Document And Entity Information - USD ($)	12 Months Ended
Document And Entity Information - USD ($)	Dec. 31, 2018	Feb. 19, 2019	Jun. 30, 2018
Document Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	FY
Entity Registrant Name	Gogo Inc.
Entity Central Index Key	0001537054
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 275,249,580
Trading Symbol	GOGO
Entity Common Stock, Shares Outstanding		87,560,694
Entity Shell Company	false
Entity Emerging Growth Company	false
Entity Small Business	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 184,155	$ 196,356
Short-term investments	39,323	212,792
Total cash, cash equivalents and short-term investments	223,478	409,148
Accounts receivable, net of allowances of $500 and $587, respectively	134,308	117,896
Inventories	193,045	45,543
Prepaid expenses and other current assets	34,695	20,310
Total current assets	585,526	592,897
Non-current assets:
Property and equipment, net	511,867	656,038
Goodwill and intangible assets, net	83,491	87,133
Other non-current assets	84,212	67,107
Total non-current assets	679,570	810,278
Total assets	1,265,096	1,403,175
Current liabilities:
Accounts payable	23,860	27,130
Accrued liabilities	212,459	201,815
Deferred revenue	38,571	43,448
Deferred airborne lease incentives	24,145	42,096
Current portion capital leases	652	1,789
Total current liabilities	299,687	316,278
Non-current liabilities:
Long-term debt	1,024,893	1,000,868
Deferred airborne lease incentives	129,086	142,938
Other non-current liabilities	80,191	134,655
Total non-current liabilities	1,234,170	1,278,461
Total liabilities	1,533,857	1,594,739
Commitments and contingencies (Note 15)
Stockholders' deficit
Common stock, par value $0.0001 per share; 500,000,000 shares authorized at December 31, 2018 and 2017; 87,678,812 and 87,062,578 shares issued at December 31, 2018 and 2017, respectively; and 87,560,694 and 86,843,928 shares outstanding at December 31, 2018 and 2017, respectively	9	9
Additional paid-in-capital	963,458	898,729
Accumulated other comprehensive loss	(3,554)	(933)
Accumulated deficit	(1,228,674)	(1,089,369)
Total stockholders' deficit	(268,761)	(191,564)
Total liabilities and stockholders' deficit	$ 1,265,096	$ 1,403,175

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Allowances on accounts receivable	$ 500	$ 587
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	87,678,812	87,062,578
Common stock, shares outstanding	87,560,694	86,843,928

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Revenue:
Total revenue	$ 893,764	$ 699,090	$ 596,550
Operating expenses:
Cost of service revenue (exclusive of items shown below)	291,642	268,334	226,078
Cost of equipment revenue (exclusive of items shown below)	222,244	58,554	48,650
Engineering, design and development	120,090	133,286	96,713
Sales and marketing	58,823	64,017	61,177
General and administrative	94,269	93,671	84,927
Depreciation and amortization	133,617	145,490	105,642
Total operating expenses	920,685	763,352	623,187
Operating loss	(26,921)	(64,262)	(26,637)
Other (income) expense:
Interest income	(4,292)	(2,964)	(1,635)
Interest expense	122,809	111,944	83,647
Loss on extinguishment of debt	19,653		15,406
Adjustment of deferred financing costs			(792)
Other (income) expense	233	750	(72)
Total other expense	138,403	109,730	96,554
Loss before income taxes	(165,324)	(173,992)	(123,191)
Income tax provision (benefit)	(3,293)	(1,997)	1,314
Net loss	$ (162,031)	$ (171,995)	$ (124,505)
Net loss attributable to common stock per share-basic and diluted	$ (2.02)	$ (2.17)	$ (1.58)
Weighted average number of shares-basic and diluted	80,038	79,407	78,915
Service [Member]
Revenue:
Total revenue	$ 630,147	$ 617,906	$ 514,293
Product [Member]
Revenue:
Total revenue	$ 263,617	$ 81,184	$ 82,257

