Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Day (June 2014)
129 slides from Gogo's investor day presentation, Jun 18, 2014
Slide 1: Investor and Analyst Day
Exhibit 99.1 Investor and Analyst Day June 18, 2014
Slide 2: Today's Agenda
TODAY’S AGENDA Time Topic Speaker 8:00 am 8:05 am Welcome Varvara Alva, VP IR 8:05 am 8:40 am Strategic Positioning Michael Small, CEO 8:40 am 9:10 am Technology Roadmap Anand Chari, CTO 9:10 am 9:40 am CA North America Update Ash ElDifrawi, CCO 9:40 am 10:00 am Break Technology Display & Demos 10:0
Slide 3: Disclaimer
DISCLAIMER 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 “anticipa
Slide 4: Strategic Positioning
01 STRATEGIC POSITIONING Michael Small President & Chief Executive Officer
Slide 5: Agenda
AGENDA Solid Track Record Large In-Flight Market Opportunity Leadership Position Gogo Mission & Strategy
Slide 6: Solid Track Record
SOLID TRACK RECORD Total Revenue Service Revenue Adjusted EBITDA(*) ($M)($M)($M) $49 $328 $250 $138M $41 increase $8 73% 100% CAGR CAGR ($89) $37 $16 2009 2013 2009 2013 2009 2013 CA-ROW segment loss * Please see reconciliation of Adjusted EBITDA in appendix. GOGOAIR.COM | 6
Slide 7: Industry Leading Scale
INDUSTRY LEADING SCALE Gogo Installed Total Awarded Market Position(1) Market Share Aircraft Aircraft CA–NA #1 76% 2,056 2,300+ CA–ROW #2 2% 5 332 BA ATG #1 94% 2,250 2,250 BA Satellite #1 63% 5,236 5,236 (1) Market position is as of 3/31/2014 and based on following: CA-NA – based on publicly availa
Slide 8: Far Ahead of the Competition
FAR AHEAD OF THE COMPETITION CA Aircraft Online 2,056 2008 2009 2010 2011 2012 2013 2014 Q1 Gogo Competitors(1) Getting Technology Right Matters Technology is one element, but critical Deploying ATG provided six years of leadership 50+ million sessions to-date Fraction of capex, compared to satellit
Slide 9: Agenda
AGENDA Solid Track Record Large In-Flight Market Opportunity Leadership Position Gogo Mission & Strategy
Slide 10: What People Have Said
WHAT PEOPLE HAVE SAID… Too expensive and too slow Not enough capacity Only a small percent of rich people will use it The service is unreliable This is what people said 25 years ago about wireless industry… And now we are hearing the same thing about the connected plane…
Slide 11: Wireless Subscriber Connections Exceeded U.S. Population
WIRELESS SUBSCRIBER CONNECTIONS EXCEEDED U.S. POPULATION IN 2011 Est. Subscriber Connections (M) Burkina Faso, Africa Wireless Subscriber 150 Use a hand water pump, but enjoy Connections cellular communications 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 CTIA Wireless Industry Indice
Slide 12: Large Market of Global Aircraft to Connect
LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT Today Future ~73,000(1) 44,000 27,000 17,000 + = Global Global Global Global Commercial Business Aircraft Aircraft Aircraft Aircraft 1) Includes 36,000 aircraft for CA in 2033 and 37,000 aircraft for BA in 2023. Sources: Boeing Current Market Outlook 2013 –
Slide 13: Connecting Aircraft Is More Valuable Than You Think
CONNECTING AIRCRAFT IS MORE VALUABLE THAN YOU THINK Connected Connected Connected home car aircraft 0.97% of asset 0.71% of asset 0.84% of asset value per year value per year value per year $1.0M ARPA $0.7M ARPA $0.8M ARPA $17B–$35B industry $12B–$25B industry $14B–$30B industry Industry estimates w
Slide 14: Factors That Make Connectivity in the Air Far More Valuable
FACTORS THAT MAKE CONNECTIVITY IN THE AIR FAR MORE VALUABLE Isolated, remote and mobile Connectivity Complex and expensive asset in the air is valuable Real time requirements Upscale captive audience
Slide 15: Agenda
AGENDA Solid Track Record Large In-Flight Market Opportunity Leadership Position Gogo Mission & Strategy
