Gilat Satellite Networks Q1 2024 Earnings Call Transcript

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May 8, 2024

There are 8 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to Gilat's First Quarter 2024 Results Conference Call. All participants are at present in listen only mode.

Operator

Following management's formal presentation, instructions will be given for the question and answer session. As a reminder, this conference is being recorded May 8, 2024. By now, you should have all received the company's press release. If you have not received it, please contact Gilat's Investor Relations team at EK Global Investor Relations at 1-six forty six 688-3559 or view it in the News section of the company's website, www.kilat.com. I would now like to hand over the call to Mr.

Operator

Ehud Helft of EK Global Investor Relations. Mr. Helft, would you like to begin please? Yes.

Speaker 1

Good morning and good afternoon, everyone. Thank you for joining us today for Gilat's Q1 2024 results conference call and webcast. The recording of this call will be available beginning at approximately noon Eastern Time today, May 8, as a webcast on Gilat's website for a period of 30 days. Also, please note that investors are urged to read the forward looking statements in Gilat's earnings release with a reminder that statements made on this earnings call that are not historical facts may be deemed forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All such forward looking statements, including statements regarding future financial operating results, involve risks, uncertainties and contingencies, many of which are beyond the control of Gilat and which may cause actual results to differ materially from those anticipated results.

Speaker 1

Gilat is under no obligation to update or alter these forward looking statements whether as a result of new information, future events or otherwise, and the company expressly disclaims any obligation to do so. More detailed information about risk factors can be found in the last reports filed with the Securities and Exchange With that said, let me turn the introduction. On the call today are Mr. Adi Fadia, Gilat's CEO and Mr. Gil Benjamini, Gilat's CFO.

Speaker 1

I would now like to turn over the call to Adi Stradio. Adi,

Speaker 2

over to Gilat. Thank you, Udi, and good day to everyone. I want to thank you for joining us today for our Q1 of 2024 earnings call. We are pleased with the results of the Q1, which start 2024 well and is in line with our expectations for the year. The Q1 of 2024 showed strong 29% year over year revenue growth, including the contribution of the revenues from our recent acquisition, Data Pass and a solid level of organic growth, which was brought across multiple business areas.

Speaker 2

The broad interest and good performance were due to continued growing market interest in our solution and advancement in the satellite communication space. I also want to highlight in particular that our strategic partnership with the major satellite operators also strongly supported the growth in our business during this quarter. We are pleased with Datapas contribution to the quarter's results. Datapas contributed about 17% to the top line growth and positive adjusted EBITDA. We are already demonstrating our ability to leverage the capabilities of DataPath and WaveStream, our 2 U.

Speaker 2

S.-based subsidiaries, which I will explain further when discussing our recent activities in the defense sector. In terms of overall bottom line, we improved our adjusted EBITDA profitability over Q1 of last year, which itself was a very strong quarter with a favorable revenue mix by 11% year over year. Looking ahead, we are very much on track and as such, we are reiterating the guidance we gave at the beginning of the year, which Gil will summarize shortly. Now let's move to the business review of the Q1 of 2024. In the very high throughput satellite, the VHTS and the non geostationary satellite, the NTSO constellation business segment, we continue to lead the market and grow our business with follow on multimillion dollar orders from our strategic partners, the satellite operators, which mainly includes SCS and Intelsat among others.

Speaker 2

This is driven by increasing demand for Gilat's SkyEdge platforms as satellite operators expand their networks and deliver a wider range of applications to a growing number of users. During the last few months, we have been awarded more than $13,000,000 in cumulative orders from several satellite operators to expand their global networks utilizing Gilat, Sky2C and Sky4 multi orbit, multi service capabilities. Overall, we are enjoying an increase in the pace of deployments and installation for both gateway hubs and terminals across Empower and other SES Geosatellites. In addition, our wholly owned subsidiary in the United States, WaveStream, is successfully delivering SSPAs to a new NGSO operator for its gateway deployments. We believe this success position us well as the main SSPA supplier to this operator and potentially to receive the launch of their future business, which is worth tens of 1,000,000 of dollars.

