Gogo Inc. · NASDAQ:GOGO
Gogo — Q4 2017 Earnings Presentation
30 slides from Gogo's earnings presentation, Feb 22, 2018
Slide 1: 4th Quarter 2017 Earnings Results
4th Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan – Chief Financial Officer February 22, 2018 Exhibit 99.2
Slide 2: Safe harbor statement
Safe harbor statement Safe Harbor Statement This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based on management’s beliefs and assumptions and on information current
Slide 3: Record quarterly results
Record quarterly results 18% Y/Y Growth Total Revenue ($MM) Total revenue up 18% Y/Y Adjusted EBITDA ($MM) Adj. EBITDA up $2M Y/Y to a record $25M 8% Y/Y Growth
Slide 4: Major progress on strategic objectives
Major progress on strategic objectives 4 Weighted avg. peak speed per commercial aircraft increased 30% Q/Q and nearly 100% Y/Y Awarded 200 additional aircraft Now 2,000+ 2Ku awards 225+ Aircraft installed with 2Ku in Q4 ‘17 Next Gen Modem
Slide 5: New products drive increased engagement
New products drive increased engagement Messaging passes increasing passenger engagement, take rate up 36% Y/Y GOL launches Gogo TV Gogo Vision Touch on Delta C-Series Lightweight, low-cost seatback solution Unified Portal: Delivering a consistent passenger experience across IFC providers
Slide 6: Business Aviation's strong growth trajectory
Business Aviation’s strong growth trajectory 20,000+ Business Aviation Aircraft Complete in-flight internet portfolio to address all business aircraft Ku tail mount antenna to target large, global business jets ATG-NG extends leadership position 2Ku penetrating the VVIP market
Slide 7: Looking ahead to 2018
Looking ahead to 2018 More bandwidth will drive aircraft awards and ARPA 2Ku installs, modem upgrades, HTS satellites & launch of ATG-NG Bandwidth Growth Win Aircraft Grow ARPA BA: Continued Growth Strong revenue and profitability growth
Slide 8: Strong operational execution
Strong operational execution 2Ku aircraft installed in Q4 227 New modem increases throughput 16X 16X Installation times less than half of the competition <1/2 2Ku aircraft installed in 2017 473
Slide 9: OEM Progress
OEM Progress 9,000 Aircraft expected to be installed with IFC through OEM programs over next 10 years Airbus Expects first 2Ku line-fit order in first half of 2018 Delta Air Lines to take delivery of first 2Ku and Gogo Vision Touch line-fit C-Series in 2018 C-Series Boeing Expects first delivery of
Slide 10: Delivering more bandwidth globally
Delivering more bandwidth globally Total 2Ku aircraft online at end of 2018 1,200 1,100 to CA-ROW 2Ku aircraft online at end of 2018 450 Growth in 2Ku aircraft online over 2017 ~2X ATG-NG commercially available in late 2018
Slide 11: Business Aviation continues to extend market reach
Business Aviation continues to extend market reach Solutions for every aircraft: AVANCE L3 & L5 ATG-NG Ku tail mount Current customers upgrading and recommitting to Gogo 200 Avance L5 units shipped in 2017 Streaming class internet experience 20,000+ Business Aviation Aircraft
Slide 12: Key takeaways - COO
Key takeaways - COO Relationships built on over 25 years of experience Continually enhancing our capabilities Business Aviation set for a strong 2018 and to capitalize on long-term growth opportunities
Slide 13: Strong revenue growth
3 Strong revenue growth 18% Y/Y Growth Q4 ’17 Adjusted EBITDA reaches record $25 million Second half of ‘17 nearly doubled first half of the year Expect increased network utilization, falling unit bandwidth costs & expense management to drive operating leverage Note: Minor differences exist due to r
Slide 14: CA-NA: Continued service revenue growth
CA-NA: Continued service revenue growth 8% Y/Y Growth Service revenue of $103M up 8% 2,840 aircraft online, up 164 aircraft Y/Y Note: Minor differences exist due to rounding Annualized ARPA up 2% Y/Y to $144k Annualized Satellite ARPA $223k Annualized ATG ARPA $131k 2% Y/Y Growth
Slide 15: CA-NA: Expanding engagement through multi-payer strategy
15 CA-NA: Expanding engagement through multi-payer strategy 36% Y/Y Growth Take rate up 36% Y/Y: Increased passenger engagement with airline paid and third party paid offerings Note: Minor differences exist due to rounding Segment profit of $23 million Up $7 million sequentially Segment profit margi
Slide 16: CA-ROW: Revenue doubled year-over-year for fourth consecutive quarter
