Comtech Telecommunications Corp. (NASDAQ: CMTL) reported its financial results for the fourth quarter and fiscal year ended July 31, 2026, and announced a definitive agreement to sell the majority of its Satellite and Space Communications (S&S) business to an affiliate of Gilat Satellite Networks Ltd.
For fiscal year 2026, the company reported net sales of $249.6 million, a decrease of 17.0% compared to fiscal 2025. The company noted that the decrease was driven by the winding down of legacy U.S. Army Very Small Aperture Terminal (VSAT) contracts, which are no longer part of the continuing operations. Excluding these inactive contracts, net sales were comparable to the prior year, reflecting a transition to recurring maintenance revenue. The company estimates that approximately 80% of its fiscal 2026 net sales are recurring.
Gross profit for fiscal 2026 was $97.2 million, representing a gross margin of 38.9%, an increase from 31.6% in fiscal 2025. This improvement was attributed to the continued adoption of the company's solutions and the migration of Public Safety Answering Points (PSAPs) onto its Next Generation 9-1-1 core services and call handling platforms.
Despite the sales decline, the company reported an operating loss of $18.2 million for fiscal 2026, an improvement from an operating loss of $29.9 million in the prior year. This improvement was driven by higher gross profit and lower selling, general, and administrative expenses. Adjusted EBITDA from continuing operations increased 26% year-over-year to $20.6 million, or 8.3% of net sales. The company reported a net loss from continuing operations attributable to common shareholders of $51.0 million.
Cash flows from operations were $25.0 million for fiscal 2026, a significant improvement from cash used in operating activities of $29.2 million in fiscal 2025. The company also reported net bookings of $263.7 million, representing a book-to-bill ratio of 1.06x. This included a multi-year contract extension valued in excess of $130.0 million by Allerium’s largest customer, a leading telecommunications company in the U.S.
At the end of fiscal 2026, the company’s total consolidated liquidity was $61.3 million. The company also entered into favorable amendments to its senior debt, subordinated debt, and preferred stock agreements to enhance financial flexibility and reduce its expected cost of capital.
In a separate strategic transaction announced on June 14, 2026, Comtech entered into a definitive Securities Purchase Agreement to sell most of its S&S segment to Wavestream Corporation, an affiliate of Gilat. The transaction includes a base purchase price of $157.5 million, subject to customary adjustments. The company received an advance payment of $10.0 million, which was used to prepay debt. The transaction is expected to close in calendar 2026, subject to regulatory approvals. Following the sale, the company anticipates annual cost savings of approximately $16.0 million to $18.0 million and estimates that pro forma Adjusted EBITDA for fiscal 2026 would have been between $37.0 million and $39.0 million.
Looking ahead, the company’s funded backlog as of the end of fiscal 2026 was $520.4 million, with revenue visibility of approximately $862.0 million. The company anticipates investing between $13.0 million and $15.0 million in transition-related costs, primarily in fiscal 2027 and 2028, to align its operations with a public safety focus.
