Gogo Inc. · NASDAQ:GOGO
Gogo — Q4 2015 Earnings Presentation
26 slides from Gogo's earnings presentation, Feb 25, 2016
Slide 1: 4th Quarter and Full Year 2015 Earnings Results
4th Quarter and Full Year 2015 Earnings Results Michael Small – Chief Executive Officer Norman Smagley – Chief Financial Officer February 25, 2016
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: Transformative 2015
TRANSFORMATIVE 2015 Most advanced platform in the business Half billion dollar revenue company 2Ku launched Introduced Gogo Biz 4G for Business Aviation ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 3
Slide 4: Gogo's Open Strategy
GOGO’S OPEN STRATEGY Gogo operating with an open architecture Airline partners will have greater control over systems they choose and services they offer Greater assurance that our partners won’t be technologically trapped as the industry evolves Flexibility to meet any connectivity need tod
Slide 5: Gogo and American Airlines
GOGO AND AMERICAN AIRLINES We value our partnership with American 2Ku proposal will offer faster, cheaper, open- ended technology 800+ aircraft in 2Ku backlog ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 5
Slide 6: Gogo Technological Developments
GOGO TECHNOLOGICAL DEVELOPMENTS Backlog affirms the work and investment we have made to produce technological advantage Capacity Ku HTS capacity agreement with SES means cheaper bandwidth and lower costs for airlines and its customers Speed Powerful next gen modem capable of handling 400 Mbps
Slide 7: Operating an "Open" System
OPERATING AN “OPEN” SYSTEM 2Ku built on the redundancy of the Ku-band network of satellites Built to leverage new Ku-band LEO (Low Earth Orbit) satellite constellations offering coverage and latency advantage Building technologies that enable our airline partners to easily upgrade when the tim
Slide 8: Future Ready & Ahead of the Curve
FUTURE READY & AHEAD OF THE CURVE Open architecture strategy benefits include better flexibility and risk management Airline partner can manage their technology risks by staying future ready and ahead of the curve Open system approach for products and services: • Portal development • Entertain
Slide 9: Operating Capabilities Are Building Value
OPERATING CAPABILITIES ARE BUILDING VALUE 11,000+ connected Gogo-equipped systems flying around the world Installed or upgraded more than 1,900 aircraft in 2015, more aircraft than any competitor has flying 15 STC programs underway to jumpstart 2Ku installations Linefit programs progressing
Slide 10: The Connectivity Decision
THE CONNECTIVITY DECISION Making the right decision matters to airlines a lot ATG keeps improving and will get even better with Gogo Biz 4G for BA and the prospects for next gen ATG Ku satellite service and 2Ku added to portfolio to serve aircraft needing next generation technology Speed, ad
Slide 11: Q4'15 Record Revenue and CA-NA & BA Segment Profit
Q4’15 RECORD REVENUE AND CA-NA & BA SEGMENT PROFIT Total Revenue ($MM) $116 $121 $126 $138 $22 $109 $19 $20 $20 $20 26% • Q4’15 revenue is up 26% y/y Y/Y Growth $95 $101 $107 $116 $90 • Service revenue up 29% y/y Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Service Revenue Equipment Revenue • CA-NA + BA free
Slide 12: Q4'15 Adjusted EBITDA Is Up 6x from Q4'14
Q4’15 ADJUSTED EBITDA IS UP 6X FROM Q4’14 Adjusted EBITDA ($MM) $11 $10 $10 $8 $8 556% 9% 7% 8% Y/Y Growth • Q4’15 Adjusted EBITDA $5 6% $1 increased 6x to $8 million 1% $0 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Adjusted EBTIDA Adjusted EBITDA Margin Note: Minor differences exist due to rounding ©2014 G
Slide 13: CA-NA - Strong Growth in Revenue & Aircraft Online
