GILAT BUSINESS UPDATE INVESTORS DAY YONA OVADIA CEO November
GILAT – BOUNDLESS COMMUNICATIONS 4G/5G 2G/3G Air Sea Land Consumer Enterprise MOBILE MOBILITY BROADBAND GLOBAL PRESENCE MOST ADVANCED TECHNOLOGY END-TO-END SERVICE 20 sales offices Terrestrial-grade user experience Most stringent service levels Established 1987 NASDAQ / TASE: GILT ~900 employees 2 | Proprietary and Confidential
ACCELERATING CONNECTIVITY – GROWTH AREAS Developed, not developing world Introducing the concept of recurring revenue Increased investment in R&D Mobile Mobility Broadband HTS/VHTS/NGSO Cellular Backhaul, Broadband to the In the Air, at Sea, on the Ground Network Resilience, Public Safety Unserved and Underserved 3 | Proprietary and Confidential
GILAT FIVE MAIN PILLARS – 3 GROWTH ENGINES Mobility Mobile Broadband Cellular HTS/VHTS Mobility Backhaul Wavestream Aero NGSO Peru Ent, SSPAs 5G consumer Baseband Antenna Positively impact on Gilat ’ s performance and bright future: NGSO, and the mPower win Recurring Revenue Aero and free wi-fi Progress in Cellular Backhaul and services Turned a corner in Peru 4 | Proprietary and Confidential
BROADBAND: EVOLUTION, REVOLUTION 5 | Proprietary and Confidential
SATELLITES HTS/VHTS: EVOLUTION GEO EVOLUTION: WIDE BEAM → HTS → VHTS Commercial GEO Satellite Orders 19 20 18 16 15 16 14 12 10 7 7 8 6 6 4 HTS Evolution NGSO Revolution 2 0 2014 2015 2016 2017 2018 2019 Manufacturing Orders Satellite Capacity Telesat ~9 Tbps Although less GEO satellites are built, they are more powerful 512 Satellites WIDE BEAM (X Gbs) → HTS (10X Gbs) → VHTS (100X Gbs) 6 | Proprietary and Confidential
SATELLITE REVOLUTION: NGSO IS A REALITY NGSO PROMISE Low Latency - Order of magnitude reduction in latency (toward 5G) Terrestrial-like connection (Fiber in the sky) Tera bits of capacity; Global coverage GEO HTS/VHTS 35,786 km ~100-500 Gbps ~550msec Lower orbit → Higher number of MEO SES/mPOWER satellites in a constellation due to 5,000-10,000 km ~2 Tbps satellite field-of-view 22 Satellites ~120msec Amazon SpaceX LEO OneWeb Telesat ~ 2 0Tbps ~20Tbps ~4.5 Tbps 200-2,000 km ~9 Tbps 4425 Satellites 3236 Satellites 600 Satellites 300 Satellites ~15msec HAPs 10-50 km ~5msec 7 | Proprietary and Confidential
NGSO IS MATERIALIZING Opportunity in Both Baseband and ESA The mPower Constellation Gilat is engaged with several NGSO operators : SES/mPower, Telesat, OneWeb, SpaceX, and Amazon Won mPower: o Significant revenue opportunity Several successful demonstrations with Telesat's LEO Satellite: mPower positions us well in the vast market of NGSO, as well as for VHTS (e.g China Satcom) 8 | Proprietary and Confidential
OUR VISION OF ABUNDANCE CAPACITY (GEO + NGSO) IS MATERIALIZING Global HTS Bandwidth Supply, Demand and Price per Mbps $/Mbps/Month Gbps 1,000 1,000 20,000 10,000 900 900 18,000 9,000 ~16 times today 800 800 8,000 16,000 700 700 7,000 14,000 ABUNDANCE 600 12,000 600 6,000 OF CAPACITY 500 500 10,000 5,000 UNLOCKS 400 400 8,000 4,000 NEW MARKETS 300 6,000 300 3,000 200 200 4,000 2,000 100 100 2,000 1,000 - 0 - 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 GEO-HTS Global Demand GEO-HTS Global Supply GEO-HTS Global Demand GEO-HTS Global Supply Weighted Avarage GEO-HTS Price Non-GEO HTS Global Supply Weighted Avarage GEO-HTS Price Source: Euroconsult, NSR, 2017 9 | Proprietary and Confidential
PAVING THE PATH TO 5G PAVING THE PATH TO 5G Innovative High Speeds over wideband Speed Gbps technology Order of Low magnitude Leverage our reduction in NGSO baseband Latency latency Utilize Satellite ground Flexible SDN/NFV, segment Network Cloud, Edge integration into computing & Architecture 5G eco-system Network Slicing Significant Investment in R&D 5G Maintaining Gilat ’ s 4G Superiority on the Path to 5G 10 | Proprietary and Confidential
MOBILITY 11 | Proprietary and Confidential 11 | Proprietary and Confidential
MOBILITY – SUPERIOR PASSENGER EXPERIENCE DRIVES DEMAND Satellite Broadband Connected Aircrafts Commercial Aircrafts Business Jet Aircrafts 27,800 5,300 (2028) (2028) 7,200 ~850 (2018) (2018) Source: NSR, April 2019 Source: NSR, April 2019 12 | Proprietary and Confidential
GILAT ENABLES GOGO - THE LARGEST IFC NETWORK The largest IFC provider with >2,450 aircrafts World ’ s fastest speed ~1,500 commercial aircraft installed and activated with satellite In-Flight connectivity More then 1300 with Gilat Aero modem +850 backlog Sep 2019 One of the largest single network Gilat`s focus on mobility as part of our profitability growth 13 | Proprietary and Confidential
