Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Day (December 2017)
129 slides from Gogo's investor day presentation, Dec 11, 2017
Slide 1: Gogo Investor & Analyst Day November 17, 2017
Gogo Investor & Analyst Day November 17, 2017 Exhibit 99.1
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: Key topics for the day
Key topics for the day Building the Inflight Internet Most aviation bandwidth, at the lowest cost, to the most geographies Jon Cobin, EVP & CCO Enabling the Connected Airline Winning aircraft and growing ARPA by providing more customer value John Wade, EVP & COO Scaling Our Operations Globally Meeti
Slide 4: Gogo and the Future of Inflight Internet
Gogo and the Future of Inflight Internet Michael Small, CEO
Slide 5: Inflight is the new frontier for the internet
Inflight is the new frontier for the internet Flight 156 Route 156 With ~30,000 more CA & BA aircraft to install
Slide 6: Performance everywhere
Performance everywhere 98 % + Service availability 15 Mbps + per passenger 98 Coverage of commercial flight hours % + Everywhere aircraft fly A ground-like experience
Slide 7: 2Ku offers superior performance everywhere
2Ku offers superior performance everywhere Regional Ka Global Ka Global Ku Gogo Competitive Networks 1 As of Q3 2017, where Hub City represents capacity Gogo has access to Competitive network information based on Gogo management estimates and public filings of competitors
Slide 8: 2Ku offers superior performance everywhere
2Ku offers superior performance everywhere Architecture Open Closed Closed Open Satellites 20+ 3 4 20+ Regional Ka Global Ka Global Ku Gogo Competitive Networks 1 As of Q3 2017, where Hub City represents capacity Gogo has access to. Competitive network information based on Gogo management estimates
Slide 9: 2Ku offers superior performance everywhere
2Ku offers superior performance everywhere Architecture Open Closed Closed Open Satellites 20+ 3 4 20+ Hub City Capacity 10-20 Gbps 1-10 Gbps 0.05-0.1 Gbps 5-10 Gbps Regional Ka Global Ka Global Ku Gogo Competitive Networks 1 As of Q3 2017, where Hub City represents capacity Gogo has access to Compe
Slide 10: 2Ku offers superior performance everywhere
2Ku offers superior performance everywhere Architecture Open Closed Closed Open Satellites 20+ 3 4 20+ Hub City Capacity 10-20 Gbps 1-10 Gbps 0.05-0.1 Gbps 5-10 Gbps Antenna 2Ku Gimballed Gimballed Gimballed Regional Ka Global Ka Global Ku Gogo Competitive Networks 1 As of Q3 2017, where Hub City re
Slide 11: 2Ku offers superior performance everywhere
2Ku offers superior performance everywhere Architecture Open Closed Closed Open Satellites 20+ 3 4 20+ Hub City Capacity 10-20 Gbps 1-10 Gbps 0.05-0.1 Gbps 5-10 Gbps Antenna 2Ku Gimballed Gimballed Gimballed Redundancy Yes No No Yes Regional Ka Global Ka Global Ku Gogo Competitive Networks 1 As of Q
Slide 12: Gogo's evolution
Gogo’s evolution Where we are going Most bandwidth For everyone B2B Success-based investments Where we were Slow and expensive Constrained take rate B2C Core investments
Slide 13: From Slo-Go to Gogo, happening fast
From Slo-Go to Gogo, happening fast Percentage of Aircraft Online by Technology Satellite 50-100+ Mbps ATG-4 10 Mbps ATG 3 Mbps 2016A 2017E 2018E Nearly 50% of CA aircraft will be 50-100 Mbps by end of 2018 Significant increase in speed Weighted-average peak speed 100+ Mbps
Slide 14: Multiple drivers of substantial bandwidth growth
Multiple drivers of substantial bandwidth growth Drivers in 2018 2Ku High Throughput Satellites Modem ATG-NG Aircraft Moving quickly from terabytes to petabytes Online Online SOURCE: historical and as of 9/30/17 LTM 14
Slide 15: Bandwidth fuels growth
Bandwidth fuels growth Total Bandwidth Curve Gogo U.S. Wireless Customer Engagement U.S. Wireless Industry: >100% Gogo: 7% 3 Years SOURCE: Cellular Telecommunications Industry Association (CTIA) 000s terabytes terabytes
Slide 16: Growth = Aircraft x ARPA
