Gogo Inc. · NASDAQ:GOGO
Gogo — Q1 2017 Earnings Presentation
22 slides from Gogo's earnings presentation, May 4, 2017
Slide 1: 1st Quarter 2017 Earnings Results
1st Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan– Incoming Chief Financial Officer May 4, 2017 Exhibit 99.2
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
Slide 3: Strong Start to 2017
STRONG START TO 2017 $142 $165 17% y/y Growth Overall revenue up 17% y/y with strong service revenue growth across all segments Virgin Australia selected 2Ku – industry leading performance on its first installed aircraft Robust sales pipeline Q1 ’17 Service Revenue Growth (y/y) CA-NA CA-ROW BA 16% 1
Slide 4: Winning Strategy for Satellite Capacity
WINNING STRATEGY FOR SATELLITE CAPACITY Ample capacity – now and for the foreseeable future Lowest bandwidth cost – superior antenna, higher utilization, benefits from innovation New agreement with SES to serve flights to Hawaii, Alaska and over the Pacific
Slide 5: Setting the New Industry Standard
SETTING THE NEW INDUSTRY STANDARD Expected results and availability based on management estimates. 2Ku delivers industry-leading performance today Ongoing performance improvements with new modem and HTS satellites 2Ku antenna 5
Slide 6: Significant Progress with OEMs
ü First A350 to be installed this year – other Airbus installs expected to begin in 2018 Signed agreement with Airbus to offer 2Ku OEM installs (A320, A330 and A380 aircraft) ü ü Bombardier to install 2Ku for Delta SIGNIFICANT PROGRESS WITH OEMS
Slide 7: On Track with Installs & Product Launches
ü ON TRACK WITH INSTALLS & PRODUCT LAUNCHES Expect significant 2Ku install ramp after Labor Day More than 170 2Ku aircraft installed for 8 different airlines ü ü Gogo Biz 4G commercial launch in Q2 2017 ü Reaffirm annual guidance of 450-550 2Ku installations ü Doubled 2Ku STC coverage to 2/3 of the
Slide 8: Introducing New CFO
ü INTRODUCING NEW CFO Previously CFO at multiple public companies including Vonage and Nextel Partners Barry Rowan joined as EVP, Finance and will become Chief Financial Officer following the filing of the Q1 ’17 10-Q ü ü Long track record of success in achieving significant value creation
Slide 9: Q1'17 Strong Financial Performance
Q1’17 STRONG FINANCIAL PERFORMANCE 17% y/y Growth Q1’17 revenue up 17% y/y Service revenue up 23% y/y $142 $160 $148 $147 $165 Q1 ’17 Adjusted EBITDA decreased to $11 million including $9.4 million of spend on next gen ATG Excluding next gen ATG spend, adjusted EBITDA margin would have been ~12% Not
Slide 10: CA-NA – Continued Service Revenue Growth
CA-NA – CONTINUED SERVICE REVENUE GROWTH 16% y/y Growth Service revenue driven by ARPA growth and increases in aircraft online 38 net aircraft installed in Q1 ’17, ending the quarter with 2,714 aircraft online 9% y/y Growth Note: Minor differences exist due to rounding
Slide 11: CA-NA – ARPA Strengthens in Quarter
CA-NA – ARPA STRENGTHENS IN QUARTER Annualized ARPA of $142K, up 6% y/y Driven by strong entertainment revenue growth and the multi-payer strategy Expect ARPA growth to continue throughout 2017 Segment profit of $11 million Segment profit and margin impacted by $9.4 million spend for next gen ATG de
Slide 12: CA-ROW – Robust Revenue Growth
CA-ROW – ROBUST REVENUE GROWTH 123% y/y Growth 19% y/y Growth Note: Minor differences exist due to rounding Revenue of $10.3 million, up 123% from Q1 ’16 Aircraft online growth of 19% ARPA growth of 45% 281 aircraft online, up 44 aircraft y/y 2Ku awarded but not yet installed aircraft is approximate
Slide 13: CA-ROW – ARPA Continues Strong Growth
CA-ROW – ARPA CONTINUES STRONG GROWTH Note: Minor differences exist due to rounding $139 $202 45% y/y Growth Annualized ARPA grew 45% to $202K Driven by higher airline paid and third party paid usage Segment loss increased to $27 million Driven by increased launch costs for new airline partners and
Slide 14: Growth in BA Service Revenue Continues
GROWTH IN BA SERVICE REVENUE CONTINUES Service revenue increased 30% y/y to $40 million ATG aircraft online increased 18% y/y, to over 4,300 ATG Service ARPU increased 12% y/y, to nearly $2,800 per month 30% y/y Growth 61% Note: Minor differences exist due to rounding 66% 68% 71% 71% 18% y/y Growth
Slide 15: Service Revenue Drives Strong Segment Margin Growth
SERVICE REVENUE drives STRONG segment MARGIN GROWTH BA equipment revenue decreased to $16 million Deferred equipment revenue will be recognized starting mid-year Segment profit increased 29% y/y, to $26 million Segment profit margin expanded to 46% Note: Minor differences exist due to rounding 29% y
Slide 16: Success-Based Cash CAPEX to Drive Growth
SUCCESS-BASED Cash CAPEX TO DRIVE GROWTH 16 Note: Minor differences exist due to rounding. Note: Cash CAPEX is a non-GAAP measure. See Appendix for a reconciliation to the most comparable GAAP measure. $35MM y/y Increase Q1 ’17 y/y changes in Cash CAPEX Due primarily to increased airborne equipment
Slide 17: Q1 Key Takeaways
ü Strong financial performance in Q1 Q1 KEY TAKEAWAYS Reaffirming 2017 and long-term guidance ü 17
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Gogo Installed and Awarded Aircraft as of 3/31/2017
GOGO INSTALLED AND AWARDED AIRCRAFT AS OF 3/31/2017 All figures are as of 3/31/2017. Awarded but not yet installed figures are approximate and differences may exist due to rounding. Note: On May 27, 2016, we entered into a letter agreement with American Airlines whereby American exercised its option
Slide 21: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 Net Income (24) (40) (33) (27) (41) Interest Income (0) (0) (1) (1) (1) Interest Expense 16 18 25 25 27 Depreciation & Amortization 24 25 27 30 30 EBITDA 17 2 18 27 16 Stock-based Compensation Expense 4 4 5 5 4 Amortization
Slide 22: Cash CAPEX Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 Purchases of Property and Equipment (31) (40) (36) (41) (64) Acquisition of Intangible Assets (Capitalized Software) (6) (8) (8) (7) (8) Consolidated Capital Expenditures (37) (48) (44) (48) (72) Change in Deferred Airborne Leas