Ladies and gentlemen, thank you for standing by. Welcome to GILAT's first quarter 2026 results conference call. All participants are at present in listen-only mode. Following the management formal presentation, instructions will be given for the question and answer session. For operator assistance during the conference, please press star zero. As a reminder, this conference is being recorded May 13, 2026. By now, you should have received the company's press release. If you have not received it, please view it in the news section of the company's website, www.gillat.com. I would now like to hand over the call to Mr. Sanjay Harry of Alliance Advisors IR. Mr. Harry, would you like to begin, please?

Thank you, Hila. Good morning, everyone. Thank you for joining us for Gilad Satellite Network's earnings conference call for the first quarter of 2026. With us on the call today are Mr. Adi Svadia, Gilad's CEO, and Mr. Gil Benyamini, Gilad's Chief Financial Officer. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions, reductions in revenues from key customers, delays or reductions in U.S. and foreign military spending, acceptance of the company's new products on a global basis, and disruptions or delays in its supply of raw materials and components due to business conditions, global conflicts, weather, or other factors not under the company's control. The company cautions investors to not place undue reliance on forward-looking statements, which reflect the company's analysis as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Gillette's financial results is included in the company's filings with the Securities and Exchange Commission, including its latest quarterly report. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I'd like to turn the call now to Gilad's CEO, Aidi Schadier. Please go ahead, Aidi.