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017	Sep. 30, 2017	Jun. 30, 2017	Mar. 31, 2017	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Statement of Comprehensive Income [Abstract]
Net loss	$ (59,688)	$ (37,717)	$ (37,207)	$ (27,419)	$ (41,138)	$ (45,281)	$ (44,209)	$ (41,367)	$ (162,031)	$ (171,995)	$ (124,505)
Currency translation adjustments, net of tax									(2,621)	1,230	25
Comprehensive loss									$ (164,652)	$ (170,765)	$ (124,480)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2017	Dec. 31, 2016
Operating activities:
Net loss	$ (162,031)	$ (171,995)	$ (124,505)
Adjustments to reconcile net loss to cash provided by (used in) operating activities:
Depreciation and amortization	133,617	145,490	105,642
Loss on asset disposals, abandonments and write-downs	13,352	8,960	4,583
Gain on transition to airline-directed model	(21,551)
Deferred income taxes	(3,821)	(2,281)	839
Stock-based compensation expense	16,912	19,821	17,621
Amortization of deferred financing costs	4,280	3,743	3,803
Accretion and amortization of debt discount and premium	18,255	18,286	17,496
Loss on extinguishment of debt	19,653		15,406
Adjustment of deferred financing costs			(792)
Changes in operating assets and liabilities:
Accounts receivable	(17,064)	(43,798)	(4,265)
Inventories	(50,762)	4,723	(29,329)
Prepaid expenses and other current assets	(3,106)	4,990	(14,473)
Contract assets	(30,485)
Accounts payable	(3,864)	3,402	(3,118)
Accrued liabilities	13,281	24,941	4,982
Deferred airborne lease incentives	(7,705)	20,407	14,652
Deferred revenue	(1,021)	21,477	26,981
Accrued interest	(955)	7,213	35,825
Warranty reserves	8,009	(152)	742
Other non-current assets and liabilities	(7,305)	(4,971)	(7,102)
Net cash provided by (used in) operating activities	(82,311)	60,256	64,988
Investing activities:
Purchases of property and equipment	(108,632)	(252,375)	(148,294)
Acquisition of intangible assets-capitalized software	(23,031)	(27,855)	(28,587)
Purchases of short-term investments	(39,323)	(317,418)	(363,436)
Redemptions of short-term investments	212,792	443,103	244,450
Other, net		(2,850)	84
Net cash provided by (used in) investing activities	41,806	(157,395)	(295,783)
Financing activities:
Proceeds from issuance of convertible notes	237,750
Redemption of convertible notes	(200,438)
Proceeds from issuance of senior secured notes		181,754	525,000
Payments on amended and restated credit agreement			(310,132)
Payment of debt issuance costs	(8,054)	(3,630)	(11,474)
Payments on capital leases	(2,340)	(2,961)	(2,612)
Stock-based compensation activity	396	(227)	271
Net cash provided by financing activities	27,314	174,936	201,053
Effect of exchange rate changes on cash	578	743	(522)
Increase (decrease) in cash, cash equivalents and restricted cash	(12,613)	78,540	(30,264)
Cash, cash equivalents and restricted cash at beginning of period	203,729	125,189	155,453
Cash, cash equivalents and restricted cash at end of period	191,116	203,729	125,189
Less: current restricted cash	1,535	500	114
Less: non-current restricted cash	5,426	6,873	7,773
Cash and cash equivalents at end of period	184,155	196,356	117,302
Supplemental Cash Flow Information:
Cash paid for interest	101,489	86,359	27,535
Cash paid for taxes	401	103	305
Non-cash Investing and Financing Activities:
Purchases of property and equipment in current liabilities	18,640	53,682	39,492
Purchases of property and equipment paid by commercial airlines	7,474	23,762	13,804
Purchases of property and equipment under capital leases	279	1,082	2,177
Acquisition of intangible assets in current liabilities	312	1,483	1,623
Acquisition of intangible assets in non-current liabilities	1,375
Asset retirement obligation	$ 760	$ 370	$ 11

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]
Beginning Balance at Dec. 31, 2015	$ 66,195	$ 9	$ 861,243	$ (2,188)	$ (792,869)
Beginning Balance, Shares at Dec. 31, 2015		85,913,206
Net loss	(124,505)				(124,505)
Currency translation adjustments, net of tax	25			25
Stock-based compensation expense	17,621		17,621
Issuance of common stock upon exercise of stock options	110		110
Issuance of common stock upon exercise of stock options, Shares		12,150
Issuance of common stock upon vesting of restricted stock units and restricted stock awards, Shares		227,429
Tax withholding related to vesting of restricted stock units	(1,199)		(1,199)
Issuance of common stock in connection with employee stock purchase plan	1,360		1,360
Issuance of common stock in connection with employee stock purchase plan, Shares		143,085
Ending Balance at Dec. 31, 2016	(40,393)	$ 9	879,135	(2,163)	(917,374)
Ending Balance, Shares at Dec. 31, 2016		86,295,870
Net loss	(171,995)				(171,995)
Currency translation adjustments, net of tax	1,230			1,230
Stock-based compensation expense	19,821		19,821
Issuance of common stock upon exercise of stock options	449		449
Issuance of common stock upon exercise of stock options, Shares		50,392
Issuance of common stock upon vesting of restricted stock units and restricted stock awards, Shares		344,038
Tax withholding related to vesting of restricted stock units	(2,162)		(2,162)
Issuance of common stock in connection with employee stock purchase plan	1,486		1,486
Issuance of common stock in connection with employee stock purchase plan, Shares		153,628
Ending Balance at Dec. 31, 2017	(191,564)	$ 9	898,729	(933)	(1,089,369)
Ending Balance, Shares at Dec. 31, 2017		86,843,928
Net loss	(162,031)				(162,031)
Currency translation adjustments, net of tax	(2,621)			(2,621)
Stock-based compensation expense	16,912		16,912
Issuance of common stock upon exercise of stock options	21		21
Issuance of common stock upon exercise of stock options, