8-K
false00015370540001537054us-gaap:CommonStockMember2023-11-072023-11-0700015370542023-11-072023-11-070001537054us-gaap:PreferredStockMember2023-11-072023-11-07

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): November 7, 2023

GOGO INC.
(Exact name of registrant as specified in its charter)

Delaware

 

001-35975

 

27-1650905

(State or other jurisdiction of incorporation)

 

(Commission File Number)

 

(IRS Employer Identification No.)

 

105 Edgeview Dr., Suite 300
Broomfield, CO

 

 

80021

(Address of principal executive offices)

 

(Zip Code)


Registrant's telephone number, including area code:

303-301-3271

 

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Class

Trading Symbol

Name of Each Exchange on Which Registered

Common stock, par value $0.0001 per share

GOGO

NASDAQ Global Select Market

Preferred Stock Purchase Rights

GOGO

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 


 

Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On November 7, 2023, Gogo Inc. issued a press release announcing its results of operations for the third quarter ended September 30, 2023. A copy of the press release is attached hereto as Exhibit 99.1.

 

Item 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

Exhibit No.

 

Description

99.1

 

Press Release dated November 7, 2023.

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 


 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

GOGO INC.

 

 

 

By: /s/ Jessica G. Betjemann

Jessica G. Betjemann
Executive Vice President and

Chief Financial Officer

 

Date: November 7, 2023

 


EX-99.1

Exhibit 99.1

 

Investor Relations Contact:

Media Relations Contact:

Will Davis

Dave Mellin

+1 917-519-6994

+1 303-301-3606

wdavis@gogoair.com

pr@gogoair.com

 

 

Gogo Announces Third Quarter Results

 

Updates 2023 Financial Guidance and Reiterates Long-Term Targets

Total Revenue of $97.9 million, down 7% Year-over-Year; Record Third Quarter Service Revenue of $79.5 million, up 6% Year-over-Year

 

Net Income of $20.9 million; Adjusted EBITDA(1) of $43.2 million

 

BROOMFIELD, CO - November 7, 2023 – Gogo Inc. (NASDAQ: GOGO) (“Gogo” or the “Company”), the world’s largest provider of broadband connectivity services for the business aviation market, today announced its financial results for the quarter ended September 30, 2023.

Q3 2023 Highlights

Total revenue of $97.9 million decreased 7% compared to Q3 2022.
o
Record service revenue of $79.5 million increased 6% compared to Q3 2022 and 1% compared to Q2 2023.
o
Equipment revenue of $18.4 million decreased 39% compared to Q3 2022 and decreased 24% compared to Q2 2023.
AVANCE equipment units shipped totaled 192, a decrease of 51% compared to Q3 2022 and a decrease of 31% compared to Q2 2023.
Total ATG aircraft online (“AOL”) reached 7,150, an increase of 6% compared to Q3 2022 and an increase of 1% compared to Q2 2023.
Total AVANCE AOL grew to 3,784, an increase of 23% compared to Q3 2022 and 5% compared to Q2 2023. AVANCE units comprised approximately 53% of total AOL as of September 30, 2023, up from 45% as of September 30, 2022.
o
Average Monthly Revenue per ATG aircraft online (“ARPU”) of $3,373, compared to $3,376 in Q3 2022 and $3,371 in Q2 2023.
Net income of $20.9 million increased 4% from $20.2 million in Q3 2022.
o
Diluted earnings per share was $0.16 compared to $0.15 in Q3 2022.
Adjusted EBITDA(1) of $43.2 million, which includes approximately $2.6 million of operating expenses related to Gogo Galileo, decreased 1% compared to Q3 2022 and 2% compared to Q2 2023.
Cash provided by operating activities of $18.7 million in Q3 2023 decreased from $27.7 million in the prior year period.
o
Free Cash Flow(1) was $21.0 million in Q3 2023, an increase from $8.5 million in the prior-year period due primarily to a reduction in capital expenditures.
o
Cash, cash equivalents and short-term investments totaled $110.8 million as of September 30, 2023 compared to $97.2 million as of June 30, 2023.

