Gogo Announces Third Quarter Results

Total Revenue of $100.5 million, up 3% Year-over-Year; Third Quarter Service Revenue of $81.9 million, up 3% Year-over-Year

Q3 Net Income of $10.6 million; Adjusted EBITDA(1) of $34.8 million

Updates 2024 Guidance

Recent Strategic Galileo HDX wins with Textron Aviation and Wheels Up

BROOMFIELD, Colo., Nov. 5, 2024 /PRNewswire/ -- Gogo Inc. (NASDAQ:GOGO) ("Gogo" or the "Company"), a leading global provider of broadband connectivity services for the business aviation market, today announced its financial results for the quarter ended September 30, 2024.

Q3 2024 Highlights

Total revenue of $100.5 million increased 3% compared to Q3 2023 and decreased 1% compared to Q2 2024.

Service revenue of $81.9 million increased 3% compared to Q3 2023 and decreased slightly compared to Q2 2024.

Equipment revenue of $18.7 million increased 1% compared to Q3 2023 and decreased 7% compared to Q2 2024.

Total AVANCE aircraft online ("AOL") as of September 30, 2024 grew to 4,379, an increase of 16% compared to Q3 2023 and 4% compared to Q2 2024. AVANCE units comprised approximately 62% of total AOL as of September 30, 2024, up from 53% as of September 30, 2023 and up from 60% as of June 30, 2024.

Total ATG AOL was 7,016, a decrease of 2% compared to Q3 2023 and a slight decrease compared to Q2 2024.

AVANCE equipment units shipped totaled 214, an increase of 11% compared to Q3 2023 and a decrease of 7% compared to Q2 2024.

Average Monthly Revenue per ATG aircraft online ("ARPU") for the third quarter was a record $3,497, an increase of 4% compared to Q3 2023 and a slight increase compared to Q2 2024.

Net income of $10.6 million decreased 49% from $20.9 million in Q3 2023, and increased from $0.8 million in Q2 2024. Net income for Q2 2024 included $11.0 million of an after-tax unrealized loss related to a fair market value adjustment to a convertible note investment compared with a $0.2 million after-tax unrealized gain in Q3 2024.

Diluted earnings per share was $0.08 compared to $0.16 in Q3 2023.

Adjusted EBITDA(1) of $34.8 million, which includes approximately $2.6 million of operating expenses related to Gogo Galileo and excludes $6.7 million of expenses related to the Satcom Direct acquisition, decreased 19% compared to Q3 2023 and increased 14% compared to Q2 2024.

Net cash provided by operating activities of $25.1 million in Q3 2024 increased from $18.7 million in Q3 2023 and increased from $24.9 million in Q2 2024.

Free Cash Flow(1) of $24.6 million in Q3 2024 was an increase from $21.0 million in the prior-year period and a slight decrease from $24.9 million in Q2 2024.

Cash and cash equivalents totaled $176.7 million as of September 30, 2024 compared to $161.6 million as of June 30, 2024.

In Q3 2024, the Company repurchased approximately 1.0 million shares for a total cost of approximately $7.6 million. The Company repurchased approximately 4.1 million shares for approximately $35.6 million in the last four quarters.

Recent Company Highlights

On September 30, 2024, the Company announced a definitive agreement to acquire Satcom Direct, Inc. ("Satcom Direct") to create the only multi-orbit, multi-band in-flight connectivity provider able to satisfy the performance and cost needs of every segment of the global business aviation (BA) and military/government mobility markets.

Textron Aviation announced it will install Gogo's global Low-Earth-Orbit (LEO) solution, Gogo Galileo HDX, as a factory option for the following models in its midsize and super-midsize jet category: Cessna Citation Longitude, Latitude and Ascend.

Wheels Up, a leading provider of on-demand private aviation and one of the largest fleets in the industry, announced it will add Gogo's Galileo HDX LEO connectivity solution fleetwide. Installations of Galileo HDX are expected to begin by the middle of 2025, as soon as certifications for Wheels Up aircraft are completed.

