Investor Content Archives - Comtech Telecommunications Corp.

An Unexpected Benefit of NG911

Henry Eisler — Tue, 03 Dec 2024 16:13:35 +0000

We’ve spent a lot of time discussing the benefits of next-generation 911 (NG911) given how mobile devices have changed the way we communicate. However, it’s important to understand that NG911 also makes emergency response more effective by integrating with legacy technology.

Let’s look at Arizona as an example. Arizona is a state that has been making significant headway in its NG911 transition, and recently reported that its NG911 system allowed responders to better locate 911 callers by using latitude and longitude coordinates. They could locate someone calling with a cell phone within 150 feet, but could also better identify the origin of a landline call based on geolocation versus relying on billing addresses.

According to a recent report, almost 30% of homes in the US still have a landline. Particularly for adults that are aged 65 and older, that number increases to nearly 50%, and there are still 2% of homes that rely on a landline alone. While we have become more reliant on our cell phones, they haven’t completely replaced the fixed phones we once found in every household.

Taking a deeper look, a recent study by the National Center for Health Statistics found that there are two key characteristics of adults that rely entirely or mostly on landlines: as referenced above, they are 65 and older, but they also live in more rural areas. Elderly populations are already at a greater risk of a medical emergency, and rural areas have fewer identifying landmarks to determine a specific location, which is why precise emergency response in these instances is critical. In fact, adults aged 65 and older still accounted for over 17% of the US population and generally lived outside of metro areas as of 2022.

As technology continues to evolve, it’s important that emergency services evolve with it. However, it’s equally important that these new services also work with pre-existing infrastructure, especially as that infrastructure serves people who are more likely to need a swift emergency response.

At Comtech, we know the importance of NG911 and the opportunities it represents for our business. We’re a proud provider of NG911 services to the state of Arizona, having recently completed the statewide transition earlier this year, as well as a number of other states across the US. Stay tuned to learn more about the NG911 market and our place in it.

Latest Trends & Predictions in the Satellite Industry

Henry Eisler — Wed, 06 Nov 2024 16:03:14 +0000

Satellite communications are not only a major part of our business, but foundational to Comtech as a company, and two things are currently true about this market: it is evolving, and, as a function of that evolution, it’s growing.

Let’s first look at how satellite communications is evolving as an industry. One of the biggest use cases for satellite technology is defense, and Comtech has been proudly working with the U.S. Department of Defense (DoD) for years. The threat environment today has changed drastically with the introduction of more sophisticated methods of attack on communications, including cyber warfare. As a result, defense organizations are moving away from large, fixed legacy communications systems to alternatives that are more agile and distributed, so that they have multiple networks to route data traffic through anywhere, at any time. These flexible and resilient systems are key to keeping communication flow open and uninterrupted under extreme conditions, when it matters most.

As a result, there has been a growing need for digital ground station infrastructure and multi-orbit constellations, inclusive of Low, Medium and Geostationary Earth Orbit (LEO, MEO, GEO) satellites. Other solutions, such as troposcatter technology, can also help bridge the gap between legacy and new systems, moving from network-centric infrastructures to highly distributed, data-centric models.

What does this mean for our business? It means more opportunity in a growing market. Take the LEO market as an example. On its own, it is worth an estimated $5.4 billion now. Projections anticipate growth to over $25 billion by 2032, with North America projected to lead this growth. Additionally, the Canadian government also recently invested several billion dollars to support the advancement of LEO satellite networks.

While defense is an obvious application, LEO technology also demonstrates the commercial appeal of modern satellite solutions as well: LEO satellites are key to establishing the connectivity we need for everyday activities such as monitoring weather forecasts or helping connected devices reliably operate via mobile broadband. This kind of application is demonstrative of the high potential inherent in the military-to-civilian innovation cycle, as technology traditionally used by the government finds a variety of downstream applications in the commercial sector.

Aside from LEO as an example, we’ve also recently discussed the growing satellite ground station market, and how it is projected to grow to $6.6 trillion by 2028 – expanding at a 6.89% CAGR beginning this year. As mentioned above, solutions that fall in this space – such as troposcatter and VSAT technologies – are key to bringing legacy and modern infrastructures together, and provide the flexibility organizations, defense or otherwise, need to establish communications in difficult and ever-changing environments.

