Ladies and gentlemen, thank you for standing by. Welcome to Gilat second quarter. All participants are present in listen-only mode. Following management's 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 August 10th, 2021. By now, you should have all received the company's press release. If you have not received it, please contact Gilat's investor relations team at GK Investor and Public Relations at 1-646-688-3559 or view it in the news section of the company's website, www.gilat.com. I would now like to hand over the call to Mr. Ehud Helft of GK Investor Relations. Mr. Helft, would you like to begin, please?
Thank you, operator. Good morning and good afternoon, everyone. Thank you for joining us today for Gilat's secondnd quarter results conference call and webcast. A recording of this call will be available beginning at approximately noon Eastern Time today, August 10, as a webcast on Gilat's website for a period of 30 days. Please note that investors are urged to read the forward-looking statements in Gilat's earnings release, with a reminder that statements made on this earnings call that are not historical facts may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward-looking statements, including statements regarding future financial and operating results, involve risks, uncertainties, and contingencies, many of which are beyond the control of Gilat and which may cause actual results to differ materially from those anticipated results.
Gilat is under no obligation to update or alter these forward-looking statements, whether as a result of new information, future events, or otherwise, and the company expressly disclaims any obligation to do this. More detailed information about risk factors can be found on Gilat's report filed with the Securities and Exchange Commission. With that, let me turn to introductions. On the call today are Mr. Adi Sfadia, Gilat CEO, and Ms. Bosmat Halpern, Gilat CFO. I would now like to turn the call over to Adi. Adi, we're ready to begin.
Thank you, Ehud. Good day, everyone. I would like to thank you for joining us today for our second quarter of 2021 earnings call. I am very pleased with our results this quarter, which demonstrate a solid improvement and return to profitability in our business. We showed strong revenue growth of 49% year-over-year and 27% quarter-over-quarter. The improvement was throughout our income statement, with improved gross margins and a return to profitability on non-GAAP basis, with positive EBIT of $200,000 and adjusted EBITDA of $2.5 million. Our performance was driven by the cellular backhaul, NGSO, enterprise broadband, and defense markets, which have shown significant progress, and we expect this momentum to continue for the foreseeable future. We also made significant progress in the mobility market and in our operation in Peru, securing significant deals.
Looking ahead throughout 2021, we expect to continue our growth trend in both revenues and profitability. We expect the cellular backhaul, NGSO, and our operation in Peru will be the main growth drivers for the remainder of 2021 and beyond. Moreover, looking further out into 2022, we believe that it will be a year of significant growth for our company as our NGSO project further materialize and our mobility segment grows with maritime and defense opportunities and the expected recovery of IFC. In order to materialize the significant opportunities we see ahead, we are investing increased efforts in R&D to better support our future growth. Now, I'll focus on some of the business achievement and highlights for the quarter. Mobility is a major focus area and growth engine for Gilat. We recently secured a multimillion-dollar agreement with SES for our next-generation mobility platform.
This is a breakthrough in solidifying our leadership in the mobility market, enabling supply of initial maritime services to some of the world's top cruise liners and maritime service providers. Connectivity will be delivered by our multi-orbit platform utilizing the O3b mPOWER constellation and other SES GEO satellites, including SES-17. In the IFC market, we are seeing initial seeds of recovery. This remains a highly strategic market for Gilat, and we view the short-term impact from the pandemic over the past few quarters as temporary issue. However, we do believe it will still take some time for the IFC industry to return to its pre-COVID levels and for Gilat IFC segment to recover to its full potential. In the defense segment, we are seeing growing global opportunities, as we mentioned last quarter. We closed several important multimillion-dollar deals in both Latin America and Asia.
Furthermore, we were awarded a $5 million contract by tier 1 U.S. terminal provider to power tactical SATCOM terminals for militaries worldwide. This is in addition to our ongoing successful supply of high-quality military communication products to the U.S. Department of Defense and the U.S. Army from our U.S. subsidiary, Wavestream. In Peru, we received a $30 million award from Pronatel to provide public free Wi-Fi services across hundreds of sites in the regions of Ayacucho, Apurimac, Huancavelica, and Cusco. This two-year project has potential for further expansion to thousands of additional sites and extensions for additional years. We are making significant progress with our strategy to deliver services over the network and as such expect to meet our previously stated goal of $50 million in annual recurring revenues from Peru.