Growth = Aircraft x ARPA Q3 2017 Aircraft Type Aircraft Online Annualized ARPA Business Jets 4,567 $34K Regional Jets 1,068 $64K Mainline – NA 1,749 $174K ROW 352 $226K 1 BA excludes Satellite aircraft 16
Slide 17: Gogo's comprehensive Portfolio is why we win
Gogo’s comprehensive Portfolio is why we win Hardware Software Gogo Inflight System Gogo Inflight Network ATG SatCom Ground Gogo Support Gogo Inflight Services Connected Aircraft Passenger Account Operations Data
Slide 18: Core Investments
Core Investments Focus and scale driving superior cost structure The lowest cost per MB served Multi-provider satellite strategy Higher utilization Higher efficiency Unique ATG network in NA Network Non-network And lowest cost per aircraft served Most planes Most planes per airline Established and o
Slide 19: BA capitalizes on core investments
BA capitalizes on core investments Common Core Investments $M +89% Revenue Segment Profit ATG, ATG-4, ATG-NG | Global Ku, 2Ku % Absolute change
Slide 20: All aircraft are valuable…
All aircraft are valuable… Aircraft Type Network Q3 2017 Annualized ARPA Cost To Acquire NPV Business Jets ATG $34K Profit $ Regional Jets ATG $64K Breakeven $$ Mainline - NA ATG/Satellite $174K Co-Investment $$$ ROW Satellite $226K Co-Investment $$$
Slide 21: …with room to grow
…with room to grow SOURCE: Aircraft Online as of 9/30/2017 and Awarded But Not Yet Installed as of 10/24/2017. Uncommitted Aircraft based on management estimates and Boeing CMO Aircraft Type Gogo Aircraft Online NPV Gogo Awarded But Not Yet Installed 10 year Aircraft Opportunity Business Jets 4,567
Slide 22: Strong and consistent growth
Strong and consistent growth 7,115 $ $ $ $ 9/30/17 $ $ $ $ $ $ $ $ $ $ $ 1 Aircraft Online (AOL) Aircraft Revenue $M 1 BA excludes Satellite aircraft
Slide 23: Driving shareholder value
Driving shareholder value Comprehensive Portfolio of networks, systems, services & support Established networks Compelling unit economics Clear path to positive free cash flow Leadership position in attractive, under-penetrated market
Slide 24: Building the Inflight Internet
Building the Inflight Internet Anand Chari, EVP & CTO
Slide 25: Technology strategy
Technology agnostic Multi-technology Multi-band Open architecture Customer-centric Aviation-specific Future-proof Modular architecture Technology strategy Best performance at lowest cost
Slide 26: Innovation in all aspects of the managed network
Innovation in all aspects of the managed network All components work together: Network Coverage Capacity Redundancy Certainty of supply System Aircraft-specific design Modular Reliable Capabilities work across networks Mobility management Services IFE and IFC TV and IPTV Multi-payer, multi-tier prod
Slide 27: Networks and systems address all aircraft
Networks and systems address all aircraft SMALL LARGE Large Jets (3,000) Medium Jets (3,700) Light Jets (6,800) Turboprops (8,800) BA Market Source: Management Estimates and Analysis, Boeing CMO Regional Jets (2,500) Narrowbody (15,000) Widebody (4,000) CA Market Inflight Network ATG Inflight System
Slide 28: Aviation network design challenge
Aviation network design challenge Global coverage, concentrated traffic 80% of traffic in <20% of geography Source: ICAO 2015
Slide 29: Regional Ka capacity
REGIONAL KA Capacity LOW HIGH Existing Regional Ka offers inadequate coverage and inefficient capacity Source: based on public information and management estimates and analysis 80% of the flight minutes in <20% of the geography The larger the geography covered, more capacity is wasted Capacity appli
Slide 30: Global Ka capacity
GLOBAL KA Capacity LOW HIGH Global Ka solutions spread capacity too thin relative to where aircraft fly Spreading capacity around the entire globe to meet coverage makes the problem worse Source: based on public information and management estimates and analysis 30
Slide 31: Ku's open ecosystem allows Gogo to match supply to demand
Ku’s open ecosystem allows Gogo to match supply to demand Capacity LOW HIGH GOGO Global coverage