We’re constantly innovating to modernize communications architecture, and make it more dependable and adaptable to meet our customers’ modern-day needs. A great illustration of this is the new digital common ground modem product line we announced in September to support the DoD and coalition partners in establishing interoperability with hybrid networks. We believe this product line has multiple applications, and we are only at the beginning of a demand cycle that will be driven by new technologies.

At Comtech, we understand the importance of continued information flow, whether it’s sharing tactics across a battlefield or allowing our smartphones to connect from around the world, and we’re thrilled to see the satellite market continue to reach new heights. We’re already well-established and ready to capture more opportunities – just take a look at the Satellite & Space wins we have from the last year alone. Stay tuned for more exciting news about the satellite industry.

Forward-Looking Statements

Certain information in this blog post contains statements that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results and performance could differ materially from such forward-looking information. The Company’s Securities and Exchange Commission filings identify many such risks and uncertainties. Any forward-looking information in this press release is qualified in its entirety by the risks and uncertainties described in such Securities and Exchange Commission filings.

Where the Government Stands in the NG911 Transition

Henry Eisler — Tue, 15 Oct 2024 14:59:31 +0000

We’ve spent a lot of time breaking down the national transition to next-generation 911 (NG911), what makes up that emergency response architecture, Comtech’s place in it, and the great potential of this opportunity for our business and shareholders.

As we’ve discussed the market opportunities in the public safety space over the past year, we’ve focused a lot on state-level needs, innovation and infrastructure. Comtech has also separately announced a number of important contracts with state customers that we are proud to serve.

Today, we wanted to unpack another aspect of the growing, critical 911 market: the federal government. Importantly, it’s not only a regulatory and rule-setting body – it also acts as a customer.

The federal government operates hundreds of call centers across the U.S. on behalf of a variety of facilities, including military bases and national parks. With a vast number of people living or working in, or even visiting, these spaces, the need for effective emergency response is just as important as it is in any other neighborhood across the country. The 233 call centers the federal government is in charge of are spread across 11 federal agencies. According to a new report, seven of the 11 agencies are in the process of upgrading their systems to NG911, showing the strength of the renewal cycle even at the federal level.

How does this relate to Comtech? It’s another proof point for what we’ve been saying for months now, that this market is large and growing, and that reliable, cost-effective NG911 solutions are more important than ever. In fact, in the U.S. alone, the NG911 market is expected to be worth $1.2B by 2026. As a provider, we have a variety of offerings to aide with NG911: carrier services that accurately identify a caller’s location, solutions that establish data transfer between sender and recipient (e.g. images or video) and cloud-based capabilities, such as layers of AI that can transcribe, analyze and diagnose calls, and then successfully route them to the appropriate dispatch team.

At Comtech, we’ve also helped service a number of NG911 customers at the state level, having been awarded contracts with Massachusetts, Washington, Arizona, Iowa, South Carolina, Ohio, Pennsylvania and Texas. We’re also experienced at working with departments of the federal government.

At its core, Comtech is about establishing the connections people need when they matter most, and public safety is an incredible example of the important work we do. Stay tuned to learn more about our public safety business and the industry as a whole.

Forward-Looking Statements

How AI Will Enhance NG911

Henry Eisler — Wed, 02 Oct 2024 15:01:42 +0000

Next-generation 911 (NG911) has dramatically improved public safety, making it possible to better locate callers, accept text messages, and receive images or video to help assess an incident. With the latest artificial intelligence (AI) releases, Public Safety Answering Points PSAPs can now introduce another crucial layer of efficiency and precision to emergency response. While some may hesitate to embrace AI for fear it will replace the human beings doing the work and making the decisions, AI can work as a significant extension of employees, such as those in PSAPs, to help them do their jobs better and faster. Here, we outline the key ways AI could transform NG911 for the better.

Real-Time Call Transcription:

Deploying AI to transcribe calls as they’re unfolding will help eliminate confusion between callers and dispatchers so there is an accurate record of their discussion to determine next steps. Aside from cataloging the conversation, AI could also determine sounds and sentiment for additional analysis.

