Gilat Q2 2026 earnings: Revenue growth lifts adjusted EBITDA while GAAP profit falls

Gilat Satellite Networks (NASDAQ: GILT) reported Q2 2026 revenue of $122.7 million, up 17% from $105.0 million, while GAAP diluted EPS fell to $0.10 from $0.17. Adjusted EBITDA grew 31% to $15.4 million, but higher GAAP operating expenses and weaker working-capital cash flow offset part of the benefit from broad-based segment growth.

Core financial results

Revenue increased across the Commercial, Defense, and Peru segments. GAAP gross profit rose by approximately 17%, leaving gross margin nearly unchanged at 30.4%.

Operating expenses increased faster than revenue, rising approximately 24% to $32.6 million. General and administrative expense nearly doubled to $12.2 million from $6.2 million, contributing to lower GAAP operating income and margin even as adjusted operating profit expanded.

Business and segment performance

All three reporting segments generated higher revenue. Commercial was the principal growth contributor, accounting for approximately 79% of the company’s total year-over-year revenue increase. Defense and Peru also advanced, although at slower rates.

Management said Defense activity continued to expand in the United States and Europe as demand increased for communications equipment supporting mobility, rapid deployment, and operational continuity. Gilat also introduced its Viper Ka electronically steered antenna terminal and advanced certifications for next-generation defense communications systems.

Business-combination compensation widened the gap between GAAP and adjusted profit

The quarter showed a significant divergence between reported and adjusted profitability. GAAP operating income declined approximately 17%, while non-GAAP operating income increased 35%. Total operating-income adjustments rose to $7.9 million from $3.6 million, with $4.3 million of stock-based compensation related to a business combination representing the largest change from the prior-year period.

Share dilution also affected per-share results. Non-GAAP net income increased approximately 31%, but non-GAAP diluted EPS slipped to $0.20 because the diluted share base used for adjusted EPS rose to approximately 79.9 million shares from 58.0 million. GAAP diluted EPS experienced an even larger decline as reported net income fell while the share count increased.

Cash flow and balance sheet

Q2 operating cash flow was a $1.9 million outflow, compared with a $5.1 million inflow a year earlier. Major working-capital uses included a $20.7 million quarterly increase in inventory and a $27.4 million decrease in customer advances and deferred revenue. Higher trade payables and accrued expenses partially offset these uses.

At June 30, 2026, cash and cash equivalents stood at $144.8 million, compared with $168.9 million at the end of 2025. Gilat also held $14.4 million in short-term deposits. Inventory increased to $65.5 million from $45.4 million over the same six-month period, while net trade receivables rose to $107.7 million from $85.9 million.

2026 guidance

Gilat reiterated its full-year outlook, indicating that first-half performance, recent contract awards, backlog, and the sales pipeline continue to support the existing ranges. The midpoint growth rates were provided by management.

The company does not provide corresponding GAAP guidance because it cannot reasonably forecast certain items, including earnout-based expenses related to recent acquisitions.

Management’s view

Management characterized momentum as broad-based across Defense, Commercial, and Peru. It expects the proposed acquisition of Comtech’s Satellite & Space Communications segment to close toward year-end, subject to regulatory approvals and customary closing conditions.

Gilat said the transaction would create a company with more than $700 million in pro forma annual revenue, more than double Gilat Defense revenue, and expand its U.S. engineering and manufacturing presence. These figures describe the expected combined company rather than Gilat’s standalone 2026 guidance.

Risks investors should monitor

• GAAP margin pressure: Operating expenses grew faster than revenue, reducing GAAP operating margin even as adjusted margins improved.
• Weak cash conversion: Inventory growth and lower customer advances caused operating cash flow to turn negative despite positive net income.
• Per-share dilution: The substantially higher diluted share count limited EPS and caused adjusted EPS to decline despite higher non-GAAP net income.
• Comtech closing uncertainty: The acquisition remains subject to regulatory approvals and customary conditions, so its anticipated scale and defense exposure have not yet been realized.
• Limited GAAP visibility: Full-year guidance is provided only for revenue and adjusted EBITDA, leaving acquisition-related expenses and other GAAP adjustments outside the quantitative outlook.

Summary

Gilat’s Q2 2026 revenue growth was broad-based and supported a faster increase in adjusted EBITDA, with Commercial providing most of the incremental sales. Reported profitability was less favorable because operating expenses and business-combination compensation increased, while dilution weighed on EPS. Investors’ next points of focus are cash conversion, GAAP cost control, delivery against reiterated guidance, and completion of the planned Comtech transaction.