CA-NA - STRONG GROWTH IN REVENUE & AIRCRAFT ONLINE Service Revenue ($MM) • Service revenue driven by increases in aircraft online and $83 $68 $72 $75 $78 22% ARPA Y/Y Growth • 2,387 Aircraft Online as of 12/31/2015 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 - 128 aircraft installed - ~950 ATG-4 aircraft onl
Slide 14: CA-NA - Strong Revenue & ARPA Growth
CA-NA - STRONG REVENUE & ARPA GROWTH Annualized ARPA $141 • ARPA grew 7% to $141K: $134 $136 $136 $131 - Driven by 14% increase in ARPS 7% Y/Y Growth - 20% y/y growth in ARPA excluding newly installed regional jets - Gogo Vision revenue doubled from prior year Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 • Se
Slide 15: BA Service Revenue - Continued High Growth
BA SERVICE REVENUE – CONTINUED HIGH GROWTH Service Revenue ($MM) 52% 55% 59% 58% • Service revenue increased 51% $29 $26 41% 41% y/y to record $29 million $24 Y/Y Growth $22 $20 • Service revenue continues strong growth track record Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 • Total revenue reaches new Serv
Slide 16: Increased ATG Units Online & Service ARPU Drive Segment Profit Growth
INCREASED ATG UNITS ONLINE & SERVICE ARPU DRIVE SEGMENT PROFIT GROWTH ATG Units Online (End of Period) 3,477 • ATG units online increased 3,170 3,314 24% 24%, to nearly 3,500 2,983 Y/Y Growth 2,797 • ATG Service ARPU increased 15%, to more than $2,400 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 • Segment pro
Slide 17: International Expansion Progress
INTERNATIONAL EXPANSION PROGRESS Satellite Aircraft Online (End of Period) 202 • 202 aircraft online, up 42 q/q 148 160 138% 116 Y/Y Growth • Revenue of $4.2 million for Q4’15, up 85 three-fold from Q4’14 • 450+ awarded and not yet installed at Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Q4’15, mostly 2Ku CA
Slide 18: 2015 Full Year Highlights
2015 FULL YEAR HIGHLIGHTS Half a billion in revenue $37 million in adjusted EBITDA, up three-fold from 2014 1,100 broadband aircraft added during the year BA service revenue broke through $100 million for the full year, exceeding equipment revenue for 2015 ©2014 Gogo Inc. and Affiliates. Pro
Slide 19: Consolidated Cash CapEx
CONSOLIDATED CASH CAPEX Cash CapEx ($MM) • Q4 ’15 Y/Y changes in capital $32 expenditures: $23 Lower spend on network $1MM $12 $12 $13 Y/Y Increase Increase in equipment proceeds from airline partners Shift in airborne expenditures to 2016 for 2Ku ramp Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q4 '15 Note: Minor
Slide 20: 2016 Guidance
2016 GUIDANCE Installations • CA-NA over 200 incremental installations • CA-ROW 75 aircraft in 2016, at least 200 in 2017 • 2Ku installations: 75 in 2016, 300 in 2017 Total revenue between $575-$595 million, y/y growth of 15-19% • CA-NA revenue $350-$365 million • BA revenue $190-$205 million •
Slide 21: Strong Financial Results
STRONG FINANCIAL RESULTS $366 million on balance sheet Have the funding to execute our business plan and get to profitability ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 21
Slide 22: Q&A
Q&A
Slide 23: Appendix
Appendix
Slide 24: 2016 Financial Guidance
2016 FINANCIAL GUIDANCE Revenue $575 - $595 million CA-NA $350 - $365 million BA $190 - $205 million CA-ROW $25 - $30 million Adjusted EBITDA $55 - $65 million Cash CAPEX $110 - $135 million ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 24
Slide 25: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2015 2015 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Income (142) (140) (18) (96) (146) (17) (19) (25) (24) (20) (25) (29) (34) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 2
Slide 26: Cash CapEx Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2015 2015 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Purchases of Property and (69) (33) (33) (67) (105) (32) (28) (35) (37) (53) (33) (19) (30) Equipment Acquisition of Intangible Assets (8) (7) (10) (12) (16) (4) (5) (5) (3) (4) (