Welcome to the 20th Annual Needham Growth Conference. I'm Ryan Koontz. I cover the communications, networking, and space sectors here at Needham. Joining us, you see a great turnout here today. Space is really turning up the heat of late. It's been a really exciting time to work in the sector. We're joined today by Gilat Satellite Networks, who's a world leader in satellite networking technology solutions and services. We have CEO Adi Sfadia and CFO Gil Benyamini here with us today. Gil's going to give a short presentation with us today, about 15 minutes, overviewing the company. Then Adi and I will step up and have a little quick Q&A fireside type. But with that, Gil, take it away.
Thank you, Ryan. Hi, everyone. Thank you for joining us today to the presentation. Let's start. So we'll start with a brief presentation of Gilat. Gilat is providing satellite communication services and solutions for the defense and for the commercial markets. We don't build satellites. We don't own satellites. We provide the connectivity to and from the satellite itself. Our solutions and products include hubs, which are the main servers, antennas, aero antennas, modems, receivers, transceivers, and all kinds of services and platforms that enable the connectivity to and from the satellites. And you can see here on the right the main markets that we serve. So the first two on the top are the defense market and the IFC, the in-flight connectivity market. I'll speak about it in a few slides. These are the two main markets that we focus on.
You can see other markets like solar backhauling, connecting solar antennas to the internet via satellite in rural areas, land mobility, which is mainly trains, maritime, of course, government and enterprise connectivity, and digital inclusion, which is a general space usually supported by governmental subsidies to connect the unconnected people and to overcome the digital divide. We're a global company established almost 40 years ago. So we're a long-time player, 1,200 employees in about 20 locations. And we're traded here in Nasdaq and in Tel Aviv. We're focusing on three main segments. The first one is the defense segment with a high focus on the U.S. DOD. The second segment is the commercial segment. And here we serve a variety of markets like the IFC and the solar backhauling, the enterprise, and we'll touch it in a second. And the third market, or the third segment, is Peru.
In Peru, we provide both terrestrial and satellite-based solutions and services. And we're connecting large parts of the country to fast internet. Let's speak about our customer base and then attach it to the value chain. So we have four main groups of customers. The first group would be the satellite operators. These are the most, I would say, pivotal players, the owners of the satellites. And you can see here names like SES, now including Intelsat, JSAT, Hispasat, and others. The second group of customers would be the service providers. These are mainly MNOs and ISPs. And here you can see names like T-Mobile here in the U.S. that we provide full-minute services for, Gogo for business aviation, TIM in Brazil, many MNOs in Japan, and others. The third group would be system integrators that take our solutions and integrate it into a bigger one.
Here you can see names like Boeing, General Dynamics, Airbus, Safran, and other large players. The fourth group would be government and agencies, of course, related to the defense market. If we look at the value chain, so at one end, we have the satellite manufacturers. They would manufacture and launch the satellite for the operators. Operators were the first group that I discussed in the previous slide. The operators are monetizing the capacity of the satellite and sell it to the service providers. They would provide their service to the end- users. End users could be each end market that I described before. We are here in the middle, just between the satellite operators and the service providers. We would usually sell the platform and the large solutions to the satellite operators. Then we would sell the end- user terminals to the service providers.
In some cases, we sell it to the satellite operator. But this is where we are in the ecosystem. We see a lot of consolidation within the ecosystem, both between satellite operators and other satellite operators, and the same within the service providers like Gogo and Satcom Direct, for example. And at the end of the day, it makes our opportunities much, much larger. Let's speak about Gilat itself. So here on the left side, you can see our TAM. And you can see that it's very nicely growing from the area of $4 billion to the area of $7 billion in the next few years. What are the catalysts for that? What makes it grow? So there are a few megatrends that push the whole market. One is the abundance of capacity. We see today much more capacity than we used to see a few years ago.