Slide 16: Critical Mass Is Needed to Enter the Broadband IFC Market
CRITICAL MASS IS NEEDED TO ENTER THE BROADBAND IFC MARKET AND SUCCEED has the Critical Mass & experience #1 globally SCALE >4,300 broadband aircraft online START-UP $0.63B or ~$150,000 investment per plane INVESTMENT 2006-2010 – operating expenses, cash capex, spectrum CONTINUING $154M(1) or ~$75,00
Slide 17: Why We Win
WHY WE WIN 1 Specialize in aviation 2 End-to-end service provider 3 Superior technology and roadmap 4 Deliver excellent reliability 5 Flexible business model
Slide 18: Gogo Video #1
GOGO VIDEO #1
Slide 19: End-to-End Service Provider
2. END-TO-END SERVICE PROVIDER AIRCRAFT REGULATORY NETWORK OPERATIONS APPROVAL ENGINEERING & DESIGN CONNECTIVITY NETWORK & PRODUCTS & BANDWIDTH AIRLINE SERVICES MANAGEMENT DEVELOPMENT CUSTOMER CARE & MARKETING AIRCRAFT SUPPORT COMPLETE CONNECTIVITY BACK-OFFICE SOLUTIONS INFRASTRUCTURE ENGINEERING AN
Slide 20: Gogo Is Bringing 100+ Mbps to the Sky
3. GOGO IS BRINGING 100+ Mbps TO THE SKY… Mbps Fixed networks Mobile networks Gogo FTTH 100 LTE Spot GPON Advanced beam* LTE 80 VDSL2 GTO/ 60 VDSL HSPA 2Ku* Evolved HSPA HSUPA 20 ADSL2+ SDSL HSDPA ATG ATG-4 UMTS GSM GPRS EDGE 1996 2001 2006 2011 2016 * Expected date of availability
Slide 21: Superior Technology and Roadmap
3. SUPERIOR TECHNOLOGY AND ROADMAP Broadest suite of leading technology solutions Full fleet availability Performance, cost & time to market benefits Mbps GTO / 2Ku w/Spot Beams* GTO* 2Ku* Next Gen ATG* 50 Global Ku w/Spot Xpress* Beams* Ku ATG-4 0 ATG 2008 2010 2012 2014 2016 2018 2020 *Expected da
Slide 22: Service Reliability Rooted in Scale and Experience
4. SERVICE RELIABILITY ROOTED IN SCALE AND EXPERIENCE 50+ million 8,000+ flights sessions per day
Slide 23: Flexible Model – Responding to Market Demand
5. FLEXIBLE MODEL – RESPONDING TO MARKET DEMAND Passenger Airline Flexible business model provides choice for airlines
Slide 24: Agenda
AGENDA Solid Track Record Large In-Flight Market Opportunity Leadership Position Gogo Mission & Strategy
Slide 25: Gogo Mission
GOGO MISSION Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet
Slide 26: Gogo Five Point Strategy
GOGO FIVE POINT STRATEGY 1 Gain global share 2 Grow revenue per aircraft in Commercial Aviation – North America 3 Evolve technology roadmap to address market needs 4 Accelerate Business Aviation growth 5 Deliver consistent execution
Slide 27: In Summary
I N S U M M A R Y POWERFUL COMPETITIVE ADVANTAGES. MOMENTUM IS BUILDING. SUPERIOR SOLUTIONS THE ONLY PURE PLAY LARGE GROWTH OPPORTUNITY MARKET LEADER
Slide 28: Technology Roadmap
02 TECHNOLOGY ROADMAP Anand Chari Executive Vice President, Engineering & Chief Technology Officer
Slide 29: Agenda
AGENDA Recent Developments Key Technology and Operating Strengths Priorities Going Forward
Slide 30: 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 6 Ku STC’s obtained, more underway Boeing line-fit program underway New in-cabin products
Slide 31: Exclusive 2Ku and GTO Technologies Will Disrupt Aviation
EXCLUSIVE 2Ku AND GTO TECHNOLOGIES WILL DISRUPT THE GLOBAL AVIATION INDUSTRY GTO: ATG-4 2Ku: Global footprint coverage (North America) (ROW) Best global coverage with 2Ku – skew angle issue resolved Best spectral efficiency – higher speed at lower cost Half the height of traditional antenna – lower
Slide 32: Typical Aero Antennas – Skew Angle Issue
TYPICAL AERO ANTENNAS – SKEW ANGLE ISSUE Tropical regions Higher skew angle More adjacent Poor performance satellite and interference economics
Slide 33: Conventional Aero Antenna
CONVENTIONAL AERO ANTENNA NYC TO RIO DE JANEIRO Note antenna orientation toward satellite, along skew line JFK GIG Small skew, small twist, no interference GOGOAIR.COM 33 | 33
