Hawk Eye 360 (HAWK) upgraded to buy: Adjust international frequency strategy

Upgrade to BUY: Changing It Up on InternationalFrequency With HAWK shares down 25% since June 1 (vs. S&P -2%) and now offering 43%upside potential to our $34 PT, we upgrade to Buy from Hold. Fundamentally,nothing has changed in our outlook; if anything, $100MM+ of new int'l awards/options YTD reinforce robust global RF demand that can support a 47%international CAGR through 2030, which underpins a 23% total HAWK organic Upgrade to BUY on Share Price Dislocation, Not a Thesis Change.We initiated HAWK at HOLD on6/1 following the IPO, reflecting what we viewed as limited near-term upside despite a differentiatedasset in space-based RF intelligence. Since then, shares have pulled back 25% vs. the market -2%,creating a more compelling risk/reward with 43% upside to our unchanged $34 PT. Importantly, New International Awards Reinforce Demand Strength.HAWK has announced over $100MMof new international contract awards/options YTD across eight int'l customers/programs. Weview this as an important proof point that allied and partner nations are increasingly adoptingcommercial signals intelligence to support domain awareness, electronic warfare, and operational RF Demand Still Expanding; HAWK a Commercial-Scale Pureplay.HAWK provides space-basedRadio Frequency intelligence through a proprietary constellation of 30+ satellites and AI-enabledprocessing, serving U.S. and international defense/intelligence customers. We continue to forecaststrong growth supported by a $305MM backlog, expanding mission sets, and international demand, Margin Expansion and Net Cash Optionality Support Upside.HAWK’s asset-light model andrecurring software/data revenue mix drive operating leverage. EBITDA margins are expectedto expand to ~27% in 2028 from 17% in 2026, supported by higher gross margins, recurringrevenue scale, and SG&A/R&D leverage. The balance sheet also remains a differentiator, with over Valuation Same PT, Better Entry Point.Our $34 PT remains a 50/50 blend of 11x 2028E EV/Salesand 34X 2028E EV/EBITDA. At current levels, HAWK trades at 7.0X 2028E EV/Sales vs. an avg12.3x for peers BKSY/PL, which we view as attractive, given HAWK's growth profile, profitability, Sheila Kahyaoglu * | Equity Analyst+1 (212) 336-7216 | sheila.kahyaoglu@jefferies.com The Long View: Hawkeye 360 Investment Thesis HawkEye 360 is a provider of space-based Radio Frequency Intel supportedby a proprietary constellation of 30+ satellites along w/ AI-based processing.Demand is expanding on budget/increasingly complex geopolitics met byevolving tech to serve an expanding mission set. This leads to a 23% organicrev CAGR over the next 3 years while software/recurring sales drive EBITDA Downside Scenario,$20, -22% Base Case,$34, +33% Upside Scenario,$63, +146% •Organic revenue rises at a 15% CAGR reaching$270MM of sales in 2028.•EBITDA margins stay in 20% range implying2028 EBITDA of $54MM•109MM shares and net cash of $300MM •Revenues rise at a 41% CAGR (23%) organicthrough 2028 to $328MM.•EBITDA margins up more than 1,000 bps,expanding to 27.3% ($89.6MM of EBITDA) in2028 from $24.8MM (21.1% margin) in 2025.•109MM shares and net cash of $416MM. •Organic revenue rises at a 40% CAGR reaching$488MM of sales in 2028.•EBITDA margins expand to 30% implying 2028EBITDA of $146MM•109MM shares and net cash of $500MM Sustainability Matters Catalysts HawkEye 360's ESG focus is on the end markets and customers it serves with products monitoring forboth illegal activities along with broader defense. The RF data and insights that it generates can supportthe security and track illegal maritime activities for its customers. Its main customers are both the U.S. andinternational governments with heavy reliance on overall government spending levels and the timing ofprocurement and outlay cycles. This creates risk and opportunity. The company is also heavily levered to •Additional satellite launches with potentially 6Kestrels (18 satellites) launched through YE2028.•Increased offering and improvement in latency/ In this note we are upgrading HawkEye 360 to Buy from Hold: 1.Revenue Expanding at a 41% CAGR (23% Organic) on International Strength2.$34BB Market TAM Up on Collect Capability3.Leveraging Recurring Revenue for 27%+ EBITDA Margins in 20284.FCF Positive in 2027 on Improved Profitability and Moderate WC Usage Revenue Expanding at a 41% CAGR (23% Organic) onInternational Strength HawkEye 360 could grow at a 23% organic CAGR over the next three years with sales increasingto $328MM in 2028 from $118MM ($178MM on a PF basis) in 2025. Revenue growth is tied tothe $305MM backlog along with the factored pipeline, which includes follow-on opportunities and U.S. Revenue:In 2025, US revenue increased by $30.9MM, or 76%, to $71.6MM from $40.8MM in2024. The majority was driven by a $30.4MM increase in government revenue due to higher sales ofradio frequency data which was across recurring purchases from existing U.S. government customersas well as the addition