Satellites, GEO satellites that used to have one beam 10 or 20 years ago moved to a dozen of beams and then to hundreds of beams and in the future to thousands. So it means much more capacity on each and every satellite that could be monetized. The second trend is the launching cost, the decrease of the launching cost. When I say decrease, it's about 90% decrease in the launching cost, and these two megatrends move the whole needle in the market. So today, there is much more capacity available for flights, much more capacity available for defense users, and much more. So we focus at the end of the day on three areas. One is VHTS and NGSO. VHTS stands for very high throughput satellites, and NGSO is the non-geostationary orbits. It's the low and mid-earth orbits.
The second focus area is the in-flight connectivity, which today represents about 40% of our business, very fast growing, and the third area is the defense market, representing a little bit lower than 25% of our business today. Let's speak about the orbits for a second, so geosatellites have been here for a very long time. These days, we see the opportunities mainly with the VHTS satellites, software-defined satellites, and satellites that carry a lot of capacity. Within the MEO, medium-earth orbit, there is currently one active constellation of SES, and Gilat is the sole provider of equipment and solutions to it, and in the LEO, there are currently two active constellations, Starlink, which is a closed garden, and OneWeb, for which we provide amplifiers to the gateways. We also provide amplifiers to Amazon, which is about to be operative very soon.
In discussions with IRIS square, which is a very large European initiative, mainly defense-oriented and also commercial-oriented, that could represent a very big opportunity for us. All in all, the most important point here is that the more capacity that runs in the system, in the market, and runs over our systems, the more revenues we have. You can see that in all of the orbits, we see more and more capacity running. How do we do it? We have our own platform called SkyEdge IV. This platform is, in the last few years, the most advanced one in the market. It was designed and built in order to serve multi-orbit and very high throughput constellations. It serves all kinds of applications. You can see it here. It's, of course, ready for the next generation, meaning 5G and cloud.
About the commercial market, so you can see here all the verticals that we're serving. I'll speak about the IFC in the next slide, but in the maritime, we have business in cruise ships. We have a very large business of enterprise and solar backhaul. For many years, we're a strong player in that, and in the gateways, we provide the amplifiers to the LEO constellations. Last year, we acquired a company called Stellar Blu, which developed and now manufactures aero antenna for commercial users, and it is a core component of our IFC strategy. As I said before, IFC represents about 40% of our revenues, just a little bit below $200 million.
We have solutions for all kinds of IFC equipment needs, starting from the platforms, the SkyEdge IV, going to the modems on the airplanes, the amplifiers, and of course, the aero antennas, both for commercial users and for business aviation users, and you can see here on the right the logos of airlines that use our solutions, so the chances of going up to an airplane and finding a Gilat solution and using it in a connected airplane is pretty high. Let's move to defense, so the nice thing today is that I don't have to explain why satellite and defense are working together. Looking at all of the conflicts in the world and all of the budgets which are allocated to space and satellite is self-explanatory, but you can see here some numbers on the left side with the U.S., of course, leading the market.
This is a trend that is going on for some time and only accelerates. We have a variety of solutions with a focus on the U.S. DOD and a much larger go-to market, including other countries, of course, like European countries, Asia, LATAM, and others. We've acquired a company here two years ago, DataPath, Atlanta-based company, which focuses mainly on portable and transportable hubs. Also provides boots-on-the-ground services to the U.S. DOD and lifted our revenues from about less than $30 million two years ago to $100 million this year. We expect to see doubling in the next three, four years to the $200 million and even further. Adi will touch it with Ryan in the Q&A. The third area is Gilat, Peru. In Peru, we provide both terrestrial and satellite-based businesses.
Gilat won over the last 10 years six regional bids, large bids in Peru to provide terrestrial connectivity into rural areas. Overall, value of about $600 million. In 2025, we won another $85 million of upgrade and enhancements to this network. Peru today represents more than $50 million of recurring revenues to Gilat, very nicely profitable. We expect it to continue growing with a very nice pipeline of opportunities in Peru. I'll finish with some numbers. We're in January, soon to announce the annual results and next year's outlook. Revenues for 2025 are expected to be between $445-$455 million, representing 47% growth compared to last year. The main catalyst here was Stellar Blu, but it's a combination of organic and inorganic growth. EBITDA is expected to grow from $42 million to a midpoint of $50 million, $52 million.
