Comtech Telecommunications Q3 2025 Earnings Call Transcript

Quartr
Provided by Quartr
June 9, 2025

Key Takeaways

  • $40 million capital infusion secured, coupled with covenant waivers and suspension of leverage tests through October 2025, enhancing the company’s financial flexibility.
  • Generated $2.3 million positive GAAP cash flow from operations in Q3—the first positive quarter in eight—marking a milestone toward sustainable cash flow.
  • Implemented cost‐reduction measures including approximately $33 million in annual labor savings and discontinued over 70 low‐priority satellite products, driving higher gross margins.
  • Lost a $36.4 million US Army GFSR contract on protest, leading to a debooking from backlog and reducing near-term low‐margin bookings.
  • Received a DDTC inquiry regarding past voluntary disclosures on modem export classification, signaling potential regulatory scrutiny and licensing delays.
AI Generated. May Contain Errors.
Earnings Conference Call
Comtech Telecommunications Q3 2025
00:00 / 00:00

Transcript Sections

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Operator

Welcome to Comtech Telecommunications Corp. Conference Call for Third Quarter of Fiscal twenty twenty five. As a reminder, this conference call is being recorded. I would now like to turn the call over to Maria Cerello, Senior Director of Financial Operations of Comtech. Please go ahead, Maria.

Maria Ceriello
Maria Ceriello
Senior Director of CFO Operations at Comtech Telecommunications

Thank you, operator, and thanks, everyone, for joining us today. I'm here with Ken Traub, Comtech's Chairman, President and CEO Mike Bondi, CFO Daniel Gudzinski, President of the Satellite and Space Communications business and Jeff Robertson, President of the Terrestrial and Wireless Networks business. Before we get started, please note we have a detailed discussion of the quarter in the press release and 10 Q we issued this afternoon, which is available on our website as well as the SEC's website. Certain information presented in this call will include, but not be limited to, information relating to the future performance and financial condition of the company, the company's plans, objectives and business outlook and the plans, objectives and business outlook of the company's management. The company's assumptions regarding such performance, business outlook and plans are forward looking in nature and always involve significant risks and uncertainties.

Maria Ceriello
Maria Ceriello
Senior Director of CFO Operations at Comtech Telecommunications

Actual results could differ materially from such forward looking information. Any forward looking statements are qualified in their entirety by cautionary statements contained in the company's SEC filings. With that, I will turn it over to Ken. Ken?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Thank you, Maria, and good afternoon, everyone. I appreciate you taking the time to join us today. I'm going to provide some high level comments on the business and this past quarter's results, then turn it over to Mike to go deeper into the financials. Daniel and Jeff will also be available for questions during the Q and A section. When I took over as CEO of Comtech earlier this year, I unveiled a transformation plan and committed to earn the trust of all of our stakeholders by being transparent and delivering on our promises.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

In this spirit, I would like to provide an update on my observations and our progress in executing the transformation plan. the update on my observations. Overall, while Comtech has faced significant challenges over the past few years, the company also has compelling opportunities that make it worthwhile to address these challenges so that we can capitalize on the upside. I will provide additional perspective on both the challenges and the opportunities ahead. Let's review the major challenges the company has been facing.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We are frankly gratified that we've made significant progress in in addressing many of these challenges, which include the following. this company has had a burdensome capital structure. Comtech has a $168,000,000 of senior secured debt with tight financial covenants, $65,000,000 of subordinated debt, and $200,000,000 of preferred stock, plus additional rights and preferences from each of these securities. Comtech has an expensive cost structure. Due to the capital structure, organizational design, inefficiencies, and various legacy factors, the company's historical cost structure has been much too high for the company's recent historical revenue run rate.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Comtech has had extensive leadership turnover. I am the CEO to lead Comtech in less than four years. Other senior leadership positions in the company have been either vacant or in transition. Comtech has had poor operational discipline. Weak disciplines have contributed to compliance shortcomings, a lack of accountability, outdated products remaining in the product line for too long, excessive production costs, overly aggressive inventory purchasing, and a buildup in working capital has put additional pressures on cash management over the years.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

