Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Presentation (December 2014)
31 slides from Gogo's investor presentation, Dec 8, 2014
Slide 1: December 2014 Investor Presentation
December 2014 Investor Presentation Michael Small President and CEO
Slide 2: Disclaimer: Safe Harbor Statement
2 DISCLAIMER Safe Harbor Statement This presentation contains “forward-looking statements” that are based on management’s beliefs and assumptions and on information currently available to management. Most forward-looking statements contain words that identify them as forward-looking, such as “antici
Slide 3: Gogo's Mission
3 GOGO’S MISSION Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet
Slide 4: Why Invest in Gogo
WHY INVEST IN GOGO Gogo is a leading aero communications service provider for the global aviation industry. LARGE GROWTH OPPORTUNITY HIGH BARRIERS TO ENTRY EXPERIENCE & SCALE LEADING POSITION 4 ATTRACTIVE ECONOMICS
Slide 5: Billion Things Are Getting Connected
5 50 BILLION THINGS ARE GETTING CONNECTED(1) Monitoring to detect dangerous patterns in land conditions. Detection of rubbish levels to optimize trash collection routes. Patient biometrics sent directly to doctors. Tractors feed data back to the manufacturer. Radios embedded in protected trees track
Slide 6: Connectivity Transforms Aviation
6 CONNECTIVITY TRANSFORMS AVIATION Airline connectivity Passenger inflight connectivity and wireless entertainment Cabin crew connectivity(1) Cockpit connectivity(1) Remote Diagnostics(1) (1) Gogo currently provides cabin crew connectivity to certain airline partners. Gogo expects to offer cockpit c
Slide 7: Passenger Connectivity Is Only the Starting Point
7 PASSENGER CONNECTIVITY IS ONLY THE STARTING POINT (CHART) 43% CAGR $50 $25 $75 $100 $125 $1 Million Passenger Connectivity Passenger Entertainment 2015+ Average service revenue per aircraft online (“ARPA”). We define ARPA as the aggregate service revenue for the period divided by the number of mon
Slide 8: Large Market of Global Aircraft to Connect
LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT. (CHART) (1) Based on management estimates, trade publications and other public sources of broadband connected aircraft as of 9/30/2014. Commercial Aviation North America (CHART) (CHART) Business Aviation North America Commercial Aviation Rest of World 8 (1
Slide 9: Market & Company Overview
MARKET & COMPANY OVERVIEW
Slide 10: Connected Aircraft Is a Large Growth Opportunity
CONNECTED AIRCRAFT IS A LARGE GROWTH OPPORTUNITY Commercial Aviation(1) Business Aviation(2) Aircraft 17,000 Amount Spent in 2013 ($B) $710 27,000 $23 (1) Commercial Aviation spend is based on air transport spend as reported by IATA in the mid-year 2014 report titled “Airline Industry Economic Perfo
Slide 11: Connecting Aircraft Is More Valuable Than You Think
CONNECTING AIRCRAFT IS MORE VALUABLE THAN YOU THINK (1) Industry estimates were derived by taking the amount spent to provide connectivity to a home or automobile as a percentage of the average value of the asset. This analogue in conjunction with an assumed $100M asset value for a commercial aircra
Slide 12: Gogo's Large Install Base Is a Significant Competitive Advantage
12 GOGO’S LARGE INSTALL BASE IS A SIGNIFICANT COMPETITIVE ADVANTAGE CA-NA Aircraft Online CA-ROW Aircraft Online BA—Broadband Aircraft Online BA—Satellite Aircraft Online(1) 2,044 35 2,637 5,322 Gogo Touches Over 20% Of The World’s Aircraft (1) Satellite Aircraft Online includes 5,294 Iridium and 28
Slide 13: Strong Execution
13 STRONG EXECUTION (CHART) Service Revenue ($MM) Note: Minor differences exist due to rounding. (CHART) Total Revenue ($MM) (CHART) Adjusted EBITDA(1) ($MM) 100% CAGR 73% CAGR $79 (1) Please see reconciliation of Adjusted EBITDA in appendix.
