Earnings call transcript: Comtech Q4 2026 loss narrows, but revenue misses

Comtech Telecommunications reported a narrower-than-anticipated loss in its fiscal fourth quarter of 2026, but revenue fell significantly short of Wall Street's expectations as the company continued its transformation centered around its public safety business, Allerium. Adjusted earnings per share (EPS) came to minus $0.49, an improvement over the expected minus $0.59, while revenue was $66.23 million, considerably below the $109.3 million consensus estimate.

The company's gross margin improved substantially, driven by a better revenue mix and a shift towards recurring revenue from the public safety sector. Operating cash flow turned positive and maintained that positive trend for six consecutive quarters. Management stated they do not plan to provide detailed guidance until the transition process is further along.

In the full year, continuing operations generated $249.6 million from sales, down 17% from $300.9 million in fiscal 2025. Gross profit rose to $97.2 million from $95.2 million, expanding the gross margin to 38.9% from 31.6%, mainly due to the exit of lower-margin legacy contracts and a larger share of recurring public safety revenue. This helped offset weaker sales in other areas, including call handling solutions, as initial deployments shifted into maintenance revenue.

GAAP operating loss narrowed for the year, with adjusted EBITDA improving and operating cash flow turning positive for six consecutive quarters. Management noted the company has now produced positive operating cash flow for six straight quarters. Revenue in Q4 was $66.23 million, a 12.1% decrease from $75.3 million a year earlier. Full-year revenue was $249.6 million, down 17% from $300.9 million in fiscal 2025.

The CEO, Ken Traub, stated that fiscal 2026 was "a defining year" and emphasized the company's focus on Allerium's public safety business. The President of Allerium, Jeff Robertson, highlighted a multi-year contract extension worth over $130 million from the company's largest customer and noted progress on a Kentucky deployment.