Ladies and gentlemen thank you for standing by. Welcome to Gilat 's Second Quarter 2025 Results Conference Call. Participants are present in listen-only mode. Following management's formal presentation instructions will be given for the question- and -answer session. As a reminder this conference is being recorded August 26th, 2025. By now you should have all received the company's press release. If you have not received it please 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. Alex Villalta of Alliance Advisors IR. Mr. Villalta would you like to begin please? Thank you operator and good day to everyone. Thank you for joining us for Gilat Satellite Networks Earnings Conference Call for the second quarter of 2025. With us on today's call are Mr. Adi Sfadia Gilat's CEO and Mr. Gil Benyamini Gilat's CFO. The earnings press release was issued earlier today and if anyone has not received a copy I invite you to visit the company's website at gilat.com where you'll find the release in the investor relations section. Before turning the call over to management I'd like to remind everyone that some statements made during the conference call contain forward-looking statements based on current expectations. Actual results could differ materially from these projected as a result of various risks and uncertainties. The potential risks and uncertainties that could cause actual results to differ materially include uncertain global economic conditions reductions in revenues from key customers delays or reductions in U.S. and foreign military spend acceptance of our new products on a global basis and disruptions or delays in our supply of raw materials and components due to business conditions global conflicts weather or other factors not under our control. The company cautions investors not to place undue reliance on forward-looking statements which reflect the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Gilat's financial results is included in the company's filings with the SEC including the latest quarterly report on Form 10-Q. In addition on today's call management will refer to certain non-GAAP financial measures that management considers to be useful and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that I would now like to turn the call over to Gilat CEO Adi. Please go ahead Adi. Thank you Alex and good day everyone. Thank you for joining us today to discuss Gilat 's second quarter 2025 results. Please note that we are posting a PowerPoint presentation on our website with all the data we will discuss today. The second quarter not only showed strong performance but also validated our growth strategy across each of our growth engines. Our priorities in 2025 remains on capturing the growing opportunities emerging from our acquisition of Stellar Blu earlier this year and investing in Gilat Defense to better position to drive revenue growth in 2026. These drivers along with our strong presence in VHTS and NGSO constellations continue to fuel our growth and strengthen our market leadership. Second quarter revenues reached $105 million a 37% increase year-over-year which includes about $36 million in revenues from Stellar Blu. Adjusted EBITDA was $11.8 million 17% above the same quarter last year including Stellar Blu's expected ramp-up losses of about $1.5 million. Excluding Stellar Blu loss our adjusted EBITDA for the second quarter was about $13.3 million representing a 32% year-over-year increase. Stellar Blu's yearly performance remains on track with revenue expectations of between $120 million and $150 million. Now on to the business review. In the second quarter our Defense division continued to set the foundation for future growth. Continuing geopolitical tension and shifting global security priorities are promoting governments to increase their defense spending and allocate more of their budget to secure satellite communications. This is generating increased interest in mission-critical satcom solutions and Gilat Defense is well-positioned to meet these evolving operational needs. We are seeing active engagement from customers across multiple regions including North America Europe and Asia-Pacific. Gilat Defense is also extending our global footprint by leveraging top-line synergies between Gilat DataPath and Wavestream by offering a broader range of solutions to defense customers. In the second quarter over $8 million in Gilat DataPath systems were ordered by the Israeli Ministry of Defense demonstrating the strong value of our technology and the applicability of our solutions to diverse mission requirements. During the second quarter Gilat DataPath was awarded a contract to provide field service and technical services in support of the U.S. Army. The award includes an initial order of more than $7 million with an option to extend the program for up to five years reaching an estimated order of up to $70 million. With a clear strategy a growing global presence and an unwavering focus on mission-critical connectivity Gilat Defense is positioned for substantial growth and long-term impact in this essential sector. Turning to our commercial business. Q2 was a milestone quarter driven by strong booking strategic wins and continued adoption of our next-generation satellite communication platform. Our momentum reflects both the accelerating transformation of the industry and Gilat's success in aligning the technology and solutions with the needs of our customers. One of the most significant announcements this