Speaker 2

Additional orders from this NTSO operator are expected during 2024. Our increased focus on the defense market segment is already bearing fruit. The acquisition of Datapath was completed in November of last year and Q1 was the 1st full quarter consolidating the revenues into our defense sector under the satellite network segment. We recently announced several new projects that were awarded to Datapas and WaveStream. Datapas received multiple orders during the Q1, totaling more than $15,000,000 from the U.

Speaker 2

S. Department of Defense for DECT 3,421 Terminals. This market leading solution is a transportable SATCOM hub that delivers the operational flexibility, capacity, connectivity and control required to ensure connectivity anywhere in the world. Following last quarter announcement that the U. S.

Speaker 2

Army awarded WaveStream a $20,000,000 contract for the sustained anytime, anywhere satellite connectivity program, we've already received the follow on orders for more than $12,000,000 We are providing a 51 Ka band SSP8 for the long term sustainment of thousands of mobile satellite transportable terminals, which enables a continuous communication on the pole solution across diverse climates and hard conditions around the globe. This order demonstrates Gilat's ability to leverage the capabilities of our 2 U. S.-based subsidiaries. We also received a multimillion dollar defense satellite connectivity project order from a leading governmental defense organization. This order included Gilat's Sky's 4 platform and Taurus M modems to augment the defense organization's advanced satellite communication capabilities.

Speaker 2

In addition, a leading defense organization selected Gilat to develop a next generation software defined modem for SATCOM ON THE MOVE and SATCOM ON THE POS military applications valued at 1,000,000 of dollars. We continue to take to make great progress in the mobility sector, demonstrating solid growth, developing more products, adding more customers and supporting more verticals. During the Q1, we made significant progress in developing our electronically sterile antenna for Jio and LEO. Initial test over Jio proved that the antenna design meets the intended specifications and commercial for commercial aviation. Gilat East Star further meets and exceeds the performance of develop, qualify and produce a new line of Ku band power supply unit products to support the Ku band ESA, bolstering Gilat's growth in the IFC market.

Speaker 2

In addition, we received orders for the TAROS modem from Safran for the Airbus HPC Plus program as well as from a leading IFC service provider that expands Gilat IFC footprint into the business aviation and government markets. In our Enterprise business segment, our customers worldwide continue to depend on us to enhance their business and new opportunities continue to arise. We are witnessing a significant surge in social inclusion project globally. This project aims to bridge the digital divide and empower underserved communities by providing access to essential services such as education, healthcare and economic opportunities. Communication is the cornerstone of social inclusion and satellite communication stand out as the key achieving widespread connectivity that surpass the limitation of terrestrial alternative.

Speaker 2

We received a $3,000,000 follow on order for a public Wi Fi service in Latin America. This project highlights once again the importance of social inclusion project aimed at bridging the digital device. During the quarter, we also received a significant order for an additional social inclusion project in Brazil. This program will expand Wi Fi services across the country and require thousands of additional Visa systems from Gilat over the coming years. In Peru, we are pleased to announce the completion of the construction and implementation of the 6 regional project for Bonatel in the Amazonas region.

Speaker 2

We are now in the acceptance process and expect to be operational later this year. In addition, we are progressing in building the 17,000,000 dollars expansion project in the Amazonas region, expecting to finish the expansion before the end of the year. Furthermore, in Peru, we are expecting additional progress in the next few months. This includes the maturity of several large RFPs with Bonatera and the the rest of the year. To conclude, I am pleased with our results for the Q1, which included the contribution of the revenues our recent acquisition Datapath in addition to a solid level of organic growth, which are attributed to the growing interest in our solutions, advancement in the satellite communication market and particularly our strategic partnership with the major satellite operators.

