Photo: Comtech

Sales in Comtech’s Satellite and Space Communications (S&S) segment were down 5.3% year-over-year in the third quarter of fiscal year 2025, while the company works through a transformation plan to improve efficiency and margins. 

Comtech reported third quarter fiscal year 2025 results on June 9. Company-wide, sales dipped 1% year-over-year to $126.8 million, with higher sales in Terrestrial and Wireless Networks, offset by lower S&S sales. 

Comtech reported a 26.7% quarter-on-quarter increase in its gross profit to $33.7 million, due to its sales mix and production efficiencies. 

The company reported S&S sales decreased 5.3% year-over-year to $67.6 million. S&S saw lower troposcatter sales to the U.S. Marine Corps and U.S. Army with two contracts winding down, offset by higher net sales of satcom solutions including VSAT and similar equipment to the U.S. Army and satellite ground infrastructure solutions. 

The company’s backlog also took a hit from the removal of a $544 million Global Field Service Representative (GFSR) contract after a contract protest. CEO Ken Traub told investors the U.S. Army informed the company on May 20 that it decided to award the contract to the incumbent. 

Comtech removed all associated orders from its funded backlog, which had the effect of $36 million de-booking this quarter. Traub noted the loss of the contract impacts bookings, backlog, and future revenue, but said “this GFSR contract had very low gross margin expectations.” 

Traub commented that the S&S segment is working to grow sales of next-generation products, improve margins, and reduce operating expenses. 

“We’ve had recent strategic wins in digital satcom infrastructure, resilient communication programs and strategic multi-orbit connectivity. Organizational streamlining, product rationalization and improved operational discipline have contributed to lower costs,” Traub said. “While I am pleased with the pace and trajectory of our progress this quarter, our Satellite and Space business has underperformed in recent quarters, and we have more work to do.” 

Comtech is going through a transformation plan with new CEO Ken Traub, who joined the company this year. Traub recently detailed that plan in an interview with Via Satellite.