Gogo Inc. · NASDAQ:GOGO
Gogo — Q3 2016 Earnings Presentation
21 slides from Gogo's earnings presentation, Nov 3, 2016
Slide 1: 3rd Quarter 2016 Earnings Results
3rd Quarter 2016 Earnings Results Michael Small – Chief Executive Officer Norman Smagley – Chief Financial Officer November 3, 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: Strong Q3 Performance
STRONG Q3 PERFORMANCE Total Revenue ($MM) 2Ku’s momentum strong with $147 $126 1,500+ awarded aircraft $18 $19 17% $107 $129 Y/Y Growth Expect cash CAPEX to decline in 2019 both in aggregate dollars and Q3 '15 Q3 '16 as a percentage of revenue Service Revenue Equipment Revenue 1 Adjusted EBITDA ($MM
Slide 4: 2Ku Update
2Ku UPDATE Analyst Day Sept 29 Today Increase Awarded 1,300+ 1,500+ 1 2Ku Aircraft 2 Obtain 30+ STCs by 8 10 end of 2017 3 Install Awarded 14 47 2Ku Aircraft Reduce Days to 8 3.5 4 Install 2Ku ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 4
Slide 5: Business Aviation Progress
BUSINESS AVIATION PROGRESS Large Jets Medium Jets Light Jets Turboprops * ~3,000 Aircraft* ~4,000 Aircraft ~5,000 Aircraft * ~8,500 Aircraft* • 4G service expected to launch in first half of 2017 • Selling 4G equipment today • Announced partnerships to secure 4G STCs + Bandwidth Applications + + Ban
Slide 6: Next Gen ATG Proprietary Technology Expected to Launch in 2018
NEXT GEN ATG PROPRIETARY TECHNOLOGY EXPECTED TO LAUNCH IN 2018 Low Cost Solution Market & Deployment Performance Low ~9,000 1 100+ Mbps Network & aircraft Business jets, RJ’s and investment High select mainline aircraft Reliability Leverage Overnight Existing ATG infrastructure: Low Installation Lat
Slide 7: Q3'16 Revenue & Adjusted EBITDA Maintains Strong Growth
Q3’16 REVENUE & ADJUSTED EBITDA MAINTAINS STRONG GROWTH Total Revenue ($MM) $148 $126 $138 $142 $20 $147 $18 17% • Q3’16 revenue up 17% Y/Y $19 $22 $23 Y/Y Growth $107 $116 $119 $128 $129 • Service revenue up 20% Y/Y Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Service Revenue Equipment Revenue Adjusted EBITD
Slide 8: CA-NA – Strong Growth in Revenue & Aircraft Online
CA-NA – STRONG GROWTH IN REVENUE & AIRCRAFT ONLINE Service Revenue ($MM) • Service revenue driven largely by $90 $89 increases in aircraft online $83 $83 $78 14% - 33 net aircraft installed in Q3 ’16 Y/Y Growth • 2,629 aircraft online as of 9/30/2016 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 • ~800 aircraf
Slide 9: CA-NA – Consistent Performance Preparing for 2Ku Deployment
CA-NA – CONSISTENT PERFORMANCE PREPARING FOR 2KU DEPLOYMENT Annualized ARPA ($M) • Annualized ARPA of $134K: - ~8% y/y growth in ARPA excluding $139 $138 $135 $134 $134 aircraft added since the beginning of 2015, primarily regional jets and aircraft with new airline partners Q3 '15 Q4 '15 Q1 '16 Q2
Slide 10: CA-ROW Revenue Doubles While Awarded Aircraft Total Expands
CA-ROW REVENUE DOUBLES WHILE AWARDED AIRCRAFT TOTAL EXPANDS Total Revenue ($MM) $7.6 $5.7 • Revenue of $7.6 million, double from 110% $4.2 $4.6 Y/Y Growth Q3 ’15 $3.6 - Aircraft online growth of 60% - ARPA growth of 22% Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 • 256 aircraft online, up 96 Y/Y Aircraft Onl
