Gilat reports strong growth in Q3 2019
Gilat Satellite Networks Ltd., a worldwide leader in satellite networking technology, solutions and services, has reported its results for the third quarter ended September 30, 2019.
Key Financial Highlights:
Revenues for Q3 2019 increased to $63.4 million compared with $59.7 million for Q2 2019 and $62.8 million in Q3 2018.
Continued strong profitability:
Q3 2019 GAAP operating income increased 17.1% to $7.0 million from $6.0 million in Q3 2018 and was up 43.1% from $4.9 million in Q2 2019. Non-GAAP operating income in Q3 2019 rose to $7.5 million, or by 15.4% from Q3 2018 and rose 19.4% sequentially.
Q3 2019 GAAP net income totaled $6.3 million, or $0.11 per diluted share a decrease of 27.3% compared with $8.7 million, or $0.16 per diluted share, in Q3 2018, which included a one-time tax benefit of $4.1 million. Q3 2019 net income increased 84.7% from $3.4 million, or $0.06 per diluted share, in Q2 2019. On a non-GAAP basis, Q3 2019 net income increased 34.1% to $6.8 million, or $0.12 per diluted share, compared with $5.1 million, or $0.09 per diluted share, in Q3 2018 and was up 41.6% from $4.8 million, or $0.09 per diluted share, in Q2 2019.
Q3 2019 Adjusted EBITDA totaled $10.1 million, an increase of 10.6% year over year and 13.0% quarter over quarter. Q3 2019 Adjusted EBITDA represented 15.9% of revenues versus 14.5% of revenues in Q3 2018 and 14.9% in Q2 2019.
Updated management objectives for 2019: Reiterating GAAP operating income of between $23 million and $27 million, and Adjusted EBITDA of between $38 million and $42 million, while reducing the revenue range to between $260 million to $270 million. The adjustment in the revenue objectives is due to delay of several key orders, coupled with delivery constraints that have since been mostly resolved.
Yona Ovadia, CEO of Gilat, commented: “We achieved significant milestones in the Third Quarter, both on the financial and the business sides, as we continued to execute our strategy to build high quality, profitable revenues through our growth engines of Broadband, Mobile Cellular Backhaul and Mobility IFC.
“On the financial side we attained substantial progress as we continued to improve profitability. We have attained a record achievement of double-digit millions of dollars of Adjusted EBITDA, $10.1 million to be exact. This has been achieved only once before since we made growth in profitability one of the pillars of our strategy, and we have every intention to repeat it going forward.
“On the business side, I am excited to report that Gilat reached a landmark achievement with the selection of Gilat’s platform by SES for the O3b mPOWER Medium Earth Orbit (MEO) Communications System. Gilat was selected due to our innovative ground segment, that significantly reduces cost per bit, best-in-class spectral efficiency, and a step function in modem performance. This win positions Gilat at the forefront of ground networks for Non-Geo Stationary Orbit (NGSO) constellations and as well as a prominent player for the new generation of HTS and VHTS GEO satellites.
“In Peru, our goal has always been the profitable recurring revenues from operations and sales of services, and indeed, further to last quarter’s achievement of moving to Operations in three awarded regions, I am pleased to share that this quarter we won a $10 million five-year project for 3G/4G backhaul services over the network that we built and just started to operate. We are pleased to see our vision materializing, and expect that this contract will significantly expand over time to additional multiple millions of dollars, as well as to selling additional services over our networks.
“In Australia we have reached an important milestone this quarter with NBN Co. with the launch of NBN’s business satellite services. The commercial launch of this flagship project initiates our managed service to NBN, delivering revenue of tens of millions of US dollars over a ten-year period.
“In addition, we have seen continued progress in our mobile and mobility growth areas. Particularly in cellular backhaul Gilat continues to be recognized as the global leader with the selection of the leading Japanese MNO, NTT DoCoMo. In Aero Mobility, we are encouraged by the clear direction of airlines to offer free wifi, as we already saw it starting to generate significant demand for Gilat equipment in this quarter. Both mobile and mobility continue to be major growth engines for Gilat.
“Lastly, in Q3, we also continued to strengthen our partnership with China Satcom with an agreement to upgrade to the most up-to-date, efficient, and high-performance communication network for aero and maritime mobility applications as well as fixed applications.”
Mr. Ovadia concluded: “In closing, we are pleased with our momentum in the market-place and in parallel with our continued improvement in our bottom line. We are engaged these days in planning our work plan for 2020. We will base it on the same guidelines as the existing growth engines, with continued if not increased investment in maintaining our product leadership, and in improvement of both the top line and bottom line.”