 

1

 


 

"We are in a two-year investment cycle launching Gogo 5G and Galileo (our global LEO satellite product) to deliver order-of-magnitude improvements in network speed and coverage, grow our addressable market, and strengthen our competitive position," said Oakleigh Thorne, Chairman and CEO. "We expect these investments to drive significant growth starting in 2025 and to drive substantial returns for shareholders."

"Despite near-term revenue headwinds, Gogo maintains our long-term targets of approximately 15-17% revenue growth from 2022-2027 and $150 million to $200 million of Free Cash Flow in 2025. Our guidance is underpinned by our strong outlook for our planned Gogo 5G and Gogo Galileo product launches, in an underpenetrated global market," said Jessi Betjemann, Executive Vice President and CFO. "We expect to continue to strengthen our balance sheet while investing in our key growth initiatives."

 

2023 Financial Guidance and Long-Term Financial Targets

The Company provides the following guidance for 2023, which includes the impact of the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program ("FCC Reimbursement Program").

Total revenue in the range of $390 million to $400 million, versus prior guidance in the range of $410 million to $420 million, driven predominantly by lower equipment revenue.
Adjusted EBITDA(1) at the high end of the previously guided range of $150 million to $160 million reflecting operating expenses of approximately $15 million for strategic and operational initiatives including Gogo 5G, Gogo Galileo and the FCC Reimbursement Program.
Free Cash Flow(1) at the high end of the previously guided range of $60 million to $70 million which includes approximately $20 million of negative Free Cash Flow due to the expected lag of reimbursements tied to the FCC Reimbursement Program.
Capital expenditures of $25 million to $30 million including $12 million for the Gogo 5G program and $2 million related to the FCC Reimbursement Program, versus prior guidance at the low end of $30 million to $40 million.

The Company reiterates the following long-term financial targets:

Revenue growth at a compound annual growth rate of approximately 15%-17% from 2022 through 2027. The Company continues to expect that Gogo Galileo will contribute revenue beginning in 2025.
Annual Adjusted EBITDA Margin(1) in the mid-40% range by 2027.
Free Cash Flow(1) in the range of $150 million to $200 million in 2025, without the effect of the FCC Reimbursement program, and growing thereafter. The FCC Reimbursement Program is expected to positively impact Free Cash Flow in 2025.

 

(1)
See “Non-GAAP Financial Measures” below

 

Conference Call

 

The Company will host its third quarter conference call on November 7, 2023 at 8:30 a.m. ET. A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company’s investor website at http://ir.gogoair.com.

Participants can also join the call by dialing +1 844-543-0451 (within the United States and Canada). Please use the below link to retrieve your unique conference ID to use to access the earnings call.

 

https://register.vevent.com/register/BIc916c46af134493e80fe6a372b98e364

2

 


 

 

 

 

Non-GAAP Financial Measures

We report certain non-GAAP financial measurements, including Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in the discussion above. Management uses Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. These supplemental performance measures also provide another basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP. When analyzing our performance with Adjusted EBITDA or Adjusted EBITDA Margin or liquidity with Free Cash Flow, as applicable, investors should (i) evaluate each adjustment in our reconciliation to the corresponding GAAP measure, and the explanatory footnotes regarding those adjustments, (ii) use Adjusted EBITDA and Adjusted EBITDA Margin in addition to, and not as an alternative to, net income (loss) attributable to common stock as a measure of operating results, and (iii) use Free Cash Flow in addition to, and not as an alternative to, consolidated net cash provided by (used in) operating activities when evaluating our liquidity. No reconciliation of the forecasted amounts of Adjusted EBITDA for fiscal 2023, Adjusted EBITDA Margin for fiscal 2027 or Free Cash Flow for fiscal 2025 is included in this release because we are unable to quantify certain amounts that would be required to be included in the corresponding GAAP measure without unreasonable efforts, due to high variability and complexity with respect to estimating certain forward-looking amounts, and we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors.