Thank you, Sanjay, and good day, everyone. Thank you for joining us today to discuss Gilad's first quarter results. I am pleased to report that we opened the year with solid execution across the business, reflecting strong performance, for the competitiveness, long year-over-revenue growth and profitability. As satellite operators programs, from VHDS satellites to NGSO constellations, we are seeing our capabilities translate into new orders, expanding customer engagement, and growing opportunities. This momentum is closely tied to the progress we continue to make in technology diverse in advanced and interoperable systems designed to support the evolving requirements of next generation satellite communication networks. During the quarter, ELAT Defense conducted a live demonstration of its virtualized SATCOM gateway modem architecture at Satellite 2026 in Washington, D.C., in collaboration with Amazon AWS, SCS Space and Defense, and the WAVE Consortium, and so to define gateway architecture designed to improve scalability, resiliency, and agility for defense and government networks, and represent a significant step forward in how future SAPCOM gateways will be deployed and operated. In parallel, we successfully conducted a 5G non-terrestrial network demonstration, highlighting how satellite systems can integrate with future 5G-based architecture. Together, this milestone reflects our continued investment in technology solutions that will support next-generation satellite and hybrid networks across both commercial and defense markets. First quarter revenues reached $110.5 million, 20% year-over-e revenue growth, and and first-quarter adjusted EBITDA reached $15.1 million, almost double the same quarter last year. Overall, the first quarter reflects continued disruption and position as well for the reminder of the year. Now on to the business review. I will start with the defense business, an increase in interest for transportable and portable Stockholm solutions driven by the growing importance of mobility, rapid deployment and operational flexibility. As militaries and government users increasingly operate in dynamic and contested environments, the value proposition of highly mobile, resilient SATCOM solutions continues to strengthen. This demand translates into meaningful order during the quarter. In February, we announced a $16 million order from the European Ministry of Defence for our DK transportable solutions, reinforcing our leadership in high-performance, rapidly deployed systems. penetration into the European market, driven in part by the evolving geopolitical environment and higher defense readiness requirements across the region. In Israel, we continue to strengthen our relationship, enforcing our long-term strategic balance scenarios, critical environments, as defense customers transition away from legacy technologies. Also in the United States, we continue our long-standing support of the U.S. Army. During the quarter, we received an order of approximately $6 million for field and technical services, reflecting the continued reliance on GILAT defense to support mission-critical SATCOM operations and ensure system availability in the field. Our defense pipeline remains strong, supported by sustained global demand, and our continued investment in R&D, advanced system architectures, and customer engagement. Turning to our commercial business. In the first quarter, our commercial business continued to show solid performance and steady execution across our programs. As satellite operators and service providers move forward with Next Generation Network, they are increasingly focused on platforms that offer scalability, flexibility and multi-orbit support for our mobility applications. GILAT remains well positioned within this in-flight connectivity remains one of our key growth engines. Demand for IFC continues to increase, consistent, high-performance connectivity, growing passenger usage and the industry's transition towards NGSO and multi-orbit networks, GILAT technology roadmap and product portfolio. As of today, we have delivered approximately 750 side-windor ISA terminals, of which more More than 570 are already installed and in service. We reached an important key in-cabin milestone to offer SideWin Derisa Terminal as a line-fit solution and deliveries of the first units are expected in Q4 this year. Starting a process to achieve a line-fit every quarter, we announced $39 million in orders for our SideWin Derisa Terminal. These awards reinforce the market's confidence in its performance and multi-orbit capability. We have also expanded with the ESR 2030, which is now commercially available. ESR 2030 is designed to support commercial and defense applications over the OneWeb Leo constellation, complementing our side window offering and broadening our addressable market. With growing interest in Leo services, we believe ESR 2030 positioned us well to support new programs and as operators move from network deployment towards commercial services, IST integrator for solid-state power amplifiers to support connectivity solutions. Across the industry, operators are operating grounded infrastructure to support a wider range of services across multiple orbits. SkyH4 is built for this shift, providing a scalable software-defined platform that enables efficient management of complex multi-service satellite networks. A recent example is our strategic multi-million dollar partnership with Nelco in India to deploy SkyS4 in support of India's first Ka event service deployment using the JSAT-N2 HTS satellite. India represents an important growth market for GILAT and a central part of our expansion strategy in the Asia-Pacific region. The deployment will enable scalable, high-performance connectivity across multiple services, including IFC, Cellular Mecon and Enterprise Connectivity, delivering the performance and flexibility required for KA deployments. The commercial pipeline remained healthy, supported by continued IFC demand alongside longer-term investments in advanced satellite networks architecture. Our Peru business continued to execute very well, with strong operational progress across our national connectivity programs. One great project that was announced a few quarters ago, ahead of schedule in the second quarter of 2026, demonstrating Gilad Peru's ability to deliver large-scale, complex infrastructure projects reliably and on time. These results strengthen our position as a trusted partner for national digital inclusion initiative and provide a solid foundation for continued activity in the region. We expect additional large RFPs and follow-on orders during the year. I am pleased to say that we continue to have a strong backlog and a healthy pipeline. Therefore, we feel comfortable reiterating our 2026 annual guidance. We expect 2026 revenues of between $500 and $520 million and adjusted EBITDA of between $61 to $66 million. Technology development remained a core pillar of our strategy across defense and commercial markets. During the quarter, we advanced software-defined system capabilities that enabled more scalable and resilient satellite networks, while also continuing our work on integrating satellite networks with future 5G NTN frameworks. Together, these efforts support next-generation satellite systems and community and commercial applications. Demand across our core markets continue to develop favorably, and our strategic focus on mobility multi-orbit architectures and next-generation systems is translating into tangible momentum across our business. GILAT Defense continues to see strong customer interest as defense and government organizations expand investment in mobile, Brazilian, and SATCOM capabilities. We continue to see growing engagement across the United States, Europe, and Israel, supported by a robust pipeline and ongoing investment in advanced architectures that address evolving defense requirements. IST remains one of our key growth engines, supported by increasing airline demand and and continued adoption of ESA-based solutions. We continue to maintain a strong balance sheet and financial flexibility while remaining disciplined in our capital allocation. Mergers and acquisitions continue to be a key element of our defense and long-term growth strategy with a focus on opportunities that complement our core technologies, strengthen our defense portfolio and support sustainable value creation. Overall, we delivered a solid start to 2026, validating the strengths of our diversified portfolio across our business. With growing backlog, a healthy pipeline and a continued investment in technology leadership, Gilat is well positioned to sustain growth and create long-term value. And with that, I will hand over the call to Gil Bin Yemini, our CFO. Gil, please go ahead.

