Comtech Is Turning Around
Comtech has officially completed its transformation program, moving from a $148M GAAP net loss in Q1 2025 to achieving three consecutive quarters of positive operating cash flow. The company’s gross profit margin expanded significantly to 33.1% in Q1 2026, up from 12.5% the prior year, as management deliberately pruned low-margin product lines.
The Satellite & Space (S&S) segment has transitioned to a GAAP operating profit of over $3M, driven by a focus on high-margin defense programs like A3M and EDIM modems, which enter full production in 2026. Analysts estimate the segment could capture $25–$50M in incremental revenue in FY26 as a lead supplier for Amazon’s Project Kuiper satellite gateways.
Allerium’s Market Dominance: Rebranded in late 2025, the Allerium segment routes over 30% of US emergency calls and boasts 65% recurring software revenue from its Next-Generation 911 (NG911) services. The segment recently solidified its stability by securing a multi-year contract renewal worth over $130M with a leading U.S. wireless carrier.
Management is currently reviewing strategic alternatives, with a sale of the S&S segment expected by Q1/26 to address a distressed capital structure. Selling S&S is prioritized over Allerium to avoid a “change-in-control” trigger that would balloon preferred stock liabilities from $208.7M to $312M.
Comtech is utilizing a new 146K-square-foot automated factory in Arizona to manufacture modems at high volume for the U.S. Army and commercial titans like Amazon. Simultaneously, the company is re-platforming Allerium’s cloud architecture to target EBITDA margins exceeding 30%.
Signals of a pending transaction include the postponement of the annual shareholder meeting to March 9, 2026, and the approval of executive bonuses tied to net deal proceeds. The board further prepared for a major event by appointing M&A expert Mary Jane Raymond, who has a history of overseeing multi-billion-dollar mergers.
While the company maintains a backlog exceeding $660M and visibility toward over $1 billion in revenue, it faces a high cost of capital with debt compounding at 16.5%. Despite these burdens, analysts suggest the current valuation is attractive if the company can successfully monetize assets to clear its balance sheet.