Slide 34: Conventional Aero Antenna
CONVENTIONAL AERO ANTENNA NYC TO RIO DE JANEIRO Note antenna orientation toward satellite, along skew line JFK GIG Moderate skew, moderate twist, moderate interference GOGOAIR.COM 34
Slide 35: Conventional Aero Antenna
CONVENTIONAL AERO ANTENNA NYC TO RIO DE JANEIRO Note antenna orientation toward satellite, along skew line JFK GIG High skew, high twist, high interference
Slide 36: Conventional Aero Antenna
CONVENTIONAL AERO ANTENNA NYC TO RIO DE JANEIRO JFK GIG Maximum skew, maximum twist, maximum interference
Slide 37: Gogo 2Ku Aero Antenna
GOGO 2Ku AERO ANTENNA NYC TO RIO DE JANEIRO JFK GIG
Slide 38: Gogo 2Ku Aero Antenna
GOGO 2Ku AERO ANTENNA NYC TO RIO DE JANEIRO JFK GIG
Slide 39: Gogo 2Ku Aero Antenna
GOGO 2Ku AERO ANTENNA NYC TO RIO DE JANEIRO JFK GIG
Slide 40: Gogo 2Ku Aero Antenna
GOGO 2Ku AERO ANTENNA NYC TO RIO DE JANEIRO JFK GIG
Slide 41: 2Ku Offers Global Coverage with Superior Performance and Economics
2Ku Offers Global Coverage with Superior Performance and Economics
Slide 42: ATG4 Retrofit Program Showing Strong Results
ATG4 RETROFIT PROGRAM SHOWING STRONG RESULTS ATG-4 demonstrates expected performance improvement to the ~800 aircraft Average latency on high usage 534 flights declined by 50% 436 Customer care contact rate on ATG-4 tails declined by 49% 129 ATG-4 tails increased to 26% of 2012 2013 2014 Q1 2014 ins
Slide 43: Agenda
AGENDA Recent Developments Key Technology and Operating Strengths Priorities Going Forward
Slide 44: Leveraging Strong Technology Platform
LEVERAGING STRONG TECHNOLOGY PLATFORM Integrated Best-in-class three operations sub-networks Best Mature coverage technology platform Broadest End-to-end & best service solutions provider Strong platform Unmatched service reliability
Slide 45: The Most Broadband Solutions and Best Coverage
1. THE MOST BROADBAND SOLUTIONS AND BEST COVERAGE Thales/ Global Gogo PAC ViaSat LiveTV Eagle Business jets 2,250+ ATG 200+ satellite Regional jets (limited) Mainline jets Fastest time to deployment (ATG/ATG-4) Multiple connectivity ATG/ATG- Ka Ka 4, SBB, Ku Ku options Ku, Ka1 (Ku – TV) (limited Ku)
Slide 46: Superior Technology and Roadmap
2. SUPERIOR TECHNOLOGY AND ROADMAP Broadest suite of leading technology solutions Full fleet availability Performance, cost & time to market benefits Mbps GTO / 2Ku w/Spot Beams* GTO* 2Ku* Next Gen ATG* 50 Global Ku w/Spot Xpress* Beams* Ku ATG-4 0 ATG 2008 2010 2012 2014 2016 2018 2020 *Expected da
Slide 47: STC Portfolio Is the Largest in Broadband In-Flight Connectivity
3. STC PORTFOLIO IS THE LARGEST IN THE BROADBAND IN-FLIGHT CONNECTIVITY INDUSTRY AND IS GROWING Number of aircraft Airborne System Install time types installed ATG 33 Overnight ATG-4 16 Overnight Ku 6 3 days+ Gogo Vision 10 Overnight Business Jets Hundreds Multi-day Gogo has the most STCs in the ind
Slide 48: Operating Three Networks Together Drives Superior Reliability
4. OPERATING THREE NETWORKS TOGETHER DRIVES SUPERIOR RELIABILITY AND RAPID INNOVATION Scalable and modular architecture Operational leverage Rapid innovation and evolution Reliable and mature hardware and software platform Airborne Network Aircraft To Ground Ground Infrastructure Common in-cabin Con
Slide 49: Agenda
AGENDA Recent Developments Key Technology and Operating Strengths Priorities Going Forward
Slide 50: Key Priorities
KEY PRIORITIES Bring more capacity to North American airlines Retrofit more ATG-4 aircraft Get GTO / 2Ku flying Global expansion Rapid rollout of Ku aircraft under contract Get 2Ku flying Add Ka (GlobalXpress) network Rollout next generation in-cabin network technology Line fit offerability of vario
Slide 51: In Summary