Slide 32: Matching supply to demand
Matching supply to demand Capacity LOW HIGH GOGO Global coverage Multiple satellites offering redundancy everywhere
Slide 33: Matching supply to demand
Matching supply to demand Capacity LOW HIGH GOGO Global coverage Multiple satellites offering redundancy everywhere Ability to layer in additional capacity as needed
Slide 34: Matching supply to demand
Matching supply to demand Capacity LOW HIGH GOGO Global coverage Multiple satellites offering redundancy everywhere Ability to layer in additional capacity as needed Many HTS satellites launched, more to be launched when and where needed
Slide 35: Gogo vs. Regional Ka: high traffic area
Gogo vs. Regional Ka: high traffic area
Slide 36: Gogo vs. Regional Ka: high traffic area
Gogo vs. Regional Ka: high traffic area
Slide 37: Gogo vs. Regional Ka: high traffic area
Gogo vs. Regional Ka: high traffic area
Slide 38: Gogo vs. Regional Ka: high traffic area
Gogo vs. Regional Ka: high traffic area
Slide 39: Global coverage and aero-optimized capacity win the day
Global coverage and aero-optimized capacity win the day ATG ATG-4 (MBPS) COVERAGE (% OF GEOGRAPHY) SPEED SECOND SATELLITE Regional Ka ATG-NG Regional Ka 2Ku 2Ku+LEO Global Ka Global Ku = Gogo = Competitors
Slide 40: Lowest network cost
Lowest network cost Drivers 2Ku Advantage Utilization 3x – scale and targeted capacity leases Efficiency 2x – proprietary modem and antenna Riding rapidly improving satellite cost curve Raw Transport Above advantages more than offset any theoretical advantage of a Ka satellite Note: 3x higher utiliz
Slide 41: Gogo's cost structure benefits from open ecosystem innovation
Gogo’s cost structure benefits from open ecosystem innovation Cost per MB Time Increased Wide Beam supply Hybrid & other constellations Economies of scale / Hosted payloads Inclined orbit satellites Benefits of multi-provider satellite strategy: Low cost Leverage innovation Add capacity on demand Hi
Slide 42: 2Ku's performance benefits
2Ku’s performance benefits Speed per device and growing 100+ Mbps per aircraft, capable of 450+ Mbps Access most satellite capacity At lowest cost Internet + IPTV global route minutes Gate-to-Gate Performs well everywhere LEO compatible end-to-end Fewer moving parts Multi-satellite = redundancy 15 M
Slide 43: North America presents a unique opportunity
North America presents a unique opportunity 2/3 of RJs and business jets in North America Source: ICAO 2015, Diio Mi
Slide 44: ATG-NG brings high-speed, low cost regional solution to North America
ATG-NG brings high-speed, low cost regional solution to North America 1 3 Mbps 10 Mbps 100+ Mbps 2008 2018 2012 ATG ATG-4 ATG-NG Tower Upgrades Licensed + unlicensed spectrum Hardware Hardware 100+ Mbps demonstrated in lab in May 2017 Nationwide network build out begun – leveraging towers, backhaul
Slide 45: ATG-NG benefits
ATG-NG benefits For $50 million CapEx: Extends 100+ Mbps speeds to Business Aviation and Regional Jet aircraft Adds 100 Gbps of dedicated capacity Speed 100+ Mbps and growing Size/Cost Lower CapEx Lighter-weight Overnight install Reliability 99% end-to-end Note: Expected results and availability bas
Slide 46: The road ahead
The road ahead Best bandwidth solution for every aircraft everywhere Will continue to design solutions based on philosophy of: Multi-band Multi-constellation Multi-mode
Slide 47: Enabling the Connected Airline
Enabling the Connected Airline Jon Cobin, EVP & CCO
Slide 48: Growth fueled by meeting customer needs
Growth fueled by meeting customer needs CA Aircraft Online growth Annualized ARPA growth Leading Portfolio Address all aircraft Drive take rate More services $K
Slide 49: Strong track record
Strong track record Source: Management Estimates and Analysis through 10/24/17 …And the Largest Awards World’s leading airlines... (including 9 of top 20 airlines) >40% win rate… Average awarded aircraft per airline account ~200 ~100 49
Slide 50: Why Gogo?