Speaker 2

We continue to lead with our next generation platform, the SkyEdge 4, which supports multiple orbits, verticals and applications, including our strategic markets of mobility, cellular backhaul and defense. During the first quarter, we made significant progress in developing our electronically steerable antenna for Jio and LEO and expanded our IFC footprint into business of the Asian and government markets. We have also delivered our SSPAs to a new NGSO operator for its gateway deployments and are seeing increasing opportunities in this line of business. We have a strong pipeline and expect the materialization of important deals over the coming months. With that, I hand over to Gil Bin Yamini, our CFO.

Speaker 2

Gil?

Speaker 3

Thank you, Adi. Good morning and good afternoon to everyone. I would like to remind everybody that our financial results are presented on both GAAP and non GAAP basis. We regularly use supplemental non GAAP financial measures internally to understand, manage and evaluate our business and make operating decisions. We believe these non GAAP financial measures provide consistent and comparable measures to help investors understand our current and future compensation expenses, amortization of purchased intangibles, lease incentive amortization, other integration expenses, one time changes of deferred tax assets, other operating income, net and income tax effect on the relevant adjustments.

Speaker 3

The reconciliation table in our press release highlights this data and our non GAAP information presented excludes these items. I will now move to our financial highlights for the Q1 of 2024. Overall, as Adi mentioned earlier, we are very pleased with the strong start of 2024. We reported a 29% year over year growth in revenue. This was driven by 12% organic growth as well as by our recent acquisition Datapath that contributed 17% to our growth.

Speaker 3

Our GAAP gross margin was 38% and our adjusted EBITDA reached $9,300,000 11% growth over Q1 last year. We are optimistic about our prospects in our quarters ahead. And as Odi mentioned earlier, we reiterate our guidance for 20 24, which I'll cover later. In terms of our financial results in more detail, revenues for the Q1 were 76 point 29% higher than those of Q1 of last year, which were $59,000,000 The improvement was driven by growth in the Satellite Network segment and was comprised of organic sources and from acquisition of DataPath, which we closed in the middle of Q4 of last year. We also demonstrated solid growth in the Network Infrastructure and Services business segment.

Speaker 3

In terms of revenue breakdown by segment, Q1 'twenty four revenues of the Satellite Network segment were $46,800,000 compared to $33,500,000 in the same quarter last year. Q1 'twenty four revenues of the Integrated Solutions segment were 11,600,000 compared to $12,900,000 in the same quarter last year. Q1 'twenty four revenues of the Network Infrastructure and Services segment were $17,700,000 compared to $12,500,000 in the same quarter last year. The increase was derived from higher construction revenues as well as increasing the services revenue. I would now like to summarize our percent compared to 41.9 percent in the same quarter last year.

Speaker 3

The reduction in our gross margin was mainly due to particularly favorable product and services mix that we experienced in Q1 of last year. In addition, and as we mentioned in the past, Datapath gross margins are slightly lower than Gilat's average, which impacts the overall gross margin in the current quarter and will continue to do so going forward. As we discussed in previous calls, analyzing Gilat's result on a quarter by quarter basis is problematic since they can be significantly affected by our revenue and product mix. I note that the gross margin in the trailing 4 quarters was 38.2%, similar to 38.5% in the trailing 4 quarters that ended on March 31, 2023. GAAP operating expenses in Q1 2024 were $22,700,000 an increase of $5,000,000 versus the same quarter last year.

Speaker 3

In Q1 of last year, we had a onetime cash income of approximately $3,000,000 for an arbitration won in Peru. This quarter, we also have an impact of approximately $700,000 of amortization of purchased intangibles and other acquisition related expenses. These impacts are included only in the GAAP numbers. I also note that this quarter, we have operational expenses related to Datapath, which we did not have in the Q1 of last year. GAAP operating income for the quarter is $5,400,000 compared to $7,000,000 in the same quarter last year.

