With $GILT (+8,92%) the figures don't convince me. Declining margins and lower growth for 2026, so I think it's time to secure the remaining profits.
Gilat Satellite Networks Ltd (NASDAQ:GILT) released its Q4 2025 results on February 10, 2026 and reported a 75% year-on-year increase in revenue, but was met with considerable skepticism from the market. Despite the strong top line growth, the stock plummeted 12.77% in pre-market trading and continued its decline until the market opened, trading 21.22% below the previous close.
The satellite communications provider's mixed results highlight the challenges of balancing growth investment and profitability in the rapidly evolving satellite industry. While Gilat continues to position itself as a leader in the "multi-orbit revolution", investors appear concerned about declining net income and negative operating cash flow.
Highlights of the quarterly results
Gilat reported fourth quarter 2025 revenue of $137.0 million, an increase of 75% year-over-year. Adjusted EBITDA increased 50% year-over-year to $18.2 million, while GAAP operating income increased slightly by 1% to $13.0 million.
As shown in the quarterly financial performance chart below:
GAAP net income, however, declined 25% to $8.8 million despite significant revenue growth, indicating margin pressure and higher costs. This discrepancy between sales growth and profitability appears to be a key factor in the negative market reaction.
The company's performance varied significantly between its three business segments. The commercial segment led growth with a 103% year-on-year increase to $75.1 million, while the Peru segment grew 141% to $28.5 million. The defense segment recorded more moderate growth of 14%, reaching USD 33.3 million.
The breakdown of segment sales is illustrated in this chart:
Detailed financial analysis
Gilat significantly strengthened its balance sheet in Q4 2025, ending the period with a net cash position of $183.4 million, compared to $95.6 million in Q3 2025 and $118.2 million in Q4 2024. This increase is mainly due to capital increases of $100 million in December 2025 and $66 million in September 2025.
Despite the strong liquidity position, the key operating figures showed some worrying trends. Days sales outstanding (DSO) increased to 88 days, compared to 68 days in the previous quarter and 73 days in the fourth quarter of 2024, indicating potential difficulties in collecting receivables. More significantly, operating cash flow was negative at USD -6.3 million, compared to positive USD 28.4 million in the third quarter of 2025 and USD 16.3 million in the fourth quarter of 2024.
The balance sheet highlights are summarized in this table:
This deterioration in operating cash flow despite strong revenue growth raises questions about the sustainability of Gilat's current growth trajectory and may explain some of the negative market reaction to the results.
Strategic initiatives
In its presentation, Gilat highlighted several strategic initiatives in its business segments. In the defense sector, the company reported a record year in sales and secured its first earth observation contract worth approximately $10 million for a direct downlink solution via transportable platforms. The company also highlighted its continued collaboration with the Israeli Ministry of Defense for advanced SATCOM solutions in the defense sector.
The commercial segment saw strong momentum in In-Flight Connectivity (IFC) with orders worth USD 42 million for SkyEdge products. Gilat also won two new customers for SkyEdge IV in the Asia-Pacific region and received additional orders for gateway SSPAs to support growing LEO constellations.
In Peru, Gilat accelerated the implementation of construction projects under contracts worth USD 85 million to expand broadband infrastructure for over 1,000 public institutions. The company now operates all six regional projects in the country, supporting digital inclusion initiatives.
The strategic focus and highlights of the fourth quarter are summarized in this comprehensive slide:
Outlook
For the full year 2026, Gilat forecasts revenue of between USD 500 million and USD 520 million, an increase of 13% year-on-year. Adjusted EBITDA is expected to reach USD 61 to 66 million, an increase of 19% compared to 2025.
The company's outlook for 2026 is shown in the chart below:
However, the breakdown by segment shows different growth expectations. While the commercial segment is forecast to grow by 16% to USD 315 to 335 million and the defense segment by 22% to USD 115 to 130 million, the Peru segment is expected to decline by 11% to USD 60 to 65 million.
The breakdown of the sales forecast by segment is shown here:
This forecast decline in the Peru segment, which still showed growth of 141% in the fourth quarter of 2025, indicates the completion of large infrastructure projects for which there are no comparable follow-up orders in the pipeline. The company's strategic focus for 2026 is to capitalize on growth in the IFC space and address demand in the defense sector by expanding into new global markets with new products, including DKETs, modems and multi-orbit antenna solutions.
Although Gilat's presentation highlights strong growth prospects, the negative market reaction suggests that investors may be concerned about the sustainability of growth rates, declining profitability and cash flow challenges. The company's ability to translate the significant capital raises and revenue growth into improved profitability will be critical to regaining investor confidence in the coming quarters.