quarter was the signing of a $40 million contract for a virtualized SkyEdge IV platform. This landmark agreement not only demonstrates the trust our customers place in Gilat but also highlights a critical industry shift in how satellite communication infrastructure is being deployed. SkyEdge IV virtualization empowers operators to move to cloud-native software-defined environments designed for scale agility and interoperability with next-generation satellites. Evolving to a software-only cloud-based platform elevates Gilat's positioning with higher value improved margins and provides the option to sell through a platform-as-a-service business model. During the second quarter we announced over $47 million in orders from Tier 1 satellite operators. These orders underscore the surging demand for Gilat multi-orbit ground segment technologies driven by increasing demand for IFC solutions and the widespread adoption of GEO MEO and LEO architectures. Operators are making substantial investments in ground systems that can seamlessly manage multi-orbit connectivity across a range of use cases including fixed broadband mobility solutions and critical government services. These orders also span multiple regions and program types including both network expansions and new deployments highlighting the global relevance of our technology and the growing trust in our platform to support mission-critical services. Moving on to Stellar Blu we announced receiving $27 million in orders from our Stellar Blu portfolio. With more than 150,000 cumulative flight hours and deployment of over 225 terminals Gilat's Sidewinder ESA terminal is exceeding expectations for performance reliability and user experience. Production ramp-up is progressing slowly and we expect to see more units delivered in Q3 and Q4 this year with better margins. Stellar Blu continues to work closely with its partners to secure new fleet wins. We are confident these efforts will yield positive results soon. Looking ahead we remain focused on expanding our leadership across key verticals and deepening our relationship with strategic partners. With strong customer demand and a differentiated technology portfolio we believe Gilat is well-positioned for continued growth in our commercial business. Q2 was an outstanding quarter for Gilat Peru highlighted by the award of more than $60 million in new orders from Pronatel. As a reminder these orders were delayed last quarter. The awards are for upgrading the regional network infrastructure that was originally awarded to us in 2016 bringing high-speed internet to more than 800 public institutions including schools healthcare and police stations across more than 280 localities. This award reflects Gilat Peru's continued partnership with the Peruvian government and our longstanding commitment to digital inclusion demonstrating once again the key role Gilat Peru plays in delivering meaningful nationwide impact. Digital inclusion is a key priority worldwide and the expertise developed by Gilat Peru in connecting remote and underserved communities is now being leveraged in other regions around the world allowing us to replicate proven models and accelerate similar projects globally. In Peru we still expect to receive several large RFPs and orders from existing project expansions and renewals in the coming few quarters. I am pleased to say that we continue to have a strong backlog and a healthy pipeline of opportunities in all divisions. On the strengths of our results here today improved visibility and business momentum we are resetting our full-year guidance. We are narrowing our revenue range to $435 million - $455 million for a higher revenue growth rate of approximately 46% at the midpoint. We have also narrowed our adjusted EBITDA guidance range now targeting between $50 million - $53 million for a higher growth rate of approximately 22% at the midpoint. Gilat remains strategically well-positioned for sustained growth supported by strong demand for secure high-performance connectivity across commercial and defense markets. As satellite networks evolve expanding in capacity shifting to multi-orbit GEO MEO and LEO architectures and moving towards software-defined infrastructure our portfolio is uniquely equipped to meet these emerging requirements with the scalability flexibility and reliability our customers expect. Gilat Defense continues with a focused roadmap and expanding sales resources to broaden engagement and awareness of our technological expertise and our role in supporting the mission-critical satellite connectivity needs of governments and defense agencies in the U.S. and allied countries. In our commercial division we are meeting the growing industry demands for virtualized software-defined ground infrastructure that enables more agile scalable network deployments. Our multi-orbit platform are delivering seamless connectivity across GEO MEO and LEO constellations positioning Gilat as a key enabler of next-generation satellite networks. At the same time Gilat's Sidewinder ESA terminal continues to gain traction with ongoing progress in integration and certification across multiple aviation segments. In Peru we play a vital role in expanding access to digital inclusion services strengthening public infrastructure and supporting long-term national connectivity goals. Our local presence and trusted partnership with the Peruvian state remains a key differentiator as we help close the digital divide in underserved regions. We