Speaker 3

GAAP net income in the first quarter was $5,000,000 or 0 point $1,000,000 or diluted earnings per share of $0.10 in the same quarter last year. Moving to non GAAP results. Our non GAAP gross margin in Q1 2024 was 37.8% compared to 42% in the same quarter last year. Differential was for same reasons I mentioned earlier. Non GAAP operating expenses in Q1 'twenty four were $22,200,000 compared with $19,500,000 in the same quarter last year.

Speaker 3

The increase was mainly due to the consolidation of DataPath. Non GAAP operating income for the quarter improved to $6,600,000 compared to $5,300,000 in the same quarter last year. Non GAAP net income in the Q1 was $6,000,000 or diluted earnings per share of $0.11 This is compared with $3,800,000 or diluted earnings per share of $0.07 in the same quarter last year. Adjusted EBITDA for the quarter improved to $9,300,000 an increase of 11% compared with adjusted EBITDA of $8,400,000 in the same quarter Moving to our balance sheet. As of March 31, 'twenty four, our total cash and cash equivalents and restricted cash net of short term debt were $98,500,000 compared with $95,300,000 on December 31, 'twenty 3 and compared to $89,700,000 as of March 31, 'twenty three.

Speaker 3

In terms of cash flow, we generated $4,200,000 from operating activities during the Q1 of 'twenty four and net repayment of loans was 2.7 $1,000,000 DSOs, which exclude receivables and revenues of our terrestrial network construction project in Peru, were 76 days higher than the previous quarter DSO, which was of 64 days. This KPI is within our normal range of 60 to 90 days. Our shareholders' equity as of March 31, 'twenty four, totaled about $281,000,000 compared with $275,000,000 at the end of December 2023. Looking ahead, we reiterate our guidance for the year. Our Our expectations remain for revenues of between $305,000,000 to $325,000,000 representing year over year growth of 18 percent at the midpoint, GAAP operating income of between $15,000,000 to $19,000,000 and adjusted EBITDA of between $44,000,000 representing year over year growth of 15% at the midpoint.

Speaker 3

That concludes my financial review. I would now like to open the call and would be happy to take your questions. Operator, please.

Operator

Thank you. The first question is from Ryan Koonce of Needham. Please go ahead.

Speaker 3

Hi, thanks for

Speaker 2

the question.

Speaker 4

And nice results particularly there out of the infrastructure business. I want to unpack the networks business a little bit if we could there. In terms of your product mix, how that shifted now with DataPath and how you think about that mix going forward with regards to I guess maybe the best way to segment it would be defense versus commercial. And how do you see that evolving as the year goes forward between defense and commercial? It sounds like defense is particularly strong for you, but would like to hear your thoughts

Speaker 3

on it, please? Thank you.

Speaker 2

I think it's a bit too early for us to between commercial and defense. But I agree with that defense is getting more and more traction. We had a very strong booking quarter. But book to ship in the defense, it's usually not in the same quarter. It's over time.

Speaker 2

So most of the orders that we received were of course factored already into our guidance, but we expect to deliver them along the coming 18 to 24 months. We are in initial stages, but just a rule of thumb, we said at the beginning of the year that data pass revenues will be around €45,000,000 So if you add satellite networks and integrated solution defense revenues, overall defense revenues this year should be above 60,000,000

Speaker 4

dollars Great. That's really helpful. Thanks, Adi. And in terms of the IFC market, can you maybe update us on your thoughts overall and how you see that segment developing? So it sounds like you had to touch some orders or some new wins and a lot of excitement in that category.

Speaker 4

Can you maybe expand on your kind of broader thoughts about the IFC opportunity for you?

Speaker 2

Yes. Sure. We see a lot of traction in the IFC. We managed to receive several orders for several new programs, where in some of the cases, the service provider will have dual solutions. So they are adding Gilat modems and solution into the overall solutions.