And misaligned sales incentives. The company's commission structure has led in some instances to taking on unprofitable or very low margin deals and further exacerbated the company's cash burn from excessive working capital commitments. There have been other challenges, but that summarizes the big ones. Notwithstanding these historical challenges, Comtech does have attractive assets and compelling opportunities ahead, which include the following. In satellite and space, a strong market position with deep and long standing relationships across a diversified customer base in both military and commercial end markets.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

also in satellite and space, Comtech has proprietary technology and homegrown expertise that enables the development and supply of some of the world's most advanced modems, high power amplifiers, troposcatter systems, cybersecurity training, and other advanced products and services. a growing addressable market for our satellite and space product offerings that is driven by the emergence of space as a contested military domain, the global demand for resilient secure satellite communications, increased demand for high speed connectivity, and the emerging international interest in alternatives to Starlink. our terrestrial and wireless business retains high quality, long term customer relationships with states, municipalities, and communications carriers providing critical public safety and emergency response services. in T and W, our growth drivers include customer upgrades for next generation core services, new cloud based emergency response products, and increased interest from international carriers for five g location technologies. And six, finally, Comtech has a strong and deep talent throughout the organization.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Personally, I have to say that now that I've gotten to work with this team and see them in action over the past few months, I'm impressed with the capabilities, talent, and loyalty at all levels, in corporate, in satellite and space, and in T and W. Our transformation plan is intended to address the challenges I described earlier while enabling us to leverage Comtech's core strengths and capitalize on the opportunities in each of our businesses. I am pleased to report that our transformation plan is gaining traction, and notable progress is already evident in our improved financial performance. Before I get into some of the specifics of the quarter, I want to highlight that the context of today is notably different than the context of just a few months ago. There's a new sense of purpose and a sense of urgency.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Lines of responsibility and accountability are clearer today. While the team recognizes the long standing challenges that I described, there's also a shared pride in what we are accomplishing in both addressing those challenges and embarking on the path to capitalize on the compelling opportunities ahead. As we previously announced, during the third quarter, we secured a $40,000,000 capital infusion that enabled us to renegotiate terms with our senior secured lenders, which not only waived prior covenant breaches, but provided for the suspension of the fixed charge coverage ratio and the net leverage ratio covenants through the quarter ending on 10/31/2025. This was an important milestone as it addressed the issue of the company's prior breaches and improved our financial flexibility going forward. It is also a testament to the confidence that our lenders and preferred stockholders have in our transformation plan.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

In addition, we've implemented measures to align accountability throughout the organization, improve operational efficiency, streamline our product lines, increase gross margins, and reduce administrative costs. I will give some specifics. During the quarter, we continued to make progress in reducing costs and implementing additional efficiency measures. On the cost front, for example, we've reduced our annual labor cost by approximately $33,000,000 through worse workforce reductions since 07/31/2024. These cost reductions represent the results of product rationalization and organizational streamlining.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We have simplified the organizational structure through direct reporting lines and added direct accountability at the production site. We've also continued to streamline our product lines so we can focus on delivering results on the components that matter. In fact, we have discontinued more than 70 products across the satellite and space business. The overall effect is higher margins that result from comparable revenue and lower costs. With a more targeted product market focus, we've strengthened customer relationships and that's important new business wins for the future.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Before I turn to the specific business units and recent developments, I want to note that as we stated previously, we will only be providing updates on our previously disclosed strategic alternative processes if and when we have something specific to share. At this point, there is nothing to share. Now I will provide some comments on our business units. Our satellite and space business is executing on initiatives to grow sales of next generation products, improve gross margins, and reduce operating expenses. In this business, we are capitalizing on our differentiated technologies and extensive customer relationship to develop new vectors for growth.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We've had recent strategic wins in digital satcom infrastructure, resilient communication programs, and strategic multi orbit connectivity. Organizational streamline, product rationalization, and improved operational discipline have contributed to lower costs while also helping to improve accountability, the site level, and enhance our focus on priority products, production, and customer commitments. Additionally, as part of our commitment to improving operational discipline, Steve Black recently joined the satellite and space leadership team from General Dynamics as the new segment chief operating officer reporting to Daniel Gazinski. While I'm 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 todo. Comtech previously disclosed that a large multiyear GFSR contract was under protest.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

