Thank you, Ehud and good day to everyone. I would like to thank you for joining us today for our first quarter of 2021 earnings call. I am encouraged by the improvement of our first quarter of 2021 revenues versus the previous quarter.
While the first quarter is seasonally the weakest one of the year, we are seeing a positive progress and momentum across all our business units when compared with the previous quarter. The exception is the IFC segment, which is yet to show a recovery. Revenues in the quarter were $44.7 million, which were 5% better than the previous quarter and slightly below the same quarter last year, as last year we benefited from ISP backlog that we delivered.
Looking ahead, we do expect to see a continued sequential growth trend in revenues throughout 2021, with a boost from the IFC segment once it starts its recovery, which we do hope it will be towards the end of this year.
We expect that NGSO and cellular backhaul will be the main market segment that will drive growth in 2021 and beyond. And we also see strong potential for the defense business to support our growth in a more meaningful way than in the past. Moreover, looking into 2022, we believe that it will be a year of significant growth for our company as our NGSO project will materialize and we believe that IFC will recover.
On the bottom line, our adjusted EBITDA loss in Q1 was $1.4 million compared with a loss of $5 million in the same quarter last year.
As our revenues continue to recover in 2021, we would expect much of this growth to benefit our bottom line. The lower EBITDA level this quarter in comparison to the previous quarter was primarily due to the increase in expenses and the less favorable dollar shekel exchange rate. Expenses are higher, because thankfully life in Israel, are mostly returned to normal and our employees are back to full-time work, mainly from the office with the associated expenses.
We have very important projects, mainly in LEO and MEO constellations, in which we are currently investing significant R&D efforts and which will enable us to have significant revenue in the coming few quarters.
We also see many opportunities ahead of us and want to sure make we are well-positioned to capitalize on those as well. And therefore, we are investing increased efforts in R&D in order to better support our future growth.
Now, I would like to focus on some of the business achievements and highlights. The non-GEO stationary orbit satellite constellation and the very high throughput satellite continue to be a major strategic focus area and growth engine for Gilat.
This quarter, we received additional multimillion dollar order from a leading satellite operator for support of low earth orbit constellation.
As we reported in the past, Gilat’s subsidiary Wavestream was chosen as a vendor of choice to supply gateway solid-state power amplifiers for this project.
In addition, we are on schedule with the development of the ground segment for the SES O3BM power satellite constellation and expect to start seeing significant revenue from this project in the upcoming quarters.
As a leading provider for NGSO and VHTS market, we see significant growth potential for Gilat, comprising of hundreds of millions of dollars of market opportunities. We believe that we are well-positioned to win additional NGSO and VHTS business as the opportunities mature. Gilat continued to lead the sale of backhaul industry and according to a new report by industry analyst NSR, Gilat is the number one vendor in modem shipments with a market share of approximately 40%. According to Gilat analysis based on NSR report, we continue to lead the 4G market with 80% market share. Furthermore, as we reported, Gilat was awarded over $5 million from Tier 1 mobile network operator in Japan for cellular backhaul expansion to quickly provide coverage to rural areas and to support emergency response in case of natural disasters.
In addition, we are seeing significant expansion in follow-on orders from our Tier 1 MNOs around the globe, including in Latin America, Europe, Australia, and from leading mobile operators in Japan. This is a testament to the great value our customers see in our solutions as they continue to expand their networks.
We are confident in our ability to continue to lead the industry with the transition to 5G.
For this, we launched this quarter our next generation family of VSATs, Aquarius in support of 5G networks and NGSO constellations. The multi-orbit ultra performance VSATs provide over 2 gigabit per second of concurrent speed and support seamless satellite handle.
As we stated previously, we see 5G – we view 5G adoption as a market with huge potential for Gilat. The addressable market size is expected to reach more than $300 million per year for satellite equipment only for 4G and 5G cellular backhaul and more than $6 billion a year for satellite equipment and services, including satellite capacity in few years. We believe that the 5G adoption initially in cities will drive significant 4G deployment over satellite backhauling in the suburban and rural areas, where terrestrial coverage is less feasible. At the second stage, 5G deployment of the satellite was spread to rural areas as well entering the promise of universal coverage. In the enterprise segment, Gilat was announced – Gilat just announced a strategic agreement valued at tens of millions of dollars, including potential of significant project expansions with a large government cooperation in Asia-Pacific. The equipment and the multi-year managed service contract will enable connectivity for multiple applications across the nation.
In addition, we saw significant achievements in Latin America with several projects totaling multimillion dollars in support of broadband connectivity for education to the most remote regions of the continent.
With these efforts, we joined our partners in a common goal of bridging the digital divide and promoting the vision of equal opportunity for children everywhere. Among other enterprise projects around the globe, Gilat was chosen to provide a satellite network of thousands of VSATs to energy plants of a multinational leading energy company.
We are also seeing growing opportunities in the IoT market segment for which our solution is an excellent fit. We secured a large expansion order for an IoT project in Latin America and we are increasing our pipeline with prospects in Europe and Asia-Pacific.
As is well known and we mentioned in our previous conference call, the mobility market segment, especially IFC and maritime was mostly heavily hit by the COVID-19 pandemic saying that we continue to view this segment as strategic for Gilat and view the pandemic effect as temporary. Upon an industry recovery, we expect this segment to grow in importance as air passengers increasingly demand reliable high-speed internet connection during travel.
We expect this trend to be further strengthened with the introduction of free Wi-Fi for IFC which will significantly increase take-up rates and will provide a strong tailwind to the industry and to Gilat.
During the quarter, Gilat reached an important milestone in achieving DO-160G certification as successfully tested by global legal entertainment. The major IFC service provider tested the high power IFC transceivers developed and manufactured by our subsidiary, Wavestream. Production units are planned to be shipped to Global Eagle for usage in commercial aircraft later this year and onwards. In Peru, I am pleased to report that we have now passed the acceptance test in the region of Cusco, the fourth project that was awarded in late 2015 both with the transport and the access networks, followed by a payment of more than $12 million in early April and additional payment of about $7 million to be further received in the coming few weeks.
Following this acceptance, we are now in the operational phase of 4 out of 6 regions we were awarded. This is a very significant step towards achieving our goal of recurring revenues of over $50 million in Peru.
We are also progressing with the additional two last regions awarded us in 2018.
Although this progress is significantly affected by the pandemic restriction in Peru which are still very much in effect, we do expect to finish the construction phase of these last two regions in early 2023.
As we reported last quarter, we see growing opportunities in defense segment worldwide.
We are making significant progress in materializing these opportunities and I expect to be able to report further progress and wins in the near future. In summary, we are able and continue to win new projects across all our target markets.
We have a lot to look forward to in the quarters ahead.
Specifically, looking out through the current year, we expect to see ongoing improvements in revenues quarter-over-quarter and we believe that these improvements will benefit our profitability throughout the current year. At the same time, we are focused on capitalizing and staying ahead of many opportunities that we see in our end markets, which we believe will further secure our long-term future growth. I am excited with our potential for the coming quarters and years. With that, I would like to hand over to Bosmat. Bosmat, we are now ready for your report. Please go ahead.