Gilat CEO: "We’re Not Investing for a Quick Flip – We See Real Synergy"
Gilat invests up to $3.5 million in Crosense, a drone detection startup, as part of its expansion into defense and homeland security
Gilat Gilat Satellite Networks Ltd. 1.63% announced an investment of up to $3.5 million in Crosense, a startup developing systems for drone detection and tracking. The investment is part of a funding round led by Frontier Capital and aligns with Gilat’s strategy to expand into defense and homeland security (HLS). Crosense is developing an advanced electronically steered antenna (ESA) system designed to continuously detect drones and provide a solution for identifying and tracking unauthorized activity in sensitive locations such as airports, military bases, and critical infrastructure.
The system operates passively and can function in various weather conditions while maintaining full coverage 24/7. Gilat noted that the investment in Crosense aligns with its efforts to expand its defense-related activities and provide solutions for military and government clients. Crosense, for its part, stated that the partnership with Gilat is expected to support its expansion, both in terms of technology development and access to global markets through Gilat’s sales and marketing network.
Gilat’s Defense Sector Is Booming
Gilat CEO Adi Sfadia told us: “Defense revenues will double within four years.” The company recently announced its expansion into the defense sector with a dedicated division that is expected to accelerate growth. In 2024, Gilat’s defense revenues grew fivefold, and the company expects them to double again in the next four years. In 2023, defense-related revenue totaled just $20 million out of $266 million in total revenue.
The sector wasn’t a core focus for the company, but it began recognizing its potential, leading to the acquisition of DataPath toward the end of the year—an acquisition that significantly boosted Gilat’s exposure to the sector. DataPath generated $50 million in 2024, bringing Gilat’s total defense-related revenue to $98 million for the year. This represents phenomenal growth, and even excluding DataPath, Gilat’s organic defense revenue more than doubled from $20 million to $48 million.
Strong Q4 Earnings Despite Revenue Miss
Gilat’s fourth-quarter earnings were mostly positive. While the company missed revenue expectations, reporting $78 million versus analysts’ consensus of $82.7 million, it beat earnings estimates, posting $0.15 per share, well above the expected $0.11 per share. The company also issued a strong outlook, forecasting full-year revenue between $415 million and $455 million, compared to analysts' consensus of $391.6 million.
Following Gilat’s announcement of its investment in the drone detection startup, we spoke again with CEO Adi Sfadia about the investment and the company’s focus in the coming years.
What does Crosense do, and why did you choose to invest?
"The company detects drones that others can’t, using technologies that we are currently keeping under wraps. It leverages equipment and technologies in which Gilat has deep expertise, aligning with our strategy to expand in the defense sector. Our goal is to grow our presence there, not just in satellite-related areas but also in adjacent fields. In the future, we want to integrate antennas into drones, and we already have antennas for UAVs, so we clearly see the synergy. We’re not investing for a quick flip or to sell at a multiple down the line. The goal is to integrate into the value chain as this develops."
Does Gilat hold a significant stake?
"This is a seed investment, so we hold a meaningful share."
Were you specifically looking in the drone space, or were you exploring multiple areas?
"We were searching—and continue to search—in the drone sector because of our satellite capabilities. We’re always on the lookout for acquisitions. We’re not a venture capital fund, but this company fit well with our business understanding, and we felt we could add significant value to it."
If you invest further in this space, will it be in Crosense or other companies?
"I can’t say if we’ll join future funding rounds. We’re looking for opportunities that will expand Gilat’s business."
Is Gilat shifting its focus from satellites to defense?
"I think our defense focus is broader than satellites. We have an integration company in the U.S., solutions for UAVs, and more. That’s why we see this investment as closely aligned with our core business. Over the next three to four years, I expect it will contribute meaningfully to our revenue and profitability. We didn’t enter this investment just to exit at a high multiple—though that could happen. We see real synergy here."
