Gogo Inc. · NASDAQ:GOGO
Gogo — Q3 2016 Earnings Presentation
21 slides from Gogo's earnings presentation, Nov 3, 2016
Slide 1: 3rd Quarter 2016 Earnings Results
3rd Quarter 2016 Earnings Results Michael Small – Chief Executive Officer Norman Smagley – Chief Financial Officer November 3, 2016 Exhibit 99.2
Slide 2: Safe Harbor Statement
2 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 curre
Slide 3: Strong Q3 Performance
STRONG Q3 PERFORMANCE 2Ku’s momentum strong with 1,500+ awarded aircraft $126 $147 17% Y/Y Growth 57% Y/Y Growth Expect cash CAPEX to decline in 2019 both in aggregate dollars and as a percentage of revenue Next-gen ATG network expected to deliver 100 Mbps service in 2018 (1) Adjusted EBITDA is a no
Slide 4: 2Ku Update
2Ku UPDATE 4 47 Today Increase Awarded 2Ku Aircraft Obtain 30+ STCs by end of 2017 1,300+ 1,500+ 10 8 Install Awarded 2Ku Aircraft 14 3.5 Reduce Days to Install 2Ku 8 Analyst Day Sept 29 1 2 3 4
Slide 5: Business Aviation Progress
BUSINESS AVIATION PROGRESS Large Jets ~3,000 Aircraft Medium Jets ~4,000 Aircraft Light Jets ~5,000 Aircraft Turboprops ~8,500 Aircraft * * * * + Bandwidth Applications + PURCHASE MOTIVATION + Bandwidth Applications + 4G service expected to launch in first half of 2017 Selling 4G equipment today Ann
Slide 6: Next Gen ATG Proprietary Technology Expected to Launch in 2018
NEXT GEN ATG PROPRIETARY TECHNOLOGY EXPECTED TO LAUNCH IN 2018 6 Low Cost Solution Market & Deployment Performance Low Network & aircraft investment Leverage Existing ATG infrastructure: 250 cell sites, fiber backhaul & data centers Use Existing 3 MHz licensed spectrum and unlicensed spectrum in the
Slide 7: Q3'16 Revenue & Adjusted EBITDA Maintains Strong Growth
Q3’16 Revenue & ADJUSTED EBITDA MAINTAINS STRONG GROWTH 17% Y/Y Growth Q3’16 revenue up 17% Y/Y Service revenue up 20% Y/Y $126 $148 $138 $142 $147 57% Y/Y Growth Q3 ’16 Adjusted EBITDA increased 57% Y/Y to $15 million Q3 ’16 Adjusted EBITDA margin increased to 10% from 8% Y/Y Note: Minor difference
Slide 8: CA-NA - Strong Growth in Revenue & Aircraft Online
CA-NA - Strong GROWTH IN Revenue & AIRCRAFT ONLINE 14% Y/Y Growth Service revenue driven largely by increases in aircraft online 33 net aircraft installed in Q3 ’16 2,629 aircraft online as of 9/30/2016 ~800 aircraft to be converted to 2Ku ~170 net awarded but not yet installed aircraft at end of Q3
Slide 9: CA-NA – Consistent Performance Preparing for 2Ku Deployment
CA-NA – CONSISTENT PERFORMANCE PREPARING FOR 2Ku Deployment Annualized ARPA of $134K: ~8% y/y growth in ARPA excluding aircraft added since the beginning of 2015, primarily regional jets and aircraft with new airline partners Segment profit up 23% Y/Y to $15 million Includes one-time costs related t
Slide 10: CA-ROW Revenue Doubles While Awarded Aircraft Total Expands
CA-ROW REVENUE DOUBLES WHILE AWARDED AIRCRAFT TOTAL EXPANDS 110% Y/Y Growth 60% Y/Y Growth Note: Minor differences exist due to rounding Revenue of $7.6 million, double from Q3 ’15 Aircraft online growth of 60% ARPA growth of 22% 256 aircraft online, up 96 Y/Y Awarded but not yet installed aircraft
Slide 11: Strong CA-ROW ARPA Growth Continues
STRONG CA-ROW ARPA GROWTH CONTINUES Note: Minor differences exist due to rounding $143 $174 22% Y/Y Growth Annualized ARPA grew 22% Y/Y to $174K: JAL program demonstrates significant ARPA opportunity from multi-payer model Segment loss flat at $20 million despite continued investment in 2Ku STC and
Slide 12: Strong Growth in BA Service Revenue
STRONG GROWTH IN BA SERVICE REVENUE 12 Service revenue increased 28% Y/Y to $33 million BA equipment revenue decreased to $16 million, driven by deferral of revenue on ATG equipment that will be upgraded to Gogo Biz 4G starting in 2017 28% Y/Y Growth 59% 11% Y/Y Growth $44.2 Note: Minor differences
Slide 13: Increased ATG Aircraft Online & Service ARPU Drive Strong Segment Margin Growth
Increased ATG AIRCRAFT online & SERVICE ARPU drive STRONG segment MARGIN GROWTH ATG aircraft online increased 20% Y/Y, to nearly 4,000 ATG Service ARPU increased 9% Y/Y, to over $2,500 per month Segment profit increased 14% Y/Y, to $21 million Segment profit margin expanded to 42% 20% Y/Y Growth Not
Slide 14: Consolidated Cash CAPEX
Consolidated Cash CAPEX 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. $24MM Y/Y Increase Q3 ’16 Y/Y changes in Cash CAPEX: Due primarily to increased 2Ku equipment purchases
Slide 15: 2016 Outlook
Revenue above midpoint of guidance range of $575-$595 million Adjusted EBITDA between $55-$65 million Cash CAPEX at top end of guidance range of $110-$135 million 2016 OUTLOOK 1 (2) Cash CAPEX is a non-GAAP measure. See Appendix for a reconciliation to the comparable GAAP measure. (1) Adjusted EBITD
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix
Slide 18: Gogo Installed and Awarded Aircraft as of 9/30/2016
GOGO INSTALLED AND AWARDED AIRCRAFT AS OF 9/30/2016 (1) All figures are as of 9/30/2016. Awarded but not yet installed figures are approximate and differences may exist due to rounding. Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 1,102 - 1,102 ATG-4 Aircraft Online 1,513 - 1,513 Ku Aircra
Slide 19: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 Net Income (20) (25) (29) (34) (24) (40) (33) Interest Income (0) (0) (0) (0) (0) (0) (1) Interest Expense 10 16 17 16 16 18 25 Income Tax Provision – – – – – – – Depreciation & Amortization 19 21 22 25 24 2
Slide 20: Cash CAPEX Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 Purchases of Property and Equipment (53) (33) (19) (30) (31) (40) (36) Acquisition of Intangible Assets (Capitalized Software) (4) (4) (4) (5) (6) (8) (8) Consolidated Capital Expenditures (57) (37) (24) (35) (37
Slide 21: Cash CAPEX Guidance Reconciliation ($MM)
CASH CAPEX GUIDANCE RECONCILIATION ($MM) For the year ending 2016 Low High Consolidated capital expenditures (GAAP) (150) (185) Deferred airborne lease incentives 40 50 Cash CAPEX (110) (135)