Cautionary Note Regarding Forward-Looking Statements

Certain disclosures in this press release and related comments by our management include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our business outlook, industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future technologies, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release. Forward-looking statements are based on our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: our ability to continue to generate revenue from the provision of our connectivity services; our reliance on our key OEMs and dealers for equipment sales; the impact of competition; our reliance on third parties for equipment components and services; the impact of global supply chain and logistics issues and increasing inflation; our ability to expand our business outside of the United States; our ability to recruit, train and retain highly skilled employees; the impact of pandemics or other outbreaks of contagious diseases, and the measures implemented to combat them; the impact of adverse economic conditions; our ability to fully utilize portions of our deferred tax assets; our ability to evaluate or pursue strategic opportunities; our ability to develop and deploy Gogo 5G, Global Broadband or other next generation technologies and the timing thereof; our ability to maintain our rights to use our licensed 3Mhz of ATG spectrum in the United States and obtain rights to additional spectrum if needed; the impact of service interruptions or delays, technology failures, equipment damage or system disruptions or failures; the impact of assertions by third parties of infringement, misappropriation or other violations; our ability to innovate and provide products and services; our ability to protect our intellectual property rights; the impact of our use of open-source software; the impact of equipment failure or material defects or errors in our software; our ability to comply with applicable foreign ownership limitations;

3

 


 

the impact of government regulation ; our possession and use of personal information; risks associated with participation in the FCC Reimbursement Program; our ability to comply with anti-bribery, anti-corruption and anti-money laundering laws; the extent of expenses, liabilities or business disruptions resulting from litigation; the impact of global climate change and legal, regulatory or market responses to it; the impact of our substantial indebtedness; limitations and restrictions in the agreements governing our current and future indebtedness and our ability to service our indebtedness; fluctuations in our operating results; and other events beyond our control that may result in unexpected adverse operating results.

 

Additional information concerning these and other factors can be found under the caption “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission (“SEC”) on February 28, 2023 and in our subsequent quarterly reports on Form 10-Q as filed with the SEC.

Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

 

4

 


 

About Gogo

Gogo is the world’s largest provider of broadband connectivity services for the business aviation market. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment and voice solutions. Gogo’s products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals.

 

As of September 30, 2023, Gogo reported 3,784 business aircraft flying with Gogo’s AVANCE L5 or L3 system installed, 7,150 aircraft flying with its broadband ATG systems onboard, and 4,395 aircraft with narrowband satellite connectivity installed. Connect with us at business.gogoair.com.

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Service revenue

 

$

79,546

 

 

$

75,252

 

 

$

237,107

 

 

$

218,983

 

Equipment revenue

 

 

18,403

 

 

 

30,066

 

 

 

62,660

 

 

 

76,921

 

Total revenue

 

 

97,949

 

 

 

105,318

 

 

 

299,767

 

 

 

295,904

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of service revenue (exclusive of amounts shown below)

 

 

18,116

 

 

 

17,297

 

 

 

51,732

 

 

 

47,683

 

Cost of equipment revenue (exclusive of amounts shown below)

 

 

12,320

 

 

 

19,261

 

 

 

47,983

 

 

 

50,410

 

Engineering, design and development

 

 

9,154

 

 

 

7,988

 

 

 

26,259

 

 

 

21,346

 

Sales and marketing

 

 

7,015

 

 

 

6,240

 

 

 

21,748

 

 

 

18,539

 

General and administrative

 

 

13,336

 

 

 

15,474

 

 

 

40,734

 

 

 

44,289

 

Depreciation and amortization

 

 

4,692

 

 

 

2,716

 

 

 

12,022

 

 

 

10,006

 

Total operating expenses

 

 

64,633

 

 

 

68,976

 

 

 

200,478

 

 

 

192,273

 

Operating income

 

 

33,316

 

 

 

36,342

 

 

 

99,289

 

 

 

103,631

 

Other expense (income):

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(1,622

)

 

 

(690

)

 

 

