Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Presentation (November 2014)
30 slides from Gogo's investor presentation, Nov 12, 2014
Slide 1: Investor Presentation November 2014
Exhibit 99.1 November 2014 Investor Presentation
Slide 2: Gogo's Mission
GOGO’S MISSION Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet
Slide 3: Why Invest in Gogo
WHY INVEST IN GOGO Gogo is a leading aero communications service provider for the global aviation industry . Our scale position supports superior unit economics, operational excellence, and industry-leading R&D investments. Gogo is a pure play . We are the only telecom company that focuses solely on
Slide 4: Industry Leading Scale
INDUSTRY LEADING SCALE Market Position (1) CA–NA CA–ROW BA ATG # 1 # 3 # 1 Market Share (1) 71% 4% 87% Gogo Installed Aircraft 2,044 2,637 2,500+ 2,637 Total Awarded Aircraft (2) BA Satellite (Iridium) # 1 63% 5,294 5,294 (1) Market share is as of 9/30/2014 and based on following: CA-NA – based on p
Slide 5: Largest Market Share in CA North America
LARGEST MARKET SHARE IN CA NORTH AMERICA Aircraft Online as of September 30, 2014 (1) Based on management estimates, trade publications and other public sources as of 9/30/2014. 2,044 Gogo Global Eagle LiveTV Panasonic (1) (1) (1) 71% of connected aircraft >4x the closest competitor
Slide 6: The International Market Is Large & Untapped
13% 79% THE INTERNATIONAL MARKET IS LARGE & UNTAPPED (1) Based on Boeing Current Market Outlook 2013 (2) Based on management estimates as of 9/30/2014 Total Aircraft ~4,000 ~13,000 Uncommitted 13% 79% Committed to IFC 87% 21% North America Rest of World (1) (2) …and growing at 2x the rate of the Nor
Slide 7: Valuable Long-Term Partnerships
NORTH AMERICA COMMERCIAL AVIATION BUSINESS AVIATION ORIGINAL EQUIPMENT MANUFACTURER INTERNATIONAL FRACTIONAL JET OPERATORS VALUABLE LONG-TERM PARTNERSHIPS (1) (1) Letter of Intent (1) Subsidiary of
Slide 8: Our Versatile, Proprietary Platform Engages Every Passenger, Aircraft Owner & Operator
AIRCRAFT OWNERS & OPERATORS PASSENGERS, AIRLINES & MEDIA PARTNERS Gogo Connectivity & Gogo Biz Gogo Vision Gogo Text & Talk Gogo Signature Services Operations-Oriented Communication Services PASENGERS OUR VERSATILE, PROPRIETARY PLATFORM ENGAGES EVERY PASSENGER, AIRCRAFT OWNER & OPERATOR
Slide 9: Large Market of Global Aircraft to Connect
LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT (1) Includes 36,000 aircraft for CA in 2033 and 37,000 aircraft for BA in 2023. Sources: Boeing Current Market Outlook – 2032, excludes: cargo aircraft JetNet iQ Report Q1 2014; General Aviation Manufacturers Association Statistical Databook; excludes rest
Slide 10: Why We Win
Specialize in aviation Superior technology and roadmap End-to-end service provider Deliver excellent reliability Flexible business model 1 2 3 4 5 WHY WE WIN Specialize in aviation Superior technology and roadmap End-to-end service provider Deliver excellent reliability Flexible business model
Slide 11: Specialized End-to-End Service Provider
AIRCRAFT OPERATIONS REGULATORY APPROVAL NETWORK & BANDWIDTH MANAGEMENT CUSTOMER CARE & MARKETING SUPPORT NETWORK ENGINEERING & DESIGN AIRCRAFT CONNECTIVITY SOLUTIONS ENGINEERING AIRLINE CONNECTIVITY PRODUCTS & SERVICES DEVELOPMENT COMPLETE BACK-OFFICE INFRASTRUCTURE AND SUPPORT SPECIALIZED END-TO-EN
Slide 12: Superior Technology and Roadmap
Technology Region Peak Speed Key Attributes Global Eagle SUPERIOR TECHNOLOGY AND ROADMAP Iridium Global 2.4 Kbps - Primarily telecom service - Low data speeds - Satellite SwiftBroadband Global 432 Kbps - Low data speeds - Satellite Air-to-Ground (EvDo Rev A) Regional 3.1 Mbps - Overnight install - S
Slide 13: Recent Developments – Extending Our Technology Lead
RECENT DEVELOPMENTS – EXTENDING OUR TECHNOLOGY LEAD Revolutionary 2Ku and GTO connectivity systems announced Strong results from ATG-4 upgrade program Operationalized International: network, STCs, aircraft online Boeing line-fit program progressing well Launched Delta Studio with Delta Air Lines pow
Slide 14: Deliver Excellent Reliability
DELIVER EXCELLENT RELIABILITY 65+ million sessions 8,000+ flights per day 98% + ATG End-to-End System Availability
Slide 15: Flexible Business Model
FLEXIBLE BUSINESS MODEL Gogo Per session to the passenger % of revenue, paid by Gogo to airline Included Airline Per megabyte & per aircraft to the airline No revenue share between parties Charged per service to airline TURNKEY MODEL AIRLINE DIRECTED MODEL Passenger Integration Pricing Revenue Share
