Comtech Telecommunications Corp

Gilat Satellite Networks reported second quarter 2026 revenue of $122.7 million, a 17% increase from $105 million a year earlier, while adjusted EBITDA rose 31% to $15.4 million. GAAP operating income was $4.7 million, compared with $5.7 million in the prior-year period, and non-GAAP operating income climbed 35% to $12.6 million. The company reiterated its full-year 2026 guidance for revenue between $500 million and $520 million and adjusted EBITDA between $61 million and $66 million. Gilat also confirmed that its acquisition of Comtech’s Satellite & Space Communications segment is on track to close toward year-end, a deal expected to create a company with more than $700 million in pro forma annual revenues.

Comtech Telecommunications has agreed to sell most of its Satellite & Space Communications segment to Gilat Satellite Networks for $157.5 million. The transaction, expected to close in late 2026, will allow Comtech to focus exclusively on its public safety technology business, which will be rebranded as Allerium. The company plans to use the net cash proceeds to reduce debt and strengthen its balance sheet, alongside amendments to its credit and preferred stock agreements. By simplifying its operating model, Comtech aims to accelerate growth in recurring software and AI-enabled emergency response services, targeting a more profitable and focused financial profile. The divestiture marks the conclusion of Comtech's strategic review process, and Allerium will prioritize next-generation mission-critical solutions for public safety agencies and mobile network operators.

Comtech Telecommunications is leveraging its Allerium segment to capture demand for Next Generation 9-1-1 upgrades and cloud-native emergency communications. Allerium provides call handling, location services, and messaging software for public-safety answering points and carriers, aligning with the industry shift toward data-centric emergency response. Recent product launches include Allerium Coral, a network-native coordination solution introduced on June 23, 2026, and Allerium Mira, a cloud-native call-handling platform launched on June 18, 2026. Early adoption is evident, with Allerium migrating Kentucky's Bluegrass 911 Communications in December 2025 and moving 12 public-safety answering points in four months, completing over a dozen NG911 upgrades in Canada this fiscal year, and being selected by the 911 Association of Central Oklahoma Governments for call routing. The company's remaining company-funded backlog stands at $554 million, mostly tied to long-term software-based services, suggesting a shift toward more recurring revenue.

Comtech Telecommunications is reshaping its investment story around the Allerium segment, which now accounts for the majority of sales and is central to the company's pivot toward public-safety software and NG911 infrastructure. In the third quarter of fiscal 2026, Allerium generated $55.67 million of the company's $106 million in total net sales, representing about 52.5% of the top line, while the Satellite and Space Communications segment contributed $50.33 million. For the first nine months of the fiscal year, Allerium represented 51.8% of consolidated sales and posted a 1.30x book-to-bill ratio, supported in part by a multi-year contract extension valued above $130 million. The pending sale of most of the Satellite and Space Communications business to an affiliate of Gilat Satellite Networks for a $157.5 million base cash price is expected to yield net cash proceeds of about $143 million to $145 million, with 65% earmarked for senior secured debt repayment and 35% for subordinated debt prepayment. Near-term headwinds persist, as third-quarter revenue fell from $126.79 million a year earlier, consolidated bookings were $70.5 million for a 0.67x book-to-bill ratio, and funded backlog slipped to $696.1 million from $708.1 million. CMTL currently carries a Zacks Rank #2 (Buy) with a Value Score of A, Momentum Score of A, Growth Score of B, and VGM Score of A.