10-Q · June 15, 2026
Comtech Telecommunications Corp. reported Q3 2026 earnings with revenues of $107 million, a decrease from $111 million in Q2 2026, marking a continued decline year-over-year. The company posted a diluted EPS of -0.68…
Earnings analysis · 10-K
CMTL earnings analysis
Filed October 14, 2026 · Our reading of the company's report
The latest report
Comtech is executing a major strategic shift toward its Allerium public-safety business, with stronger gross margins, improved operating performance and a recovery in continuing-operations cash flow. However, reported…
Read full summary
Comtech is executing a major strategic shift toward its Allerium public-safety business, with stronger gross margins, improved operating performance and a recovery in continuing-operations cash flow. However, reported revenue declined 17.0% to $249.6 million, GAAP diluted EPS remained negative at $2.31, and the company remains highly leveraged pending completion of the $157.5 million S&S divestiture. The outlook is therefore balanced: backlog and product launches support the repositioning, but transaction execution, liquidity, covenant compliance and unremediated internal-control weaknesses remain material constraints.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $-2.31
- Segment
- Allerium / public safety: $249.6 million continuing-operations revenue; the company now reports one operating segment after classifying most of S&S as discontinued operations.
What stood out
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Refocus on public-safety technology
The strategic repositioning centers the company on Allerium’s public-safety technology portfolio, including NG9-1-1, emergency routing, call handling, mobile-network solutions and cybersecurity training. The company launched the cloud-agnostic Allerium Mira and network-native Allerium Coral in June 2026.
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Material margin and operating improvement
Fiscal 2026 gross margin improved to 38.9% from 31.6% in fiscal 2025, while operating loss narrowed to $18.2 million from $29.9 million. Excluding amortization, restructuring, stock compensation and CEO transition costs, adjusted operating income increased to $10.8 million, or 4.3% of sales, from $7.6 million, or 2.5%.
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Backlog supports revenue visibility
Fiscal 2026 bookings were $263.7 million, producing a 1.06x book-to-bill ratio, including a multi-year contract extension valued at more than $130.0 million from the largest customer. Funded backlog increased to $520.4 million from $506.3 million, with approximately 40% of backlog expected to be recognized in fiscal 2027.
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Cash generation recovered
Operating cash flow from continuing operations improved to $25.0 million from negative $29.2 million in fiscal 2025. Management attributed the improvement primarily to working-capital execution, including a $19.7 million reduction in accounts receivable during fiscal 2026.
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Divestiture enables deleveraging
The planned S&S divestiture has a base cash purchase price of $157.5 million, including a $10.0 million advance payment already received. Management intends to use net proceeds to substantially reduce debt and then pursue a comprehensive recapitalization.
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International public-safety momentum
The company expanded its Canadian public-safety footprint, including more than 60 NG9-1-1 upgrades in Canada during fiscal 2026 and the opening of a purpose-built Gatineau facility. Subsequent to year-end, Allerium received more than $3.0 million of Canadian government funding for a multi-year Guardian call-handling deployment.
What to watch
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Divestiture closing and proceeds risk
The $157.5 million S&S sale remains subject to regulatory approvals and customary closing conditions and is expected to close in calendar 2026. The company may retain the $10.0 million advance payment only under specified termination conditions, while 65% of net sale proceeds must be applied to the Credit Facility and 35% to subordinated debt.
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Highly leveraged capital structure
Liquidity remains highly dependent on closing the divestiture and maintaining financing access: borrowings were $108.5 million under the Credit Facility and $102.0 million under the Subordinated Credit Facility at July 31, 2026, while available consolidated liquidity was $61.3 million. Contractual cash obligations totaled $273.7 million, including $144.6 million due within one year.
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Unremediated reporting-control weakness
Deloitte issued an adverse opinion on internal control over financial reporting because of material weaknesses in the control environment and revenue-recognition and contract-liability controls. Management stated that the revenue-recognition weakness had not yet been remediated as of July 31, 2026.
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Limited goodwill impairment cushion
Allerium’s goodwill was $176.1 million, and its estimated fair value exceeded carrying value by only 7.9% in the August 1, 2026 assessment. Management warned that weaker customer spending, lower sales or cash-flow projections, stock-price declines or transformation actions could trigger a material goodwill or intangible-asset impairment.
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Covenant compliance risk
Financial covenant testing is suspended only through the four-quarter period ending July 31, 2027. Thereafter, the Credit Facility requires a maximum net leverage ratio of 2.65x, minimum fixed-charge coverage of 1.35x and minimum EBITDA of $37.5 million for the period ending July 31, 2027; fiscal 2026 adjusted EBITDA was $20.6 million.
Management's outlook
No quantitative annual revenue or EPS guidance was provided in the 10-K. Management stated that the operating environment remains unpredictable and that future results may vary due to the transformation plan, customer decisions and other factors.
Earlier filings 4
10-Q · March 16, 2026
Comtech reported Q2 net sales of $106,761,000 and gross profit of $36,223,000 (≈33.9% gross margin), with an operating loss of $1,236,000, improved versus prior-year quarter operating loss of $10,257,000. The company…
10-Q · June 9, 2025
Comtech reported Q3 net sales of $126,787,000, essentially flat year-over-year, with gross profit of $38,945,000 (≈30.7% margin) and an operating loss that narrowed to $(1,532,000). Balance sheet actions and new…
10-Q · January 13, 2025
Comtech reported revenue of $115,800,000 for the quarter ended October 31, 2024, down from $151,911,000 a year earlier, with gross profit falling to $14,516,000 (12.5% margin) and a GAAP operating loss of $129,170,000…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.