Comtech Telecommunications Corp. (Comtech (CMTL)) shares climbed Monday after the company announced it would sell most of its Satellite and Space Communications business to Gilat Satellite Networks Ltd. (Gilat (GILT)) for $157.5 million — and reported fiscal third-quarter results that came in better than Wall Street expected.

The deal includes a $10 million payment already made at signing, and Comtech expects to close the transaction in the fourth quarter of calendar 2026, pending regulatory approvals and other customary conditions. After the sale, Comtech will keep certain cyber-focused assets and rights to some accounts receivable collections. But the big picture is clear: Comtech is shedding its satellite business to double down on public safety technology.

Chairman, President and CEO Ken Traub called the transaction “a significant milestone in Comtech’s transformation” and said it reflects the successful execution of the company’s strategy. The company plans to use most of the net cash proceeds — expected to be between $143 million and $145 million after expenses — to reduce debt and shore up its balance sheet.

As of March 31, Gilat reported $140.15 million in cash and cash equivalents, so it has the resources to fund the deal.

The sale also sets the stage for a rebranding. Comtech plans to focus on its public safety technology business, Allerium, and eventually transition to the Allerium name. So Comtech as you know it may not be around for long — at least not under that ticker.

Q3 Earnings: A Beat, but Revenue Slips

The sale announcement came alongside Comtech’s fiscal third-quarter results, which offered a mixed picture.

Comtech reported an adjusted loss of 22 cents per share, beating analyst estimates for a loss of 27 cents. Revenue fell 16.4% year over year to $106.0 million, missing the $110.2 million analysts were looking for. So the company is losing less money than expected, but it’s also bringing in less revenue.

Gross profit came in at $36.1 million, or 34.0% of sales, compared with $38.9 million, or 30.7% of sales, a year earlier. That’s a slightly better margin, even if the top line shrank. Operating loss widened to $3.1 million from $1.5 million in the prior-year quarter.

On the cash flow front, Comtech generated $6.1 million in operating cash flow during the quarter — its fifth consecutive quarter of positive operating cash flow. That’s a good sign for a company in transition. Funded backlog stood at $696.1 million, and revenue visibility totaled approximately $1.1 billion, giving some sense of future revenue.

Traub said the company’s operational improvements, strategic review process and capital structure initiatives have positioned Comtech to become a streamlined public safety technology company focused on long-term growth opportunities.

Comtech shares were up 5.14% at $5.078 during premarket trading on Monday, according to market data.