On May 20, the US Army informed us that it had decided to award the contract to the incumbent. We've removed all associated orders from our funded backlog, which had the effect of $36,000,000 debooking this quarter. Excluding the debooking, the satellite and space businesses book to bill ratio was higher this quarter than it was in the second quarter of this year. While the loss of this contract has the aforementioned impact on bookings, backlog and future revenue, it should be noted that this GFSR contract had very low gross margin expectations. On April 9, we announced that following months of rigorous testing and performance validation, we completed initial deliveries of Comtech's next generation VSAT systems through strategically significant allied navy partner.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

This partner selected our systems for inclusion in its comprehensive programs to modernize its ships, submarines, and ground based stations. Deliveries are expected to continue over the next two years. And before moving on to T and W, as discussed in more detail in our form 10 q filing today, in late May twenty twenty five, we received a request for information from the director of defense trade controls, often referred to as the DDTC. Its request relates to voluntary disclosures that we already submitted to the government back in 2024 related to the potential misclassification of certain variants of our modems. Since making these voluntary disclosures, we have taken internal corrective actions and are seeking licenses under the more restrictive ITAR classification for future exports.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We are supporting the DDTC's review of the matter and will provide updates as they occur. The terrestrial and wireless business had a strong quarter. Compared to the prior year period, D and W experienced higher net sales of next generation nine one one services and location based serve solutions, offset in part by lower net sales of call handling solutions. C and W did better this quarter on many key metrics, including operating income, net income, and adjusted EBITDA than it did last quarter in the well as in the prior year period. Our position as a trusted leader in handling emergency response assistance requests situation us well for delivering similar solutions through new devices and new delivery methods.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

The key drivers for growth in this segment are expected to include new cloud based emergency response products and increased interest from international carriers in our five g location technologies. I'm also pleased to report that the development of our latest next generation nine one one call handling solution is nearly complete. We anticipate launching this important new product later this month at the National Emergency Number Association conference. Our next generation nine one one call handling product is designed to leverage cloud and AI capabilities to serve first responders in The US, Canada, and Australia even better than the existing solutions. As a concluding comment, I want to highlight that when I took over as CEO, I made it clear that the company needs to prioritize returning to positive cash flow.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

It is a significant milestone. Company generated GAAP cash flow from operations of a positive $2,300,000 this quarter. This is the first quarter that Comtech generated positive GAAP cash flow from operations in the past eight quarters. Finally, I want to express my gratitude to our entire dedicated team as well as all of our stakeholders for their loyalty, perseverance, and contributions. Frankly, the most gratifying aspect of my job is when I hear from our employees, our partners, and our customers who love Comtech and feel the energy and optimism that comes from a renewed sense of purpose and the progress along a positive trajectory to a successful future for Comtech.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

And with that, I'll turn the call over to Mike to walk through the financials. Mike?

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Thank you, Ken. Before getting into the detailed results, I would like to summarize this past quarter for you. Sequentially, our consolidated GAAP results were better than our second quarter of fiscal twenty twenty five. We experienced a better mix of higher gross margin business, lowered our operating expenses, increased our EBITDA and achieved positive cash flows from operations. The T and W segment continues to perform well and our Satellite and Space Communications segment reported improved bottom line results.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