Why Gogo? Airline Priorities Performance Best internet experience Innovation Future-proof technology Customer-focus Tailored digital experiences Operational excellence Our Value Proposition Market leadership Experienced provider Long-term support Low total cost of ownership
Slide 51: The Gogo Portfolio for delivering leading performance and flexibility to airlines
The Gogo Portfolio for delivering leading performance and flexibility to airlines In-Cabin Network Access technology (2Ku / ATG-NG) System software Gogo System Gogo Inflight Network Regional ATG Global Satcom Ground Gogo Support Gogo Inflight Services Connected Aircraft Services Passenger Services A
Slide 52: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO PRE – 2013 NETWORK ATG/4 SYSTEM ATG/4 Retrofit SERVICES Retail Internet SUPPORT N. America
Slide 53: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO 2013 NETWORK ATG/4 Ku Wide Beam SYSTEM ATG/4 Retrofit Ku Retrofit SERVICES Retail Internet Gogo Vision SUPPORT N. America Japan
Slide 54: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO 2014 NETWORK ATG/4 Ku Wide Beam SYSTEM ATG/4 Retrofit Ku Retrofit 2Ku Retrofit SERVICES Retail Internet Gogo Vision Airline Directed Internet SUPPORT N. America Japan Europe
Slide 55: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO 2015 NETWORK ATG/4 Ku Wide Beam SYSTEM ATG/4 Retrofit Ku Retrofit 2Ku Retrofit SERVICES Retail Internet Gogo Vision Airline Directed Internet SUPPORT N. America Japan Europe South America
Slide 56: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO 2016 NETWORK ATG/4 Ku Wide Beam SYSTEM ATG/4 Retrofit Ku Retrofit 2Ku Retrofit SERVICES Retail Internet Gogo Vision Airline Directed Internet SUPPORT N. America Japan Europe South America Global
Slide 57: Gogo Portfolio growth drives wins
Gogo Portfolio growth drives wins PORTFOLIO 2017 NETWORK ATG/4 Ku Wide Beam Ku Spot Beam SYSTEM ATG/4 Retrofit Ku Retrofit 2Ku Retrofit 2Ku Line fit SERVICES Retail Internet Gogo Vision Airline Directed Internet IPTV SUPPORT N. America Japan Europe South America Global 57
Slide 58: Well positioned to deliver customer value…
Well positioned to deliver customer value… Inflight Systems – For every aircraft Inflight Network – Best bandwidth everywhere Customer Support – Best airline experience Inflight Services – Best passenger experience GGV-touch Unified digital experience Seamless sign-on 2Ku line fit ATG-NG retrofit El
Slide 59: And continued growth
And continued growth CA Market Penetration (projected) Commercial Aircraft (projected) 9,000 9,000 Source: 2017 Boeing CMO, Management Estimates and Analysis Rapid Industry Growth 10 year growth - 18,000 aircraft
Slide 60: And continued growth
And continued growth Source: 2017 Boeing CMO, Management Estimates and Analysis Commitments to date Commercial Aircraft >40% <10% Connected Commercial Aircraft (projected) 9,000 9,000 10 year growth - 18,000 aircraft CA Market Penetration (projected) Rapid Industry Growth Increasing addressable mark
Slide 61: The Vision
The Vision Ground-like Connectivity for: Every device Every flight Everywhere Enabling Better: Passenger Experiences Airline Operations
Slide 62: Video
Video 1 Go to: gogo.to/video1
Slide 63: Growing ARPA
Growing ARPA Deliver more value to Airlines and Passengers Increased engagement Take rate ↑ Prices ↓ More services Entertainment Connected Aircraft Solution (CAS)
Slide 64: Better experience and increased distribution
Better experience and increased distribution
Slide 65: Flexibility for airlines to tailor marketing
Flexibility for airlines to tailor marketing Passengers Want Connectivity More bandwidth Free Airlines Want Improved passenger satisfaction Minimize costs First Aircraft Differentiation by Cabin Business Economy+ Economy Passenger Paid Airline Paid Third Party $ $$ $$$ $$$$ Multi-tier is consistent
Slide 66: Internet enabled entertainment benefits to airlines and passengers
v v Internet enabled entertainment benefits to airlines and passengers Passengers want access to their content Gogo Vision enables any content, anywhere
Slide 67: Revolutionizing in-flight entertainment
Revolutionizing in-flight entertainment Legacy In-Seat Source: Management estimates of IFE market size, The Future of In-Flight Entertainment – 2017 Valour Consultancy, Diio, Boeing CMO Seats Served ~30% 100% Titles available Dozens Anything you want Internet-Enabled $5B annually $4 per passenger se
Slide 68: Connected Aircraft Solutions represents a long-term opportunity
Connected Aircraft Solutions represents a long-term opportunity Enabling you to fly smarter and safer eEnablement Data management Operational solutions eEnablement today 2,000+ aircraft 55,000+ crew devices 3 TB+/mo crew traffic 68