The non-geostationary orbit satellite constellation and the very high throughput satellite segments continue to be a major strategic focus area and growth engine for Gilat. As a leading provider for this market, we see solid growth potential comprising of hundreds of millions of dollars in market opportunities, for which we are making very significant progress in several fronts. We continue to receive multi-million dollar orders from a leading satellite operator for support of low Earth orbit constellation. As we reported in the past, our subsidiary Wavestream was chosen to supply gateway solid-state power amplifiers for this project. We also continue our development of the ground segment for the SES O3b mPOWER satellite constellation and expect to start seeing significant revenue from this project in the coming quarters. The cellular backhaul segment continued to be of strategic importance to us.
We saw significant expansion and follow-on orders during the quarter from our Tier 1 MNO globally. This is a testament to the great value that our customers see in our solution as they continue to expand their networks. I would like to highlight our leading MNO customer in Latin America who expanded a multi-million dollar IoT project for additional coverage provided by Gilat Cellular Backhaul solution. The mobile operator expand its agricultural IoT network to address the critical need to enable better communication between the field and the office. On the 5G front, as the market adoption of 5G is growing, we see strong potential for Gilat to expand its leadership. This will initially be with the drive towards additional 4G deployments and as a next step with 5G as it spread to rural areas.
In North America, we closed a deal estimated at over $5 million with Pacific Dataport to provide broadband coverage in Alaska for everyone, everywhere. This strategic agreement will utilize Gilat multi-application platform to provide both fixed and mobility applications. In the enterprise segment, we also closed important deals in Latin America, including one with Telefónica. In summary, as you can see, it has been very active and successful quarter for Gilat, and I'm particularly satisfied with our solid strategic and financial performance over the past quarter. The strength was driven by cellular backhaul, NGSO, and defense markets, enabling very strong revenue growth and our return to profitability on non-GAAP and EBITDA level following the COVID-19 downturn over the past year. Furthermore, we won new service projects in Peru, which will bring us recurring revenues in the future, as well as new contracts in defense and maritime markets.
We expect our momentum to continue for the remainder of 2021, providing continued growth in both revenues and profits. Moreover, looking further out into 2022 and beyond, we expect significant growth primarily in the following market segments. In the NGSO and VHTS segment, we see opportunities of hundreds of millions of dollars, for which we are making very significant progress. In the mobility segment, we expect to strengthen our leadership with the SES award for our mobility and maritime platform, as well as with the expected recovery of the IFC market as air travel picks up. In the cellular backhaul over satellite segment, we are the global leaders in 4G and LTE, and as such, we expect to enjoy the growing opportunity as markets adopt 5G, for which we have proven technology.
In the defense segment, we believe that our gained momentum with global wins this quarter has further potential of tens of millions of dollars. I'm excited with our potential and look forward to reporting on our progress over the coming quarters and years. With that, I'd like to hand over to Bosmat. Bosmat, we are now ready for your report. Please go ahead.
Thank you, Adi. Good morning and good afternoon to everyone. I would like to remind everyone that our financial results are presented both on a GAAP and non-GAAP basis. We regularly use supplemental non-GAAP financial measures internally to understand, manage, and evaluate our business and to make operating decisions. We believe these non-GAAP financial measures provide consistent and comparable measures to help investors understand our current and future operating performance. These non-GAAP financial measures should be considered in addition to and not in lieu of comparable GAAP financial measures. Non-GAAP financial measures mainly exclude the effect of stock-based compensation, amortization of purchased intangibles, amortization of lease incentive, litigation expenses or income related to trade secrets claims, reorganization costs, merger acquisition, and related litigation costs and settlement, and initial recognition of deferred tax assets with respect to carryforward losses.
The reconciliation table in our press release highlights this data, and our non-GAAP information presented excludes these items in accordance with Regulation G requirements. I will now move to our financial highlights for the second quarter of 2021. Overall, as Adi mentioned earlier, we are pleased with the results. Our quarterly results showed continued sequential improvement and strong year-over-year improvement in both revenue and profitability. Notably, we are very happy to have returned to profitability on a non-GAAP basis in the quarter, which we expect to maintain and improve in the coming quarters. The trend indicates that we are moving in the right direction, and even while the COVID-19 pandemic remains in the background, there is a clear stabilization of our end markets. Our improvement does not yet have the significant contribution of the in-flight connectivity or IFC vertical, which remains weak.
In terms of our financial results, revenues for the second quarter were $56.9 million, up 49% when compared to $38.3 million in the second quarter of 2020, and up 27% compared to $44.7 million in the previous quarter. The increase was driven by revenue growth from enterprise broadband, cellular backhaul, NGSO, and defense markets. In terms of the revenue breakdown by segment, Fixed Network Segment revenues were $30.8 million compared to $21.8 million in the same quarter last year. We also saw an improvement compared with the previous quarter, where Fixed Networks revenues were $25.3 million. These results demonstrate the significant improvement in the business we have been seeing in this segment, and we expect that it will show continued improvement in the second half of 2021. Mobility Solution Segment revenues were $19.9 million compared to $14 million in the same quarter last year.