Speaker 2

In those cases, they will usually use Intelsat service, but on the aircraft, you will have several modems. We are progressing with electronically steerable antenna development that we received an award for Satcom Direct. In general, we see a lot of traction in the ISA market. This is a very growing segment. It seems like that the shift from flat panel mechanical steered to ESA is now becoming much more effective because of the ability to use OneWebku constellation.

Speaker 2

So we are seeing a lot of traction in this area and we believe it will significantly push our growth in the next few years. In addition, we are having several auxiliary products, new products like the power supply unit that we are providing to Safran for their HPC plus Airbus solution. So overall, we see a lot of traction in the market. We are still getting a nice order for SSPA for the old versions of the terminals, but now we see also a lot of potentials with ESA worldwide.

Speaker 4

Got it. And pardon me for not knowing, is the ESA product, is that a a relatively new product for you that you

Speaker 2

don't have a meaningful revenue stream from today? Correct. Gilat and ESA is episodes for several years, probably more than 10. We were the leader in electronically steered antenna for different applications than IFC at the beginning. And in 2023, we got an award from Satcom Direct to develop a unique business aviation and government aviation electronically steered antenna that will support a one constellation.

Speaker 2

And in parallel, we are developing a LEO Jio electronically steered antenna. It will be available slightly after the SATCOM direct antenna will be available. We expect that Satcom Direct will contribute to 2025 revenues. Right now, we are in a development phase.

Operator

The next question is from Chris Quilty of Quilty Space. Please go ahead.

Speaker 5

Thanks. I want to follow-up on

Speaker 6

that IFC question. You think you mentioned in your script that you had done a biz jet program. And can you just elaborate on that? I can't remember you playing in that market previously and this for SSTA or?

Speaker 2

Okay. So as you may remember, Satcom Direct is the main player in the business aviation. And with them, we signed the ISA development project for business jet. So we started to play in this market segment a year ago. And recently, we received another order from a leading service provider for Taurus modems for a service provider that will use HinterSat service.

Speaker 6

Got it. So this is a SkyEdge 2C or a 4?

Speaker 2

It can be a combination of the towers, motors for IFC can work both on SkyEdge 2C and SkyEdge 4.

Speaker 6

Got you. And these are all Ku systems and how much do you think that market can contribute to your overall IFC in the commercial ISC business? I mean in terms of relative scale,

Speaker 1

the opportunity.

Speaker 2

I think that the overall opportunity in the business of aviation is large. I see Intelsat is playing there, SATCOM Direct is playing there and others, and we are trying to penetrate more and more service providers. I think that in the next few years, we'll see a shift from commercial aviation to business aviation and it will drive additional growth.

Speaker 6

Understand. Elton, in the room question, the announcement of the acquisition or merger Intelsat and FBS, it's probably still a year and

Speaker 4

a half out. But what are

Speaker 6

your initial thoughts there? I know you've got pressure from both operators.

Speaker 2

Well, this is a very good question, I must say. In general, both SCS and Intrasat are strategic partners with Gilat. Our equipment is deeply integrated with both of them. We have Intelsat IFC platform and cellular backhaul solution is a strategic business for us and with SCS, both SCS Empower, which recently launched their service and SCS-seventeen and all the satellites are working with Gilat, both SkyEdge to Sea and SkyEdge for solution. We expected this merger to happen.

Speaker 2

It's this time the time from rumors to announcement was very fast, usually took months. We believe that the mergers once approved will have a positive effect on Gilat and we'll have one customer and instead of being trying to serve 2 new 2 giants with their roadmap requirement will have one customer with the roadmap requirements and most of our focus will be on delivering for them. I think in the short term, definitely, they will continue to buy Both of them have plans. Intelsat already committed to several new satellite and SCS is talking about new satellites, so they're willing to continue their plan. I don't think that the merger is to take a cost competitor out of the market rather to increase and make 1 +1 equal more than 2.

Speaker 2

And so us, I believe it's an opportunity for future growth. Great.

