Strong out the gate. For the fifth consecutive quarter, Gilat reported revenues that were slightly below our forecast, but the company significantly outperformed on the bottom line, reporting AEBITDA of $8.4 million, 77% above our forecast.
Gross margins up 10 points. Gross margins improved for the ninth consecutive quarter, gaining 10 points y/y to a decade- plus high of 41.9%. Management cited a particularly favorable hardware mix and growing software contribution.
Satellite Networks up 35%. Gilat reported its third consecutive quarter of double-digit revenue growth, driven by record IFC and cellular backhaul orders in 2022. We are raising our 2023 and 2024 revenue estimates to reflect 22% and 12% growth, respectively;Integrated Solutions down 6%. We are forecasting flattish revenues in 2023 as large deployments with Intelsat SES taper off, and Gilat awaits the start of a potentially nine-figure contract with an NGSO operator.
Peru approves a region. The Peruvian Ministry of Transport and Communications (MTC) accepted the fifth Pronatel region during the quarter, with the sixth region expected to be completed by early-2024. MTC also paid Gilat an arbitration settlement of ~$3 million with an outstanding potential balance of $26 million.
Raising estimates. Just three months after providing initial 2023 guidance, Gilat affirmed its revenue forecast while raising its midpoint AEBITDA guidance by 3% to a range of $31-35 million. We are raising our 2023 and 2024 AEBITDA estimates by 6% and 7%, respectively.