Gogo Inc. · NASDAQ:GOGO
Gogo — Q4 2016 Earnings Presentation
23 slides from Gogo's earnings presentation, Feb 27, 2017
Slide 1: 4th Quarter 2016 Earnings Results
4th Quarter 2016 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Norman Smagley – Chief Financial Officer February 27, 2017
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: Strong Q4 and 2016 Performance
STRONG Q4 AND 2016 PERFORMANCE 1 Total Revenue ($MM) Adjusted EBITDA ($MM) $160 $23 $138 $21 $22 14% 187% 16% $116 $139 y/y Growth $8 y/y Growth 6% Q4 '15 Q4 '16 Q4 '15 Q4 '16 Adjusted EBTIDA Adjusted EBITDA Margin Service Revenue Equipment Revenue Record quarterly financial results and exceeded ann
Slide 4: Technology Roadmap Brings More Bandwidth at Lower Costs
TECHNOLOGY ROADMAP BRINGS MORE BANDWIDTH AT LOWER COSTS Peak Speed (Mbps) Proprietary 2Ku w/ Spot Non-Proprietary Next gen ATG Beam HTS 100 2Ku 50 Ku Iridium ATG-4 Analog (L-band) ATG JetConnex ATG (Ka-band) Swift Broadband (L-band) 1991 … 1998 … 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 201
Slide 5: Global Satellite Network Strategy
GLOBAL SATELLITE NETWORK STRATEGY Leasing satellite capacity lets us take advantage of industry’s rapid innovations Benefits: lower bandwidth costs, robust capacity and geographic coverage 2Ku open platform lets us take advantage of new satellites without taking aircraft out of service 5 ©2017 Gogo
Slide 6: Over 1,000 2Ku Aircraft Awards in 2016
OVER 1,000 2Ku AIRCRAFT AWARDS IN 2016 1,500+ 500 50 2014 2015 2016 Enough awarded aircraft to achieve profitability in CA-Rest of World and on consolidated basis Focus on Asia and Middle East in 2017 Grow share of aircraft awards through the OEM channel * 2Ku awards include both signed contracts, l
Slide 7: 2Ku and Operations Update
2Ku AND OPERATIONS UPDATE Reduced 2Ku install time down to 3 days, best in industry Increased 2Ku installation guidance Reduced 2Ku system costs and expect further cost reductions Expect 2Ku STCs for all leading airframes by end of 2017 First OEM aftermarket install expected in 2017 ©2017
Slide 8: Q4'16 Strong Financial Performance
Q4’16 STRONG FINANCIAL PERFORMANCE Total Revenue ($MM) $160 $138 $142 $148 $20 $147 $18 $21 16% • Q4’16 revenue up 16% y/y $22 $23 y/y Growth $116 $119 $128 $129 $139 • Service revenue up 20% y/y Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Service Revenue Equipment Revenue Adjusted EBITDA ($MM) • Q4 ’16 Adju
Slide 9: CA-NA – Strong Growth in Revenue & Aircraft Online
CA-NA – STRONG GROWTH IN REVENUE & AIRCRAFT ONLINE Service Revenue ($MM) $90 $89 $95 $83 $83 15% y/y Growth • Service revenue driven largely by Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 increases in aircraft online Aircraft Online (End of Period) 2,596 2,629 2,676 • 47 net aircraft installed in Q4 ’16, 2,3
Slide 10: CA-NA – Robust Segment Profit Growth
CA-NA – ROBUST SEGMENT PROFIT GROWTH Annualized ARPA ($M) • Annualized ARPA of $141K $141 - ~8% y/y ARPA growth adjusting for $139 $138 $134 $134 dilution from additional regional jets and aircraft added by new airline partners Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 • Segment profit up 171% y/y to Segme
Slide 11: CA-ROW Revenue & Aircraft Online Continue Strong Growth
CA-ROW REVENUE & AIRCRAFT ONLINE CONTINUE STRONG GROWTH Total Revenue ($MM) $7.6 $7.4 • Revenue of $7.4 million, up 76% $5.7 76% $4.2 $4.6 y/y Growth from Q4 ’15 - Aircraft online growth of 32% - ARPA growth of 17% Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 • 267 aircraft online, up 65 aircraft y/y Aircraft