$52 million next year, representing 23% growth. This was the quick review. I'll turn it to you.
Great job, Gil. Thank you.
Seat, stand.
Yeah, I'm going to stand up here, I think, because I don't have, we don't have an extra mic. Adi, so apologies. Adi, I've been covering the company for five years now. Nice to see the patience pay off in terms of performance in the stock and your results. Can you maybe walk us through some of the important trends that drove the success you saw in 2025 and how you think about that going forward, some of the key bets you made and how it's paying off?
Yeah. For years, we are delivering on our promises. We are investing a lot internally in R&D.
We also made an acquisition in January 2025, AeroAntenna Company, electronically steered antenna that drove a lot of traction and business to Gilat. We gave guidance of between $120-$150 million in terms of revenues. From Stellar Blu. From Stellar Blu, yeah. And we delivered on our promises. We'll land somewhere in this range. So we met our revenue expectation. I know that at the beginning, investors asked us if a conservative company like Gilat is doing the right move. I think that over time, everyone understands that we did the right move. We had some beginning issues with ramping up production. We had to replace some of the avionics around the antenna. We have internal capabilities. So today, we are in a full ramp-up of production, delivering about 60 units a month. The main customer is SES.
We have a lot of business with SES, not only on the ESA terminal. SES is a very large customer of Gilat. We have a very good relationship with them. And their entire business going forward is based on Gilat equipment, both on the networking side and on the electronically steered antenna side. I think this is the main trend on top of being a profitable company, showing yearly growth both on the top line and on the bottom line.
So it sounds like there's some synergy even on the sales and product side as you offer kind of both ends of the solution. Can you maybe explain that a little more for those that aren't familiar with the terminal and the kind of hubs? Yeah.
So what we deliver to SES is the gateway equipment, the hubs and data centers that sit with the gateway with big antenna that talk with their satellites. And at the end, there are modems. User terminals can be together with a simple dish antenna or with an electronically steered antenna on in-flight connectivity. Our antenna is very unique. It's the only antenna today in the market that provides both LEO connectivity and geostationary connectivity. With LEO, it's worked with the HNS modem on the OneWeb LEO constellation. On the geo side, it works with Gilat modem that you saw earlier in the picture, that modem that can provide up to 400 Mb per second to the aircraft.
We have a large network covering more than 25 satellites, 30 gateways globally, with one management system of Gilat that manages the entire IFC network of SES in parallel to the OneWeb network that OneWeb is managing for SES, so there is a lot of complementary solution, and the way our business with SES is built is that every time they have another satellite, every time they increase their capacity, they need to buy more licenses and more equipment from Gilat, so it's not a recurring business, but we call it internally recurring business, so we have the equipment, and every quarter, on average, we see more and more business with SES. SES is also a MEO constellation, which is a medium-earth orbit constellation. More than 15 satellites today. They expect to be more than 100 satellites in the next five years.
Today, Gilat is the major equipment provider for SES mPOWER constellation. We expect this to grow significantly in the coming future. Another business that we see from SES is that they are planning to launch two new satellites, IS-42 and IS-43, and it represents a very significant opportunity for Gilat. We expect to get orders in 2026 for satellites that will be launched in 2027.
Great. Stellar Blu, I know when you acquired it, it came with quite a backlog. You've been working that backlog down. What's still ahead of you here in terms of deliveries, changes, and others? Explain maybe what line-fit means in some of the.
Yeah. So indeed, Stellar Blu, when we bought the company, it was a startup company that finished development of the terminal, was around moving to production. Production ramp-up was in 2025 at the beginning.
They came with a backlog of slightly above $150 million for orders from both. Back then, it was Intelsat that was acquired by SES and Panasonic and OneWeb. We started delivering. They started delivering towards December 2024, and we ramped up production during the second quarter of 2025. We received during the year another $100 million in orders, so we are entering 2026 with significant backlog that we still expect another large orders from both SES and Panasonic in 2026. We have insight to the awards that they got from airlines, both new airlines and additional aircraft to existing airlines. So we know exactly what to expect. We expect to have significant orders. We are give or take will be covered for our 2026 revenues and more to 2027.