AERO CONNECTIVITY AND THE FREE WI-FI OPPORTUNITY “ We did conduct two weeks of tests, it was on a limited scale. We learned a lot about the technical capacity challenges when you want to open up Wi-Fi free with great broadband capabilities ” “ They will be coming, certainly, later this year ” “ We think it ’ s important ” Delta CEO Ed Bastian - July 2019 “… to get the system to a high enough level of reliability and bandwidth that we can make WiFi free for our customers. ” United CEO Scott Kirby- July 2019 Free Wi-Fi Trend Represent Significant Opportunity for Gilat 14 | Proprietary and Confidential
AERO ANTENNAS - ACCELERATING GROWTH Global Aero Flat Panel Antenna (Cumulative) TMA Business Jet Aviation First project – aero parabolic antenna “ The aero vertical will Generate $8.4B in cumulative equipment revenues, with Strategic agreement with Tier-1 aviation ~29,000 units forecasted to be shipped, by service provider 2028 ” Expansion into business aviation Source: NSR, Feb 2019 Best in class product 15 | Proprietary and Confidential
ESA AERO ANTENNAS - NEXT GEN ANTENNA Horizon 2020 - Joint Development Project An established player in the Phased Array Antenna (PAA) for the defense (UAV) market Developing an ESA (Electronically Steered Antenna) Won a Technology Demonstrator project with Airbus ESA Represents a Significant Growth Engine to Gilat Mobility Business 16 | Proprietary and Confidential
MOBILE 17 | Proprietary and Confidential 17 | Proprietary and Confidential
LEADING THE FAST GROWING 4G/LTE SATELLITE BACKHAUL MARKET SATELLITE BACKHAUL MARKET “ For the first time, Gilat gets to the pole “ Service , Equipment & Capacity position in shipment Source: NSR, April 2019 $3,790M (2028) $820M “ Being able to differentiate with a compelling managed service offer is key “ (2018) to gain business and defend healthy margins Source: NSR, April 2019 Source: NSR, April 2019 More Than 85% Market Share In LTE Market Leader With 35% of Market Share in Modem Shipments Source: NSR, April 2019 18 | Proprietary and Confidential
JAPAN – THE "LAND OF THE RISING SUN “ High ARPU country Geography: islands, earthquakes CBH is one of the main Relationships of trust and loyalty sources of managed service - recurring revenues
PERU 20 | Proprietary and Confidential 20 | Proprietary and Confidential
GOT APPROVAL TO MOVE TO OPS IN R1 R2: R3: Cusco Amazonas ICA R1: Our target is to turn Peru into a Huancavelica source of profitable recurring Ayacucho revenue of Apurimac (at least) ~$50m/year Q4 2019 - started selling services over the network, First $10m deal with IPT, Confident we will win more. 21 21 | Proprietary and Confidential
PERU – POLITICAL FOCUS ON THE PROGRAM 22 | Proprietary and Confidential
FINANCIAL INDICATORS HIGHLIGHTS 23 | Proprietary and Confidential 23 | Proprietary and Confidential
EXECUTING PROFITABLE GROWTH STRATEGY Updated 2019 Management Objectives (US$ millions) Annual Revenues GAAP Operating Profit Adjusted EBITDA 38-42 283 266 260-270 23-27 35.2 21.3 26.2 10.9 2017 2018 2019E 2017 2018 2019E 2017 2018 2019E Revenues: $260M - $270M GAAP Operating Profit: $23M - $27M Adjusted EBITDA: $38M - $42M 24 | Proprietary and Confidential
UPDATED 2019 GUIDELINES AND OUTLOOK – INCREASED PROFITABILITY US$ MILLIONS Mobility Revenues Mainly IFC $105M-$108M ($97.2M) Revenues Revenues 8%-11% YoY w/o Terrestrial Infra $260M-$270M ($266.4M) (2%)-1.4% YoY $234M-$240M ($241.4M) (3%)-0% YoY Fixed Networks Revenues including CBH $128M-$132M ($144.2M) (11%)-(8%) YoY Adjusted EBITDA Operating Margin Operating Profit $38M-$42M ($35.2M) GAAP 9% (8%) GAAP $23M-$27M ($21.3M) 8%-19% YoY Non GAAP 11% (9%) Non GAAP $27M-$31M ($25.1M) * Guidance 2019 / (Actual 2018) 25 | Proprietary and Confidential
GILAT REVENUES & TERRESTRIAL INFRASTRUCTURE BREAKDOWN US$ millions 283M 266M 260M-270M 25M 26M-30M 78M 241M 234M-240M 205M 2017 2018 2019E Fixed & Mobility Terrestrial Infr. 26 | Proprietary and Confidential
ANNUAL REVENUE PER SEGMENT US$ millions 283M 266M 260M-270M 25M 26M-30M 78M 97M 105M-108M 88M 144M 128M-132M 116M 2017 2018 2019E Fixed Mobility Terrestrial Infr. 27 | Proprietary and Confidential
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