Speaker 6

Shifting gears, can you quantify what I don't think you have huge exposure to the maritime market, but it's pretty ugly out there with StarLink. Just wanted to see whether you have seen any impact on that business or is it

Speaker 4

too small to matter?

Speaker 2

1st of all, it's too small to matter. We are newcomers to this market segment and mainly serving SCS cruise line. It's relatively not material. And we from our perspective, it's regardless, we expect it to grow because it's very small and in the initial phases. But definitely, we see more and more StarLink getting traction in this market.

Speaker 6

Great. Shifting gears back to Datapath, you had a couple of announcements. I think when you closed it last quarter, you had mentioned that post closing, you picked up a $20,000,000 order and it seems like there's more. Is that still on track for I think you quantified around $50,000,000 a year run rate or has it improved from there since the acquisition?

Speaker 2

Yes. So we received this quarter several large orders through DataPath. And at the beginning of the quarter or beginning of the year, we said that in 2024, we expect Datapas to be around $45,000,000 in revenues. We decided to be a bit conservative because it's the 1st year of integration and sometimes you have hiccups at the beginning. I can say that the first quarter went well.

Speaker 2

We are on track of achieving those guidelines. And we expect to see a significant growth in years to come. We are recruiting several executives in order to strengthen our U. S. Defense presence.

Speaker 2

Nothing that I can share now, but hopefully we will be able to share with everyone. And I think that the defense, especially in the U. S, will be a significant growth engine for us.

Speaker 6

Great. And final question for Gil, Just looking at the OpEx, it looks like the last two quarters, you've run around $25,000,000 of of OpEx and obviously a partial quarter for Gilat in Q4 for DataPath in Q4. But there was also a pretty step up in G and A here in the Q1. I'm assuming is that timing related or is that sort of $25,000,000 in quarter OpEx a good run rate?

Speaker 3

So I can say that this Q1 OpEx expenses are representative ones. And this, of course, includes a full year of Datapath acquisition. You should also remember that in our GAAP reports, we include the purchase price allocation expenses and some share based compensation expenses related to the acquisition and some of these expenses are volatile and may go up or down due to changes in Gilat share price during the quarter. So this is, of course, relevant only in the GAAP reports. But as the bottom line, this quarter is representing the ongoing expenses in Gila.

Speaker 6

Very good. Thanks for all the feedback and great quarter.

Speaker 3

Thank you very much, Chris.

Operator

The next question is from Gunther Karger of Discovery Group. Please go ahead.

Speaker 5

Yes. So thank you for taking the call and congratulations on an excellent quarter. Three two questions and one comment. Question number 1 has to do with satellite backhaul. Is there any new developments in that area?

Speaker 5

And the second question has to do with the status of the high speed trains as they seem to be evolving worldwide. Any comment on those two questions?

Speaker 2

Okay. So hi, Gunther. Nice to speak with you again. So on the cellular backhaul, we continue to lead the market. We are seeing a lot of opportunities in 4 gs and we are starting to see some traction on the 5 gs.

Speaker 2

Recently, we demonstrate together with one of the largest MNOs in the world on SES satellites more than 1 gigabyte per second to the modem and more than 500 megabits per second to the handset. Those are extremely high speeds, 5 gs speeds. So our equipment is ready and we have initial sales, but we expect that 5 gs revenues will ramp up within, let's say, 2 years. I have a say that first you take Manhattan. So first you will have 5 gs in the cities and only then the operators will handle the rural connectivity.

Speaker 2

But what we see in the meantime is a lot of orders on the 4 gs. Over there, everyone wants to be to get a decent Internet speed, and we see a lot of deployments on the 4 gs. As for high speed trains, 5 or 6 years ago, it was there was a lot of traction around it and then it's relaxed a bit. We are delivering to 2 high speed trains terminals, but I cannot say right now that I see a lot of traction and I expect it to be a significant growth engine, but we have the solution. Our electronically steered antenna will be also a solution that will fit to that.