are very happy with the progress we are making across the company and remain focused on advancing our priorities deepening customer relationships and delivering meaningful results as we support the evolving needs of a rapidly changing satellite communication market. With that I will hand over the call to Gil Benyamini our CFO. Gil please go ahead. Thank you Adi. Good morning and good afternoon to everyone. Before I dive into the numbers I would like to remind everyone that our financial results are presented both on GAAP and non-GAAP basis. I will now walk through our financial highlights for the second quarter of 2025. As Adi mentioned we're very pleased with our second quarter performance. We closed the second quarter and the first half of the year delivering sustained improvements in our results giving us strong momentum going forward. In terms of our financial results revenues for the second quarter were $105 million a 37% increase compared to $76.6 million in Q2 2024. In terms of revenue breakdown by segments Q2 2025 revenues for the commercial segment were $69.1 million compared to $43.4 million in the same quarter last year. The 59% increase was primarily due to the contribution of Stellar Blu which we acquired in early January this year. Stellar Blu generated $36 million which was partially offset by the termination of our activity in Russia in 2024. Q2 2025 revenues for the Defense segment were $20 million similar to the second quarter last year. Q2 2025 revenues for the Peru segment were $15.9 million compared to $13.9 million in Q2 2024. Our GAAP gross margin in Q2 2025 decreased to 30.4% compared to 34.7% in Q2 2024. The decrease is primarily due to lower margins in Stellar Blu as it ramps up production as well as amortization of purchased intangibles. GAAP operating expenses in Q2 2025 were $26.2 million compared to $23.8 million in Q2 2024. The increase is primarily due to consolidation of Stellar Blu amortization of purchased intangibles partially offset by other income which included profits from an arbitration that were recognized in Q2 2025. As a result GAAP operating income in Q2 2025 was $5.7 million compared to GAAP operating income of $2.8 million in Q2 2024. GAAP net income in Q2 2025 was $9.8 million or a diluted income per share of $0.17 compared to GAAP net income of $1.3 million or a diluted income per share of $0.02 in Q2 2024. Moving to our non-GAAP results our non-GAAP gross margin in Q2 2025 decreased to 32.9% compared to 36.8% in Q2 2024. Non-GAAP operating expenses in Q2 2025 were $25.2 million compared to $20.9 million in Q2 2024. The non-GAAP operating income in Q2 2025 was $9.3 million compared to $7.3 million in Q2 2024. Non-GAAP net income in Q2 2025 was $12 million or a diluted income per share of $0.21 compared to a net income of $5.6 million or income per share of $0.10 in Q2 2024. Adjusted EBITDA in Q2 2025 was $11.8 million compared to an adjusted EBITDA of $10.1 million in Q2 2024. Our Q2 2025 organic adjusted EBITDA excluding Stellar Blu losses was approximately $13.3 million a 32% increase compared with Q2 2024. Moving to our balance sheet on January 6th 2025 the company secured a $100 million credit line from the bank consortium from which we utilized $60 million to finance the acquisition of Stellar Blu. As a result as of June 30, 2025 total cash cash equivalents and restricted cash were $65.4 million or approximately $5.5 million net of loans compared to $3.8 million on March 31st, 2025. In terms of cash flow we provided $5.1 million from operating activities in Q2 2025. DSOs which exclude receivables and revenue of our terrestrial network construction projects in Peru were 60 days a decrease from 75 days in previous quarter. Our shareholders' equity as of June 30, 2025 totaled $316 million compared with $300 million at March 31st, 2025. Looking ahead as Adi mentioned we're narrowing our guidance range and raising the guidance midpoints for 2025 revenue and EBITDA. Revenue is now expected to be between $435 million and $455 million representing year-over-year growth of 46% at the midpoint. The adjusted EBITDA is expected to be between $50 million and $53 million representing year-over-year growth of 22% at the midpoint. That concludes my financial review. I would now like to open the call for questions. Operator please. Thank you. Ladies and gentlemen at this time we will begin the question- and- answer session. If you are dialing in please press star one. If you've connected via Zoom please use the raise hand button located at the bottom of the screen. Please stand by while we poll for your questions. The first question is from Ryan Koontz of Needham & Co. Please go ahead. Great. Thanks for the question. I wanted to ask about the ramp at Stellar Blu. Obviously doing well there. How are you feeling about the second half ramp your ability to meet customer demand? From a margin perspective improving margins on Stellar Blu can you give us a rough idea of where those margins are at today and where you expect them to be at the end of the year? Particularly on a non-GAAP basis would be really helpful. Thank you. Hi Ryan. Good to hear from you again. I think that the production ramp-up in Stellar Blu is progressing. As you remember last quarter we said that there is one specific component that our vendors are struggling with. We are seeing better results in the third quarter and our internal solution is in certification stages and will be ready for shipment towards the end