Gogo Inc. · NASDAQ:GOGO
Gogo — Q1 2015 Earnings Presentation
22 slides from Gogo's earnings presentation, May 7, 2015
Slide 1: 1st Quarter 2015 Earnings Results
1st Quarter 2015 Earnings Results Michael Small – Chief Executive Officer Norman Smagley – Chief Financial Officer May 7, 2015
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: Q1 2015 Earnings Call Objectives
Q1 2015 EARNINGS CALL OBJECTIVES Perspective on the in-flight connectivity industry Why Gogo wins Update on the quarter ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 3
Slide 4: Global Aero-Communications Service Provider Requirements
GLOBAL AERO-COMMUNICATIONS SERVICE PROVIDER REQUIREMENTS Global scale is essential Most bandwidth at the lowest cost Invest in R&D and network engineering capabilities ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 4
Slide 5: Gogo Checks All the Boxes
GOGO CHECKS ALL THE BOXES We have the largest scale We are global We have industry leading R&D and network capabilities We have nearly 1,000 smart, specialized, and passionate employees around the world GOGO DELIVERS HIGHLY RELIABLE AND SOPHISTICATED IN-FLIGHT CONNECTIVITY SOLUTIONS ©2014 Go
Slide 6: Gogo Leads Technology Innovation
GOGO LEADS TECHNOLOGY INNOVATION 1st generation – ATG / ATG4 2nd generation – 2Ku 3rd generation – in progress… GOGO IS PLAYING TO WIN ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 6
Slide 7: Delivering on 2015 Priorities
DELIVERING ON 2015 PRIORITIES Add-new aircraft Expanded partnership with NetJets - Expanded partnership with Delta - Installed 300+ broadband aircraft - Announced ATG8000 and ATG1000 for BA Increase bandwidth to aircraft - 730 ATG4 equipped aircraft (1) - Nearly 50% of data traffic goes through
Slide 8: We Are Playing to Win
WE ARE PLAYING TO WIN IFC industry is large and global Gogo has industry leading R&D capabilities Gogo has scale and experience Gogo has a scalable business model EXECUTING ON THE WORLD’S FASTEST GLOBAL COMMUNICATIONS INFRASTRUCTURE DEPLOYMENT YET ©2014 Gogo Inc. and Affiliates. Proprietary
Slide 9: Q1 2015 Record Revenue & Adjusted EBITDA
Q1 2015 RECORD REVENUE & ADJUSTED EBITDA Total Revenue ($MM) $104 $109 $116 $96 $100 $20 21% $20 $22 $20 $23 Y/Y Growth $79 $82 $90 $95 $72 • Q1 2015 record revenue quarter: - Service revenue up 32% y/y Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 - CA-NA service revenue up 28% y/y Service Revenue Equipment R
Slide 10: Consolidated Cash CapEx & Cash
CONSOLIDATED CASH CAPEX & CASH Cash CapEx ($MM) $30 $32 $29 $27 $3MM Y/Y Increase • Q1 ’15 Y/Y changes in capital $12 expenditures: CA facilities build out of $6M Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 2015 Airborne equipment purchases ATG network Cash Balance ($MM) $400 Airborne equipment proceeds $243 $22
Slide 11: CA-NA Strong Revenue & ARPA Growth
CA-NA STRONG REVENUE & ARPA GROWTH Service Revenue ($MM) $68 $72 $62 $62 $56 28% Y/Y Growth • Service revenue driven by: - 22% y/y growth in ARPA - 7% y/y growth in aircraft online Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 • Strong ARPA growth continues: - Changes in pricing and product mix Annualized ARPA
Slide 12: CA-NA Aircraft Online & Segment Profit Growth
CA-NA AIRCRAFT ONLINE & SEGMENT PROFIT GROWTH Aircraft Online (End of Period) 2,200 2,098 7% 2,056 2,058 2,044 Y/Y Growth • 102 aircraft online added in Q1 2015 Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 • Segment profit margin Segment Profit ($MM) expands to 13% $10 $8 13% 66% • Strong leverage of network
Slide 13: BA Service Revenue & ATG Aircraft Online Growth
BA SERVICE REVENUE & ATG AIRCRAFT ONLINE GROWTH Service Revenue ($MM) 51% 52% 46% 47% $22 41% $20 38% $19 • Strong growth in ATG aircraft Y/Y Growth $17 $16 online and ATG ARPU Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 • NetJets expands long-standing partnership Service Revenue Service Revenue as a % of To
Slide 14: BA Revenue & Segment Profit Growth
BA REVENUE & SEGMENT PROFIT GROWTH Total Revenue ($MM) $42 $39 $37 $40 $40 $20 8% $23 $20 $21 $19 Y/Y Growth • Q1 2015 record revenue quarter: $19 $20 $22 - Service revenue up 38% y/y $16 $17 - ATG aircraft online up 33% y/y Q1 '14 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Service Revenue Equipment Revenue Note:
Slide 15: Focus on International Expansion
FOCUS ON INTERNATIONAL EXPANSION Satellite Aircraft Online (End of Period) 116 • 31 Ku aircraft installed in Q1 2015 85 36% • Revenue of $1.4M impacted by: Q/Q Growth - Classification of certain CA-ROW 35 transactions 19 5 - Some aircraft flying CA-NA routes - Adjusting for the above activities Q1 '
Slide 16: 2015 Guidance
2015 GUIDANCE Revenue $485 - $505 million CA-NA $300 - $320 million BA $170 - $180 million CA-ROW $10 - $15 million Adjusted EBITDA $15 - $25 million Cash CAPEX $100 - $120 million ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 16
Slide 17: Strong Q1 Financial Performance
STRONG Q1 FINANCIAL PERFORMANCE Record revenue of $116M, up 21% y/y Adjusted EBITDA of $8.2M, up 54% y/y Strong cash position of $400M WELL POSITIONED TO ACHIEVE OUR GOALS ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 17
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Convertible Notes Details
CONVERTIBLE NOTES DETAILS Transaction Summary • $362 million aggregate principal amount of 3.75% Convertible Senior Notes issued in March 2015, due March 1, 2020; conversion price of $23.85 per share. • Conversion may occur prior to December 1, 2019 upon the occurrence of certain events or any time
Slide 21: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Net Income (142) (140) (18) (96) (146) (17) (19) (25) (24) (20) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 9 9 10 Income Tax Provision – 3 1 1 1 – – – –
Slide 22: Cash CapEx Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Purchases of Property and (69) (33) (33) (67) (105) (32) (28) (35) (37) (53) Equipment Acquisition of Intangible Assets (Capitalized (8) (7) (10) (12) (16) (4) (5) (5) (3) (4) Software) Consolidated Capi