Gogo Inc. · NASDAQ:GOGO

Gogo — Q3 2015 Earnings Presentation

25 slides from Gogo's earnings presentation, Nov 5, 2015

  1. Slide 1: 3rd Quarter 2015 Earnings Results

    3rd Quarter 2015 Earnings Results Michael Small – Chief Executive Officer Norman Smagley – Chief Financial Officer November 5, 2015

  2. 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

  3. Slide 3: Increased 2015 Profitability & Guidance

    INCREASED 2015 PROFITABILITY & GUIDANCE  YTD 2015 Adjusted EBITDA is up 3X from last year to $28.7 million  2015 Adjusted EBITDA guidance is increased to $30-$35 million  On a path to consolidated profitability ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 3

  4. Slide 4: 2Ku: Surpassing Expectations

    2Ku: SURPASSING EXPECTATIONS  First truly global broadband highway in the sky  Eight airline wins for more than 550 aircraft  Speed tests demonstrate 12+ Mbps to a device even with simultaneous streaming on more than 40 devices  2Ku live television programming ©2014 Gogo Inc. and Affiliates. Pro

  5. Slide 5: 2Ku: Advantages

    2Ku: ADVANTAGES 2Ku  Proprietary electro-mechanical, phased-array antenna design  Superior global coverage  Much lower bandwidth costs Conventional than global Ku or Ka Gimbaled Antenna Ku or Ka 30 in  Redundancy and capacity of 180 Ku satellites Bigger is better, round is better ©2014 Gogo Inc.

  6. Slide 6: Q3 '15 Update – Commercial Aviation

    Q3 ’15 UPDATE – COMMERCIAL AVIATION  75 commercial aviation aircraft installed between CA-NA & CA-ROW  Nearly 2,500 commercial aircraft online - Includes over 860 ATG-4 aircraft online  Expect about 1,000 ATG-4 aircraft online by year-end or 40% of CA-NA installed base ©2014 Gogo Inc. and Affilia

  7. Slide 7: More Bandwidth Drives More Revenue & ARPA Growth

    MORE BANDWIDTH DRIVES MORE REVENUE & ARPA GROWTH  ATG aircraft upgraded to ATG-4: 20% ARPA growth  ATG-4 aircraft upgraded to Ku: 30% ARPA growth  Expect greater ARPA growth from 2Ku ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 7

  8. Slide 8: Q3'15 Update – CA-ROW

    Q3’15 UPDATE – CA-ROW  CA-ROW ARPA has surpassed CA-NA ARPA  Full fleet deployment & 2Ku will drive ARPA growth  CA-ROW contributing to consolidated revenue growth ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 8

  9. Slide 9: Q3'15 Update – Business Aviation

    Q3’15 UPDATE – BUSINESS AVIATION  38% service revenue growth  41% segment profit margin  Over 3,300 ATG units online  Segmentation strategy gaining traction  GogoBiz 4G brings 10Mbps to BA aircraft in 2017 ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 9

  10. Slide 10: Business Model & Profitability

    BUSINESS MODEL & PROFITABILITY  CA-NA & BA combined segment profit reached record $30 million, up 46% y/y  Scale is vital in our industry  Gogo has sufficient scale to achieve consolidated profitability  Free cash flow for CA-NA & BA combined have been positive for Q3 and year-to-date Note: Refe

  11. Slide 11: Q3'15 Earnings Call Key Highlights

    Q3’15 EARNINGS CALL KEY HIGHLIGHTS 1. 2Ku is here - Surpassing expectations - Most efficient global solution - Expect 2Ku to drive aircraft wins 2. More planes and more bandwidth drive revenue growth & profitability 3. Gogo has enough aircraft to achieve consolidated profitability ©2014 Gogo Inc. an

  12. Slide 12: Q3'15 Record Revenue and CA-NA & BA Segment Profit

    Q3’15 RECORD REVENUE AND CA-NA & BA SEGMENT PROFIT Total Revenue ($MM) • Q3’15 revenue is up 22% y/y $116 $121 $126 $104 $109 $20 $19 $20 $20 22% $22 Y/Y Growth • Service revenue up 31% y/y $90 $95 $101 $107 $82 • CA-NA + BA segment profit up Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Service Revenue Equipm