of this quarter. We definitely see a ramp-up in Stellar Blu ability to deliver in the third quarter and even more in the fourth quarter. As for the overall margins I will let Gil give you the input. Our margins are ramping up a bit slower than expected mainly due to the component challenge. We see them ramping. We started the year still at a low rate pace and now we're moving to a regular production pace. I guess that we'll see towards the third and even more in the fourth quarter and in the beginning of next year we'll see a more material improvement in the margin of the product. Great. That's helpful. Thank you. On your virtualization win for SkyEdge IV what's the fulfillment model look like there? Are you just shipping software to COTS hardware? Are you having to ship appliances with that? How do you think about pricing and utilization there? Do you sell licenses? Can it be sold on a consumption-based or even a subscription-based model? What's happening with the virtualized SkyEdge IV please? The initial order that we received is basically to operate our software on a cloud commercial- off-the-shelf equipment. It will be from a revenue recognition perspective a license sale or a CapEx sale. It's a one-time sale plus ongoing maintenance services. Future upgrades will be also software-only. The overall business is that the price is give or take the same price as if we sell the hardware but in this case the customer needs to bring its own hardware. In most of the cases most of the customers will prefer to build their own private cloud but it will be able also to run it on a public cloud. We also have several flexible business models including where we build the cloud for the customers provide our licenses and do some kind of a platform of a service or a subscription-based or consumption-based model. Based on our history most of the customers at the end wants to buy it in a CapEx mode but we are open for a recurring revenue business model as well. That's great. Thanks for that. Maybe just one last question on Peru. Are there any major decisions coming in the second half of this year that you think can improve that business top line? Yes. I think that the order that we received this quarter will delay at least from late December and will help us ramping up Peru's revenues in 2025. We do expect another large order in the next few weeks or the next two months. In addition there are several large RFPs that are expected to be issued by the Peruvian government and we expect to participate in those RFPs. Even if we take some of them it will help us to generate significant growth in Gilat Peru. Great. Thanks for all that. That's all the questions I have. Thank you Ryan. The next question is from Louie DiPalma of William Blair. Please go ahead. Adi and Gil good afternoon. Hi Louie. How are you? Great. What are the main contributors to the improved outlook that weren't in the prior guidance or the different assumptions? Should we assume that the new programs that you've won in terms of the revenue carry over into 2026? Can you repeat the first question? You were a bit disconnected. Yeah no problem. What are the main contributors to the improved guidance? Okay. The main contributor you know we started the year with a relatively high range of the guidance because of the acquisition of Stellar Blu and the unknown in this acquisition. Today we have much better visibility both to Stellar Blu and Gilat. The last recent business award the significant award that we announced and the backlog that we have including the opportunities that we feel comfortable in our pipeline gave us the assurance that we can increase our guidance for the year. Now as for your second question some of the awards that recently we received will be dragged as well into 2026 and some of it even further like Peru which is building the network or upgrading the network and then another four years- five years of recurring services. Fantastic. You discussed I believe you said that there are now 225 Stellar Blu Sidewinder ESA terminals that have been deployed which I assume means are flying. What is the backlog now for future shipments? It seems that you've won and you announced and you discussed on today's call several new contracts and you have regional contracts with American Airlines Air Canada and I believe also Alaska Airlines. What is the backlog? What was the backlog at the end of the quarter? It's not the data that we are providing on a quarterly basis but when we acquired Stellar Blu we said that we have close to slightly below 1,000 aircraft in backlog. You can do the math. There are additional awards that our customers already received but haven't placed a PO with Gilat. We do expect to have large orders in the next few weeks or coming quarter. Great. Also related to Stellar Blu what is the status of the different milestone payments associated with the acquisition? Okay. I'll remind everyone that we have three types of earnouts. The first earnout milestone ended at the end of the second quarter and was to reduce the operational risk and the new product introduction risk. Stellar Blu had to deliver 350 terminals before the end of the second quarter which they failed or Gilat failed to do. We delivered only 225 aircraft because of several reasons mainly because of the production ramp-up and some vendors' inability to deliver products on time. The first earnout payment is not going to be paid. The second earnout is to get new orders of summing to a range of