Slide 16: Formula for Revenue Growth: Revenue = Aircraft x ARPA
TODAY TOMORROW FORMULA FOR REVENUE GROWTH: REVENUE = AIRCRAFT X ARPA North America In-Flight Connectivity Global In-Flight Connectivity Wireless In-Flight Entertainment Text Messaging Operations-Oriented Communications Services INCREASE AIRCRAFT INCREASE ARPA $ Business Passengers All Passengers Adv
Slide 17: Financials
FINANCIALS
Slide 18: Growing Revenue Drives Profitability
73% CAGR $14 $9 $8 $41 $69 $9 GROWING REVENUE DRIVES PROFITABILITY * Please see reconciliation of Adjusted EBITDA in appendix. Note: Minor differences exist due to rounding. Adjusted EBITDA* ($M) $49 $24 CA-ROW Segment Loss Revenue ($M) $79 $37 $95 $160 $234 $328 $392 2014 Q3 LTM ($89) ($45) ($1) 20
Slide 19: Proven Operating Leverage
PROVEN OPERATING LEVERAGE Consolidated COGS Consolidated COGS excl. CA-ROW Consolidated COGS excl. CA-ROW and assuming no change to Rev Share % (1) Cost of Goods Sold (% of revenue) Engineering, Design & Development (% of revenue) General & Administrative (% of revenue) Sales & Marketing (% of reven
Slide 20: Q3 Financial Results
$35 $40 $51 $63 22% Q3 FINANCIAL RESULTS $104 $85 2013 Q3 2014 Q3 Note: Minor differences exist due to rounding. CA-NA BA CA-ROW CA-NA BA CA-ROW Total Revenue ($M) Segment Profit (Loss) ($M) 2013 Q3 2014 Q3 ($2) $15 ($11) $2 $6 $15 ($19) $1
Slide 21: Our Segments Are in Different Phases
OUR SEGMENTS ARE IN DIFFERENT PHASES BA: CA-NA: CA-ROW: Strong revenue growth Strong segment profitability and FCF Strong revenue growth Segment profitability Start-up phase Focusing on signing airlines and investing for growth
Slide 22: BA High-Margin Service Revenue Drives Segment Profitability and Cash Flow
69% CAGR 107% CAGR 54x Increase BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT PROFITABILITY AND CASH FLOW ATG Aircraft Online (1) Note: Minor differences exist due to rounding. Service Revenue ($M) Segment Profit ($M) (1) End of period. 1,455 2,047 2,637 2014 Q3 2014 Q3 2014 Q3 $6 $34 $52 $67 $3 $36
Slide 23: CA North America Aircraft Online and ARPA Drive Revenue Growth
~3x Increase 5x Increase 115% CAGR CA NORTH AMERICA INCREASE IN AIRCRAFT ONLINE AND REVENUE PER AIRCRAFT DRIVE REVENUE GROWTH Aircraft Online (1) ARPA ($ ‘ 000s) Service Revenue ($M) (1) End of period. (2) Annualized Note: Minor differences exist due to rounding. 1,811 2,032 2,044 2014 Q3 $24 $84 $1
Slide 24: CA North America Segment Demonstrates Significant Operating Leverage
CA NORTH AMERICA SEGMENT DEMONSTRATES SIGNIFICANT OPERATING LEVERAGE Assuming constant revenue share % (1) Cost of Goods Sold (% of Revenue) Segment Profit (% of Revenue) Other Operating Expenses Excluding D&A (% of Revenue) Assuming constant revenue share % (1) -30% -9% -1% 7% 16% Q3 LTM 59% 56% 52
Slide 25: CA Rest of World Investment Positions for Future Growth
CA REST OF WORLD INVESTMENT POSITIONS FOR FUTURE GROWTH 2012 – Announced international expansion 2013 – Established global Ku network, began development of industry leading technology solutions 2014 – announced industry leading 2Ku, first Ku equipped aircraft flying, multiple STCs received In-flight
Slide 26: Evolving CapEx Model
N E T W O R K I N S T A L L GOGO RENTS GOGO PAYS AIRLINE PAYS GOGO BUILDS EVOLVING CAPEX MODEL (1) Cash CAPEX represents capital expenditures net of airborne equipment proceeds received from the airlines and incentives paid to us by landlords under certain facilities leases. Gross CapEx Cash CapEx (
Slide 27: Gogo Five Point Strategy
GOGO FIVE POINT STRATEGY TO INCRESE SHAREHOLDER VALUE Gain global share Grow ARPA in CA-NA Evolve technology roadmap to address market needs Accelerate BA growth Deliver consistent execution
Slide 28: Appendix
APPENDIX
Slide 29: Adjusted EBITDA Reconciliation
2009 2010 2011 2012 2013 2013 Q4 2014 Q1 2014 Q2 2014 Q3 ADJUSTED EBITDA RECONCILIATION ($MM) Net Income (142) (140) (18) (96) (146) (22) (17) (19) (25) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense – Income Tax Provision – – – – – Depreciation & Amortization EBITDA (91) (106)
Slide 30: Cash CapEx Reconciliation
2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 CASH CAPEX RECONCILIATION ($MM) Purchases of Property and Equipment (69) (33) (33) (67) (105) (32) (28) (35) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (4) (5) (5) Gross CapEx (77) (40) (43) (79) (121) (36) (33) (41