Thank you, Adil. Good morning and good afternoon to everyone. Before I dive into the numbers, I would like to remind everyone that our financial results are presented on both GAAP and non-GAAP basis. I will now walk through our financial highlights for the first quarter of 2026. Dadi mentioned we delivered a strong first quarter, which was mainly driven by the higher revenues related to the new. Our GAAP gross margin in Q1 26 was 34% compared with 31% in Q1 25. The increase is primarily at operating expenses in Q126, where as a result, we delivered a significant improvement in income of 4.0% in a year-over-year swing. The net income in Q126 was 5.2% of 11 cents, higher operating income, as well as higher financial income. According to non-GAAP results, our non-GAAP gross margin in Q126 was 36.25, and non-GAAP Gap operating income in Q126 was $12.5 million compared with $5.2 million in Q125. The non-gap net income in Q126 was $13.6 million for a diluted income per share of $0.18. The adjusted EBITDA reached $15.1 million, nearly doubling year-over-year, reflecting strong operating leverage from higher revenue. Moving to our balance sheet and cash flow, over the past several quarters we significantly During the quarter, we used approximately $12.2 million in operating cash, primarily driven by working capital timing, while generating approximately $15 million. We ended the quarter with a strong liquidity position of $171 million on activity and remained within our expected. During the quarter, we were at $9 million, $500 million. Looking ahead, based on our strong backlog and visibility, we are expected to be between $500 to $520 million for EBITDA of Between Financial Review. I would now like to open the call for questions.

Thank you. Ladies and gentlemen, at this time we will begin the question and answer session. If you have a question, please press star 1. If you wish to cancel your request, please press star 2. If you are using speaker equipment, try to leave the hands in before pressing the numbers. Your questions will be formed in the ordinary seat. Please stand by for the portfolio of questions. The first question is from Ryan Kuntz of Medium & Company. Please go ahead.

Thanks for the question. Maybe start with the commercial segment here. Sounds like Stellar Blue is executing pretty well. He talked about better margin improvements. And, you know, how are you seeing the overall demand environment for the Stellar Group product? You know, what's behind some of the gross margin improvements? And, you know, how are you thinking about this business kind of over the medium term and into next year? How's the visibility looking relative to backlog, et cetera?

Hi, Ryan. A guidance on Stellar. They reached a relief, and we do expect once we start delivering a line-fit unit.

Great. And those line pitches, is that starting initially with Boeing here?

Correct. With Boeing, we passed the in-carbin certification, waiting to the full certification during Q4.

Great, Adi. Thank you. And then maybe I'll continue on commercial relative to SkyEdge 4. You know, a nice win in India here, as well as, you know, the demo for the virtualized with AWS. But how are you thinking about that transition from kind of hardware to a software-based platform? Any updates you can share with us about how you think that business evolves over the next year or two?

I think Hero 2, it's a short development in the Hero 2 platform, meaning at day one you get give or take for the gateway and all the upgrades and moving to commercial and running on virtual platform, I guess it's three to four years now, and it's combined together with the plans of shifting the waveform from DVB-S2X to 5G and TN.

Perfect, makes sense on that. And then maybe shifting to defense, any other color you can provide you talked about, you know, some traction with other countries? Is this for the mobility products you talked about, or is that more of a U.S. need for your mobility defense products?

I think it's a combination of the two. I think that everyone understands, especially now after the Middle East got hit, and they will need to replace them. And we believe that the replacement will be done with a mobility solution, the gateway advantage. We are already starting to see a very big market that is growing, and our presence over there is very important, and this penetration to a new MOD is crucial for our future growth, and also we see a lot of traction in Israel. So all in all, we believe that the defense, the strong pipeline will drive at the end significant booking year. It's important to remember that there is a time between booking to revenues. In the defense it's typically projects and it takes six to nine months from the order until you deliver the product and in some cases if it's a big project it can take much more than that. So we are very optimistic about our growth in defense in 26 and more in 27.

It's helpful, Adi. Thanks very much.

Question is from Chris Quilty of Quilty Analytics. Please go ahead.

Thanks, Adi. Just to follow up, you were saying six to nine months from booking to ship. Are you seeing any changes or any indications, you know, here in the U.S. where the administration is really pushing hard on moving quickly? Do you see any possibility of, you know, that ordered, you know,

order to ship GAAP closing over time? It really depends on, you know, it's lead time and inventory. If we will, but definitely if we... Great, and when you talk about the uptick in

portable solutions, is it fair to assume that that's all coming out of the Datapath portfolio

products? The portable and portable solutions are mainly from Datapath products, but we do see also very nice business to our modems solutions and we do and hope to view that in the US gotcha and staying on defense I mean you mentioned demos

with Amazon AWS and SES I know on the Amazon side you do some hardware into Amazon Leo but what is the connection with Amazon AWS the main idea is to

to run our AWS platform and this is the demonstration in DC that come and of course we need to tailor AWS and customer requirements but I see that the demo and is it fair to assume this is a virtualized platform correct it's virtual platform we are running our gateway modem on the AWS platform which connects to a standard modem at the end-user site.

