Comtech Announces Financial Results for Second Quarter of Fiscal 2026

Comtech Telecommunications Corp. , reported financial results for its second quarter ended January 31, 2026.

Ken Traub, Chairman, President and CEO, stated: “Comtech continued on its positive trajectory of improvement, as we delivered our fourth consecutive quarter of positive operating cash flow and ended the quarter with approximately $50 million of total liquidity. With net bookings of $175 million in the quarter, we have achieved a book-to-bill ratio of 1.64x, increased our backlog to $732 million and maintained our revenue visibility at approximately $1.1 billion. As previously disclosed, we have streamlined our product lines and are more selective in the customer orders we accept. As a result of these deliberate decisions, as well as the temporary impact of the U.S. government shutdown, consolidated net sales decreased from $127 million in the second quarter of fiscal 2025 to $107 million this past quarter. But importantly, we increased gross profit from $34 million to $36 million, increased our gross profit percentage from 27% to 34% and increased Adjusted EBITDA from $2.9 million to $9.1 million. These improvements are due to the initiatives we have implemented to enhance operational efficiency, reduce the cost structure and focus our product development and sales efforts on strategic, higher operating margin products. As a result of our improved performance and stronger financial position, we continue to see increased support and enthusiasm from current and prospective customers, vendors and employees.”

Consolidated Financial Results

Net sales of $106.8 million

Gross profit of 33.9%

Operating loss of $1.2 million and net loss attributable to common shareholders of $20.2 million

Adjusted EBITDA (a Non-GAAP financial measure) of $9.1 million, or 8.6% of net sales

Net bookings of $175.4 million, representing a book-to-bill ratio of 1.64x

Funded backlog of $731.6 million and revenue visibility of approximately $1.1 billion

GAAP cash flows provided by operations of $4.9 million

Total liquidity at quarter end of $49.9 million

Second Quarter Fiscal 2026 Results Commentary

Consolidated

Consolidated net sales were $106.8 million, a decrease of 15.6% compared to $126.6 million reported in the second quarter of fiscal 2025. As anticipated, the decline in net sales in the Satellite and Space Communications (“S&S”) segment primarily reflects the Company’s decision to phase out and eliminate certain low margin and working capital intensive revenues, as well as the impact of the recent U.S. government shutdown. Examples include contracts for services, including the Very Small Aperture Terminal (“VSAT”) Satellite Systems and Services contract and the Global Field Service Representative (“GFSR”) contract, as well as legacy troposcatter related products and services. As part of this repositioning, S&S is pursuing sales of innovative, higher-margin solutions, such as digital common ground modems, network solutions and rapidly deployable multi-path radios (“MPRs”). Allerium reported higher net sales in all three of its product areas compared to the prior year period. 

Consolidated gross profit was $36.2 million, or 33.9% of consolidated net sales, an increase from $33.7 million, or 26.7% of consolidated net sales, reported in the second quarter of fiscal 2025. The year-over-year improvement in consolidated gross profit, both in dollars and as a percentage of net sales, reflects overall product mix changes and improved operational and financial performance as a result of the Company’s transformation initiatives to, among other things, enhance operational efficiency, streamline product lines with a focus on strategic, higher operating margin products and reduce cost structures. The improvement in the Company’s quarterly gross profit percentage builds upon the improving quarterly trend achieved throughout fiscal 2025 and the first quarter of fiscal 2026.

Consolidated operating loss was $1.2 million, compared to an operating loss of $10.3 million in the second quarter of fiscal 2025. The improvement from the second quarter of fiscal 2025 is primarily the result of higher gross profit, both in dollars and as a percentage of consolidated net sales, and lower selling, general and administrative expenses, including lower restructuring costs, no proxy solicitation costs and lower amortization of stock-based compensation, offset in part by higher CEO transition costs that included a net benefit from the recovery of certain legal related expenses in the prior year period. Operating loss in the second quarter of fiscal 2026 reflects $5.0 million of amortization of intangibles, $1.6 million of restructuring costs (of which $0.7 million and $0.9 million related to the S&S and Unallocated segments, respectively), $0.4 million of amortization of stock-based compensation and $0.3 million of CEO transition costs. Excluding such items, consolidated operating income for this past quarter would have been $6.2 million, or 5.8% of consolidated net sales.

Consolidated net loss attributable to common stockholders was $20.2 million, compared to a net loss attributable to common stockholders of $22.4 million in the second quarter of fiscal 2025. In addition to those items described above, and as more fully discussed in the Company’s SEC filings, the more recent period included $6.5 million of net dividends related to the Company’s Convertible Preferred Stock, compared to $26.4 million of net deemed contributions in the prior year period.

Consolidated Adjusted EBITDA (a Non-GAAP financial measure) was $9.1 million, compared to $2.9 million in the second quarter of fiscal 2025, representing an increase of 214%. The year-over-year improvement in Adjusted EBITDA reflects the improvement in operating income described above and the Non-GAAP reconciliations described in the appendix.