Slide 11: Strong CA-ROW ARPA Growth Continues
STRONG CA-ROW ARPA GROWTH CONTINUES Annualized ARPA ($M) $174 • Annualized ARPA grew 22% Y/Y to $143 22% $174K: Y/Y Growth - JAL program demonstrates significant ARPA opportunity from multi-payer model Q3 '15 Q3 '16 • Segment loss flat at $20 million despite continued investment in 2Ku Segment Loss
Slide 12: Strong Growth in BA Service Revenue
STRONG GROWTH IN BA SERVICE REVENUE Service Revenue ($MM) 68% 58% 66% 59% 61% $32.4 $33.3 $28.5 $30.7 28% Y/Y Growth • Service revenue increased 28% $26.0 Y/Y to $33 million Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Service Revenue Service Revenue as a % of Total BA Revenue • BA equipment revenue decreased
Slide 13: Increased ATG Aircraft Online & Service ARPU Drive Strong Segment Margin Growth
INCREASED ATG AIRCRAFT ONLINE & SERVICE ARPU DRIVE STRONG SEGMENT MARGIN GROWTH ATG Aircraft Online (End of Period) 3,974 • ATG aircraft online increased 20% 3,681 3,795 3,477 20% Y/Y, to nearly 4,000 3,314 Y/Y Growth • ATG Service ARPU increased 9% * Y/Y, to over $2,500 per month Q3 '15 Q4 '15 Q1 '
Slide 14: Consolidated Cash Capex
CONSOLIDATED CASH CAPEX Cash CapEx ($MM) • Q3 ’16 Y/Y changes in Cash CAPEX: $40 - Due primarily to increased 2Ku equipment $36 purchases $24 $24MM Y/Y Increase $12 $13 Q3 '15 Q4 '15 Q1 '16 Q2 '16 Q3 '16 Note: Minor differences exist due to rounding. Note: Cash CAPEX is a non-GAAP measure. See Appen
Slide 15: 2016 Outlook
2016 OUTLOOK • Revenue above midpoint of guidance range of $575-$595 million • Adjusted EBITDA between $55-$65 million 1 • Cash CAPEX at top end of guidance range 2 of $110-$135 million Strong progress on path to profitability (1) Adjusted EBITDA is a non-GAAP measure. We are not able to provide a r
Slide 16: Q&A
Q&A
Slide 17: Appendix
Appendix
Slide 18: Gogo Installed and Awarded Aircraft as of 9/30/2016
GOGO INSTALLED AND AWARDED AIRCRAFT AS OF 9/30/2016 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 1,102 - 1,102 ATG-4 Aircraft Online 1,513 - 1,513 Ku Aircraft Online - 255 255 2Ku Aircraft Online 14 1 15 Total Aircraft Online 2,629 256 2,885 Awarded But Not Yet Installed Aircraft1 CA-NA CA
Slide 19: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2015 Q1 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 2016 Q3 Net Income (20) (25) (29) (34) (24) (40) (33) Interest Income (0) (0) (0) (0) (0) (0) (1) Interest Expense 10 16 17 16 16 18 25 Income Tax Provision – – – – – – – Depreciation & Amortization 19 21 22 25 24 2
Slide 20: Cash Capex Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2015 2015 2015 2015 2016 2016 2016 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Purchases of Property and Equipment (53) (33) (19) (30) (31) (40) (36) Acquisition of Intangible Assets (Capitalized Software) (4) (4) (4) (5) (6) (8) (8) Consolidated Capital Expenditures (57) (37) (24) (35) (37
Slide 21: Cash Capex Guidance Reconciliation ($MM)
CASH CAPEX GUIDANCE RECONCILIATION ($MM) For the year ending 2016 Low High Consolidated capital expenditures (GAAP) (150) (185) Deferred airborne lease incentives 40 50 Cash CAPEX (110) (135) ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 21