between $120 million - $140 million and it's until the end of the fourth quarter this year. I think it's too early to tell if we will meet the earnout milestone or not. We do see a strong pipeline with our customers. We do expect to get a significant amount of orders before the end of the year. I believe that there is a very good chance that Stellar Blu will be able to meet the milestone. Of course it needs to be in the profitability that was set in the agreement. The cost reduction initiatives that we are taking including shifting some of the production internally and developing some substitute products to a very expensive one need to happen and we are on our way of doing so. The third earnout is until mid-2026 and is signing up to four strategic agreements. Each one is about $25 million. Strategic agreements need to be at least $35 million of orders in significantly better profitability than the existing one and to be a door opener to a new market. It should be for example line fit with Airbus a significant order from defense customers and other Tier 1 vendors in the market. We have an ongoing discussion with several strategic customers but it's really too early to say. There is almost a year. Great. That is super helpful. One final question. It seems that Eutelsat has signed an agreement to raise significant funding from different parties to support OneWeb Gen 2 or the general OneWeb constellation. What is your view of how OneWeb Gen 2 and IRIS² will proceed? Do you believe that OneWeb Gen 2 and IRIS² are going to be the same constellation? What are the potential opportunities for Gilat associated with both of these plans? Based on the discussion we held with Eutelsat in the last several quarters they want to integrate OneWeb Gen 2 and IRIS² together the same as SES with their MEO-100 and IRIS² because IRIS is going to be a multi-orbit constellation. They want to tie together and they won't take any decision on OneWeb Gen 2 before they will know exactly what is going on with IRIS². As for IRIS² we received the first RFI this quarter for the end-user terminal and additional RFIs will follow and then RFPs. We do believe that awards will be granted not before mid-year next year. IRIS² is I think almost fully subsidized or financed by the EU regulators and the EUR 12 billion project I think 40% or so comes from the operators from Eutelsat SES and Hispasat and the rest is coming from the European Committee. All in all we believe that IRIS² will be a bit delayed but they will launch the constellation and then OneWeb Gen 2 will follow. Great. Gilat it's a very. One final question. S ure. Go ahead. Thank you. One final one. The Intelsat-SES merger recently closed and I know it only closed a few weeks ago but have you observed any changes in customer behavior as both SES and Intelsat are fairly large customers of yours? How would you assess the impact of the deal? Yeah. We'll just add one small thing about IRIS². I think it's an extremely important and very large opportunity for Gilat. We have a decent EU presence which will give us the right qualification to participate in the programs. As such we received the RFI. We do see that this is a top priority for Gilat to get an award over there. As for Intelsat and SES merger indeed I think they are three or four weeks into the merger. What we see today is that the people that we used to work on both sides are there. From a customer perspective the relationships are very strong. We keep on seeing a lot of interest on both sides both from Intelsat and from SES for Gilat equipment on the terminals on the ISA side on the SkyEdge IV side and also on the SkyEdge II-c for IFC side. We do expect to see significant business from the combined company in the next few months. Fantastic. Thanks everyone. Thank you Louie. Talk to you soon. The next question is from Omri Efroni of Oppenheimer. Please go ahead. Hi guys and congrats for the great quarter. I have a few questions about Stellar Blu as the other analyst. Last quarter as you said the guidance was for Stellar Blu for revenue between $120 million - $150 million and EBITDA positive in the second half of 2025. I only wanted to make sure that the guidance is still intact. That's the first one. For the follow-up I was wondering if you can give some more color about the Defense division and what you are seeing here. What did you see from demand especially from the Israeli Defense Ministry and Europe? Thank you. Okay. Yes the guidance for Stellar Blu still stays in place $120 million- $150 million in revenues. We do expect them to significantly reduce the losses and to show positive EBITDA. You saw in the announcement that in my script where I said that we reduced the losses from $3.5 million in the first quarter to $1.5 million this quarter and we do expect them to progress quarter- over- quarter and show positive EBITDA in the second half of the year and even to be able to reach a 10% EBITDA ratio towards the end of the quarter. I'm not sure it will be a full quarter but towards the end of the quarter once the cost reduction will be in place and we will be able to start delivering the replacement for the component that is developed by another vendor we'll see a decent profitability from Stellar Blu. As for the Defense we do see a lot of interest from several countries. It's mainly discussions on capabilities and things like that. We're having a lot of proof of concept and demo sessions not only in Europe but worldwide. In parallel we are