Slide 69: Clear path to ARPA growth
133 Clear path to ARPA growth ARPA ARPA NA Bandwidth constrained RJ dilution Contributing Factors Impacting ARPA + Take rate (bandwidth, multi-payer) + Additional services (Entertainment, CAS) +/- Aircraft mix - Legacy pricing transition - New fleet dilution 174 NA Mainline CA-NA fleet 64 NA RJ $K 2
Slide 70: Video
Video 2 Go to: gogo.to/video2
Slide 71: Scaling Our Operations Globally
Scaling Our Operations Globally John Wade, EVP & COO
Slide 72: Supporting the customer life cycle
Supporting the customer life cycle Post Award On-going Support Operation Customer Benefits Leading certification Portfolio Rapid fleet deployment Fastest installations Complete turnkey capability Customer Benefits 98% uptime Rapid issue resolution Scale across nearly 8,000+ aircraft Customer Benefit
Slide 73: Design and certification process
Design and certification process Fleet survey Engineering design Design substantiation and certification Prototype installation Regulatory approval (FAA, EASA, ANAC, TCCA, and others) Comprehensive and complete engineering and certification capability
Slide 74: Certification approaches for existing and new aircraft
Certification approaches for existing and new aircraft Aftermarket Installations (existing and new aircraft) Supplemental Type Certificates (STCs) Service Bulletins OEM Production Line Fit (new aircraft deliveries only) Installations completed during production of the aircraft by the OEM
Slide 75: Broad Portfolio maximizes the addressable market
Broad Portfolio maximizes the addressable market & reduces time to market STC reuse reduces time and cost to achieve certification OEM approved Service Bulletins provide certification solutions ahead of production installation 2Ku STCs and service bulletins expected to cover ~80% of Global Commercia
Slide 76: Expected OEM line fit offer-ability
Expected OEM line fit offer-ability 1 Timing subject to confirmation Expected OEM production line offer-ability based on management estimates Percent of aircraft currently on order based on Diio data, April 2017 These airframes represent 87% of aircraft currently on order OEM production line install
Slide 77: Installation expertise
Installation expertise 3,000+ retrofit installations completed Dedicated and experienced teams reduce 2Ku installations from over a week to around 30 hours ATG-NG expected to be an overnight installation Faster installs reduce installation expense and decrease aircraft downtime Full fleet connectivi
Slide 78: Video
Video 3 Go to: gogo.to/video3
Slide 79: Global Supply Chain
Global Supply Chain Built to ensure zero work stoppages utilizing a new ERP system Drive costs lower through purchasing and logistical efficiency Reliably deliver to airline installation locations around the globe Install Line & Supply Depot Locations Ability to support global airline installations
Slide 80: Market leading installation capability
Market leading installation capability 76 installs in October 28 install lines operating now 16 installation locations globally Fastest installation in just 30 hours 76 installs in October Capable of 750 installations per year Cumulative 2Ku Aircraft Installations
Slide 81: Network Monitoring
Network Monitoring ~8,000 aircraft systems monitored 24/7 Leverage automation to rapidly resolve network issues Diagnose problems and have parts ready before the aircraft lands 99% ATG system availability 98% broadband satellite system availability Network availability doesn’t affect just one plane,
Slide 82: Maintenance Support
Maintenance Support Access to spares and maintenance personnel is key to maintaining system availability Gogo has dedicated technical support teams to assist with troubleshooting Dedicated Gogo maintenance team at key airports Third party maintenance repair and overhaul for some airport locations Tr
Slide 83: Data Analytics is a Competitive Advantage
Data Analytics is a Competitive Advantage Gogo has an industry leading capability to synthesize insights into system performance and operations Multiple sources of data into a data lake Team of data scientists develop sophisticated algorithms to evaluate every aspect of Gogo Operations Reduce airpla
Slide 84: Competitive advantage through world class capabilities
Competitive advantage through world class capabilities Invested in: World class aircraft engineering teams Market leading STC and SB Portfolio OEM line fit offerability Strong Supply Chain Fastest installations of any IFC company Strong Maintenance Repair Overhaul (MRO) partnerships Substantial anal
Slide 85: Extending Business Aviation's Market Leadership
Extending Business Aviation’s Market Leadership John Wade, EVP and COO
Slide 86: Embedded in the business aviation ecosystem