(5,509

)

 

 

(931

)

Interest expense

 

 

8,025

 

 

 

8,781

 

 

 

24,807

 

 

 

29,442

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

2,224

 

 

 

 

Other (income) expense, net

 

 

(728

)

 

 

95

 

 

 

(733

)

 

 

112

 

Total other expense

 

 

5,675

 

 

 

8,186

 

 

 

20,789

 

 

 

28,623

 

Income before income taxes

 

 

27,641

 

 

 

28,156

 

 

 

78,500

 

 

 

75,008

 

Income tax (benefit) provision

 

 

6,728

 

 

 

7,980

 

 

 

(52,711

)

 

 

10,619

 

Net income

 

$

20,913

 

 

$

20,176

 

 

$

131,211

 

 

$

64,389

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stock per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.16

 

 

$

0.16

 

 

$

1.01

 

 

$

0.53

 

Diluted

 

$

0.16

 

 

$

0.15

 

 

$

0.98

 

 

$

0.50

 

Weighted average number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

129,951

 

 

 

129,914

 

 

 

129,632

 

 

 

121,762

 

Diluted

 

 

133,320

 

 

 

134,221

 

 

 

133,382

 

 

 

134,454

 

 

 

 

5

 


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands)

 

 

September 30,

 

 

December 31,

 

 

 

2023

 

 

2022

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

86,157

 

 

$

150,550

 

Short-term investments

 

 

24,655

 

 

 

24,796

 

Total cash, cash equivalents and short-term investments

 

 

110,812

 

 

 

175,346

 

Accounts receivable, net of allowances of $1,884 and $1,778, respectively

 

 

49,356

 

 

 

54,210

 

Inventories

 

 

62,792

 

 

 

49,493

 

Prepaid expenses and other current assets

 

 

63,873

 

 

 

45,100

 

Total current assets

 

 

286,833

 

 

 

324,149

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net

 

 

100,982

 

 

 

104,595

 

Intangible assets, net

 

 

52,719

 

 

 

49,509

 

Operating lease right-of-use assets

 

 

71,539

 

 

 

75,261

 

Other non-current assets, net of allowances of $545 and $501, respectively

 

 

37,239

 

 

 

43,355

 

Deferred income taxes

 

 

217,976

 

 

 

162,657

 

Total non-current assets

 

 

480,455

 

 

 

435,377

 

Total assets

 

$

767,288

 

 

$

759,526

 

Liabilities and stockholders’ equity (deficit)

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

15,328

 

 

$

13,646

 

Accrued liabilities

 

 

38,219

 

 

 

60,056

 

Deferred revenue

 

 

1,704

 

 

 

3,418

 

Current portion of long-term debt

 

 

7,250

 

 

 

7,250

 

Total current liabilities

 

 

62,501

 

 

 

84,370

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt

 

 

588,733

 

 

 

690,173

 

Non-current operating lease liabilities

 

 

74,481

 

 

 

79,241

 

Other non-current liabilities

 

 

8,031

 

 

 

7,611

 

Total non-current liabilities

 

 

671,245

 

 

 

777,025

 

Total liabilities

 

 

733,746

 

 

 

861,395

 

Stockholders’ equity (deficit)

 

 

 

 

 

 

Common stock

 

 

14

 

 

 

14

 

Additional paid-in capital

 

 

1,396,348

 

 

 

1,385,933

 

Accumulated other comprehensive income

 

 

23,913

 

 

 

30,128

 

Treasury stock, at cost

 

 

(158,375

)

 

 

(158,375

)

Accumulated deficit

 

 

(1,228,358

)

 

 

(1,359,569

)

Total stockholders’ equity (deficit)

 

 

33,542

 

 

 

(101,869

)

Total liabilities and stockholders’ equity (deficit)

 

$

767,288

 

 

$

759,526

 

 

 

6

 


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

For the Nine Months
Ended September 30,

 

 

 

2023

 

 

2022

 

Operating activities:

 

 

 

 

 

 

Net income

 