"Our Satcom Direct acquisition will turbo-charge Gogo Galileo penetration of the global underpenetrated Business Aviation and Military/Government markets," said Oakleigh Thorne, Gogo's Chairman and CEO.  "Unprecedented demand for both Galileo and Gogo 5G will drive equipment revenue in 2025, and growth in profitable recurring service revenue beginning in 2026." 

"Strong third quarter results across the board drove upside to our 2024 Adjusted EBITDA and Free Cash Flow guidance," said Jessi Betjemann, Gogo's Executive Vice President and CFO. "We expect the Satcom Direct acquisition to be accretive day one and expect to reach our net leverage target of 2.5x-3.5x within 1-2 years after closing."

Financial Guidance

The Company includes below its revised 2024 guidance, which includes the impact of the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program ("FCC Reimbursement Program") and excludes the impact of the closing of the Satcom Direct transaction.

Due to the pending acquisition of Satcom Direct, the Company is withdrawing its multi-year long-term financial targets previously provided on August 7, 2024.

2024 Financial Guidance

Total revenue in the range of $400 million to $410 million (no change)

Adjusted EBITDA(1) in the range of $120 million to $130 million versus prior guidance at the high end of the range of $110 million to $125 million. This guidance reflects increased legal expenses from ongoing legal proceedings and approximately $20 million of operating expenses for strategic and operational initiatives including Gogo 5G and Gogo Galileo.

Free Cash Flow(1) in the range of $55 million to $65 million, which includes $35 million in reimbursements tied to the FCC Reimbursement Program, versus prior guidance of $35 million to $55 million.

Capital expenditures of approximately $30 million versus prior guidance of $35 million, which includes approximately of $20 million for strategic initiatives.

(1)  See "Non-GAAP Financial Measures" below

Conference Call

The Company will host its third quarter conference call on November 5, 2024 at 8:30 a.m. ET. A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company's investor website at https://ir.gogoair.com.

3Q Earnings Call Webcast Link:https://edge.media-server.com/mmc/p/r7xg4923

Participants can use the below link to retrieve your unique conference ID to use to access the conference call.https://register.vevent.com/register/BI9f9348b06a694d9a9f21c0b7ecda8a5d

Non-GAAP Financial Measures

We report certain non-GAAP financial measurements, including Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in the discussion above. Management uses Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. These supplemental performance measures also provide another basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP. When analyzing our performance with Adjusted EBITDA or Adjusted EBITDA Margin or liquidity with Free Cash Flow, as applicable, investors should (i) evaluate each adjustment in our reconciliation to the corresponding GAAP measure, and the explanatory footnotes regarding those adjustments, (ii) use Adjusted EBITDA and Adjusted EBITDA Margin in addition to, and not as an alternative to, net income (loss) attributable to common stock as a measure of operating results, and (iii) use Free Cash Flow in addition to, and not as an alternative to, consolidated net cash provided by (used in) operating activities when evaluating our liquidity. No reconciliation of the forecasted amounts of Adjusted EBITDA for fiscal 2024 is included in this release because we are unable to quantify certain amounts that would be required to be included in the corresponding GAAP measure without unreasonable efforts, due to high variability and complexity with respect to estimating certain forward-looking amounts, and we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors. 