I N S U M M A R Y GOGO PROVIDES SUPERIOR TECHNOLOGY AND END-TO-END SOLUTIONS Key Strengths The Gogo Advantage Scalable Trusted Superior communication service provider for End-to-end airline’s FULL fleet (all sizes, all routes, Pure-play all times) 2Ku and GTO will transform global aviation industry
Slide 52: CA North America Update
03 CA NORTH AMERICA UPDATE Ash ElDifrawi Executive Vice President & Chief Commercial Officer
Slide 53: Agenda
AGENDA Strong Performance Record Focused on Strong Airline Partnerships Bending the Curve on Revenue
Slide 54: Strong CA Revenue Growth
STRONG CA REVENUE GROWTH Aircraft Online ARPA(1) Total CA Revenue ($k)($M) 2,032 $101 $199 $24 $11 2009 2013 2009 2013 2009 2013 3X >4X 106% CAGR 1) Annualized average revenue per aircraft
Slide 55: Significant Recurring Revenue Growth and Loyalty Trends
SIGNIFICANT RECURRING REVENUE GROWTH AND LOYALTY TRENDS Subscription Revenue High Repeat Usage ($M)(Repeat Passengers’ Sessions as % of Total Sessions) 144% $73 73% 78% CAGR 66% $53 58% $27 $5 2010 2011 2012 2013 2010 2011 2012 2013 Subscription base increased 4x Trend continuing into 2014
Slide 56: Largest Market Share in North America
LARGEST MARKET SHARE IN NORTH AMERICA Aircraft Online as of March 31, 2014(1) 2,056 76% of connected aircraft >4x the closest competitor Gogo Global Eagle Panasonic LiveTV 1) Based on management estimates, trade publications and other public sources as of 3/31/2014.
Slide 57: Recent Wins Add Aircraft to Backlog
RECENT WINS ADD AIRCRAFT TO BACKLOG … Recent wins: Air Canada – 130 aircraft – ATG/ATG4 American Airlines Regional Jets – 30 aircraft Aircraft awarded: Installed as of Q1 – 2,056 Aircraft in backlog ~ 250 What’s left in North America: United Regional Jets – ~200 American Regional Jets – ~200 Spirit
Slide 58: Agenda
AGENDA Strong Performance Record Focused on Strong Airline Partnerships Bending the Curve on Revenue
Slide 59: Redefining the Customer
REDEFINING THE CUSTOMER … Passenger Airline Our Mission: Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet
Slide 60: Being a Trusted Aero Communication Service Provider Means
BEING A TRUSTED AERO COMMUNICATION SERVICE PROVIDER MEANS … 1 Network reliability and dependability 2 Adding more capacity to the network 3 Empowering amazing experiences
Slide 61: Delivering Reliability to Our Airline Partners
1. DELIVERING RELIABILITY TO OUR AIRLINE PARTNERS 99%+ 99%+ ATG network ATG End-to-End reliability System Availability
Slide 62: More Capacity Is Having Positive Customer Impact
2. MORE CAPACITY IS HAVING POSITIVE CUSTOMER IMPACT ATG4 Plane Performance Customer satisfaction +48% Customer care contact rate declined -49% Average latency -50%
Slide 63: Product Innovation to Meet Airline Needs
3. PRODUCT INNOVATION TO MEET AIRLINE NEEDS Gogo Vision – Ascend Autonomous Mode Bundle Alaska needed Delta wanted the entertainment solution ability to sell for flights to Hawaii connectivity pre-flight that do not have as part of bundle connectivity GogoSphere Virgin wanted an integrated partnersh
Slide 64: Gogo Video #2
e_ GOGO VIDEO #2
Slide 65: Agenda
AGENDA Strong Performance Record Focused on Strong Airline Partnerships Bending the Curve on Revenue
Slide 66: Bending the Curve on Revenue
BENDING THE CURVE ON REVENUE 1 Expand airline offerings 2 Expand distribution channels 3 Launch operational applications 4 Leverage more capacity
Slide 67: New Products Will Increase Usage
1. NEW PRODUCTS WILL INCREASE USAGE Gogo Vision Text & Talk Gogo App 75%* interested to 79%* of passengers Central hub for all access entertainment want to text products (SITA) 33%* willing to pay for it In-air app store 72%* prefer to watch on their own device Launched in BA, In-app payment in beta
Slide 68: Building a Ground Distribution Network