$

131,211

 

 

$

64,389

 

Adjustments to reconcile net income to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

12,022

 

 

 

10,006

 

Loss on asset disposals, abandonments and write-downs

 

 

285

 

 

 

166

 

Provision for expected credit losses

 

 

541

 

 

 

855

 

Deferred income taxes

 

 

(53,255

)

 

 

10,470

 

Stock-based compensation expense

 

 

15,729

 

 

 

14,101

 

Amortization of deferred financing costs and interest rate caps

 

 

2,671

 

 

 

2,486

 

Accretion of debt discount

 

 

304

 

 

 

345

 

Changes in fair value of equity investment

 

 

(773

)

 

 

 

Loss on extinguishment of debt

 

 

2,224

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

4,356

 

 

 

(12,289

)

Inventories

 

 

(13,299

)

 

 

(12,622

)

Prepaid expenses and other current assets

 

 

(37,454

)

 

 

12,862

 

Contract assets

 

 

2,822

 

 

 

(2,836

)

Accounts payable

 

 

2,526

 

 

 

1,116

 

Accrued liabilities

 

 

(5,091

)

 

 

(16,245

)

Deferred revenue

 

 

(1,708

)

 

 

(222

)

Accrued interest

 

 

(9,565

)

 

 

1,720

 

Other non-current assets and liabilities

 

 

(728

)

 

 

(2,363

)

Net cash provided by operating activities

 

 

52,818

 

 

 

71,939

 

Investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(14,006

)

 

 

(35,187

)

Acquisition of intangible assets—capitalized software

 

 

(4,711

)

 

 

(4,745

)

Proceeds from FCC Reimbursement Program

 

 

3

 

 

 

 

Proceeds from interest rate caps

 

 

20,165

 

 

 

803

 

Redemptions of short-term investments

 

 

49,524

 

 

 

 

Purchases of short-term investments

 

 

(49,383

)

 

 

 

Purchase of equity investment

 

 

(5,000

)

 

 

 

Net cash used in investing activities

 

 

(3,408

)

 

 

(39,129

)

Financing activities:

 

 

 

 

 

 

Payments on term loan

 

 

(105,438

)

 

 

(5,438

)

Repurchases of common stock

 

 

 

 

 

(18,375

)

Payments on financing leases

 

 

(117

)

 

 

(136

)

Stock-based compensation activity

 

 

(8,326

)

 

 

(2,703

)

Net cash used in financing activities

 

 

(113,881

)

 

 

(26,652

)

Effect of exchange rate changes on cash

 

 

78

 

 

 

65

 

(Decrease) increase in cash, cash equivalents and restricted cash

 

 

(64,393

)

 

 

6,223

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

150,880

 

 

 

146,268

 

Cash, cash equivalents and restricted cash at end of period

 

$

86,487

 

 

$

152,491

 

Cash, cash equivalents and restricted cash at end of period

 

$

86,487

 

 

$

152,491

 

Less: non-current restricted cash

 

 

330

 

 

 

330

 

Cash and cash equivalents at end of period

 

$

86,157

 

 

$

152,161

 

Supplemental cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

53,911

 

 

$

28,841

 

Cash paid for taxes

 

 

429

 

 

 

289

 

Non-cash investing activities:

 

 

 

 

 

 

Purchases of property and equipment in current liabilities

 

$

5,425

 

 

$

11,549

 

 

7

 


 

Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Aircraft online (at period end)

 

 

 

 

 

 

 

 

 

 

 

 

ATG

 

 

7,150

 

 

 

6,777

 

 

 

7,150

 

 

 

6,777

 

Narrowband satellite

 

 

4,395

 

 

 

4,484

 

 

 

4,395

 

 

 

4,484

 

Average monthly connectivity service revenue per aircraft online

 

 

 

 

 

 

 

 

 

 

 

 

ATG

 

$

3,373

 

 

$

3,376

 

 

$

3,378

 

 

$

3,342

 

Narrowband satellite

 

 

294

 

 

 