While more work is needed, we are encouraged by another good quarter of meaningful progress. Now let's turn to the key metrics for this past quarter. Consolidated net sales were $126,800,000 compared to $128,100,000 a year ago and $126,600,000 in Q2 of fiscal twenty twenty five. Relative to the prior year period, net sales this quarter in the T and W segment were higher, while the S and S segment was lower. Compared to last year, our T and W segment benefited from higher sales of our NG911 services as we continue to migrate customers through their implementation phases onto recurring services.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Compared to last year, net sales in our S and S segment reflect lower sales of our troposcatter solutions offset in part by higher sales of our Satcom solutions. As discussed on prior earnings calls, within our troposcatter product line, our legacy next generation troposcatter contracts with the Marines and Army are winding down as anticipated. Collectively, these two programs accounted for approximately $13,000,000 of quarter over quarter reduction in net sales. Such reduction was substantially offset though by increased sales of VSAT equipment to The U. S.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Army and increased sales of our satellite ground infrastructure solutions. Sequentially, T and W's net sales increased 12% to $59,200,000 Net sales in this segment for the third quarter of fiscal twenty twenty five included over $3,000,000 of incremental NG911 services revenue due to reaching an agreement with a statewide customer to retroactively invoice for certain recurring services that we have provided for in the past. Without this adjustment, net sales in this segment increased sequentially about 6%. Gross margins in this segment both in terms of dollars and percentage also benefited from such activity in Q3 as the associated costs of providing such services were mostly expensed in prior periods. Given the cumulative catch up nature of such activity, we do not expect it to repeat in Q4.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Sequentially, S and S's net sales decreased 8.3% to $67,600,000 as the prior second quarter of fiscal twenty twenty five included higher sales of low margin VSAT equipment to the U. S. Army. Although net sales were down in the third quarter, the S and S segment was successful in achieving a more favorable product mix, resulting in an improved gross profit percentage compared to last quarter. Overall, on a consolidated basis, gross margin was 30.7% in Q3 as compared to 30.4% a year ago.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Gross margin in the more recent quarter also improved sequentially from the 26.7% reported in Q2. Consolidated net bookings were $71,000,000 in the third quarter. Our consolidated book to bill ratio, a measure defined as bookings divided by net sales for the three months ended 04/30/2025 was 0.56 times. Bookings in the more recent quarter reflect a $36,400,000 de booking related to the low margin U. S.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Army GFSR contract that Ken just referenced. Gross bookings for the quarter excluding this de booking were $107,400,000 representing a quarterly book to bill ratio of 0.85 times. Our consolidated operating loss for Q3 decreased to $1,500,000 compared to a $3,500,000 operating loss in Q3 of last year and a $10,300,000 operating loss last quarter in Q2. The sequential improvement this quarter is due to a more favorable sales mix and benefit of our cost reduction initiatives lowering our overall operating expenses. As reconciled in our Form 10 Q for the quarter, we utilize a non GAAP measure that we refer to as adjusted EBITDA.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Our consolidated adjusted EBITDA for Q3 increased to $12,600,000 compared to $11,900,000 in Q3 of last year and $2,900,000 in Q2 last quarter. I just mentioned our Q3 results included an incremental benefit to net sales and gross profit within our T and W segment that we do not anticipate repeating. Turning to the balance sheet. As highlighted on our prior earnings call, we amended our credit facility and subordinated credit facility to among other things, waive all defaults, specifically the net leverage ratio and fixed charge coverage ratio, suspend testing of these covenants until 10/31/2025 reduce the interest rate on the term loan and the revolver loan reduce the minimum quarterly average liquidity requirement to $17,500,000 and allow for the new $40,000,000 capital infusion in the form of subordinated debt. Of the subordinated debt proceeds received $27,300,000 and $9,100,000 respectively net of fees were used to repay without penalty a portion of the term loan and revolver loan outstanding under the credit facility with 3,200,000 of the revolver repayment representing a permanent reduction in commitment related to the revolver.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

At both 04/30/2025 and 06/06/2025, total outstanding borrowings under the credit facility were $168,000,000 including $23,400,000 drawn on the revolver. As June 6, our available sources of liquidity approximately $27,300,000 consisting of qualified cash and cash equivalents and the remaining available portion of the revolver. As of 04/30/2025, total outstanding borrowings under the subordinated facility was $65,000,000 excluding accreted interest and make whole adjustments. And the liquidation preference of our outstanding convertible preferred stock was $199,700,000 excluding potential increases in the liquidation preference and other obligations that could be triggered by among other things breaches of covenants, asset sales and or change in control of the company. With respect to receivables, our consolidated net unbilled balance approximated $73,000,000 as of 04/30/2025, up slightly from the approximate $69,000,000 last quarter, but substantially down from the $123,700,000 as of 07/31/2024.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