2. BUILDING A GROUND DISTRIBUTION NETWORK Airline Purchase Path Integration Device Financial Manufacturers Services Revenue Companies Travel Management Companies
Slide 69: Operational Applications Are Taking Off
3. OPERATIONAL APPLICATIONS ARE TAKING OFF Thousands of flight attendants are using devices connected to Gogo to manage onboard customer transactions Airlines are exploring the use of electronic flight bags Aircraft component manufacturers and other third party providers are interested in partnershi
Slide 70: More Capacity Will Unlock Growth
4. MORE CAPACITY WILL UNLOCK GROWTH Market expansion 70 – 100+ Mbps 3 – 10 Yield Mbps management
Slide 71: Passenger, Crew and Aircraft Offerings Will Drive Revenue per Aircraft
PASSENGER, CREW AND AIRCRAFT OFFERINGS WILL DRIVE REVENUE PER AIRCRAFT Operational Apps New products: —Gogo Vision —Text & Talk SOURCES - Signature Services Gogo Connectivity REVENUE PASSENGERS CREW AIRCRAFT Productive Constant Infrequent Passengers Connectors Leisure Flyers
Slide 72: In Summary
I N S U M M A R Y STRONG PERFORMANCE AND CLEAR DRIVERS OF GROWTH Focused on strong airline relationships New products will engage the entire plane Distribution network will enable selling everywhere Operational applications represent attractive opportunity More capacity will turbo-charge revenue per
Slide 73: CA Rest of World Update
04 CA REST OF WORLD UPDATE Niels Steenstrup Senior Vice President, International Sales
Slide 74: Agenda
AGENDA International Market Opportunity Why We Win Key Priorities
Slide 75: The International Market Is Large & Untapped
THE INTERNATIONAL MARKET IS LARGE & UNTAPPED North America Rest of World 25% 75% Total Aircraft1 ~4,000 ~13,000 Committed to IFC2 87% 17% Uncommitted 13% 83% …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
Slide 76: A Closer Look
A CLOSER LOOK… NORTH AMERICA EUROPE Aircraft 25% Aircraft 25% Intl. Aircraft 3% ASIA-PAC Aircraft 30% MIDDLE EAST/AFRICA LATIN AMERICA Aircraft 9% Aircraft 8% Aircraft = % of global aircraft Source: ATW World Airline Report, 2013 GOGOAIR.COM | 76
Slide 77: Importance of Wi-Fi to Airline Choice
IMPORTANCE OF WI-FI TO AIRLINE CHOICE Importance of Wi-Fi Availability (Top 3 Box) 56% 44% 36% 33% 29% South America Asia Overall Europe North America * Gogo Global Category Attitude & Usage Study, October 2013. Question: How important are the following factors to you when choosing the airline for a
Slide 78: Wi-Fi Device Ownership Is High Among Air Travelers
WI-FI DEVICE OWNERSHIP IS HIGH AMONG AIR TRAVELERS Laptop / Netbook Tablet Smartphone Total 83% 48% 72% North America 79% 43% 62% South America 90% 58% 81% Asia 79% 48% 76% Europe 86% 49% 73% * Gogo Global Category Attitude & Usage Study, October 2013. Question: Which Wi-Fi enabled devices do you ow
Slide 79: The International Market Is at an Inflection Point
THE INTERNATIONAL MARKET IS AT AN INFLECTION POINT U.S. market validates inflight connectivity demand worldwide Competitive pressures driving decisions Passenger demand influencing airline choice Connectivity technology innovation
Slide 80: Momentum Is Building
MOMENTUM IS BUILDING International Aircraft Wins (cumulative) Expanding presence internationally: (2014 vs 2013) 1.8x Opportunities in sales pipeline—150% increase 180 Number of Proposals submitted—400% increase Sales force—100% increase Added presence in 5 countries, 3 continents 2012 2013
Slide 81: Delta International Alone Will Create Competitive Dynamic
DELTA INTERNATIONAL ALONE WILL CREATE COMPETITIVE DYNAMIC Global WI-FI availability will pressure airlines to make IFC partner decision
Slide 82: Agenda
AGENDA International Market Opportunity Why We Win Key Priorities
Slide 83: 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 84: Significant Progress To-Date
