Spacecom in the first quarter: profit is back, but Amos-17 has not closed the gap yet

Spacecom opened 2026 with net profit of $2.9 million, which makes the quarter look like confirmation that the company has moved from survival to proof. The important part is the gap beneath that headline: revenue fell to $20.2 million and EBITDA fell to $13.4 million, while operating profit edged higher and net finance expenses were almost cut in half. The net-profit improvement came from the debt restructuring, lower depreciation and lower costs tied to Amos-3 and Amos-7, not from growth that has already fully replaced the decline in 4W. Amos-17 continues to grow and is now the main engine, but in this quarter it added less than $1 million of revenue against an almost $5 million decline in 4W. The cash picture is more comfortable than it was at the end of 2025, with cash and a short-term deposit of about $29.7 million and an unused credit line, but the quarter did not include a cash interest payment and the first principal repayment on the new bonds starts at the end of June. At this stage the company has received time to prove that Amos-17, Amos-4 and the newer activity can support EBITDA and cash flow after debt service.

The company no longer looks like a survival story, but it is not a clean growth story either

Spacecom is already a different company from the one that entered the debt restructuring. The old debt was repaid, the going-concern note was removed, and the balance sheet is far cleaner. In the previous annual analysis of Spacecom in 2025, the test was clear: can Amos-17 and the government contracts replace the fading 4W activity without pushing the company back into financing pressure? The first quarter gives only a partial answer.

The business now rests on two active company-owned satellites, Amos-4 and Amos-17, plus limited activity using third-party capacity. Amos-3 ended commercial service in March 2026, Amos-7 had already left the system in February 2025, and 4W has moved from a full satellite activity into a residual service layer and a strategic orbital-position option that still depends on regulation and demand. That changes the way this quarter should be read: 4W revenue still exists, but it is no longer the company's growth base.

This map explains why the quarter looks better in net profit than it does at the EBITDA line. Spacecom is no longer under immediate restructuring pressure, but it did not yet show a quarter in which a new engine cleanly replaced the old one. This is a transition year with a calmer balance sheet, not a proven breakout year.

Profit came back because of the restructuring and lower depreciation, while EBITDA declined

The comfortable headline is the move from a small loss to net profit of $2.9 million. Operating profit rose to $6.7 million from $6.5 million in the comparable quarter, and net finance expenses fell to $3.9 million from $6.8 million. That is a real change, driven mainly by the debt restructuring and lower bond interest expense.

The operating picture is less clean. Revenue fell 11.6% to $20.2 million, and EBITDA fell 25.5% to $13.4 million. The EBITDA margin fell from 79% to 66%. That is not a technical detail. It is the difference between accounting profit helped by lower depreciation and cheaper financing, and a business that is generating more operating cash earnings before debt.

The sharpest gap sits in 4W. Segment revenue fell from $9.4 million to $4.5 million, mainly because Amos-7 and Amos-3 exited. Still, 4W gross profit rose from $0.9 million to $1.8 million because depreciation and costs tied to the outgoing satellites fell faster than revenue. This matters: the 4W decline hurts revenue and EBITDA, but part of the old activity carried depreciation and costs that are not returning at the same intensity.

Amos-17 tells the opposite story. Service revenue rose from $9.8 million to $10.7 million, an annualized first-quarter run rate of about $42.6 million. But segment gross profit was almost unchanged at $5.8 million because satellite operating costs and depreciation increased. The implication is straightforward: Amos-17 is growing, but this quarter did not yet turn that growth into clear operating leverage.

Amos-4 is the quieter yellow flag. Its revenue rose slightly to $3.7 million, but gross profit fell from $1.5 million to $0.4 million because operating costs and depreciation increased. That is not enough to change the whole thesis, but it shows that the company depends not only on whether contracts exist, but also on the profitability at which those contracts reach the income statement.

The backlog creates a short floor, not long-term certainty

Spacecom's backlog stood at $74 million from April 1, 2026. Of that, $46 million belongs to Amos-17, $21 million to Amos-4 and $7 million to other activity. At first glance, that gives the company better visibility after Amos-3. In practice, backlog quality matters more than the total amount.