297

 

 

 

297

 

 

 

263

 

Units sold

 

 

 

 

 

 

 

 

 

 

 

 

ATG

 

 

192

 

 

 

388

 

 

 

692

 

 

 

944

 

Narrowband satellite

 

 

40

 

 

 

43

 

 

 

132

 

 

 

144

 

Average equipment revenue per unit sold (in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

ATG

 

$

77

 

 

$

68

 

 

$

73

 

 

$

69

 

Narrowband satellite

 

 

39

 

 

 

39

 

 

 

48

 

 

 

50

 

 

ATG aircraft online. We define ATG aircraft online as the total number of business aircraft for which we provide ATG services as of the last day of each period presented. This number excludes aircraft receiving ATG service as part of the ATG Network Sharing Agreement with Intelsat.
Narrowband satellite aircraft online. We define narrowband satellite aircraft online as the total number of business aircraft for which we provide narrowband satellite services as of the last day of each period presented.
Average monthly connectivity service revenue per ATG aircraft online. We define average monthly connectivity service revenue per ATG aircraft online as the aggregate ATG connectivity service revenue for the period divided by the number of months in the period, divided by the number of ATG aircraft online during the period (expressed as an average of the month end figures for each month in such period). Revenue share earned from the ATG Network Sharing Agreement with Intelsat is excluded from this calculation.
Average monthly connectivity service revenue per narrowband satellite aircraft online. We define average monthly connectivity service revenue per narrowband satellite aircraft online as the aggregate narrowband satellite connectivity service revenue for the period divided by the number of months in the period, divided by the number of narrowband satellite aircraft online during the period (expressed as an average of the month end figures for each month in such period).
Units sold. We define units sold as the number of ATG or narrowband satellite units for which we recognized revenue during the period.
Average equipment revenue per ATG unit sold. We define average equipment revenue per ATG unit sold as the aggregate equipment revenue from all ATG units sold during the period, divided by the number of ATG units sold.
Average equipment revenue per narrowband satellite unit sold. We define average equipment revenue per narrowband satellite unit sold as the aggregate equipment revenue earned from all narrowband satellite units sold during the period, divided by the number of narrowband satellite units sold.

 

Gogo Inc. and Subsidiaries

Supplemental Information – Revenue and Cost of Revenue

(in thousands, unaudited)

 

 

For the Three Months
Ended September 30,

 

 

% Change

 

 

For the Nine Months
Ended September 30,

 

 

% Change

 

 

 

2023

 

 

2022

 

 

2023 over 2022

 

 

2023

 

 

2022

 

 

2023 over 2022

 

Service revenue

 

$

79,546

 

 

$

75,252

 

 

 

5.7

%

 

$

237,107

 

 

$

218,983

 

 

 

8.3

%

Equipment revenue

 

 

18,403

 

 

 

30,066

 

 

 

(38.8

)%

 

 

62,660

 

 

 

76,921

 

 

 

(18.5

)%

Total revenue

 

$

97,949

 

 

$

105,318

 

 

 

(7.0

)%

 

$

299,767

 

 

$

295,904

 

 

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months
Ended September 30,

 

 

% Change

 

 

For the Nine Months
Ended September 30,

 

 

% Change

 

 

 

2023

 

 

2022

 

 

2023 over 2022

 

 

2023

 

 

2022

 

 

2023 over 2022

 

Cost of service revenue (1)

 

$

18,116

 

 

$

17,297

 

 

 

4.7

%

 

$

51,732

 

 

$

47,683

 

 

 

8.5

%

Cost of equipment revenue (1)

 

$

12,320

 

 

$

19,261

 

 

 

(36.0

)%

 

$

47,983

 

 

$

50,410

 

 

 

(4.8

)%

 

(1)
Excludes depreciation and amortization expense.

