Gogo Inc. · NASDAQ:GOGO
Gogo — Non-Deal Roadshow (August 2014)
31 slides from Gogo's roadshow presentation, Aug 11, 2014
Slide 1: Roadshow Presentation
Roadshow Presentation August 2014 Exhibit 99.1
Slide 2: Safe Harbor Statement
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 “anticipates,” “beli
Slide 3: Gogo's Mission
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. 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 5: Industry Leading Scale
INDUSTRY LEADING SCALE (1) Market position is as of 6/30/2014 and based on following: CA-NA – based on publicly available information as of 6/30/14 for Panasonic, Thales / LiveTV, Global Eagle Entertainment, and ViaSat; CA-ROW – based on backlog of awarded aircraft that may include aircraft that fly
Slide 6: Largest Market Share in CA North America
LARGEST MARKET SHARE IN CA NORTH AMERICA 73% of connected aircraft >4x the closest competitor Aircraft Online as of June 30, 2014 (1) 1) Based on management estimates, trade publications and other public sources as of 6/30/2014.
Slide 7: The International Market Is Large & Untapped
15% 81% THE INTERNATIONAL MARKET IS LARGE & UNTAPPED …AND GROWING AT 2X THE RATE OF THE NORTH AMERICAN MARKET 1. Based on Boeing Current Market Outlook 2013 2. Based on management estimates as of 6/30/2014 Total Aircraft ~4,000 ~13,000 Uncommitted 15% 81% Committed to IFC 85% 19% North America Rest
Slide 8: Valuable Long-Term Partnerships
International North America Original Equipment Manufacturers Fractional Jet Operators COMMERCIAL AVIATION BUSINESS AVIATION VALUABLE LONG-TERM PARTNERSHIPS Subsidiary of (1) (1) Letter of Intent (1)
Slide 9: Our Versatile, Proprietary Platform Engages Every Passenger, Aircraft Owner & Operator
Gogo Vision Gogo Signature Services Operations-Oriented Communication Services Gogo Connectivity & Gogo Biz AIRCRAFT OWNERS & OPERATORS PASSENGERS, AIRLINES & MEDIA PARTNERS PASSENGERS Gogo Text & Talk OUR VERSATILE, PROPRIETARY PLATFORM ENGAGES EVERY PASSENGER, AIRCRAFT OWNER & OPERATOR
Slide 10: 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 2013 – 2032, excludes: cargo aircraft JetNet iQ Report Q1 2014; General Aviation Manufacturers Association 2012 Statistical Databook; exclu
Slide 11: Why We Win
WHY WE WIN Specialize in aviation End-to-end service provider Superior technology and roadmap Deliver excellent reliability Flexible business model
Slide 12: Specialized 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 DEVELOPMENT SPECIALIZED END-TO-EN
Slide 13: Superior Technology and Roadmap
Technology Region Peak Speed Key Attributes 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 - Suits all airc
Slide 14: 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 Global Ku satellite network established, Ku aircraft flying 7 Ku STC’s obtained, more underway Boeing line-fit program underway Launched Delta Studio
Slide 15: Slide 15
Slide 16: Flexible Business Model
Gogo Per session to the passenger % of revenue, paid by Gogo to airline Included Airline Per megabyte to the airline No revenue share between parties Charged per service to airline TURNKEY MODEL AIRLINE DIRECTED MODEL Passenger Interaction Pricing Revenue Share Back-end Services FLEXIBLE BUSINESS MO
Slide 17: 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 Gogo Vision Gogo Text Messaging Gogo Operations-Oriented Communications Services INCREASE AIRCRAFT INCREASE ARPA $ Business Passengers All Passengers Advertising, e
Slide 18: Financials
FINANCIALS
Slide 19: Growing Revenue Drives Profitability
73% CAGR Adjusted EBITDA* ($M) GROWING REVENUE DRIVES PROFITABILITY $49 $24 CA-ROW Segment Loss Revenue ($M) * Please see reconciliation of Adjusted EBITDA in appendix. $71 Note: Minor differences exist due to rounding.