SIGNIFICANT PROGRESS TO-DATE 6 STCs received for Ku covering 125 aircraft OPERATIONAL 3 day Ku install – fastest in the industry 19 Ku aircraft flying today Global satellite network up and running NETWORK 11 Teleports established in six locations International sales & marketing staff increased to ap
Slide 85: Gogo Stole the Show at the Aircraft Interiors Expo
GOGO STOLE THE SHOW AT THE AIRCRAFT INTERIORS EXPO FOR SECOND YEAR IN A ROW Premier event for global aviation industry Announced 2Ku – revolutionary technology for the global aviation industry 50+ airline meetings in 3 days (up by 60% from last year)
Slide 86: Agenda
AGENDA International Market Opportunity Why We Win Key Priorities
Slide 87: Key Priorities
KEY PRIORITIES Get Delta Air Lines, Japan Airlines and AeroMéxico flying by end of 2015 Reach 500 – 1,000 aircraft awarded by end of 2015 Establishes international presence Enables long-term profitability Positions for long-term growth 2Ku flying in 2015
Slide 88: In Summary
I N S U M M A R Y UNIQUELY POSITIONED GLOBALLY. MARKET AT INFLECTION POINT Large untapped market Market inflection point is reached Gogo is best positioned Focused on sales and execution
Slide 89: Business Aviation Update
05 | BUSINESS AVIATION UPDATE John Wade Executive Vice President & General Manager, Business Aviation
Slide 90: Agenda
AGENDA Business Today Market Opportunity Key Priorities
Slide 91: Established Leader in Business Aviation Market
ESTABLISHED LEADER IN BUSINESS AVIATION MARKET Voice and narrowband data High-speed internet and Text & Voice and light internet with with global coverage Talk for the continental U.S., near-global coverage Canada, and portions of Alaska 5,236 aircraft online 2,250 aircraft online 16 aircraft online
Slide 92: Leadership Position in Business Aviation Market
LEADERSHIP POSITION IN BUSINESS AVIATION MARKET Market leader & innovator Broadest product offerings Deep and long term customer relationships Global sales & distribution
Slide 93: Strong BA Revenue Growth and Profitability
STRONG BA REVENUE GROWTH AND PROFITABILITY BA Revenue BA Segment Profit ($M)($M) $127 $51 49% CAGR 103% CAGR $26 $3 2009 2013 2009 2013
Slide 94: Recent Product and Service Announcements
RECENT PRODUCT AND SERVICE ANNOUNCEMENTS SUPPORT LONG TERM GROWTH STRATEGY Leverage Add New Products Expand Existing Networks & Services Internationally ATG 2000 Gogo Text & Talk Inmarsat FANS over Iridium Gogo OnePhone SwiftBroadband Universal Cabin System Global Xpress Gogo Vision Gogo Cloud
Slide 95: Universal Cabin System Is the First All-in-One Smart Router and Media Server
UNIVERSAL CABIN SYSTEM IS THE FIRST ALL-IN-ONE SMART ROUTER AND MEDIA SERVER In-Cabin In-Cabin Devices Capabilities Wi-Fi 3G/4G Bridge Modem Permits access to all in-cabin wireless services with a single log on Offers data compression – maximizes efficiency & increases throughput Updates onboard con
Slide 96: Agenda
AGENDA Business Today Market Opportunity Key Priorities
Slide 97: Market Opportunity Is Large and Growing
MARKET OPPORTUNITY IS LARGE AND GROWING Business Aviation Market 1.3x 36,000 27,000 11,000 Rest of World 7,000 25,000 North America 20,000 ATG has penetrated only 11% of the North America market 2013 2023F Sources: JetNet iQ Report Q1 2014; General Aviation Manufacturers Association 2012 Statistical
Slide 98: Our Industry-Leading Product & Service Offerings Set Us Apart
OUR INDUSTRY-LEADING PRODUCT & SERVICE OFFERINGS SET US APART C O M P E T I T O R S 1 Features Gogo Hardware & Service Resellers Hardware Service Providers & Wholesalers Providers Air to Ground Iridium Inmarsat Ku Services Ka Global Xpress Ground Wi-Fi Turn-key Content Text & Talk Air to Ground Irid
Slide 99: Why We Win