8

 


 

 

Gogo Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

 

 

For the Three Months
Ended September 30,

 

 

For the Nine Months
Ended September 30,

 

 

For the Three Months Ended June 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

 

2023

 

Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to common stock (GAAP)

 

$

20,913

 

 

$

20,176

 

 

$

131,211

 

 

$

64,389

 

 

$

89,849

 

Interest expense

 

 

8,025

 

 

 

8,781

 

 

 

24,807

 

 

 

29,442

 

 

 

7,806

 

Interest income

 

 

(1,622

)

 

 

(690

)

 

 

(5,509

)

 

 

(931

)

 

 

(1,971

)

Income tax (benefit) provision

 

 

6,728

 

 

 

7,980

 

 

 

(52,711

)

 

 

10,619

 

 

 

(63,827

)

Depreciation and amortization

 

 

4,692

 

 

 

2,716

 

 

 

12,022

 

 

 

10,006

 

 

 

4,539

 

EBITDA

 

 

38,736

 

 

 

38,963

 

 

 

109,820

 

 

 

113,525

 

 

 

36,396

 

Stock-based compensation expense

 

 

5,235

 

 

 

4,690

 

 

 

15,729

 

 

 

14,101

 

 

 

5,453

 

Change in fair value of equity investment

 

 

(773

)

 

 

 

 

 

(773

)

 

 

 

 

 

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

 

2,224

 

 

 

 

 

 

2,224

 

Adjusted EBITDA

 

$

43,198

 

 

$

43,653

 

 

$

127,000

 

 

$

127,626

 

 

$

44,073

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net cash provided by operating activities (GAAP) (1)

 

$

18,677

 

 

$

27,699

 

 

$

52,818

 

 

$

71,939

 

 

$

15,627

 

Consolidated capital expenditures (1)

 

 

(5,355

)

 

 

(19,982

)

 

 

(18,717

)

 

 

(39,932

)

 

 

(8,766

)

Proceeds from FCC Reimbursement Program (1)

 

 

3

 

 

 

 

 

 

3

 

 

 

 

 

 

 

Proceeds from interest rate caps (1)

 

 

7,676

 

 

 

803

 

 

 

20,165

 

 

 

803

 

 

 

6,402

 

Free cash flow

 

$

21,001

 

 

$

8,520

 

 

$

54,269

 

 

$

32,810

 

 

$

13,263

 

 

(1)
See Unaudited Condensed Consolidated Statements of Cash Flows

 

Gogo Inc. and Subsidiaries

Reconciliation of Estimated Full-Year GAAP Net Cash

Provided by Operating Activities to Non-GAAP Measures

(in millions, unaudited)

 

FY 2023 Range

 

 

Low

 

 

High

 

Free Cash Flow:

 

 

 

 

 

Net cash provided by operating activities (GAAP)

$

64

 

 

$

69

 

Consolidated capital expenditures

 

(30

)

 

 

(25

)

Proceeds from interest rate caps

 

26

 

 

 

26

 

Free cash flow

$

60

 

 

$

70

 


 

 

Definition of Non-GAAP Measures

EBITDA represents net income attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization expense.

Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense, (ii) changes in fair value of an equity investment and (iii) loss on extinguishment of debt. Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.

9

 


 

We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA provides a clearer view of the operating performance of our business and is appropriate given that grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.

We believe it is useful for an understanding of our operating performance to exclude the changes in fair value of an equity investment from Adjusted EBITDA because this activity is not related to our operating performance.

We believe it is useful for an understanding of our operating performance to exclude the loss on extinguishment of debt from Adjusted EBITDA because of the infrequently occurring nature of this activity.

We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our consolidated financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.

Adjusted EBITDA Margin represents Adjusted EBITDA divided by total revenue. We present Adjusted EBITDA Margin as a supplemental performance measure because we believe that it provides meaningful information regarding our operating efficiency.

Free Cash Flow represents net cash provided by operating activities, plus the proceeds received from the FCC Reimbursement Program and the interest rate caps, less purchases of property and equipment. We believe that Free Cash Flow provides meaningful information regarding our liquidity. Management believes that Free Cash Flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in property and equipment to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis of making capital allocation decisions.

 

10