Embedded in the business aviation ecosystem 1,000s of individual owner operators 170 Independent dealers 10 Leading OEMs 9 Fractional jet operators
Slide 87: Our complete technology roadmap
Our complete technology roadmap Attributes: Benefits: CONUS & Canadian coverage Small to large aircraft Peak speeds 10Mbps 99% availability Priced to fit any size aircraft Smart Cabin Gogo Vision Upgrade provides IFE and Smart Cabin features CONUS coverage Medium to large aircraft Peak speeds >100Mb
Slide 88: Gogo Portfolio model
Gogo Portfolio model Same network Modified hardware for smaller aircraft Different go-to-market and customer support In-Cabin Network Access technology (2Ku / ATG-NG) System software AVANCE Gogo Inflight Network Regional ATG Global Satcom Ground Gogo Support Gogo Inflight Services Connected Aircraft
Slide 89: AVANCE platform
AVANCE platform Gogo AVANCE platform supports future networks, capabilities and systems Seamless integration with any new network All components can be configured remotely depending upon the mission Upgrade and update remotely in minutes Direct access to system performance through mobile suite of ap
Slide 90: AVANCE inflight now
AVANCE inflight now Gogo AVANCE L5 – formerly known as Gogo Biz 4G AVANCE L5 will operate over the Gogo Biz 4G network, with the ability to connect to Gogo’s ATG-NG network in 2018 Systems are being installed and flying today Over 110 AVANCE L5 units sold to date Most sales are upgrades from legacy
Slide 91: Connected Broadband Aircraft
Connected Broadband Aircraft Largest Competitor Leading market share… 11x Competitor information based on management estimates 400
Slide 92: …with strong growth profile
Total Revenue …with strong growth profile Segment Profit Equipment revenue Service revenue 18% Segment profit CAGR $M $M 35% Service revenue CAGR
Slide 93: Market leader with room to grow
Turboprops Light Jets Medium Jets Large Jets Committed aircraft 40% 15% <5% Note: numbers provided are approximate Source: JetNet iQ Report Q3 2017 all figures are approximate Rest of World addressable market Market leader with room to grow Uncommitted aircraft 65% 3,900 2,200 5,800 8,400 ~2,700 Nor
Slide 94: Strong growth in light jets and turboprops
Strong growth in light jets and turboprops Deploying the only solutions suitable for smaller aircraft Smaller aircraft adopting higher bandwidth solutions and subscription plans Rapidly penetrating the largest segments of Business Aircraft Gogo Aircraft Online Two year CAGR 20% 40%+ Unconnected Airc
Slide 95: Business Aviation positioned for strong continued growth
Business Aviation positioned for strong continued growth Relationships built on 25 years of reliable service Leading air-to-ground solutions that are about to get even faster in 2018 Introducing a 25Mbps satellite solution in 2018 Smaller aircraft accelerating connectivity adoption Connectivity and
Slide 96: Charting the Path to Profitability
Charting the Path to Profitability Barry Rowan, EVP & CFO
Slide 97: Charting the path to profitability
Charting the path to profitability Levers in place to achieve positive Free Cash Flow 5 CA-ROW is on track to reach profitability 4 Commercial aviation unit economics demonstrate attractive returns on capital 3 Business aviation represents significant shareholder value 2 Strong track record of finan
Slide 98: Gogo has delivered compelling revenue growth
Gogo has delivered compelling revenue growth Total Revenue 26% Service Revenue CAGR Equipment revenue Service revenue $M
Slide 99: Aircraft and ARPA drive revenue growth
Aircraft and ARPA drive revenue growth Source of Incremental Service Revenue (2013 – LTM 9/30/2017) Represents BA – ATG units online. 13% Commercial Aviation 24% Business Aviation(1) 11% Commercial Aviation 11% Business Aviation(1) Aircraft Online CAGR SINCE 2013 ARPA CAGR SINCE 2013
Slide 100: Attractive service margin progression across all business segments…
Attractive service margin progression across all business segments… BA High market share Attractive margins CA-NA High market share Leveraging scale CA-ROW Building global market share Improving satellite network utilization 100
Slide 101: …results in strong consolidated performance
…results in strong consolidated performance Note: Minor differences exist due to rounding 1 Please see reconciliation of Adjusted EBITDA in appendix Adjusted EBITDA CA-ROW Segment Loss Adjusted EBITDA Profitability of BA and CA-NA results in strong consolidated performance Investing in attractive RO
Slide 102: Charting the path to profitability
Charting the path to profitability Levers in place to achieve positive Free Cash Flow 5 CA-ROW is on track to reach profitability 4 Commercial aviation unit economics demonstrate attractive returns on capital 3 Business aviation represents significant shareholder value 2 Strong track record of finan