Very good. You know, I guess back on the traditional geo side of the business, it appears that both Airbus and California Space have now kind of gotten their act together with regard to the next-gen software-defined satellites. I think the first ones are going up next year. So, at what point do you start to see an uptake in equipment to support those systems?

Getting all of them, give or take 6 to 12 months before the satellite launch, and the deployment really depends on the customer. I believe we will start getting this year. We need to deliver everything this year, but some of it is factored within our guidance already.

Gil, the gross margins were nice in a quarter. Obviously, that was a little bit mixed and a little bit stellar blue. On the stellar blue side, it's profitable, but you were shooting for 10% EBITDA, exiting, you know, 25 didn't happen. You know, do you have a sense of where in 26 you expect to hit that milestone?

integrated into GILAT with the operations team and R&D team and so on. I guess that if we would you know go back and measure it, the company would be we don't do it we don't do it anymore so it's less relevant but we definitely see this improvement a long time. Of course with the line fit deliveries that, as Adi mentioned, expected to start at the last quarter of this year. It will also give another improvement to the growth margins and to the EBITDA margins of this activity.

Chris, I think it's important to mention that we do start investing in next generation ESA technology on a daily basis. It's not big yet, but we do expect them to have more than $10 million business with defense this year.

You know, and I know you did have, you know, in the original purchase agreement and earn-out agreement, you know, some large strategic wins that were part of that. How is that stuff shaping up? Is it still on the horizon here, maybe not on the time zone, the timeline that you were targeting?

We do, with one of the strategic deals that it's progressing, we do expect coming here in 2026 and I'm not sure.

Alright, well thank you gentlemen.

The next question is from Sergei Munijanov of Freedom Broker. Please go ahead.

Good day, gentlemen, and my congratulations. You provide really great work on your gross margin side. So my question is recently that on NTN solution and I'm wondering, do you see any surging demand on your 5G NTN solution? Have this trend got better visibility?

team? We do see a lot of traction in the market on 5G, NTN, OneWebgen2 and also startups are talking on 5G modems and here and there also geo players are talking about 5G modems. I think that the overall requirement in the market is not mature enough. So we do, we already started the work on 5g network mainly the main building blocks but in order to launch it we need the coming year

what do you expect well when when the market conditions would be ready for full deployment

of the systems 5g and the end full deployment advanced is iris square from today okay got it

And a little bit about Peru, your statement about this segment, should you think the most part of revenue leaning towards the second half of WG26?

We do expect to get the first one, but in general, it's a swap when you see relatively high revenues in short time and then recurring revenue over a period of the second half.

And I would add to that, I think the important thing or takeaways about Peru is that the base level of the recurrent revenues of Peru is to be in previous years and the implementation are, you know, boosting it for the next years. So you can see that we're in a much better position over there.

Okay, thank you very much. Thank you for taking my questions.

The next question is from Louis de Palma of William Blair. Please go ahead.

Hi, Adi and Gil. I was wondering, what is the potential timing of the Airbus partnership with the Stellar Blue system? How long do you think that will take to materialize? Will it be similar to the timeline with Boeing?

I think it will be slightly faster than the timeline with Boeing because we are we gain some some knowledge testing our equivalent so we can use the qualification and tests that we have done of course the documentation is totally different and we need to the knowledge we gain through the boing do you have any any sense for the timing

should it take should we be thinking 2027 2028 what is your thoughts there i would say that we

expect to finish the certification process early 2027 and ship first unit second half of 2027.

And earlier in the call, did you mention that you should ship the first unit to Boeing in the fourth quarter of this year? Correct. And my second question, And also relating to the Stellar Blue development, I think for the past year, you've been working on, like, multi-beam technology. And it would also seem that, like, the broader in-flight connectivity industry is looking for multi-band technology, so a terminal that can communicate both in KA band and KU band. What is the progress for these initiatives, and how far away are we from having Stellar Blue multi-beam or for multi-band?

So, multi-beam is mainly dependent on ability, and I think today with KUKA, I think certification cycle, and I think it will be in launch of the AI.

Excellent. Thanks, everyone.

If there are any additional questions, please press R1. Please stand by, we will be pulled for more questions. There are no further questions at this time. Mr. Benjamin, would you like to make a concluding statement?

I want to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak with you on our next call. Thank you very much and have a great day.

Thank you. This concludes the last first quarter 2026 legal conference call. Thank you for your participation. You may go ahead and disconnect.