CA-ROW: Revenue doubled year-over-year for fourth consecutive quarter 119% Y/Y Growth Note: Minor differences exist due to rounding Service revenue doubled Y/Y for the 4th consecutive quarter to $15.3 million Aircraft equivalents online increased 57% Y/Y $201k annualized ARPA, up 17% Y/Y Aircraft On
Slide 17: CA-ROW: Scaling our international business
CA-ROW: Scaling our international business 17 Note: Minor differences exist due to rounding Annualized ARPA up 17% to $201k Sequentially, growth in ARPA for existing aircraft offset by new aircraft. New aircraft represented ~40% of aircraft online ARPA for airlines launched prior to 2017 grew 66% Y/
Slide 18: CA-ROW: On path to profitability
CA-ROW: On path to profitability 18 Note: Minor differences exist due to rounding Segment loss approximately equivalent Y/Y Path to profitability: Expect continued operating leverage as aircraft are brought online 770 awarded but not yet installed aircraft at 12/31/17 Enough awarded aircraft to reac
Slide 19: BA: Continuing strong revenue growth
BA: Continuing strong revenue growth Service revenue increased 25% Y/Y to a record $45 million Total revenue increased 28% Y/Y, to $66 million ATG aircraft online increased 12% Y/Y, to over 4,600 ATG Service ARPU increased 13% Y/Y, to over $2,900 per month Note: Minor differences exist due to roundi
Slide 20: BA: Strong AVANCE platform adoption
BA: Strong AVANCE platform adoption Segment profit increased 16% Y/Y, to $27 million Profit margin improved sequentially due to charges recorded in Q3 Note: Minor differences exist due to rounding 16% Y/Y Growth L5 shipments drove 36% growth in equipment revenue ATG units shipped up 31% to 235 108 L
Slide 21: Investing in rapid 2Ku installations
21 Investing in rapid 2Ku installations Note: Minor differences exist due to rounding. Note: Cash CAPEX is a non-GAAP measure. See Appendix for a reconciliation to the most comparable GAAP measure. $10MM Y/Y Increase Cash CAPEX Y/Y increase reflects 2Ku installations ~70% of Cash CAPEX related to ai
Slide 22: 2017 Full Year Highlights
2017 Full Year Highlights Met or exceeded all major full-year 2017 guidance: Revenue$699 million Adjusted EBITDA$ 63 million Cash CAPEX$221 million 2Ku installations473 installs (1) Adjusted EBITDA excludes the $4.5M in charges related to write-downs of legacy product lines and the retirement of Gog
Slide 23: Revenue Recognition Standard (ASC 606)
Revenue Recognition Standard (ASC 606) Adoption of Revenue Recognition Standard 606: No impact to cash flow Record higher equipment revenues in the current period for commercial agreements under the airline directed model Supplemental material on the Gogo IR website
Slide 24: 2018 Guidance
2018 Guidance 24 606 Revenue Standard 605 Revenue Standard Y/Y Growth under 605 Standard Total Revenue $865 - $935 $750 - $790 7% - 13% CA-NA Revenue $445 - $485 $380 - $415 (5%) - 4% CA-ROW Revenue $125 - $165 $75 - $90 30% - 56% BA Revenue $285 - $295 $285 - $295 18% - 23% Adjusted EBITDA $75 - $1
Slide 25: 2018 Guidance
2018 Guidance Cash CAPEX $110 - $130 ~35% Related to airborne equipment $15 - $30 Inventory purchases related to airline-directed installations Increase in 2Ku aircraft online 550 - 650 Increase in CA-ROW 2Ku aircraft online ~300 $ in millions
Slide 26: Q&A
Q&A
Slide 27: Appendix
Appendix
Slide 28: Gogo installed and awarded aircraft as of 12/31/2017
28 Gogo installed and awarded aircraft as of 12/31/2017 Note: Under the Unified Agreement with American Airlines, the airline has the option to terminate our service, and we expect it to exercise such option, on approximately 550 mainline aircraft on which our ATG/ATG-4 service is provided. We curre
Slide 29: Adjusted EBITDA reconciliation ($MM)
Adjusted EBITDA reconciliation ($MM) 2016 Q1 2016 Q3 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Net Income (24) (40) (33) (27) (41) (44) (45) (41) Interest Income (0) (0) (1) (1) (1) (1) (1) (1) Interest Expense 16 18 25 25 27 27 28 30 Income Tax Provision (Benefit) – – – – – – – (3) Depreciati
Slide 30: Cash CAPEX reconciliation ($MM)
Cash CAPEX reconciliation ($MM) 2016 Q1 2016 Q3 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Purchases of Property and Equipment (31) (40) (36) (41) (64) (65) (62) (62) Acquisition of Intangible Assets (Capitalized Software) (6) (8) (8) (7) (8) (9) (7) (4) Consolidated Capital Expenditures (37) (