Great. And the line fit opportunity?
The line fit opportunity is an important opportunity. Good question.
Today, we have two types of orders from SES. One is for retrofit when you place the antenna on the airline on their premises, wait for a maintenance window, and then it takes a day or two to place the antenna on the aircraft. Line-fit means that you install the antenna on Airbus or Boeing premises. We already got the first Line-fit order. The Line-fit order is much more profitable than the retrofit unit. It's give or take the same cost but comes with much more certification, and it's cost more, and they are willing to pay premium for that. We are working with Boeing. We expect to finish the Line-fit certification by the end of the second quarter, and we expect to see installation in the second half of 2026.
And we recently started work with SES on Airbus line fit, which provides much greater potential for the future. The new orders that we expect to get will be a mix of retrofit and line fit. We believe that within two to three years, we will have much more line fit than retrofit deliveries.
Excellent.
There is a question over there.
Can I ask, what is the mix of revenues between equipment, software, and services? And the second part of the question is, I seem to remember that satellites have kind of an eight or 10-year life. What happens at the end of the satellite life?
Sure. The question was a mix of hardware, software, and services and end-of-life satellite sunset. Yeah. So impacts.
In general, I think that the rule of thumb around 25% of our business is services. Some of it is recurring.
Some of it needs to be renewed on a yearly basis, and some of it is one-time services. Hardware and software, in most of the cases, come together. We have the networking equipment is our new generation of platform, what we called internally SkyEdge IV, is built in a way that on day one, you are getting the entire equipment that you need for the entire satellite on the entire constellation, and all the upgrades later on are being in a software license mechanism. It's not a recurring, rather one-time CapEx buy for licenses. So we cannot separate the licenses from the hardware. The second question was the satellite end-of-life. Geostationary satellites usually launch for 15-17 years. So after 17 years, they have enough fuel to be diverted from their orbit. So they won't interfere in new satellites going to this specific Earth location.
LEO satellites is usually for five to seven years. So every five to seven years, you need to start and launch new satellites if you want to continue to have global coverage. Yeah.
This is a really great presentation. Thank you. Can you talk a little bit about Intelsat and the OneWeb announcement yesterday? So they bought, I think, 340 satellites. Yeah. Do you participate in that? Would you be a beneficiary of that? And can you talk about sort of the competitive landscape, whether Intelsat will compete against Starlink? How do you see sort of the whole competitive dynamic there?
Sure. So the question was about Intelsat's announcement for OneWeb expansion, major expansion purchase, and impacts on you and with the competitive landscape. Next slide.
So Intelsat bought OneWeb, I think, if I remember correctly, in 2020. And OneWeb started to launch satellites earlier.
I think that they started in 2018. We delivered to OneWeb the gateway amplifiers, so very strong amplifiers. It was a very large order for more than $80 million, and today, we continue to provide services and sell spare parts and things like that, so we do expect from this order of extra satellites, we do expect to see continuous business from OneWeb on the amplifier side, but it's not going to be a big order. Now, OneWeb satellites are close to their end-of-life term. It relates to the previous questions, five to seven years, so if they want to keep the global coverage and OneWeb sells capacity both to SES IFC business and to Panasonic IFC business, these are their main customers, so if they want to keep their global coverage, they must replace those satellites. They wanted to raise or to launch second-generation satellites.
We were the finalist on the ground equipment development, but then the European community launched an initiative called IRIS square to want to compete with Starlink or not to be dependent on the US and on Starlink, and the user side took a decision after a verbal award. They took a decision to hold the OneWeb Gen2 development and to put their focus on IRIS square because they saw the two of this constellation converged, and they said after the consortium will take decision on IRIS square, they will return to OneWeb Gen2. The satellite that they are going to launch now, the order from Airbus, is for Gen1, so basically, the main idea is to retain the global coverage that they have today. They are using used network modems, so we do see some potential, but not a lot. Now, the way Eutelsat and SES compete with Starlink, it's a good question.
