Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Day (September 2016)
59 slides from Gogo's investor day presentation, Sep 29, 2016
Slide 1: Analyst Day September 29, 2016
Analyst Day September 29, 2016 Exhibit 99.1
Slide 2: 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 currently available to manage
Slide 3: Overview
Overview Michael Small – President & CEO
Slide 4: Connectivity now a requirement
Connectivity now a requirement ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 4 Value-Added Broadband Connectivity Passenger Experience Passenger Connectivity & Entertainment Operational Efficiencies Rebooking Travel Baggage Tracker Digitized Attendants Turbulence Avoidance Lower Fuel C
Slide 5: Barriers to entry inherently high
Barriers to entry inherently high ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Global Regulatory Safety & Security Long-Technology Cycles
Slide 6: Significant global market opportunity
Significant global market opportunity ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 6 1 Based on management estimates 2 Sources include Boeing Current Market Outlook 2016-2035, JetNet iQ Report Q4 2015, GAMA 2015 General Aviation Manufacturers Association Statistical Handbook, and mana
Slide 7: Expanding distribution in CA
Expanding distribution in CA ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Note: Figures are based on public information and management estimates Americas EMEA APAC IFC Region Airline IFC Status Channel OEM After Market Composition of Expected Industry Commitments Through 2018
Slide 8: Market leading win rate in 2016
BA ATG Units YTD Market leading win rate in 2016 ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 8 2Ku awarded aircraft now exceeds 1,300 2 1 1 2Ku awards are as of September 29, 2016 and include both signed contracts and letters of intent 2 Data as of August 31, 2016 850+ 2Ku Conversion
Slide 9: Unrivaled scale & experience
Unrivaled scale & experience ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. As of June 2016 Based on management estimates of current installations as of June 30, 2016 Since inception through August 2016, represents only Commercial Aviation Total Broadband Aircraft 50% CA Global Market S
Slide 10: Technology roadmap
Faster & more reliable Technology roadmap Shorter time to install Streamlined maintenance Network Technology Aircraft Operations Platforms 5 Gogo and 4 third party network solutions 250+ North American cell sites and fiber backhaul 19 satellites and 18 teleports Mature passenger platform (portal, Go
Slide 11: Strong track record since IPO
Strong track record since IPO ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. CA aircraft online Consolidated Adjusted EBITDA ($M) Consolidated total revenue ($M) 2x 6x 1.4x BA ATG aircraft online 2.3x
Slide 12: Driving innovation and delivering results
Driving innovation and delivering results ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Milestones Since Investor Day 2015 Revenue – Up 23% Y/Y to $553M through Q2 2016 LTM Adjusted EBITDA – Up 118% Y/Y to $47M through Q2 2016 LTM Note aircraft operations data as of September 2016 Netw
Slide 13: More bandwidth, more aircraft, more payers, more revenue
More bandwidth, more aircraft, more payers, more revenue CA Satellite Aircraft Online (% of Total Gogo CA) CA-ROW Aircraft Online (% of Total Gogo CA) CA Passenger-Paid (% of Total Service Revenue) ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 13 From ATG to ATG & Satellite From N.A. t
Slide 14: Strong bandwidth growth is happening now
Strong bandwidth growth is happening now ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 14 Percentage of Aircraft Online by Technology Total data delivered up 57% in first half of 2016 Satellite 50-100+ Mbps ATG-4 10 Mbps ATG 3 Mbps June 2015 June 2016 June 2017E Slide Change
Slide 15: Three strategic objectives
Three strategic objectives 15 ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Scale Globally Expand Technology Leadership Grow Shareholder Value Embed 2Ku in CA Aviation Ecosystem Increase Customer Satisfaction Increase Penetration Of Light BA Aircraft Expand Product Offerings Extend Glo
Slide 16: Technology
Technology Anand Chari – EVP & CTO
Slide 17: Delivering best of breed solutions
Delivering best of breed solutions Customer-Centric Highest speed Most capacity Global coverage Fastest installation Enterprise-grade (reliability and redundancy) Lowest total cost (upfront + ongoing) Most future-proof Technology-Agnostic ATG and satellite Regional and global GEO and LEO Multiple ba
Slide 18: Relentless innovation: peak speed