building our sales force investing a lot of money in that. We see the increase in our OpEx also in new product and solutions for the defense. One of them is our next-generation tactical modem which will be one of the most advanced and resilient modem in the industry. In Israel we announced several awards and we still have ongoing interest. Of course I cannot get into specifics. Sometimes I don't know all the specifics because in some cases it's a secured project but we are progressing very well in all fronts. Also in the U.S. we announced several large orders on the service side on the product side and there is a lot of business going on that we'll see in the next quarter or two. Got it. Just to be clear even with the component change from the other vendor that is going to take place in the third and the end of the third quarter still the guidance of the Stellar Blu acquisition is intact even if with the new component. Yeah. Okay. It's still staying in place. Most of the information that I'm giving you today we knew in advance when we gave the guidance at the beginning of the year. Development and ramp-up of production sometimes take time but I think that we are progressing on a monthly basis and we see the progress. You saw the significant reduction in the losses this quarter and I'm sure that we'll move to a positive EBITDA during the second half of the year. Okay thank you very much. Thank you Omri. The next question is from Chris Quilty of Quilty Analytics. Please go ahead. Thanks guys. I just wanted to follow up on the Stellar Blu and the order front. I know that I think last quarter you were certified by Panasonic which is I think one of your big lead customers. Is it fair to expect we should see something this quarter in terms of announcements? Additionally where should we look for large follow-on orders? Are these done more directly with the airlines or do you have other partners you're working with? Hi Chris. Yes we started to work on the certification with Panasonic last quarter. We are about to finish them. We already received from Panasonic prior to closing an order of slightly below 100 aircraft and we expect to see an additional order. Panasonic Intelsat and other customers usually don't order in advance. They usually order back-to-back and there is about nine months lead time and they have a delivery schedule that they are committing to the airline. We do expect to get in the coming few months orders from both Intelsat and Panasonic. In parallel we are working with other players in the market but it's in early stages so it's too early to discuss. Got you. I think you also indicated that with the SES-Intelsat acquisition do you think there was in advance of the close any activities hold-up in orders as they processed that that may have created a little near-term backlog of potential orders going into the back half of the year? Or did you just see normal purchasing activity by both entities? I think we saw normal purchasing activity. In some cases we work together with our partners helping them promote their services and our equipment. In a relatively large number of cases the order comes back-to-back when they get the orders from their customers. We know the situation and business is continuing as usual. We do expect to have a strong second half with the merged company. Great. Follow-up question on the SkyEdge IV platform and maybe a specific end market in cellular backhaul which seemed to have slowed down in the last year to year- and- a- half. Are there any specific dynamics that you're seeing there and how does the new virtualized platform you know help if at all in that particular market? In general I agree that there is a bit of a slowness in the cellular backhaul market coupled by the promise of the direct-to-device and the LEO players that are also aiming this market. What we see right now is significantly less new RFPs and customer extensions customers waiting for the 5G NTN and to see how it's going to be integrated with the 5G network that they have today. Direct-to-device cannot provide the speed that standard cellular backhaul can provide. We do have with existing customers we do get follow-on orders not in the same magnitude that we saw in the past. We believe that it will take another I would say several few quarters until the market will return to normal on the cellular backhaul. SkyEdge IV the virtual platform is just running the SkyEdge IV software over cloud commercial -off-the-shelf equipment. It's not going to add at least not in this phase additional features but it will allow operators to have the agility and flexibility that they need and also will allow us to sell in more compelling business models. Understand I think. I think. Did I hear you say that customers go ahead. No go ahead. Go ahead. Gil you mentioned that on those SkyEdge IV sales that if customers are generally making a CapEx acquisition are you selling at the same price for the software only as you would have software hosted on a piece of hardware? Or is it something less than that? How do we think about both revenue growth would slow if you're selling software only for less but margins would change? Are we going to see that impact putting aside Stellar Blu in the model in 2025 or is that more out into a 2026 2027 impact? With respect to pricing prices are similar between the CapEx hardware model and the software model. From our perspective prices are the same. Can you repeat the second question Chris? The effect on