I think it's better to ask them, but what we see in the market is that both Eutelsat and SES are almost fully booked with their satellites. They don't have free capacity to compete with Starlink over price. They are working with the lucrative applications, in-flight connectivity, trunking, maritime, and they are almost fully booked. For example, SES launched seven mPOWER satellites. They don't have capacity to sell to anyone, so they don't see a reason why to compete Starlink on reducing prices. We do expect that when they launch the next-generation platform, probably the Eutelsat satellite will come with increased capacity. SES will go to 100 MEO satellites. They will launch the new GEO satellites, and together with IRIS square, they will have plenty of capacity, and they will start fighting also over price, and we need to remember that Amazon LEO is also entering into the market.
So I think that the overall dynamics is good for the industry. I think that it drives a lot of traction and forces both Eutelsat and SES to increase their constellation. And it's a big potential for Gilat. I hope that I answered your question.
Great. Great stuff, guys. Maybe Shifton, just following that up on the defense opportunities you've done so well with the U.S. DOD. I know that's kind of your wheelhouse. You did the great acquisition of DataPath a couple of years back. How do you think about those products evolving to sell, cross-selling maybe into more U.S. DOD? And what does the emerging opportunity look like in other countries for sovereign solutions, which I'm hearing a lot about in the space sector?
S o indeed, as Gil said, you don't need to explain why satellite is important to space today.
Three years ago, we decided to return and invest in the space industry in 2015. After several earnings warnings, Gilat decided to reduce the investment in the defense. Also, back then in the Obama administration, the DOD budget was cut. We returned to invest late in 2022. In 2023, we acquired a company in Atlanta called DataPath. They are a satellite defense integrator. They are selling portable and transportable solutions. We bought them in 2023. They did around $38 million in revenues, close to break-even. Today, they are almost double the revenues, very profitable. We replaced the management team over there. We converted them recently in 2025 to be a proxy company. So they are able to keep all the security clearances. And also, as a proxy company, they are treated by the DOD as a U.S.-owned company. So it's opened much more markets for them.
The recent announcement about the Earth observation deal is totally related to the fact that they are a proxy company. We see a lot of top-line synergies between DataPath and Gilat and our other subsidiary in the U.S. called Wavestream. We already sold more than $10 million of DataPath product into the Israeli Defense Forces. And we see a lot of traction around the globe for more and more business of defense. We more than doubled our R&D investment in the defense. We are developing a highly resilient, dedicated modem for the defense. But we are also trying, or we are seeing a trend of defense adopting commercial solutions with very small changes. So we are trying to certify our M-Power modems into the defense. We are working closely with SES Space and Defense. This alone represents a lot of potential for the future.
In 2026, our guidance shows that we are going to do around $100 million. It's slight progress about 2024. In 2024, we have a very large order of amplifiers from the DOD. We call it a program of record. Every few years, they are buying an additional batch of equipment. Because we are newcomers to the defense, we have a relatively small number of program of records. Once we will have five, six, seven program of records, every year we'll have a significant order from one of those programs. We are discussing with several agencies a very large project. We do expect to close several of these in the coming few years, and we expect to see a nice growth in the future. From orders perspective, we saw very nice growth in 2025 that will convert to revenues in 2026.
We need to understand that in the defense, the sales cycle is very long, and in some cases, converting orders to revenues takes time. In some cases, it's required development. In some cases, it's very long items. The portable and transportable solutions are very expensive. We don't hold them for inventory, so we build to order. It's a unique product for every agency, so it takes time to convert it to revenues.
That's great. Maybe we just have a minute left, but maybe touch on Peru a little bit. It's been a steady business, sometimes not always linear, and you saw some real successes here in the last couple of quarters. Walk us through how you thought about in the past and how you think about that business in the next couple of years.
So Gilat active in Peru for almost 30 years.