Live Translation:

In addition to recording what is being said, AI can also determine in what language it is being said in so it can quickly translate it for dispatchers to make faster decisions. This will help make emergency response more inclusive, while improving response times.

Call Categorization:

AI can help categorize calls in two ways – by triaging them and prioritizing them. When a call comes in, AI can determine the level of emergency by analyzing the audio and text transcripts, and then route to the appropriate dispatch team, whether it requires the medical, police or fire department.

Call Analytics:

As AI tools analyze calls, it can help PSAPs identify patterns for potential emergencies. For example, if several callers are reporting breathing issues, it could lead PSAPs to conclude that there is a localized gas leak and respond appropriately before it affects more of the surrounding community. Another application of this type of analysis could help police identify suspects if a PSAP is getting calls from people about being robbed and callers report their attackers leaving in a similar model or color vehicle.

With AI NG911 capabilities, PSAPs will be able to better handle call volume and respond to emergency requests with more accuracy. With this in mind, Comtech has already begun integrating AI into its NG911 solutions. This summer, we launched SmartAssist which helps PSAPs assess incoming emergency calls to prioritize them and then route them to the appropriate agency. With SmartAssist, PSAPs can address staff shortages and budget constraints while reducing response times and maintaining high service standards with limited resources. It’s an offering we’re excited to expand on in the future, and help make emergency response as efficient as possible.

Forward-Looking Statements

Market Highlight: Satellite Ground Station Equipment Projected for Growth

Henry Eisler — Wed, 25 Sep 2024 14:59:36 +0000

A recent report makes an encouraging prediction for the satellite ground station equipment market, projecting it will grow to $6.6 trillion by 2028 – expanding at a 6.89% CAGR beginning this year.

As you’ll recall from recent Signals posts, we’ve spent a lot of time talking about the public safety market, including growth opportunities associated with next-generation 911 (NG911) and the expansion of 988 services. Comtech’s opportunity set, however, remains larger, with two distinct businesses, each of which we believe benefits from a set of long-term growth drivers. We wanted to spend some time today taking shareholders and other financial stakeholders through the basics of this key market.

The first point worth making, especially for newer shareholders: satellite communications solutions are foundational to who we are as a company. The second is that satellite tech – which was once highly-specialized in its application – has become essential across a huge range of daily activities.

The growth forecast for the satellite market highlights why Comtech’s expertise and capabilities matter. The report documents the breadth of this fast-evolving market, noting that a key driver of that change is demand for seamless connectivity everywhere. Strong bandwidth that doesn’t fail is increasingly a must-have, even in (or more accurately, especially in) harder-to-reach parts of the world.

This demand takes many forms, and comes from multiple constituencies – from defense applications in geographies that can’t support traditional communications infrastructure (e.g. mountainous regions), to devices and IoT applications connected and communications flowing on land, in air, and at sea. More broadly, an important part of Comtech’s opportunity in this market relates to the military-to-civilian innovation cycle at play. Solutions that have been used primarily by governments often have major downstream commercial applications for the private sector. A great example of this cycle for Satellite & Space comes from the oil and gas industry where companies need reliable data flow regarding the status and function of pipelines in harsh environments. Another opportunity would be to outfit rural communities that do not have legacy infrastructure with technology to support their need for digital connectivity to support emerging, everyday activities, such as remote learning.

At Comtech, we offer a variety of solutions for customers looking to alleviate these types of communications challenges, including our VSAT and troposcatter technologies. However, we are also a leading supplier of satellite components that are key for establishing satellite connectivity. In fact, we recently announced a new line of Digital Common Ground modems that will be beneficial for both defense and commercial customers. These solutions represent a significant opportunity for Comtech as customers such as the Air Force enter new upgrade cycles for their communications equipment. We’ve also already discussed how we have and will continue to capture more of the troposcatter market. We’re excited to see the industry reporting on what we’ve been saying all along, and look forward to continually demonstrating that dependable satellite communications is synonymous with Comtech.

Forward-Looking Statements

A Look at the Public Safety Ecosystem

Henry Eisler — Tue, 10 Sep 2024 14:59:18 +0000

One of the most critical applications for CMTL’s communications solutions is public safety – one of our two major markets.