Cautionary Note Regarding Forward-Looking Statements Certain disclosures in this press release and related comments by our management include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our business outlook, industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future technologies, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words "anticipate," "assume," "believe," "budget," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "future" and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release. Forward-looking statements are based on our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: our ability to continue to generate revenue from the provision of our connectivity services; our reliance on our key OEMs and dealers for equipment sales; the impact of competition; our reliance on third parties for equipment components and services; the impact of global supply chain and logistics issues and inflationary trends; our ability to expand our business outside of the United States; our ability to recruit, train and retain highly skilled employees; the impact of pandemics or other outbreaks of contagious diseases, and the measures implemented to combat them; the impact of adverse economic conditions; our ability to fully utilize portions of our deferred tax assets; the impact of increased attention to climate change, ESG matters and conservation measures; our ability to evaluate or pursue strategic opportunities and/or integrate them into our business; our ongoing delay and the risk of future delays in deploying 5G, and our ability to develop and deploy Gogo 5G, Gogo Galileo or other next generation technologies; our ability to maintain our rights to use our licensed 3Mhz of ATG spectrum in the United States and obtain rights to additional spectrum if needed; the impact of service interruptions or delays, technology failures, equipment damage or system disruptions or failures; the impact of assertions by third parties of infringement, misappropriation or other violations; our ability to innovate and provide products and services; our ability to protect our intellectual property rights; the impact of our use of open-source software; the impact of equipment failure or material defects or errors in our software; our ability to comply with applicable foreign ownership limitations; the impact of government regulation of communication networks, and the internet; our possession and use of personal information; risks associated with participation in the FCC Reimbursement Program; our ability to comply with anti-bribery, anti-corruption and anti-money laundering laws; the extent of expenses, liabilities or business disruptions resulting from litigation; the impact of global climate change and legal, regulatory or market responses to it; the impact of our substantial indebtedness; our ability to obtain additional financing to refinance or repay our existing indebtedness; the impact of restrictions and limitations in the agreements and instruments governing our debt; the impact of increases in interest rates; the impact of a substantial portion of our indebtedness being secured by substantially all of our assets; the impact of a downgrade, suspension or withdrawal of the rating assigned by a rating agency; the volatility of our stock price; our ability to fully utilize our tax losses; the dilutive impact of future stock issuances; the impact of our stockholder concentration and of our CEO and Chair of the Board being a significant stockholder; our ability to fulfill our obligations associated with being a public company; and the impact of anti-takeover provisions, ownership provisions and certain other provisions in our charter, our bylaws, Delaware law, and our existing and any future credit facilities.

Additional information concerning these and other factors can be found under the caption "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission ("SEC") on February 28, 2024 and in our subsequent quarterly reports on Form 10-Q as filed with the SEC.

Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. 

About Gogo

Gogo, a leading global provider of broadband connectivity services for the business aviation market. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment and voice solutions. Gogo's products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals.

As of September 30, 2024, Gogo reported 7,016 business aircraft flying with its broadband ATG systems onboard, 4,379 of which are flying with a Gogo AVANCE L5 or L3 system; and 4,180 aircraft with narrowband satellite connectivity installed. Connect with us at www.gogoair.com.

 

Gogo Inc. and SubsidiariesUnaudited Condensed Consolidated Statements of Operations(in thousands, except per share amounts)

For the Three MonthsEnded September 30,

For the Nine MonthsEnded September 30,

2024

2023

2024

2023

Revenue:

Service revenue

$

81,857

$

79,546

$

245,459

$

237,107

Equipment revenue

18,672

18,403

61,451

62,660

Total revenue

100,529

97,949

306,910

299,767

Operating expenses:

Cost of service revenue (exclusive of amounts shown below)

19,051

18,116

55,793

51,732

Cost of equipment revenue (exclusive of amounts shown below)

15,165

12,320

47,383

47,983

Engineering, design and development

9,759

9,154

29,279

26,259

Sales and marketing

8,551

7,015

25,870

21,748

General and administrative

24,917

13,336

61,416

40,734

Depreciation and amortization

4,015

4,692

11,743

12,022

Total operating expenses

81,458

64,633

231,484

200,478

Operating income

19,071

33,316

75,426

99,289

Other expense (income):

Interest income

(2,419)

(1,622)

(6,587)

(5,509)

Interest expense

9,670

8,025

26,193

24,807

Loss on extinguishment of debt

—

—

—

2,224

Other expense (income), net

(332)

(728)

1,286

(733)

Total other expense

6,919

5,675

20,892

20,789

Income before income taxes

12,152

27,641

54,534

78,500

Income tax provision (benefit)

1,522

6,728

12,575

(52,711)

Net income

$

10,630

$

20,913

$

41,959

$

131,211

Net income attributable to common stock per share:

Basic

$

0.08

$

0.16

$

0.33

$

1.01

Diluted

$

0.08

$

0.16

$

0.32

$

0.98

Weighted average number of shares:

Basic

127,918

129,951

128,513

129,632

Diluted

130,389

133,320

131,538

133,382

 

Gogo Inc. and SubsidiariesUnaudited Condensed Consolidated Balance Sheets(in thousands)

September 30,