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Peak Speed (Mbps) ATG Ku 2Ku 50 100 Proprietary Non-Proprietary Next gen ATG Analog ATG 2Ku w/ Spot Beam HTS ATG-4 Expected results and availability based on management estimates. Iridium (L-band) JetConnex (Ka-band) Swift Broadband (L-band
Slide 19: Bringing 100+ Mbps to all aircraft
1 Boeing Market Outlook 2016-2035, excluding regional jets 2 JetNet iQ Report Q4 2015, including regional jets from Boeing Market Outlook 2016-2035 and management estimates ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 19 2Ku Next Gen ATG ATG, ATG-4 Global Coverage Satellite Network Re
Slide 20: Open architecture for continuous growth
Open architecture for continuous growth 1 Expected results based on management estimates ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 25 2015 Mbps 70+ Early 2017 Mbps 50 Today Mbps 100+ Late 2017 Mbps 2Ku 2Ku 2Ku 2Ku 1 1
Slide 21: Ample and diverse satellite supply
Ample and diverse satellite supply ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Select Ku launches HTS satellites Multiple LEO, MEO & GEO Satellite Launches Current Ku Coverage Future HTS Coverage Current Ku Coverage SES-12 SES-14 SES-1 SES-4 SES-6 AMC-3 AMC-1 Astra-4A IS-14 IS-18 IS-
Slide 22: North America Ku capacity far exceeds demand
North America Ku capacity far exceeds demand ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 22 4,000 Aircraft 70% Simultaneously In-Service 100 Average Passengers per Aircraft Projected Consumption per Session in 2020 70 Gbps North America Maximum Demand Ku industry is projected to prov
Slide 23: Ku band has the most flexibility to meet global demand
Ku band has the most flexibility to meet global demand through 2020 and beyond ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Global Ku bandwidth supply (Gbps) 1 Based on estimates by satellite capacity providers Planned Ku Supply Potential Ku Supply Planned Ku Supply Potential Ku Suppl
Slide 24: Continued R&D investment
Continued R&D investment ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 24 Modular approach provides multiple options to ensure today’s customer deployment delivers market leading performance for 10+ years Satellite Innovation Antenna Innovation GEO and LEO Low cost bandwidth Low latenc
Slide 25: Next gen ATG brings 100+ Mbps to smaller aircraft
Next gen ATG brings 100+ Mbps to smaller aircraft 1 Expected results and availability based on management estimates ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 25 ATG ATG-4 Next Gen ATG Tower Upgrades 3 10 100+ Mbps Mbps Mbps 2018 2008 2012 1 Existing + Unlicensed Spectrum Hardware H
Slide 26: Next gen ATG low cost solution
Low Cost Solution Market & Deployment Performance Low Network & aircraft investment Leverage Existing ATG infrastructure: 250 cell sites, fiber backhaul & data centers Use Unlicensed spectrum, LTE & beamforming ~9,000 Business jets, RJ’s and select mainline aircraft Overnight Installation Redundancy
Slide 27: Customer-centric, technology-agnostic approach: key takeaways
Customer-centric, technology-agnostic approach Innovation is in our DNA, continual focus on enhancing network even with 2Ku delivering market leading performance right now Ongoing improvements in satellite and modem technologies in 2017 will lower costs and provide better customer experience Next ge
Slide 28: Operations
Operations John Wade – EVP & COO
Slide 29: Customer needs come first
What aviation partners want: More bandwidth High reliability Minimized operational impact Increased customization Passenger interface / use Low total cost of ownership ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Customer needs come first
Slide 30: Priorities by segment
Commercial Aviation Deploy 2Ku on 1,300+ awarded aircraft Increase customer satisfaction Expand OEM delivery Improve unit economics Business Aviation Increase penetration of light aircraft Further develop platform to enable third-party applications Launch 4G BA product by Q2 2017 Deploy next gen ATG
Slide 31: Commercial aviation scale
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Note: Data is as of June 30, 2016, based on public sources and management estimates 2.6x Largest Competitor Commercial aviation scale CA-NA CA-ROW
Slide 32: 2Ku has taken flight
4 airlines & 14 installed aircraft Full plane, including streaming 50+Mbps Live TV Global performance 2Ku has taken flight 32 ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Note: As of September 22, 2016 Slide Change
Slide 33: Rapid 2Ku rollout