Slide 103: BA delivers strong financial results…
BA delivers strong financial results… Revenue Segment Profit 18% CAGR 42% Segment Profit Margin Equipment revenue Service revenue 35% Service Revenue CAGR $M $M
Slide 104: …with substantial room to grow
…with substantial room to grow Source: Q3 2017 NetJetsiQ and management estimates Large jets is inclusive of CA-NA and CA-ROW large jets 8,800 6,800 3,700 6,000 25,300 Business Aviation Addressable Market Aircraft 80% 20% Unaddressed Market 58% 84% 98% 65% 1,574 4,567 104
Slide 105: Significant value created by BA business
Significant value created by BA business Note: Service revenue growth rate calculated using 9/30/2017 LTM compared to 9/30/2016 LTM 2 Revenue ($M) Service Revenue Growth Aircraft Online Segment Profit ($M) Business Aviation CA-NA CA-ROW 4,567 2,817 352 $226 $397 $48 12% 29% 111% 9/30/17 LTM 9/30/17
Slide 106: Significant value created by BA business
Significant value created by BA business Revenue ($M) Service Revenue Growth Aircraft Online Segment Profit ($M) Business Aviation CA-NA CA-ROW 4,567 2,817 352 $226 $397 $48 12% 29% 111% 9/30/17 LTM 9/30/17 LTM 9/30/17 LTM $96 $68 ($107) 9/30/17 Note: Service revenue growth rate calculated using 9/3
Slide 107: Charting the path to profitability
Charting the path to profitability Levers in place to achieve positive Free Cash Flow 5 CA-ROW is on track to reach profitability 4 Commercial aviation unit economics demonstrate attractive returns on capital 3 Business aviation represents significant shareholder value 2 Strong track record of finan
Slide 108: Attractive economics across all aircraft types
Attractive economics across all aircraft types Gogo (as of Q3 2017) Aircraft Type Aircraft Online Annualized ARPA1 Airborne Equipment NPV Business Jets 4,567 $34K Profit $ Regional Jets 1,068 $64K Breakeven $$ Mainline - NA 1,749 $174K Co-investment $$$ ROW 352 $226K Co-investment $$$ Network ATG AT
Slide 109: Unit economics are strong
Unit economics are strong Note: ARPA is calculated using the weighted aircraft online for Mainline – NA and ROW aircraft and the respective annualized ARPAs at 9/30/2017 Represents combined CA-NA and CA-ROW segment service revenue margins YTD through 9/30/2017. Co-investment ARPA Service Revenue Mar
Slide 110: Unit economics are strong
Unit economics are strong Future Co-investment ARPA Service Revenue Margins Drivers 1 2 3 Today’s unit economics deliver attractive returns...and improving Reflects terms of aircraft awarded but not yet installed Reducing airborne equipment and installation costs Engaging more of the plane Expanding
Slide 111: Co-investment: declining per 2Ku aircraft
Co-investment: declining per 2Ku aircraft Note percentages above are based on YTD cash capex spend as of Q3 2017 and could vary period to period based on timing of purchases of airborne equipment and timing of payments by airlines for airborne equipment. 1) Average co-investment per aircraft is calc
Slide 112: ARPA growth on-track
133 ARPA growth on-track ARPA ARPA NA Bandwidth constrained RJ dilution Contributing Factors Impacting ARPA + Take rate (bandwidth, multi-payer) + Additional services +/- Aircraft mix - Legacy pricing transition - New fleet dilution 174 NA Mainline CA-NA fleet 64 NA RJ $K 25% RJs 37% RJs Target: $25
Slide 113: Margin: scaling across both networks
Margin: scaling across both networks 1 Illustrative ATG profit margin represented by CA-NA and BA historical segment profit margins. Results predominantly representative of aircraft on the ATG network. CA-NA includes satellite equipped commercial aircraft beginning in 2015 and satellite equipped bus
Slide 114: Margin: Scale drives network economics
Margin: Scale drives network economics Establish North American Footprint Projected Satellite Cost per MB 2015 2021 ATG Network Costs Smaller number of aircraft share large upfront cost initially ATG has achieved profitability at current scale Smaller number of aircraft share large upfront cost init
Slide 115: Levers in place to achieve positive Free Cash Flow
Levers in place to achieve positive Free Cash Flow 5 CA-ROW is on track to reach profitability 4 Commercial aviation unit economics demonstrate attractive returns on capital 3 Business aviation represents significant shareholder value 2 Strong track record of financial performance 1 1 Charting the p
Slide 116: Significant ARPA differential for existing and new CA-ROW aircraft
Significant ARPA differential for existing and new CA-ROW aircraft 3Q 2017 3Q 2014 Aircraft1 ARPA ARPA Existing aircraft 214 $282K $69K New aircraft 81 $76K N/A Total 295 $226K $69K 1 Aircraft equivalents as of 9/30/17.
Slide 117: Aircraft Online drive profitability: Strong record of success
Aircraft Online drive profitability: Strong record of success CA-ROW Aircraft Awards ~280 awards per year (2015 – 2017) 1,130 Total CA-ROW aircraft awards OEM Production Line Fit expands available market Demonstrated capacity for 750 aircraft installations per year Aircraft awards are approximate 11
Slide 118: CA-ROW on path to profitability
CA-ROW on path to profitability Revenue ($M) Aircraft Online Aircraft Current awards triple aircraft online ARPA Strong current annualized ARPA ($226K) Tenured aircraft offset dilution from new fleet Margin High incremental margin from additional aircraft 2017 expected to be peak investment year Cur
Slide 119: Levers in place to achieve positive Free Cash Flow
Levers in place to achieve positive Free Cash Flow 5 CA-ROW is on track to reach profitability 4 Commercial aviation unit economics demonstrate attractive returns on capital 3 Business aviation represents significant shareholder value 2 Strong track record of financial performance 1 Charting the pat
Slide 120: FCF progress obscured by success-based investment
FCF progress obscured by success-based investment CAGR 20% Unlevered FCF before Cash CapEx ~70% of CapEx is success-based and growth-related Unlevered FCF before Cash CapEx Cash CapEx Unlevered FCF $M Note: Please see reconciliation of Non-GAAP Unlevered free cash flow and Unlevered free cash flow b
Slide 121: Well positioned to leverage core investments
Well positioned to leverage core investments Note: Cash Opex is total operating expenses excluding depreciation and amortization. Cash Opex and Capex Composition Cost of Service Operating Expense Cash CapEx Growth in Aircraft Online Airborne equipment installations Improved Network Utilization Succe
Slide 122: Balance sheet improves through operational execution and refinancing opportunity
Balance sheet improves through operational execution and refinancing opportunity 1 Please see reconciliation of Adjusted EBITDA in appendix. 2. Senior secured notes and convertible notes balance is shown at par. YTW as of 11/3/2017. 18.5x 6.5x Natural deleveraging through operational execution 9/30/
Slide 123: Path to Free Cash Flow
Path to Free Cash Flow Revenue growth driven by AOL and ARPA Increased utilization of global satellite network Scale drives operating leverage Reduce interest expense through potential refinancing
Slide 124: Let's go FARTHER
Let’Ss go FARTHER
Slide 125: Appendix
Appendix
Slide 126: Gogo installed and awarded aircraft as of 9/30/2017
Gogo installed and awarded aircraft as of 9/30/2017 Note: On May 27, 2016, we entered into a letter agreement with American Airlines whereby American exercised its option to terminate its agreement with Gogo on approximately 550 Gogo-installed mainline aircraft and we currently expect such aircraft
Slide 127: Adjusted EBITDA reconciliation
Adjusted EBITDA reconciliation ($MM) 2013 2014 2015 2016 2016 Q4 2017 Q1 2017 Q2 2017 Q3 GAAP Net Income (146) (85) (108) (125) (27) (41) (44) (45) Income Tax Provision 1 1 1 1 0 0 0 0 Interest Income (0) (0) (0) (2) (1) (1) (1) (1) Interest Expense 29 33 59 84 25 27 27 28 Depreciation & Amortizatio
Slide 128: Cash CapEx reconciliation
Cash CapEx reconciliation ($MM) 2013 2014 2015 2016 2016 Q4 2017 Q1 2017 Q2 2017 Q3 Purchases of Property and Equipment (105) (132) (135) (148) (41) (64) (65) (62) Acquisition of Intangible Assets (Capitalized Software) (16) (17) (18) (29) (7) (8) (9) (7) GAAP Consolidated Capital Expenditures (121)
Slide 129: Unlevered free cash flow before Cash CapEx reconciliation
Unlevered free cash flow before Cash CapEx reconciliation ($MM) Note: Minor differences exist due to rounding Based on Statement of Cash Flows (including Supplemental Cash Flow information), Interest Costs footnote and Non-GAAP measures included in the Company's 10-Qs and 10-Ks. 2013 2016 Q4 2017 Q1