It started back then with bridging Digital Divide, rural connectivity, payphones in the jungles, satellite connectivity to schools. Over the years, it's evolved to a satellite and terrestrial solution, and in 2025 onwards, Gilat got an award to build six terrestrial networks in six different regions in Peru, including an agreement to maintain those networks for 10 years and also to sell services over the networks, so we already finished the construction of the networks. Some of them, we are already past half of the maintenance period. Some of them, we just started the maintenance period. Recently, we got an award to upgrade four out of the six networks for $85 million. We also work with telcos and local service providers in these regions.
For example, we provide services to a consortium called IPT, Internet para Todos, which is a consortium of Telefónica and Facebook who provide 4G solutions to the rural. This deal comes with almost 100% margin because we just sell the capacity of the network, and we have the team on the ground regardless to maintain those networks. We are providing also a Wi-Fi hotspot in those regions, subsidized by the government. In Peru, there are elections in April, so they have a lot of money to spend up until the election, so they want to close the two upgrades for the remaining two networks. They considered another wave of upgrading those networks and also issuing new RFPs before the election. Of course, after the election, we expect to have like three to six months quiet over there.
We do expect them to try and utilize the 2026 budget towards the end of the year. We have a high expectation to continue to see a significant growth in Peru. Today, the business over there is $60 million or so. We expect it to grow to a run rate of $80 million in the next two or three years. We need to remember it's large orders, but most of them are recurring revenue business. It's a return every year. Usually, the agreement is for three, five, and ten years. Quite a mix of services and ongoing operations. In most of the cases, it's a one-time construction and then several years of recurring business services.
Great. Any final comments, Adi, in terms of key elements of the story that you think investors are missing?
No, I think with the questions asked, we covered most of the areas.
I think it's an exciting time. Satellite was a niche market for years, and today, we are in the midst of a transition. Big players are coming in. The existing players are merging between themselves. We have $166 million that we raised in the last quarter. We are aiming to increase our business. We are aiming to make inorganic transactions to increase the business, to increase our addressable market. We are working closely with our partners. I think they have a lot of room to grow, and we see a bright future ahead of us.
What's up with SpaceX? Is it a theme that there are emerging competition coming globally to SpaceX or Starlink? And you guys would benefit from that? Is that part of the story at all?
Yeah, I think it's definitely part of the story. We are working with all the non-Starlink camp.
We have decent business with Eutelsat, not big enough. We expect to increase it with their next satellite launches, the geostationary satellites. We have a big business with SES. We are maintaining the largest in-flight connectivity network right now in the world, so every business that SES or Eutelsat is doing is a very large potential for Gilat. There are a lot of new sovereign constellations that we are hearing, in some cases, rumors, but in some cases, tangible discussions. Because of the geopolitical situation today, almost every country wants to have its own satellites to control its own destiny, so we are hearing a lot of countries want to launch small satellites, geostationary satellites. There is a lot of new startups in this field that know how to launch a geostationary satellite for 10- 15 years in a fraction of the price of the regular satellite.
Regular satellite, including the launch cost, can be between $300-$500 million. The small sat can range between $50-$100 million, which is much more affordable. Today, our platform is by far more advanced than our competitors. It doesn't mean that all the business will go to Gilat. If you talk to SES and Eutelsat, they will tell you that our platform is three or five years ahead of our competition. We are a very flexible company. We know to develop and integrate our solution with others. We believe that if they will grow, it will be a great potential for Gilat. There's tremendous interest in not being dependent on Starlink and SpaceX. Everyone wants a second source, period. When you talk to European companies, they want to reduce the dependence on the U.S.
And Starlink, they didn't like the fact that Starlink one day with them, one day against them. So especially in Europe, they want to be independent. And within Europe, each country wants to control its own destiny. So Poland and Germany and others want to control their own destiny. Germany is talking about allocating budget to launch their own LEO constellation, regardless of IRIS square constellation, that they are also part of it. So there is a big potential in Europe.
Great. Thanks all for joining, everyone. Thank you.
Thank you very much.
Great to know.
Hi, and thank you very much. It's really great.