Compared to the previous quarter, we saw an increase from $11.1 million. The improvement in this segment is driven by revenues from NGSO and defense markets, while IFC remains weak. Terrestrial infrastructure project segment revenues, which include the construction revenues for our projects in Peru for Pronatel, were $6.2 million compared to $2.5 million in the same quarter last year and $8.3 million in the previous quarter. To summarize the quarterly GAAP results, our GAAP gross margin improved to 29% compared to 25% in the same quarter last year and 28% in the previous quarter. GAAP operating loss improved to $300,000 compared to operating loss of $3.5 million in the same quarter last year and operating loss of $3.7 million in the previous quarter.
GAAP net loss in the second quarter improved to $100,000 or $0.00 per share, compared with a net loss of $4.2 million or a loss of $0.08 per share in the same quarter last year. In the previous quarter, we had a GAAP net loss of $5.1 million or a loss of $0.09 per share. Looking at our quarterly results on a non-GAAP basis. Non-GAAP gross margin improved to 29% compared to 25% in the same quarter last year and 28% in the previous quarter. I am very encouraged, as I said before, by our return to profitability on a non-GAAP basis while we continue to invest significantly in R&D. Non-GAAP operating income for the quarter was $200,000 compared with an operating loss in the same quarter last year of $2.6 million. In the previous quarter, the operating loss was $3.8 million.
I note that we had $16.6 million in non-GAAP operating expenses in the quarter compared with $12.2 million in the second quarter of last year and $16.2 million in the previous quarter. The second quarter of last year included temporary cost reductions, which mainly consisted of reduction of our global workforce to 80% work scope. We returned all our employees to 100% work scope in December 2020. We continue to invest significant efforts in R&D to ensure timely delivery of the existing large projects we have been awarded, mainly in LEO and MEO constellations, and also to capture other opportunities we see ahead of us. Non-GAAP net income in the quarter was $400,000 or $0.01 per share. In the same quarter last year, we reported net loss of $3.3 million or $0.06 per share.
In the previous quarter, we reported a net loss of $5.2 million or $0.09 per share. Adjusted EBITDA for the quarter improved to $2.5 million compared with an adjusted EBITDA of $100,000 in the same quarter of last year. In the previous quarter, we reported an adjusted EBITDA loss of $1.4 million. Moving to our balance sheet. As of June 30th, 2021, our total cash and equivalents in short-term deposits, including restricted cash, were $82 million, compared with $75.6 million at the end of the previous quarter. In terms of cash flow, we generated $8.4 million from operating activities. These days, which include our Fixed Networks and Mobility Solution segments and exclude receivables and revenues of our Terrestrial Infrastructure Project segment, decreased to 65 days compared to 77 days in the previous quarter.
With regards to our inventory, as you probably know and heard, there is a global shortage of electronic components and materials, which has been ongoing now since early 2021 and is affecting us and numerous other companies. Given our careful planning and prudent inventory management, we have been able to manage the impact thus far, and we continue to work hard and are leveraging our strong cash position to ensure we have sufficient inventory available to meet the demand for our solutions. Our shareholders' equity at the end of the second quarter totaled $228.7 million, compared with $228.1 million at the end of the previous quarter. Looking ahead, all in all, we are encouraged with the continued sequential improvement in our results on both the top and bottom line. As Adi mentioned, we view 2021 as a year of recovery in which we emerge from the COVID-19 crisis.
We look forward to a year of continued revenue growth and improved profitability in 2021, and much more so in 2022. That concludes my financial review. I would now like to open the call for questions. Operator, please.
The first question is from Chris Quilty of Quilty Analytics. Please go ahead.
Thank you, and congratulations on the good results. A question for Bosmat on the last point you mentioned around the chip shortages. Are you seeing improvements or is the situation getting worse there? How should we think about that in terms of either restricted sales capability or impact on margins for the balance of the year?
Hi, Chris. Thank you for the question. Right now, we mainly are in control of those shortages. We do see impact of the lead times of our equipment, and that's why we are managing that by ordering ahead of time. Sometimes we need to order a year in advance. I do not expect it to have material impact on our margins or on our results as we manage it correctly. However, I do expect that our inventory levels will slightly grow because of those shortages.
Fortunately, you have the cash to front that. I guess on a similar angle with the resurgence of the Delta variant, are you seeing any impact on your business in terms of trends, either globally by region or by market activity?