Consolidated net bookings were $175.4 million, an increase of 120.9% compared to the second quarter of fiscal 2025. Consolidated net bookings include over $107.0 million of incremental funding toward a multi-year contract extension, valued in excess of $130.0 million and awarded to Comtech’s Allerium segment by a domestic Tier 1 mobile network operator. The book-to-bill ratio in the second quarter of fiscal 2026 was 1.64x, compared to 0.63x in the second quarter of fiscal 2025. As part of the Company’s transformation plan, it has refocused and prioritized its product development and sales efforts to eliminate certain low-margin revenue and target higher-margin opportunities in which it has greater differentiation and to optimize cash flow. 

Consolidated backlog was $731.6 million as of January 31, 2026, compared to $763.8 million as of January 31, 2025 and $672.1 million as of July 31, 2025. Revenue visibility, measured as the sum of funded backlog and the total unfunded value of certain multi-year contracts, was approximately $1.1 billion at the end of the second quarter.

GAAP cash flows provided by operations were $4.9 million, an improvement from the second quarter of fiscal 2025 cash flows used in operations of $0.2 million. This is Comtech’s fourth consecutive quarter of positive operating cash flows and reflects improved operating income and favorable changes in networking capital requirements, due primarily to improved accountability and process disciplines, as well as the timing of and progress toward completion on contracts accounted for over time, including related shipments, billings and collections.

Operating cash flows in the second quarter of fiscal 2026 include aggregate net cash payments for interest and taxes of $4.9 million, compared to $5.6 million in the second quarter of fiscal 2025. Operating cash flows for the second quarter of fiscal 2026 and 2025 also include $4.2 million and $5.6 million, respectively, in aggregate net cash payments for restructuring costs, including severance, proxy solicitation costs and CEO transition costs.

Satellite and Space Communications (“S&S”) Segment

S&S net sales were $50.6 million, a decrease of 31.3% compared to the second quarter of fiscal 2025. As anticipated, the decline in net sales in the S&S segment primarily reflects the Company’s decision to phase out and eliminate certain low margin and working capital intensive revenues, as well as the impact of the recent U.S. government shutdown. Examples include contracts for services, including its legacy VSAT, GFSR and troposcatter related products and services. As part of this repositioning, S&S is pursuing sales of innovative, higher-margin solutions, such as digital common ground modems, network solutions and rapidly deployable MPRs.

S&S operating income was $2.5 million, compared to operating income of $1.2 million in the second quarter of fiscal 2025. S&S operating income in the second quarter of fiscal 2026 was impacted by $0.7 million of restructuring costs to streamline its operations, compared to $1.4 million in the second quarter of fiscal 2025. The year-over-year improvement in S&S operating income primarily reflects lower selling, general and administrative expenses (due to cost reduction actions), partially offset by lower net sales and gross profit, in dollars, and higher research and development expenses.

S&S Adjusted EBITDA was $5.4 million in the second quarter of fiscal 2026, compared to $4.7 million in the prior year period. Compared to the prior year period, Adjusted EBITDA reflects those factors discussed above.

S&S’ book-to-bill ratio for the second quarter of fiscal 2026 was 0.68x. This ratio compares to 0.64x in the second quarter of fiscal 2025.

Key S&S contract awards during the second quarter of fiscal 2026 included:

over $5.5 million of funded orders from several international government end customers of Comtech’s troposcatter Family of Systems (“FoS”), including its rapidly deployable MPRs and Modular Transportable Transmission Systems (“MTTS”);

incremental funding in excess of $4.5 million for ongoing training and support of complex cybersecurity operations for U.S. government customers; approximately $2.8 million in funded orders for high-frequency band amplifiers for use by a provider of high-speed satellite broadband services and secure networking systems covering military and commercial markets;

over $1.8 million in funded orders from the U.S. Navy for non-recurring engineering services;

approximately $1.2 million in funded orders for Comtech’s software-defined, satellite communications network applications in support of upgrading domestic air traffic control platforms;

in excess of $1.0 million in follow-on orders for high-power amplifiers in support of an electronic warfare and countermeasures space program led by a U.S. government agency; and over $1.0 million in funded orders for products and services related to electrical, electronic and electro-mechanical (“EEE”) space parts and components in support of an international end customer’s rocket launch initiatives.

In September 2025, as part of the Company’s operational efficiency and cost savings plans, S&S decided to migrate certain production capabilities and operational functions to its manufacturing operations in Chandler, Arizona. This initiative is expected to be substantially completed in fiscal 2026, result in increased manufacturing efficiencies, allow S&S to further optimize its facilities footprint and result in recurring annualized cost savings over time of approximately $3.0 million.

In March 2025, S&S also announced the delivery of its first Digital Common Ground 7000 (“DCG-7000”) high speed, small form factor, software-defined modems to Lite Coms for integration, interoperability and performance testing across diverse government and commercial satellite communications applications and ground terminal configurations. DCG-7000 modems support DVB-S2X, along with other protected waveforms, and incorporates modern cybersecurity design principles, including integrated Transmission Security (“TRANSEC”) for over-the-air transmission.