There is a whole ecosystem of stakeholders and sophisticated technology that makes 911 services possible, and it’s a community we are proud to support. In this infographic, we pull back the curtain on how public safety infrastructure works.

Forward-Looking Statements

Comtech Moves Headquarters to Chandler, AZ to Accelerate Innovation

Henry Eisler — Thu, 22 Aug 2024 16:30:00 +0000

Last week, we announced the official relocation of our headquarters to Chandler, AZ by celebrating this milestone with a ribbon cutting ceremony with Arizona Governor Katie Hobbs, Chandler Mayor Kevin Hartke, and other Arizona business and community leaders.

Our 150,000 square-foot, state-of-the-art tech and innovation facility will also now serve as an office to anchor operations, as well as provide space for both engineering and manufacturing.

While this is a new corporate-level development, our ties to Arizona are long-standing, as we have supported commercial and defense and government customers local to the area for over 25 years.

The relocation reinforces proximity to our customers, which include the Department of Defense, humanitarian agencies, satellite service providers, cruise lines, emergency response agencies and some of the largest cellular carriers in the country. It also puts us in a superior position to take advantage of a thriving technological community.

With a presence in Chandler, we’re able to capitalize on opportunities that are inherent to the city and surrounding communities. Chandler, and the broader Phoenix area, is robust from an economic perspective. In 2023, the number of tech jobs in Arizona increased nearly 4% from the previous year and is already experiencing another 3% increase in 2024 so far. These numbers are projected to keep climbing, with an expected 9% growth in tech jobs by 2028.

The new Chandler location also places Comtech in close proximity to potential suppliers, including semiconductor manufacturers. Since 2020, upwards of 35 companies in the semiconductor industry—e.g., Intel, Microchip, NXP—have announced plans to expand or relocate to Arizona. Establishing Comtech down the road from cutting-edge chip development will also help us quickly modernize our own solutions that are reliant on these chips.

We look forward to elevating our business within this thriving metropolis, and have full confidence that this relocation will help us capitalize on the ever-growing communications market.

Forward-Looking Statements

New FCC Ruling Pushes Next-Generation 911 Initiatives Forward

Henry Eisler — Tue, 30 Jul 2024 11:00:00 +0000

On July 19, the FCC issued a new ruling aimed at accelerating the deployment of next-generation 911 (NG911) across the U.S. According to this new ruling, once a state or region’s 911 Authority (the governmental entity that operates or has administrative authority over all or any aspect of the NG911 network) requests certain NG911 capabilities, landline, wireless and VoIP companies must deliver calls per the 911 Authority’s request within six to 12 months. The ruling also clarifies the extent to which communications companies are responsible for costs associated with transitioning to NG911.

This is a significant step forward because many states have experienced protracted delays and prolonged costs in transitioning away from legacy 911 systems due to a lack of cooperation from certain communications companies. Managing 911 traffic on both legacy and IP networks can also result in an increased risk of 911 outages. With this new ruling in place, NG911 stakeholders will be able to avoid unnecessary spending on legacy 911 networks, freeing up significant resources to accelerate this transition across the country.

We’ve spent a lot of time in the past few months discussing how important the switch to NG911 is, and the potential scale this untapped market represents. It’s a growing market as well, expected to reach $1.2 billion by 2026, because modernization efforts have been lagging community demand. If you’re curious about why that is, we encourage you to read our recent post which discusses how the public safety market got to where it is today in detail, here.

In short, almost every stakeholder in the complex community that supports 911 services agrees that the systems currently in place require upgrades to support digital modes of communication and the information they transfer. With an explosion of connected devices capable of providing relevant emergency information (from our smartphones to traffic cameras and weather sensors), to new forms of data (including voice, text, images and location), legacy communications infrastructure built to route emergency calls from landlines must evolve to operate in the world we live in today.

While there have been attempts at the federal level to support NG911 deployments across the U.S., this FCC ruling is unequivocally the most concrete step to-date to accelerate the technology upgrade process.