Today* 2017 Aircraft Online Installation Lines Days to Install Annual Install Capacity by Yearend STCs Global Maintenance Locations 14 12 8 300+ 8 33 Aircraft Online Installation Lines Days to Install Annual Install Capacity STCs Global Maintenance Locations 500+ 40+ 3 750+ 30+ 45 * Data is as of Se
Slide 34: Investing in global operational support
33 Global maintenance locations 11 Countries where aircraft are installed 7 Offices worldwide Teleports Offices Install Locations Maintenance Locations Gogo Partner Destinations Hawaii 450 Employees focused on serving airlines globally Investing in global operational support ©2016 Gogo Inc. and Affi
Slide 35: Expanding 2Ku STC portfolio for aftermarket
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 737-500 737-800 A340-300 A319-100 A330-300 747-400 737-900 777-200 777-300 757-200 757-300 A321-200 A320-200 MD 80/90 series A330-200 737-300 717-200 * Schedule as of August 2016 % of Global Commercial Aircraft Covered First-of- Type STCs ~
Slide 36: Growth of OEM opportunity
2015: First ATG OEM installation 2017: First 2Ku OEM installation expected By 2020: Most of the ~2,000 new aircraft deliveries will have IFC Gogo investing in OEM offerability on: Boeing: 777, 787, 737, 777X Airbus: A330, A340, A350, A380, A320 NEO Bombardier: CS100 1 ©2016 Gogo Inc. and Affiliates.
Slide 37: Business aviation scale
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Connected Broadband Aircraft Note: Data is as of June 30, 2016, based on public sources and management estimates 9x Largest Competitor Business Aviation scale
Slide 38: Established innovator in BA
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 10,000 1997 FCC authorizes Aircell’s ATG network 2002 Gogo launches Iridium ST3100 1991 Gogo (formerly Aircell) founded 2008 Gogo launches Axxess II Iridium System 2011 Gogo OnePhone introduced 2014 Dassault selects Gogo Axxess for FANS pro
Slide 39: Leveraging established distribution ecosystem
Leveraging established distribution ecosystem to reduce time to market BA ATG Aircraft Online Owners/Operators OEMs Aftermarket Dealers Ship Certify and Install Ship Certify and Install Supplemental Type Certificates (STCs) 90 OEM Shipments Equipped w/ Gogo Biz 73% Distribution Ecosystem ©2016 Gogo
Slide 40: Covering entire BA market
* Source: JetNet iQ Report Q4 2015 and Gogo estimates as of June 2016 ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Large Jets ~3,000 Aircraft Medium Jets ~4,000 Aircraft Light Jets ~5,000 Aircraft Turboprops ~8,500 Aircraft * * * * PURCHASE MOTIVATION + Bandwidth Applications + Global
Slide 41: Key takeaways for CA and BA
Maintain strong momentum and grow market share Continue to embed 2Ku into CA market by augmenting STC portfolio and investing in OEM offerability on leading airframes Provide more bandwidth and value-added applications to the BA market ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. Key
Slide 42: Financials
Financials Norm Smagley – EVP & CFO
Slide 43: Strong growth in revenue and profitability
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 43 Strong growth in revenue and profitability Slide Change Note: Minor differences exist due to rounding (1) Please see reconciliation of Adjusted EBITDA in appendix Adjusted EBITDA(1) ($M) $49 Revenue ($M) 54% CAGR CA-ROW Segment Loss Adju
Slide 44: Growing shareholder value: path to profitability
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 44 Growing Shareholder Value Path to profitability More Aircraft Significant backlog Growing market Leading market share Declining Investment Per Aircraft ARPA Growth Margin Improvement Rapid payback Bandwidth growth Additional services Mul
Slide 45: Strong visibility into CA aircraft online growth
Strong visibility into CA aircraft online growth ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 45 By the end of 2018… Installed majority of 2Ku aircraft awards Captured competitive share of potential awards Developed comprehensive STC portfolio Achieved OEM offerability for 2Ku Establi
Slide 46: Increasingly success-based cash CAPEX
Increasingly success-based cash CAPEX ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 46 Annual 2Ku Aircraft Installations Total Cash CAPEX ($M) 2-3 year payback at current mainline ARPA Guidance range *Total cash CAPEX includes software and network CAPEX and excludes CAPEX associated wi
Slide 47: Next gen ATG is CAPEX light
Deployment: $50 million phased project Leverages existing cell sites, backhaul & spectrum Rapid aircraft installations Low airborne equipment costs Targeted for 2018 Economic Benefits >10x capacity and peak speed increases Lower cost per bit Utilizes existing and unlicensed spectrum ©2016 Gogo Inc.