Hi, Chris. This is Adi. The Delta variant, I think two months ago, we thought that the COVID-19 is behind us with all the vaccine and the vaccination rate. Now we see that we are far from finishing this episode. We started to meet some customers, and now it seems like due to the restriction in Israel and worldwide, we need to reduce our travel significantly again. From business perspective, more or less, it's the same in the last six months. We don't see additional effect, but again, I learned from the last 15 months that every month you learn something new. Right now, it's the same situation as it was in the last six months.
Great. To follow up on, I think you had stated in the script that you expect Peru to be the primary growth driver in the back half of the year. Is that expected to come on the terrestrial side or services? Will that have any kind of a material impact on the gross margins that you report in the back half of the year relative to the first half?
The growth should come from services, mainly from services, most of them on the terrestrial network that we are building. It's going to increase our margin, especially in Peru. The effect on the consolidated P&L will be, it depends on the other revenue mix, not only on Peru. If we take Peru as a standalone, Peru margin should increase significantly with winning additional service bids, and I guess that it will also increase our overall gross margin.
Great. Congrats on the new Defense wins. Can you help us understand, are those wins that you're seeing in the Defense segment generally new program starts, or programs where you're going in and taking away business competitively?
It's a combination of both. In the U.S., there are some programs that we are continue to get orders. Some cases, it's a new project under existing programs, or if we consider a program a huge budget basket under the DoD. We do see more and more business outside of the U.S., especially for broadband solution, gateway hubs, and VSATs for non-U.S. countries. We do see some new programs in the DoD that we are now trying to find our way in.
Great. I know you don't typically provide book-to-bill per se, can you give us a sense of what the order trend is looking like, either in the quarter or year to date? I would guess, generally at a top level and specifically with regard to IFC, whether you're seeing any early leads there of order activity picking up.
In the last few quarters, on average, our book to revenue ratio was higher than one, which I think it's good situation. On IFC, we are seeing initial seeds of orders for both SSPAs, boxes, and amplifiers, they also for baseband. It's the beginning. We hope it's a beginning of a trend. To be honest, the Delta variant now probably will delay again the recovery by a quarter or two until people will understand where it's going to take us.
Are you changing your strategy at all with regard to the IFC market? Obviously, Intelsat, the former Gogo, a large anchor customer. In terms of your approach to the airline customers, are you working primarily through partners or directly? Has anything changed post-COVID with the opportunity set there?
No, I think the strategy haven't changed. Here and there, we do talk with the end users, we are primarily focused on supporting our partners, Honeywell, Gogo, and Anuvu, Global Eagle, supporting their requirements. We do participate in some of new RFPs that service providers issued in the last few months and probably will issue additional in the next few quarters. We have no intention to go directly to the airlines.
Great. Final question on the NGSO market. Obviously, SES with O3b mPOWER is the big growth driver going into 2022. Are there additional opportunities out there? Obviously, Telesat and Amazon being the largest potential opportunities, are there other potential constellations or competitive wins that you see in the next, say, 12-24 months?
Without naming names, we are working with, I think except SpaceX, we are working with all the, or trying to work with all the big satellite operators. There are a lot of new initiatives, startups, that raising a lot of money, either with IPO, private money, or under SPACs, and we have a discussion with them as well. I do believe that we'll see a success in getting awards in the next few quarters.
Great. Congratulations.
Thank you, Chris.
The next question is from Gunther Karger of Discovery Group. Please go ahead.
Yes. Good morning and congratulations on continued excellent results.
Thank you, Gunther.
Question regarding the defense military business. I know that, let's say a year ago, that business was relatively minor. Since then, I've noticed the increasing number of wins. At the present time, what percentage of total business is represented by the defense and military worldwide?
Indeed, a few quarters ago, the defense business was relatively minor, and we are saying, I think in the last two or three quarters, that we are seeing more and more traction from defense worldwide. We had several awards. I think that second quarter, this quarter, was the strongest one. In terms of revenue, it's not a data that we provide, but we do see increased portion of defense revenues. It's becoming a trend, although I can't say it's a quarter-over-quarter trend. I remind everyone that our business vary from quarter to quarter, and both top line and margins depend on the revenue mix. We do see more and more business from the defense coming in.
Yeah. Thank you, Adi.
Thank you, Gunther.
There are no further questions at this time. Ms. Halpern, would you like to make your concluding statement?
Yes. Thank you. I want to thank everyone for joining us on this call and for your time and attention. We hope to see you soon or speak to you in the next call. Thank you very much, and have a great day.
Thank you. This concludes Gilat's second quarter 2021 results conference call. Thank you for your participation. You may go ahead and disconnect.