Speaker 2

But if you remember, 6 or 7 years ago, the main problem was that not every antenna can fit on the train because of the vibration. So it's not that simple, but it's a market or market segment that we are following. You said you have another question?

Speaker 5

My comment is long range. Having observed Gilat's sales in the early beginning and through now, you should be congratulated on an excellent growth path and outlook for the future. Thank you very much, Antti.

Speaker 2

Thank you, Gunther. Talk to you soon.

Operator

The next question is from Omri Efroni of Oppenheimer. Please go ahead.

Speaker 7

Hi, guys. Thanks for taking my call. I have a bit of questions about the new installations that are coming up. We have 3 of them that are really big. We're talking about Kyper, Iris and OneWeb.

Speaker 7

So I wanted to know if a bit of talking about the timeline that Gilad is supposed to get some answers about products and services that you're going to

Speaker 2

provide. Okay. So I'll start with IS Square in Europe. They initiate the RFI process and we expect them to wrap the information and move to RFP process towards the second half of the year. I believe that awards is expected not before the end of the year, probably the first half of twenty twenty five.

Speaker 2

We need to remember it's a European governmental project, 20 something countries, everyone has something to say, so I expect it in some time. OneWeb, next gen or gen 2 is the RFP is ongoing. Gilat is 1 of 2 shortlisted vendors for the ground segment. And as I said at the beginning of the year, we expect to have more insight towards the mid year. They said that they will announce the award before the end of the Q2.

Speaker 2

Usually, those kind of large RFPs tend to delay a bit, but definitely they will take a decision year. As for Project Kiper, Amazon is planning to start service 2026. So I guess they will need to start equipping the hubs and gateways towards 2025. As we said several times in the past, we are working with several NGSO players, some we cannot name by name. 1 of the large LEO constellation that we are supporting, we started to deliver SSPAs based on the initial order that we received 2 years ago, and we expect to get follow on orders during the if not this quarter, probably next quarter.

Speaker 2

But the large deployment is expected towards 20252026. I guess orders will be probably will be in towards the end of the year.

Speaker 7

Okay. Great, Verona. Thanks for the color. I was wondering about the situation in Europe and how it's affecting about on the defense market, especially about the SATCOM defense market. And then do you have some opportunities to buy and acquire some companies as you do invest in data capture in the United States?

Speaker 7

I was wondering how you think about European market?

Speaker 2

So overall, I think that it's bad to say, but sometimes, war is doing good for business. And defense in particular, you see a lot of traction around satellite communication. You saw a lot of news articles about SpaceX in Ukraine. So we see a lot of traction around satellite communication, both in Europe, but not only in Europe. But it's too early to quantify.

Speaker 2

It's not when you work with government, it takes time, not everything is urgent as it seems in the news. We believe it the long term growth on the defense will happen also in Europe. As for your second question about acquisition. So we are monitoring and reviewing a lot of opportunities. Some of them are also in Europe, but there is nothing to that is relevant to speak right now.

Speaker 2

Once it will be relevant, we'll advise. Okay.

Speaker 7

And last one for me. Last year, you said if you want to hire about 200 people. So I'm wondering how it's going on and if the 200 personnel is still part of the business plan.

Speaker 2

I think we said that at the beginning of 2023 and it was relevant to 2023, where we recruited more than 150 people. We continue to recruit worldwide based on our needs. Once we will get the large awards that we spoke before, this will require additional significant headcount increase. But right now, we are recruiting only based on immediate needs.

Speaker 7

Okay. Excellent. Thanks for the color. Thank you.

Operator

There are no further questions at this time. Mr. Binyamini, would you like to make your concluding statement?

Speaker 3

I want 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.

Operator

Thank you. This concludes GWOT's Q1 2024 results conference call. Thank you for your participation. You may go ahead and disconnect.

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