nearly done, margin increase expected. <br>• Q3 2024: Implementation completed, entering supervision, services phase soon. | • No mention in Q4. | Previously recurring progress updates; no new Q4 reference. |
Intelsat-SES merger synergy | • Q1 2024: Management optimistic about synergy, seeing a combined roadmap. <br>• Q2–Q3 2024: Not discussed. | • No mention in Q4 about merger synergy. | Mentioned once in Q1, then dropped. |
Operational efficiencies and cost controls | • Q1–Q2 2024: No specific commentary.<br>• Q3 2024: Highlighted cost reduction targets, operational efficiency improvements. | • No mention in Q4 on new cost-control efforts. | Mentioned in Q3; not continued in Q4 commentary. |
Cellular backhaul stagnation | • Q1 2024: 4G remains strong, 5G in early phases, no stagnation mentioned. <br>• Q2 2024: Slight slowdown viewed as temporary. <br>• Q3 2024: No major new initiatives, market “shifting to the right”. | • Decline in 2024 due to delayed satellite launches; expecting resumed growth once new satellites come online. | Ongoing slowdown but optimistic rebound tied to future satellite deployments. |
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EBITDA Margin Outlook
Q: Is EBITDA margin decrease in 2025 due to Stellar Blu and R&D?
A: Yes, the slight decrease in EBITDA margin for 2025 is primarily due to Stellar Blu having a lower gross profit during its production ramp-up phase, which affects EBITDA. Additionally, we plan to significantly increase investment in the defense division, especially in R&D and sales and marketing. We expect Stellar Blu to be EBITDA positive for the year and to achieve more than 10% EBITDA in the second half. We anticipate a significant improvement in margins from 2026 onwards. -
Stellar Blu Guidance
Q: Is the $120–$150 million guidance for Stellar Blu still valid?
A: Yes, the previous guidance of $120 million to $150 million for Stellar Blu in 2025 is still relevant and is included in our overall guidance. -
Defense Segment Growth
Q: What is the outlook for growth in the defense vertical?
A: We're excited about the Gilat Defense segment, especially after acquiring DataPath, which did slightly more than $50 million in 2024, and we expect it to grow in 2025. We're seeing increased business with the U.S. DoD and internationally, leveraging synergies to sell DataPath solutions. We are bidding for large programs that include development efforts and expect a significant booking increase in 2025 with revenues impacting 2026 onwards. We're aiming for at least one or two very large awards to support future growth. -
Peru Revenue and Profitability
Q: What is the revenue and profitability outlook for Peru?
A: While we anticipate some delays in contract renewals pushing 2025 revenues down slightly, we believe that Peru is going to grow over the long term. Most revenues are for longer terms, and the operational revenues from recent projects will begin in 2025. Service revenues in Peru are associated with higher profitability, which compensates for the decrease in revenue. -
Stellar Blu Production Ramp-Up
Q: How is the production ramp-up for Stellar Blu progressing?
A: In Q4, Stellar Blu began its production ramp-up, delivering around 75 units. We have tens of active systems installed and performing well on aircraft. We're in a good position to reduce terminal costs but it's too early to discuss the earn-out milestones, with the first expected by midyear. -
Competitive Environment in IFC
Q: How is the IFC market evolving post-Stellar Blu acquisition?
A: With Stellar Blu, we have the leading multi-orbit ESA terminal offering the best size, weight, power, and cost in the market. We have opportunities with several service providers and aircraft manufacturers, aiming to become a line-fit option in large aircraft manufacturers by 2025–2026. The industry's shift to free Wi-Fi increases potential growth for Gilat. -
SkyEdge IV Outlook
Q: What is the outlook for SkyEdge IV in the commercial sector?
A: Growth in SkyEdge IV is currently flat due to delays in launching new VHTS satellites by large manufacturers. We expect revenues from next-generation SkyEdge IV shifting to virtual platforms and cloud-based solutions. Significant growth will return once new satellites are launched. -
Power Amplifier Business
Q: Are you pursuing opportunities in NGSO with power amplifiers?
A: Yes, we are definitely chasing large opportunities in the NGSO sector, and we project growth in our overall SSPA business next year. -
IRIS2 Program Timeline
Q: What is the expected timeline for IRIS2 contracts and deployment?
A: Initial discussions with the IRIS2 consortium are positive. RFIs were issued in mid-2024, and we expect RFPs towards mid-year or Q3 this year. They aim to provide awards before year-end and sign agreements in early 2026, but we anticipate some delays in that aggressive timeline. -
Increased R&D Spending in Defense
Q: What are the plans for R&D investment in the defense area?
A: We're investing in new modems, terminals, and projects for the defense sector, with R&D spending increasing by a magnitude of a few million dollars. Overall R&D is expected to remain at the same level, with internal allocations shifting focus. Additionally, Stellar Blu's R&D will contribute to a significant increase, focusing on security features, next-generation modems, and electronically steered antennas for the UAV market.