Slide 14: Industry Track Record in Winning Aircraft
14 INDUSTRY TRACK RECORD IN WINNING AIRCRAFT (1) Based on management estimates, trade publications and other public sources as of 11/30/14. (2) Based on management estimates, trade publications and other public sources as of 9/30/14. ITG Gogo won 52%(1) of all commercial aircraft awarded in 2014: Go
Slide 15: Why We Win
15 Why we win Specialize in global aviation Superior technology and roadmap End-to-end service provider Deliver excellent reliability 1 2 3 4
Slide 16: We Specialize in Aircraft and Are Far Ahead of the Competition
16 1. WE SPECIALIZE IN AIRCRAFT. AND ARE FAR AHEAD OF THE COMPETITION Telecommunications Aviation Internet CA—NA Aircraft Online Gogo Has Required Skill Set For Connected Aircraft (CHART) (1) Data based on publicly available information as of 9/30/14. Competitors include Panasonic, Global Eagle Ente
Slide 17: End-to-End Service Provider
17 2. END-TO-END SERVICE PROVIDER AIRCRAFT OPERATIONS REGULATORY APPROVAL NETWORK & BANDWIDTH MANAGEMENT CUSTOMER CARE & MARKETING SUPPORT NETWORK ENGINEERING & DESIGN AIRCRAFT CONNECTIVITY SOLUTIONS ENGINEERING COMPLETE BACK-OFFICE INFRASTRUCTURE AND SUPPORT AIRLINE CONNECTIVITY PRODUCTS & SERVICES
Slide 18: Superior Technology and Roadmap
18 3. SUPERIOR TECHNOLOGY AND ROADMAP Technology Region Peak Speed Key Attributes Iridium Global 2.4 Kbps Primarily telecom service Low data speeds- Satellite ? SwiftBroadband Global 432 Kbps Low data speeds Satellite ? ? ? ATG / ATG 4 Regional 3.1 / 9.8 Mbps—Overnight install- Suits all aircraft ty
Slide 19: Gogo Delivers Excellent Reliability
19 65+ million sessions 8,000+ flights per day 98% + ATG End-to-End System Availability 4. GOGO DELIVERS EXCELLENT RELIABILITY
Slide 20: Gogo Four Point Strategy to Increase Shareholder Value
20 GOGO FOUR POINT STRATEGY TO INCREASE SHAREHOLDER VALUE Gain global share Grow ARPA Increase bandwidth to aircraft Deliver consistent execution 1 2 3 4
Slide 21: Why Invest in Gogo
WHY INVEST IN GOGO 21 LARGE GROWTH OPPORTUNITY HIGH BARRIERS TO ENTRY EXPERIENCE & SCALE LEADING POSITION ATTRACTIVE ECONOMICS
Slide 22: Q&A
22 Q&A
Slide 23: Appendix
APPENDIX
Slide 24: Growing Revenue Drives Profitability
24 GROWING REVENUE DRIVES PROFITABILITY (1) Please see reconciliation of Adjusted EBITDA in appendix. Note: Minor differences exist due to rounding. Adjusted EBITDA (1) ($MM) (CHART) (CHART) $49 $24 CA-ROW Segment Loss Revenue ($MM) 73% CAGR(1) $79 Adjusted EBITDA
Slide 25: Our Segments Are in Different Phases
25 OUR SEGMENTS ARE IN DIFFERENT PHASES 1. BA: Strong revenue growth Strong segment profitability and FCF 2. CA-NA: Strong revenue growth Segment profitability 3. CA-ROW: Start-up phase Focusing on signing airlines and investing for growth (CHART) BA Segment Profit Margin (% of Revenue) (CHART) CA-N
Slide 26: BA High-Margin Service Revenue Drives Segment Profitability and Cash Flow
26 1. BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT PROFITABILITY AND CASH FLOW (CHART) ATG Aircraft Online (1) Note: Minor differences exist due to rounding. (CHART) Service Revenue ($MM) (CHART) Segment Profit ($MM) (1) End of period. 54x Increase 107% CAGR 69% CAGR
Slide 27: CA-NA Service Revenue Growth
(CHART) 27 2. CA-NA SERVICE REVENUE GROWTH (CHART) Aircraft Online(1) ~3x Increase ARPA ($ ‘000s) (CHART) Service Revenue ($MM) ~5x Increase 115% CAGR (1) End of period. (2) Annualized. Note: Minor differences exist due to rounding. (2)
Slide 28: CA Rest of World Investment Positions Gogo for Future Growth
28 3. CA REST OF WORLD INVESTMENT POSITIONS GOGO FOR FUTURE GROWTH Global Satellite Network established All Delta & Japan Airline STCs obtained International service operationalized Low profile, high spectral efficiency 2Ku antenna introduced (CHART) Subsidiary of (1) (1) (1) Letter of Intent (CHART
Slide 29: Evolving CapEx Model
29 EVOLVING CAPEX MODEL (1) Cash CAPEX represents capital expenditures net of airborne equipment proceeds received from the airlines and incentives paid to us by landlords under certain facilities leases. Gross CapEx Cash CapEx (1) (CHART) Capital Expenditures ($MM) ATG4 retrofit expense will declin
Slide 30: Adjusted EBITDA Reconciliation
30 ADJUSTED EBITDA RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2013 Q4 2014 Q1 2014 Q2 2014 Q3 Net Income (142) (140) (18) (96) (146) (22) (17) (19) (25) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 7 9 Income Tax Provision – 3 1 1 1 – – – – Depreciation & A
Slide 31: Cash CapEx Reconciliation
31 CASH CAPEX RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2013Q4 2014 Q1 2014 Q2 2014 Q3 Purchases of Property and Equipment (69) (33) (33) (67) (105) (22) (32) (28) (35) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (5) (4) (5) (5) Gross CapEx (77) (40) (43) (79)