Slide 20: Proven Operating Leverage
Consolidated COGS Consolidated COGS excl. CA-ROW Consolidated COGS excl. CA-ROW and assuming no change to Rev Share % (1) PROVEN OPERATING LEVERAGE Cost of Goods Sold (% of revenue) Engineering, Design & Development (% of revenue) General & Administrative (% of revenue) Sales & Marketing (% of reven
Slide 21: Q2 Financial Results Demonstrate Scaleability
25% Q2 FINANCIAL RESULTS DEMONSTRATE SCALEABILITY $100 $79 2013 Q2 2014 Q2 Note: Minor differences exist due to rounding. CA-NA BA CA-ROW CA-NA BA CA-ROW Total Revenue ($M) Segment Profit ($M)
Slide 22: Our Segments Are in Different Phases
OUR SEGMENTS ARE IN DIFFERENT PHASES Strong revenue growth Strong segment profitability and FCF Strong revenue growth Segment profitability Start-up phase Focusing on signing airlines and investing for growth BA: CA-NA: CA-ROW:
Slide 23: BA High-Margin Service Revenue Drives Segment Profitability and Cash Flow
49x Increase 107% CAGR 69% CAGR BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT PROFITABILITY AND CASH FLOW ATG Aircraft Online (1) Note: Minor differences exist due to rounding. Service Revenue ($M) Segment Profit ($M) (1) End of period.
Slide 24: CA North America Aircraft Online and Revenue per Aircraft Drive Revenue Growth
~3x Increase ~5x Increase 107% CAGR CA NORTH AMERICA INCREASE IN AIRCRAFT ONLINE AND REVENUE PER AIRCRAFT DRIVE REVENUE GROWTH Aircraft Online (1) Note: Minor differences exist due to rounding. Annualized ARPA ($ ‘000s) Revenue ($M) (1) End of period.
Slide 25: CA North America Segment Demonstrates Significant Operating Leverage
Assuming constant revenue share % (1) CA NORTH AMERICA SEGMENT DEMONSTRATES SIGNIFICANT OPERATING LEVERAGE Cost of Goods Sold (% of Revenue) Segment Profit (% of Revenue) Other Operating Expenses Excluding D&A (% of Revenue) Assuming constant revenue share % (1) (1) Revenue share percentage earned b
Slide 26: CA Rest of World Investment Positions for Future Growth
2012 – Announced international expansion 2013 – Established global Ku network, began development of industry leading technology solutions 2014 – announced industry leading 2Ku, first Ku equipped aircraft flying, multiple STCs received In-flight connectivity service launched on Delta & Japan Airlines
Slide 27: Evolving CapEx Model
N E T W O R K I N S T A L L GOGO RENTS GOGO PAYS AIRLINE PAYS GOGO BUILDS EVOLVING CAPEX MODEL (1) Cash CAPEX represents capital expenditures net of airborne equipment proceeds received from the airlines. Gross CapEx Cash CapEx (1) TRANSITION Capital Expenditures ($M)
Slide 28: Gogo Five Point Strategy
GOGO FIVE POINT STRATEGY TO INCREASE SHAREHOLDER VALUE Gain global share Grow ARPA in CA-NA Evolve technology roadmap to address market needs Accelerate BA growth Deliver consistent execution
Slide 29: Appendix
APPENDIX 2014 GOGO INC. AND AFFILIATES. PROPRIETARY & CONFIDENTIAL.
Slide 30: Reconciliation of Adjusted EBITDA ($MM)
2009 2010 2011 2012 2013 2014 Q1 2014 Q2 RECONCILIATION OF ADJUSTED EBITDA ($MM) Note: Minor differences exist due to rounding Net Income (142) (140) (18) (96) (146) (17) (19) Interest Income (0) (0) (0) (0) (0) (0) (0) Interest Expense – Income Tax Provision – Depreciation & Amortization EBITDA (91
Slide 31: Reconciliation of Cash CapEx ($MM)
2009 2010 2011 2012 2013 2014 Q1 2014 Q2 RECONCILIATION OF CASH CAPEX ($MM) Purchases of Property and Equipment (69) (33) (33) (67) (105) (32) (28) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (4) (5) Gross CapEx (77) (40) (43) (79) (121) (36) (33) Change in Deferre