At Comtech, we’ve been at the forefront of this generational shift and doing our part to make it happen. We’re excited about the possibilities this ruling creates, and look forward to helping drive NG911 into the future. If you’re interested in learning more about the public safety market and our role in it, please find more posts here: https://comtech.com/category/investor-content/

Forward-Looking Statements

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Recent Contract Wins

Henry Eisler — Mon, 01 Jul 2024 15:04:40 +0000

In the past year, we’ve made great headway in both of our businesses, Terrestrial & Wireless Networks and Satellite & Space Communications. In this infographic, we highlight key contract wins, with a total realized & potential value of over $1 billion. We have best-in-class technology, people and services, and we’re successfully operating in growing markets to meet the needs of customers who have high expectations for quality and reliability. We’re winning new business, and building on existing relationships – validating Comtech’s business is not only built on a strong foundation, but can scale to meet demand.

We encourage you to read more about how we’re performing in these markets here, and if you’re interested in learning more about these specific deals, you can learn more from the formal announcements here.

Forward-Looking Statements

3Q Earnings Highlights & Refinancing

Henry Eisler — Thu, 27 Jun 2024 15:04:59 +0000

Last week, we reported our third quarter earnings for fiscal year 2024, and announced the successful completion of a refinancing that allowed us to repay our existing lending facility, significantly strengthening our balance sheet. A detailed discussion of our results can be found in our investor letter, here, and in our filings (including our recent 10-Q, here).

Here, we wanted to recap some key highlights from our earnings announcement and call.

New $222 Million Credit Facility

We know that our stakeholders – particularly shareholders – were interested in the October maturity of our previously existing bank facility. As we announced last Tuesday, following a period of significant diligence, Comtech has executed a $222 million credit facility with a new group of specialized lenders, exiting our prior facility. The new facility represents a combination of a $60 million revolver, and a $162 million term loan that matures in 2028.

With this refinancing behind us, Comtech can continue to focus on growing our business while implementing operational improvements. Most importantly, our balance sheet should no longer distract the markets from the fundamental value of our businesses, or from the very real opportunities ahead of us.

Our Priority: Cash Conversion

We made it clear on our earnings call and in our investor letter that, with our refinancing completed, re-accelerating our cash conversion cycle is a key focus. In particular, this means managing our unbilled receivables downward from current levels.

Now, with long-term liquidity addressed, we’re working closely with vendors and partners to ensure that we can carry through our momentum to our sales, delivery, and billing cycles.

Comtech Continues to Win

Even as we faced challenges related to our balance sheet, Comtech continued to move forward. We have been winning new business, demonstrating the strength of our technologies and mission-critical nature of our solutions.

In the past quarter and more recently, we secured two substantial public safety contract wins, with a collective value of nearly $200 million and the potential for extension. For each of these contracts, Comtech will provide maintenance and operations for state-wide next-generation 911 public safety communications systems – showcasing our ability to capitalize on opportunities with existing and future customers as they face upgrade cycles and a shifting technology landscape.

Great People Joining a Great Business

We continue to attract exceptional talent. You may have seen these announcements in previous Signals posts, but over the past few months we announced Jeff Robertson’s appointment as President of our Terrestrial & Wireless Networks business, the addition of two other senior public safety professionals (Tom Guthrie and John Whitehead), and on the Satellite & Space Communications side, we added Roly Rigual as VP of Business Development and Sales.

These are experienced operators, with deep experience – we expect them to make significant contributions to our leadership team and business performance.

Looking Ahead

In the near term, we believe our financial performance for the fourth quarter – in terms of consolidated net sales and Adjusted EBITDA – will be similar to that of our third quarter, ended April 30th.

Looking ahead, we see a combination of factors that have the potential to drive growth and performance:

We have made excellent additions to our leadership team.
Our financial performance will benefit from our operational transformation.
Our people, technology, and equipment are best-in-class, evidenced by our continuing success in winning new business.

Finally, we see growth potential in our existing end markets, and at the same time, entirely new markets are coming into view as advances in technology create new applications for our solutions.

In Closing:

Comtech has a decades long history of providing mission-critical communication solutions to its customers.

Challenges remain, but our ability to develop and deliver superior technology remains fully intact. Our underlying value as one of just a few businesses in the world that can do what we can do remains unchanged. With our refinancing now complete, we have a lot to look forward to.

Forward-Looking Statements