The government contracts are the clearest anchor. In February 2026, satellite-communication services on Amos-4 and Amos-17 were extended for an estimated $8.4 million, including about $3 million on Amos-4 for nine months and about $5.4 million on Amos-17 for varying periods of up to 12 months. This extension helps 2026, but it is still not a multi-year contract that removes the renewal question.

The new yes agreement matters more as a quality test than as a number. The maximum expected revenue is $10.5 million over 34 months, but yes has the right to terminate the agreement without cause, in which case the minimum expected revenue is $5.55 million. In parallel, the share of yes television subscribers using internet-based broadcasts reached about 89%, including subscribers who also use satellite service. The agreement preserves a residual 4W activity, but it does not turn the orbital slot into an independent engine.

The OneWeb-based activity in West Africa is a small but sharp test. The deal can reach $3.25 million over 20 months, or $2.5 million if the customer exercises its exit option after 10 months of service. But the agreement enters into force only after a $1.6 million advance payment, and the payment deadline was extended again to the end of July 2026 after the customer had not yet secured full financing. This is not just a technical delay. It is a signal that the new activity still needs collection proof, not only a customer announcement.

This point connects the backlog to satellite value. Amos-17 already holds most of the backlog and most of the revenue, so every renewal or new customer there carries more weight. Conversely, if growth remains dependent on short contracts, exit options and customers that need financing before service starts, the market will keep applying a quality discount to the backlog.

Cash looks better, but the test moves to June and renewals

The all-in cash picture for the first quarter is cash plus the short-term deposit, after operating cash flow, the placement of $8.4 million into a short-term deposit and $1.2 million of lease principal repayment. On that basis, Spacecom ended March 2026 with $21.3 million of cash and an $8.4 million short-term deposit, together about $29.7 million. That is a clear improvement from $17.8 million of cash at the end of 2025.

Still, the quarter is not a full test of the new cash cushion. Operating cash flow was $12.9 million, compared with $29.5 million in the comparable quarter. Much of the gap came from working-capital movements, with changes in receivables and accrued expenses contributing far more in the comparable quarter. More important, Q1 2026 did not include cash interest paid, while the new bonds start principal repayment on June 30, 2026 and interest is paid semiannually.

On the positive side, the company is comfortably within its financial covenants. Equity stood at about $75 million versus a minimum requirement of $15 million, and net financial debt to net CAP was 59.8% versus a 90% ceiling. The $15 million bank credit line signed in February 2026 had not been drawn by the report publication date. That is available liquidity, but it carries 9% annual interest, so a draw would be a signal to read carefully rather than just another liquidity source.

Financial debt remains meaningful. Series 19 and 20 begin principal repayment in June 2026, with semiannual payments through the end of 2033 and a larger final payment. This is a far more convenient structure than the old debt, but it requires EBITDA and cash flow to stay stable after Amos-3. The first quarter improves the starting point, but it does not yet prove that the company generates surplus cash after a full debt-service cycle.

Conclusions

The first quarter of 2026 strengthens the conclusion that Spacecom has moved from balance-sheet rescue to business proof. Finance expenses fell, equity increased, the company is compliant with covenants and the bank line was not drawn. That is the good side. The weaker side is that EBITDA declined, 4W lost almost half of its revenue, and Amos-17 has not yet produced a profitability step-up that closes the gap by itself.

The current read is cautiously positive: the restructuring worked well enough to reduce immediate pressure, but not enough to make Spacecom a clean growth story. The strongest counter-thesis is that the quarter is actually stronger than it looks because 4W is declining without materially hurting operating profit and finance expenses have already fallen. That is a reasonable argument, but it has to pass the next cash test: the June payments, continued government renewals, realization of the yes contract closer to the ceiling than the minimum, and receipt of the OneWeb advance payment. If those move forward without a bank-line draw, the quarter will look in hindsight like the beginning of stabilization. If EBITDA stays weak or the backlog proves too short, the Q1 net profit will look more like accounting and financing relief than a change in business quality.