WHY WE WIN Only company offering connectivity through all three networks Broadest mix of hardware and services Scale, expertise, and credibility Award winning global 24/7 service and support
Slide 100: Agenda
AGENDA Business Today Market Opportunity Key Priorities
Slide 101: Key Priorities
KEY PRIORITIES 1 Maintain Increase technology Accelerate leadership aircraft online ARPU growth
Slide 102: Accelerate Aircraft Growth
1. ACCELERATE AIRCRAFT GROWTH ATG Iridium Swift Broadband 20,000 market 18,000 market 18,000 market All others All others 8% Gogo 1% 11% Gogo 29% Available Aircraft Available 54% All Available aircraft Others aircraft 88% 17% 92% Strategy Strategy Strategy Differentiated equipment FANS over Iridium
Slide 103: Increase Revenue by Selling More Equipment & Services to Installed Base
2. INCREASE REVENUE BY SELLING MORE EQUIPMENT & SERVICES TO INSTALLED BASE Today Future GogoBiz - In-Flight Connectivity Iridium Voice GogoBiz - In-Flight Connectivity FANs over Iridium Iridium Voice Gogo OnePhone Gogo Text & Talk Gogo Vision Universal Cabin System Gogo Operations-Oriented Communica
Slide 104: In Summary
I N S U M M A R Y KEY MESSAGES TODAY Market leader and innovator Large growth opportunity Multiple growth drivers Broadest product and service offerings Clear and profitable business model
Slide 105: Financials
06 FINANCIALS Norman Smagley Executive Vice President & Chief Financial Officer
Slide 106: Agenda
AGENDA Strong Performance Business Aviation Commercial Aviation North America Commercial Aviation Rest of the World Key Takeaways
Slide 107: Growing Revenue Drives Profitability
GROWING REVENUE DRIVES PROFITABILITY Revenue Adjusted EBITDA* ($M)($M) $353 $63 $328 $49 $24 $52 $41 73% $234 $14 CAGR $9 $8 $11 ($1) $160 CA-ROW Segment Loss $95($45) $37 ($89) 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 Q1 LTM Q1 LTM * Please see reconciliation of Adjusted EBITDA i
Slide 108: Proven Operating Leverage
PROVEN OPERATING LEVERAGE Cost of Goods Sold 130%(% of revenue) Consolidated COGS 48% 51% Consolidated COGS excl. CA-ROW 46% Consolidated COGS excl. CA-ROW and 40% assuming no change to Rev Share %(1) 2009 2011 2012 2013 Engineering, Design General & Sales & & Development Administrative Marketing (%
Slide 109: Our Segments Are in Different Phases
OUR SEGMENTS ARE IN DIFFERENT PHASES BA: Strong revenue growth Strong segment profitability and FCF CA-NA: Strong revenue growth Break-even segment profitability CA-ROW: Investment phase Focusing on signing airlines and investing for growth
Slide 110: Agenda
AGENDA Strong Performance Business Aviation Commercial Aviation North America Commercial Aviation Rest of the World Key Takeaways
Slide 111: Strong Growth in All KPIs Drive Revenue Growth
STRONG GROWTH IN ALL KPIs DRIVE REVENUE GROWTH Revenue 2009–2013 Change ($M) $140 49% $127 ATG AIRCRAFT ONLINE 40x CAGR $98 ATG UNITS SHIPPED 6x ATG SERVICE ARPU 4x $26 ATG EQUIPMENT ARPU 1.5x 2009 2012 2013 2014 Q1 LTM
Slide 112: Profitability Driven by Growing Service Revenue
PROFITABILITY DRIVEN BY GROWING SERVICE REVENUE Service Revenue Segment Profit ($M) ($M) 24% $6 2009 $34 35% 2012 $52 41% 2013 $57 41% 2014 Q1 11% $3 2009 $36 36% 2012 $51 40% 2013 $58 41% 2014 Q1 LTM LTM % of Total BA Revenue Segment Profit Margin
Slide 113: Our Focus: Revenue = Aircraft x ARPA
O U R F O C U S : REVENUE = AIRCRAFT X ARPA TODAY TOMORROW INCREASE AIRCRAFT Current aircraft online Expand market share In-Flight Connectivity In-Flight Connectivity Gogo Vision INCREASE Telecommunication Gogo Text & Talk $ ARPU Services Gogo Operations-Oriented Communications Services Universal Ca
Slide 114: Agenda
AGENDA Strong Performance Business Aviation Commercial Aviation North America Commercial Aviation Rest of the World Key Takeaways
Slide 115: Strong Growth Across All KPIs Drive Significant Revenue Growth