Slide 12: Strong CA-ROW ARPA Growth Continues
STRONG CA-ROW ARPA GROWTH CONTINUES Annualized ARPA ($M) $172 • Annualized ARPA grew 17% y/y to $148 17% $172K y/y Growth - Driven by higher airline paid and third party paid usage Q4 '15 Q4 '16 • Segment loss increased to $25 million Segment Loss ($MM) - Driven by higher ED&D expenses related to 2K
Slide 13: Strong Growth in BA Service Revenue
STRONG GROWTH IN BA SERVICE REVENUE Service Revenue ($MM) 68% 71% 61% 66% 58% $36.4 $30.7 $32.4 $33.3 28% • Service revenue increased 28% y/y $28.5 y/y Growth to $36 million • ATG aircraft online increased 20% Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Service Revenue Service Revenue as a % of Total BA Reve
Slide 14: Service Revenue Drives Strong Segment Margin Growth
SERVICE REVENUE DRIVES STRONG SEGMENT MARGIN GROWTH Total Revenue ($MM) $49.6 $50.1 $49.1 $48.9 $51.5 • BA equipment revenue decreased $15.1 $21.1 $19.4 $16.7 $15.6 4% to $15 million y/y Growth - Driven by deferral of 4G revenue that will $28.5 $30.7 $32.4 $33.3 $36.4 be recognized starting in secon
Slide 15: Consolidated Cash CapEx
CONSOLIDATED CASH CAPEX Cash CapEx ($MM) • Q4 ’16 y/y changes in Cash CAPEX $40 - Due primarily to increased airborne $36 $34 equipment purchases to support 2Ku installs $24 $20MM y/y Increase $13 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Note: Minor differences exist due to rounding. Note: Cash CAPEX is a
Slide 16: 2016 Full Year Highlights
2016 FULL YEAR HIGHLIGHTS Revenue grew 19% to $597 million Adj. EBITDA grew 83% to $67 million Exceeded 2016 financial guidance Strengthened balance sheet ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 16
Slide 17: Guidance
GUIDANCE 2017 Total revenue between $670-$695 million, y/y growth of 12-17% • CA-NA revenue $405-$425 million • CA-ROW revenue of $40-$50 million • BA revenue $220-$230 million 1 2017 Adjusted EBITDA between $60-$75 million • Includes $50 million of expense for tech development in NA and launch
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Gogo Installed and Awarded Aircraft as of 12/31/2016
GOGO INSTALLED AND AWARDED AIRCRAFT AS OF 12/31/2016 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 898 - 898 ATG-4 Aircraft Online 1,719 - 1,719 Ku Aircraft Online - 259 259 2Ku Aircraft Online 59 8 67 Total Aircraft Online 2,676 267 2,943 2Ku Aircraft Installed & Awarded But Not Yet Instal
Slide 21: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2015 2015 2015 2015 2016 2016 2016 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Net Income (20) (25) (29) (34) (24) (40) (33) (27) Interest Income (0) (0) (0) (0) (0) (0) (1) (1) Interest Expense 10 16 17 16 16 18 25 25 Depreciation & Amortization 19 21 22 25 24 25 27 30 EBITDA
Slide 22: Cash CapEx Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2015 2015 2015 2015 2016 2016 2016 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Purchases of Property and Equipment (53) (33) (19) (30) (31) (40) (36) (41) Acquisition of Intangible Assets (Capitalized (4) (4) (4) (5) (6) (8) (8) (7) Software) Consolidated Capital Expenditures (57) (
Slide 23: Cash CapEx Guidance Reconciliation ($MM)
CASH CAPEX GUIDANCE RECONCILIATION ($MM) For the year ending 2017 Low High Consolidated capital expenditures (GAAP) (290) (330) Deferred airborne lease incentives 60 70 Cash CAPEX (230) (260) For the year ending 2018 Low High Consolidated capital expenditures (GAAP) (110) (170) Deferred airborne lea