The sequential increase is due to the timing of the aforementioned retroactive NG911 milestone billing in the T and W segment, which is anticipated to occur in Q4. And the decrease from last year is largely due to the aforementioned wind down of our next generation troposcatter contracts as anticipated, as well as a bad debt reserve established earlier in fiscal twenty twenty five related to an international customer. In Q3, we generated as Ken mentioned $2,300,000 of positive consolidated operating cash flows on a GAAP basis. Operating cash flows for the quarter included close to $7,000,000 in aggregate cash payments mostly at the parent level for restructuring costs including severance, CEO transition costs and professional fees related to the modification of our subordinated credit facility on March 3. Thus, flows for the quarter would have been higher without these items.

Michael Bondi
Michael Bondi
CFO at Comtech Telecommunications

Now, let me turn the call back over to Ken. Ken?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Thank you, Mike. To summarize, we recognize Comtech has longstanding challenges, much of which we have already made strong progress in resolving. Comtech has strong assets and compelling opportunities for growth and value creation. And and finally, we have already made significant progress in executing on our transformation plan, which is already resulting in improved financial performance, enhanced accountability, and improved pride in the future of Comtech. Operator, please open the call to questions.

Operator

Certainly. And we'll take our question from Greg Burns with Sidoti. Your line is open. Greg, you may need to check the mute function on your device. Greg Burns, your line is open.

Operator

And hearing none, we'll move to Mike Crawford with B. Riley. Your line is open.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Thank you. In satellite and space, there's a number of next generation digital back end modems that are under development, including Adam. And can you just walk through where you stand on development acceptance and potential for full right production for some of these most important platforms?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Thanks, Mike. We'll let Daniel take that question.

Daniel Gizinski
Daniel Gizinski
President - Satellite & Space Communications at Comtech Telecommunications

Yeah. Thanks for the question. I think a really important one. I'll try and briefly summarize some of the progress we've made on the next generation digital platforms and where we are in that transition. As pointed out, we do have a number of products under development, one of which is with the US army under their EDEM program.

Daniel Gizinski
Daniel Gizinski
President - Satellite & Space Communications at Comtech Telecommunications

We continue to make good progress in the development of that platform. There is still some ongoing work that we're expecting to see complete completed prior to moving into a joint certification phase with the US army. There's still a couple of indeterminate dates that we have based on inputs from subcontractors, but we are expecting to make significant progress in moving towards certification prior to the end of the calendar year. In terms of other products in the portfolio, we've made really strong progress in some of the variants. It actually have early production units that have been deployed to a couple of key select customers for several of the products within that family.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Okay. Thank you. And then just switching gears to the nine one one business. Are there any outstanding competitions that you're tracking or awards submitted that you're waiting decision on for that business?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Thanks, Mike. We'll let Jeff handle that one.

Jeff Robertson
Jeff Robertson
President - Terrestrial & Wireless Networks Business at Comtech Telecommunications

Thanks for the question, Mike. The the simple answer to your question is yes. There's a number. The the RFP process, obviously, with competition is we prefer not to comment on which ones we're in, but there's a number of compelling bids that we've we're waiting on.

Mike Crawford
SMD & Head of Discovery Group at B.Riley Securities

Okay. And then just in terms of the current quarter that we're about halfway through, how would you characterize bookings so far in this quarter? And is there any any thought on how the half of the quarter might look like?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We're not going to we're not in the mode of giving guidance, Mike. And so at this stage in the quarter, we're really not going to comment on Q4. Okay. Thank you.

Operator

And we'll move to Greg Burns with Sidoti. Your line is open.

Gregory Burns
Analyst at Sidoti & Company, LLC

Hi, good afternoon. The number of products that you're discontinued on the satellite side of the business, how much revenue is going to be going away over the next and then, I guess, what time frame?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Well, we don't expect it to be a material impact on revenue, but I'll let Daniel get into the specifics on what we cut and what we expect the impact to be.