Slide 48: ARPA drivers
CA-NA Mainline fleet conversions to 2Ku Regional jet dilution mitigates CA-ROW High bandwidth satellite solutions Fewer small aircraft New fleet dilution near-term ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 48 2014 - 2016 CA-NA CA-ROW ARPA $138K $145K Note: Numbers shown are based o
Slide 49: Multi-payer model drives revenue
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. REVENUE Multi-payer model drives revenue 49 The Japan Airlines logo and lettering continues to render incorrectly More bandwidth, more flexibility, more partners
Slide 50: Service revenue margins >50% CA-ROW by 2019
= Service Revenue Margins >50% CA-ROW Service Revenue Margin in 2019* Greater utilization from more aircraft online 2X spectral efficiency from 2Ku antennas Lower bandwidth pricing from Ku HTS ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 50 CA-ROW service revenue margin expected to ex
Slide 51: Segment profit margin ~30% CA-ROW by 2021
= Segment Profit Margin ~30% CA-ROW Segment Profit Margin in 2021 Improved service revenue margin Increased operating leverage from global operations ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 51 …and achieve 30% segment profit margin by 2021 2009 2013 First half of 2016 First half
Slide 52: All elements are in place to achieve profitability
All elements are in place to achieve profitability ©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 52 Slide Change Near-term Targets Long-term Targets (5 years) Aircraft ARPA Investment Per Aircraft Margins Install most of 2Ku awards by end of 2018 Moderate growth 2-3 year breakeven >50%
Slide 53: Closing remarks: four drivers of profitability
We are keenly focused on the four drivers of profitability We have the aircraft and bandwidth to achieve profitability and free cash flow We are investing in continued innovation and leadership 2Ku has achieved market leading performance and adoption, with continued enhancements to come Next gen bri
Slide 54: Closing remarks
©2016 Gogo Inc. and Affiliates. Proprietary & Confidential. 54 Closing remarks Path to Profitability We have enough aircraft and continue to win more with the install rate accelerating Delivering more bandwidth to drive higher ARPA Margins improve as we continue to scale and execute our plan Technol
Slide 55: Questions
Questions
Slide 56: Appendix
Appendix
Slide 57: Adjusted EBITDA reconciliation ($MM)
Adjusted EBITDA reconciliation ($MM) Note: Minor differences exist due to rounding 2009 2011 2012 Q3 2012 Q4 2013 Q1 2013 Q2 2013 2015 2015 Q3 2015 Q4 2016 Q1 2016 Q2 Net Income (142) (18) (29) (36) (32) (73) (146) (108) (29) (34) (24) (40) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0)
Slide 58: Cash CAPEX reconciliation ($MM)
2013 2014 2015 2015 Q2 2015 Q3 2015 Q4 2016 Q1 2016 Q2 Purchases of Property and Equipment (105) (132) (135) (33) (19) (30) (31) (40) Acquisition of Intangible Assets (Capitalized Software) (16) (17) (18) (4) (4) (5) (6) (8) Consolidated Capital Expenditures (121) (150) (153) (37) (24) (35) (37) (48
Slide 59: 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) For the year ending 2017 Low High Consolidated capital expenditures (GAAP) (220) (265) Deferred airborne lease incentives 80 100 Cash CapEx (140) (16