STRONG GROWTH ACROSS ALL KPIs DRIVE SIGNIFICANT REVENUE GROWTH Revenue 2009–2013 Change ($M) $213 ARPP 5x $199 ARPA 4x $134 AIRCRAFT ONLINE 3x TAKE RATE 2x $11 ARPS 2x 2009 2012 2013 2014 Q1 LTM 106% CAGR
Slide 116: Demonstrated Significant Operating Leverage
DEMONSTRATED SIGNIFICANT OPERATING LEVERAGE Cost of Goods Sold Other Operating Expenses Segment Profit (% of Revenue) Excluding D&A (% of Revenue) (% of Revenue) 12% 59% 56% 71% 52% 51% 2% 41% 52% 47% -1% 45% -9% Assuming constant Assuming constant revenue share %(1) revenue share %(1) -30% 2011 201
Slide 117: Our Focus: Revenue = ARPA x Aircraft
O U R F O C U S : REVENUE = ARPA X AIRCRAFT TODAY TOMORROW In-Flight Connectivity Gogo Vision INCREASE In-Flight Connectivity Gogo Text Messaging Gogo Signature Services $ REVENUE PER Gogo Operations-Oriented AIRCRAFT Communications Services All Passengers Business Passengers Media Partners Aircraft
Slide 118: Agenda
AGENDA Strong Performance Business Aviation Commercial Aviation North America Commercial Aviation Rest of the World Key Takeaways
Slide 119: Investing for Future Growth
INVESTING FOR FUTURE GROWTH CA-ROW Segment Loss ($M) $41 $14 $17 2012 2013 2014 Q1 2012 – Launched international operations 2013 – Established global Ku network, began development of industry leading technology solutions 2014 – announced 2Ku, first Ku equipped aircraft flying, multiple STCs received
Slide 120: Our Focus: Revenue = Aircraft x ARPA
OUR FOCUS: REVENUE = AIRCRAFT X ARPA LAUNCH TOMORROW INCREASE AIRCRAFT More Airlines In-Flight Connectivity Gogo Vision In-Flight Connectivity Gogo Text Messaging GROW Gogo Signature Services Gogo Operations-Oriented $ REVENUE PER Communications Services AIRCRAFT All Passengers Business Passengers M
Slide 121: Our Focus: Drive Rest of World Towards Profitability
O U R F O C U S : DRIVE REST OF WORLD TOWARDS PROFITABILITY Get 300 aircraft flying by end of 2015 Expect high incremental margin 2Ku flying in 2015 Half the bandwidth cost of competing solutions Reach 500–1,000 aircraft awarded by end of 2015 Enables long-term profitability
Slide 122: Agenda
AGENDA Strong Performance Business Aviation Commercial Aviation North America Commercial Aviation Rest of the World Key Takeaways
Slide 123: Clear Line of Sight to Consolidated Profitability and Free Cash Flow
CLEAR LINE OF SIGHT TO CONSOLIDATED PROFITABILITY AND FREE CASH FLOW BA – strong growth, profitability and free cash flow CA-NA – strong growth, break-even and on the way to strong profitability and cash flow CA-ROW – momentum is building GOGOAIR.COM |
Slide 124: Factors That Will Drive Consolidated EBITDA Growth in 2015 and Beyond
FACTORS THAT WILL DRIVE CONSOLIDATED EBITDA GROWTH IN 2015 AND BEYOND Continued strong growth in aircraft and revenue per aircraft Underlying operating leverage continues, headwinds subside CA NA revenue share stabilizes CA ROW generates revenue Step up in spending for globalization is absorbed Fast
Slide 125: Group Q&A
GROUP Q&A 2014 GOGO INC. AND AFFILIATES. PROPRIETARY & CONFIDENTIAL.
Slide 126: Closing Remarks
CLOSING REMARKS Michael Small President & Chief Executive Officer
Slide 127: In Summary
I N S U M M A R Y POWERFUL COMPETITIVE ADVANTAGES. MOMENTUM IS BUILDING. SUPERIOR SOLUTIONS THE ONLY PURE PLAY LARGE GROWTH OPPORTUNITY MARKET LEADER
Slide 128: Appendix
APPENDIX 2014 GOGO INC. AND AFFILIATES. PROPRIETARY & CONFIDENTIAL.
Slide 129: Reconciliation of Adjusted EBITDA ($MM)
RECONCILIATION OF ADJUSTED EBITDA ($MM) 2009 2010 2011 2012 2013 2014 Q1 Net Income (142) (140) (18) (96) (146) (17) Interest Income (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 Income Tax Provision – 3 1 1 1 0 Depreciation & Amortization 22 31 33 37 56 16 EBITDA (91) (106) 16 (49) (60) 6