Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Presentation (February 2018)
13 slides from Gogo's investor presentation, Feb 22, 2018
Slide 1: Accounting Impact of Business Model Changes and New Revenue Recognition Standard on Commercial Aviation
Accounting Impact of Business Model Changes and New Revenue Recognition Standard on Commercial Aviation February 22, 2018
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: Agenda
Agenda 1. Commercial airline arrangements and business model discussion 2. New revenue recognition accounting standard ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential. 3
Slide 4: Commercial Airline Arrangements
Commercial Airline Arrangements
Slide 5: Commercial airline arrangements description
Commercial airline arrangements description • Pursuant to contractual agreements with our airline partners, we place our equipment on commercial aircraft operated by the airlines for the purpose of delivering our in-flight connectivity and entertainment services to passengers on the aircraft. There
Slide 6: Commercial airline business model comparison
Commercial airline business model comparison Financial metric Turnkey model (TK) Airline-Directed model (AD) Equipment revenue No Yes Equipment cost No Yes Income Statement Service revenue Yes Yes Service costs: Revenue share and transaction costs Yes No Amortization of deferred leasing proceeds Yes
Slide 7: Accounting impact of airline-directed model – Income statement and cash flow summary
Accounting impact of airline-directed model – Income statement and cash flow summary The following is a summary of the accounting and financial statement impact over the life of an agreement, solely as a result of the transition from a turnkey to airline-directed business model: Airline-Directed (AD
Slide 8: Airline-directed model vs. turnkey model – Illustrative example (under ASC 605)
Airline-directed model vs. turnkey model – Illustrative example (under ASC 605)* Turnkey m odel Airline-directed m odel - 605 Illustrative transaction assumptions: Install Period Years 1-10 Total Contract Install Period Years 1-10 Total Contract • Gogo equipment cost $120K; airline Equipment revenue
Slide 9: New revenue recognition accounting standard (ASC 606)
New revenue recognition accounting standard (ASC 606)
Slide 10: New revenue recognition accounting standard (ASC 606) summary
New revenue recognition accounting standard (ASC 606) summary • Accounting Standards Codification Topic 606 (ASC 606) became effective January 1, 2018. • Gogo is adopting ASC 606 under the modified retrospective approach, whereby the cumulative effect of adoption is recorded as an adjustment to equi
Slide 11: Impact of new revenue recognition standard (AD)
Impact of new revenue recognition standard 606 (AD) Financial Metric Comments vs 605 (AD) Equipment revenue recognized when installed as opposed to recognized over Equipment revenue the duration of the contract. A higher portion of forecasted service revenue is Equipment gross margin now allocated t
Slide 12: New revenue recognition accounting standard (ASC 606) – illustrative example
New revenue recognition accounting standard (ASC 606) – illustrative example Airline-directed m odel - 605 Airline-directed m odel - 606 Illustrative transaction assumptions: Install Years Total Install Years Total Period 1-10 Contract Period 1-10 Contract • Gogo equipment cost $120K; airline equipm
Slide 13: Let's go FARTHER
Let’Ss go FARTHER