Daniel Gizinski
Daniel Gizinski
President - Satellite & Space Communications at Comtech Telecommunications

Absolutely. Thank you for the question. Yeah. I think we discussed in, you know, the previous earnings calls that we expected the impact as a result of some of these discontinued products to be less than 10% of the satellite and space segment revenue. I think that still aligns with our expectations.

Daniel Gizinski
Daniel Gizinski
President - Satellite & Space Communications at Comtech Telecommunications

I think, ultimately, we've seen as we discontinued a number of these products, it's allowed us to emphasize development and production of some of the newer, later generation products that come at a slightly higher margin. I think, ultimately, no material changes expected as a result of above what's previously been discussed to to revenue as a result of discontinuing those products.

Gregory Burns
Analyst at Sidoti & Company, LLC

Okay. Great. Great.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

And then the this consistent with a a strategy of of focus where we are deliberately eliminating product lines that are either obsolete or low margin, enabling us to focus better on those products that we can deliver to customers, better solutions at fair and appropriate margins. So this, we we hope, will result in better service to customers, more satisfied customers, and improved gross margins.

Gregory Burns
Analyst at Sidoti & Company, LLC

Okay. And in terrestrial wireless, the revenue has been relatively flat there for a while and you've mentioned some growth opportunities there. So what's the outlook in terms of maybe returning that segment to growth? And do you have any initiatives in place to improve the margins on that business?

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

Jeff, you want to get into some more specifics there?

Jeff Robertson
Jeff Robertson
President - Terrestrial & Wireless Networks Business at Comtech Telecommunications

Yes. Sure, Greg. I think the part of your questions is is growth, and and we obviously don't comment on on on financial performance and growth. But I will tell you from a strategy perspective, we do see in our what we call our CLT business, Internet any growth opportunity in the international carrier markets, especially in five g with some of those services we provide to carriers in North America. We're seeing a a great move there, which will, from a growth perspective.

Jeff Robertson
Jeff Robertson
President - Terrestrial & Wireless Networks Business at Comtech Telecommunications

We also see, and are looking at launching some new products. You see in our announcement a new cloud based call handling product that would, enter us into a new segment of the market and open up other markets for us with that. So those are probably the main drivers for growth. On the margin part of your question, we do believe we are looking very, very hard at the architecture and the ways we deploy our next gen nine one networks both historically and in the future for our new customers and do believe we can, do a better job on a margin performance there. Also, you've been deploying cloud based products, it usually has a different margin profile, which I'm counting on to be positive, but we haven't necessarily deployed those yet. That's a new product.

Gregory Burns
Analyst at Sidoti & Company, LLC

Do you have a target for maybe where you think that the business can operate from maybe an EBITDA margin or operating margin perspective?

Jeff Robertson
Jeff Robertson
President - Terrestrial & Wireless Networks Business at Comtech Telecommunications

At this time, I probably wouldn't want to comment on that publicly. But yes, would say just by my comments that on the strategy.

Gregory Burns
Analyst at Sidoti & Company, LLC

Okay. All right. Thank you.

Operator

And it does appear that there are no further questions at this time. I would now like to turn it back to the company for any additional or closing remarks.

Kenneth Traub
Kenneth Traub
Chairman , President & CEO at Comtech Telecommunications

We'd to thank you for your continued interest and support of Comtech, and look forward to reporting next quarter and beyond. Thank you all for your support and interest in Comtech.

Operator

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful afternoon.

Executives
    • Maria Ceriello
      Maria Ceriello
      Senior Director of CFO Operations
    • Kenneth Traub
      Kenneth Traub
      Chairman , President & CEO
    • Michael Bondi
      Michael Bondi
      CFO
    • Daniel Gizinski
      Daniel Gizinski
      President - Satellite & Space Communications
    • Jeff Robertson
      Jeff Robertson
      President - Terrestrial & Wireless Networks Business
Analysts
    • Mike Crawford
      SMD & Head of Discovery Group at B.Riley Securities
    • Gregory Burns
      Analyst at Sidoti & Company, LLC
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