the margins. Yeah. The effect on the margins is very positive because once we develop the software it will be more like software kind of margins rather than hard ones. Chris I want to add that even today with SkyEdge IV the ratio between software and hardware has changed significantly in comparison to SkyEdge II-c. Today at the first day we provide almost all the hardware the customer will need and all the expansions and the upgrades are almost entirely software. We are starting to see the effect in the commercial segment. As you said Stellar Blu takes it a bit down. I think we'll see a gradual progress in the next few years to increase commercial business margins. The virtual platform will be ready two years from today. The real effect I would say we'll start to see towards let's say the end of 2027. Got it. Final question on the amplifier Wavestream business. I know there's still a large NGSO order out there. Any progress on moving on that? Yes. There is a lot of progress on this front. We already received more than $30 million in orders. We are delivering every quarter based on the customer needs. We do expect to get additional orders in the next few months. We see also around it also Defense business that can be built. We expect also Defense orders to this specific constellation. It has its own pace. It's not everything at one day. Great. I lied because I do have one final question for Gil. There were a number of gyrations on the balance sheet between you know contract assets inventories long-term receivables. Anything we should focus on there in terms of modeling? I think that you know all the changes are mainly in the working capital related to deliveries. We had some reduction in the inventory due to timing of the deliveries between Q1 and Q2. It also affected the AR of course. The changes over there are relatively large. More than that I wouldn't say that there is something new to take into account when you model the company. No material changes in you know either the need or cash generation from working capital you know as we go through the balance of the year? No. You know it always depends on the I would say POs that we get. Some of them like the Peruvian award that we just reported is usually associated with advanced payments. I would expect this to positively affect the balance sheet in the next quarter or two. This is something that we're used to see from time to time. I wouldn't describe it as unique but just a reflection of orders and its timing on the balance sheet. Great quarter guys. Keep up the good work. Thank you Chris. The next question is from Gunther Karger of Discovery Group. Please go ahead. Yes. Thank you for taking the question. I have a comment rather than a question. First I'm particularly pleased with your progress in the Defense business which I a long time ago thought was a big piece of growth business. Secondly it is to congratulate you on excellent performance. That's my comment. Thank you Gunther. Thank you. The next question is from Sergey Glinyanov. Please go ahead. Hi gentlemen. My congratulations with your performance in second quarter. We saw that operating margin is improved compared to first quarter of 2025. What is the primary reason what is the primary effect for that improvement of operating margin if we exclude the effect from Stellar Blu? Maybe you implemented some initiatives that could reduce the cost or something else. Hi Sergey. First of all Stellar Blu has the most I would say substantial effect on the changes in the gross margin comparing this year and previous year. We also got some improvement in the gross margin of Stellar Blu compared to Q1. I would say that this is one major driver of the change. We also had some better gross margin in Peru this quarter that also improved the weighted gross margin. Both together created a better gross margin. Of course you know the revenue mix also affects the gross margin although there are no other unique things to discuss but it can vary and fluctuate between quarters. Thank you Gil. Continuing the topic about your backlog you obtained probably more than $1.5 million of new orders for second quarter. I get that it's pretty much more than a year ago and only $27 million for Stellar Blu antennas. What is the backlog volume in commercial and defense segments now and average subsidy period excluding Stellar Blu? I did discuss Stellar Blu before about entering into the deal with about 1,000 antennas. The nature of deals there are not you know a monthly kind of deals. Usually it comes in large batches. As Adi mentioned we're expecting to see some pretty soon. With respect to the backlog of the commercial and the defense this is a number that we don't share. I can share with you that we usually have visibility for a year that we enter of at least 50% for the upcoming year. Some of the backlog is also relevant for the years after. Without stating any numbers we have a decent amount of backlog that allows us to see future growth. Yeah thank you. That's all from me. Thank you Sergey. There are no further questions at this time. Mr. Benyamini would you like to make your concluding statement? Thank you. I would like to thank you all for joining us on this call and for your time and attention. We hope to see you soon or speak to you in our next call. Thank you very much and have a great day. Thank you. This concludes Gilat 's second quarter 2025 results conference call. Thank you for your participation. You may go ahead and disconnect.