  13. Slide 13: Q3'15 Adjusted EBITDA Is Up 8X From Q3'14

    Q3’15 ADJUSTED EBITDA IS UP 8X FROM Q3’14 • Q3’15 Adjusted EBITDA Adjusted EBITDA ($MM) increased 8x to $9.7 million $11 $10 $8 $10 • Guidance is increased to $30-$35 738% 9% 8% Y/Y Growth million for FY 2015 7% $5 $1 $1 1% 1% • Combined CA-NA & BA Free $0 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Cash Flo

  14. Slide 14: CA-NA - Strong Growth in Revenue & Aircraft Online

    CA-NA - STRONG GROWTH IN REVENUE & AIRCRAFT ONLINE Service Revenue ($MM) • Service revenue driven by: - 13% y/y growth in aircraft online $72 $75 $78 $68 25% - 12% y/y growth in ARPA $62 Y/Y Growth • 2,312 Aircraft Online - 114 aircraft installed Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 - 51 aircraft reti

  15. Slide 15: CA-NA - Strong Revenue & ARPA Growth

    CA-NA - STRONG REVENUE & ARPA GROWTH Annualized ARPA $134 $136 $136 • ARPA growth continues: $131 $14 $9 $11 $122 $9 12% - Driven by increase in ARPS $6 Y/Y Growth - Estimated ARPA growth excluding the $127 $125 $115 $122 $121 impact of regional jets would have been approximately 20% Q3 '14 Q4 '14 Q

  16. Slide 16: BA Service Revenue – Continued High Growth

    BA SERVICE REVENUE – CONTINUED HIGH GROWTH Service Revenue ($MM) 55% 59% • Service revenue increased 47% 51% 52% $26 38% 38% y/y to record $26 million $24 Y/Y Growth $22 $20 $19 • Service revenue continues strong growth track record Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 • Total revenue reaches new Serv

  17. Slide 17: Increased ATG Units Online Drive Segment Profit Growth

    INCREASED ATG UNITS ONLINE DRIVE SEGMENT PROFIT GROWTH ATG Units Online (End of Period) • ATG units online increased 3,314 3,170 26% 26%, to more than 3,300 2,983 Y/Y Growth 2,797 2,637 • ATG Service ARPU increased 12%, to more than $2,300 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 • Segment profit up 21%,

  18. Slide 18: International Expansion Continues

    INTERNATIONAL EXPANSION CONTINUES Satellite Aircraft Online (End of Period) • 160 aircraft online, up 12 q/q 160 148 116 357% 85 Y/Y Growth • CA-ROW ARPA exceeds CA-NA ARPA 35 • ~400 awarded and not yet installed at Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Q3’15 CA-ROW Segment Loss ($MM) • 2Ku test result

  19. Slide 19: Consolidated Cash CapEx

    CONSOLIDATED CASH CAPEX Cash CapEx ($MM) • Q3 ’15 Y/Y changes in capital expenditures: Y/Y Decrease $30 $32 $18MM $23 Decrease in airborne equipment spend $12 $12 Increase in equipment proceeds from airline partners Build-out of the BA office in Q3’14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Q3 '15 Purchase of t

  20. Slide 20: Strong Financial Results

    STRONG FINANCIAL RESULTS  Strong Q3’15 financial results  Raised 2015 Adjusted EBITDA guidance  Expect strong growth in revenue and profitability going forward supported by aggressive roll out of 2Ku ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 20

  21. Slide 21: Q&A

    Q&A

  22. Slide 22: Appendix

    Appendix

  23. Slide 23: Updated 2015 Guidance

    UPDATED 2015 GUIDANCE Revenue $485 - $505 million CA-NA $300 - $320 million BA $170 - $180 million CA-ROW $10 - $15 million Adjusted EBITDA $30 - $35 million Cash CAPEX $100 - $120 million ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 23

  24. Slide 24: Adjusted EBITDA Reconciliation ($MM)

    ADJUSTED EBITDA RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2015 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Net Income (142) (140) (18) (96) (146) (17) (19) (25) (24) (20) (25) (29) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 9 9 10 16 1

  25. Slide 25: Cash CapEx Reconciliation ($MM)

    CASH CAPEX RECONCILIATION ($MM) 2014 2014 2014 2014 2015 2015 2015 2009 2010 2011 2012 2013 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Purchases of Property and (69) (33) (33) (67) (105) (32) (28) (35) (37) (53) (33) (19) Equipment Acquisition of Intangible Assets (8) (7) (10) (12) (16) (4) (5) (5) (3) (4) (4) (4) (Capit

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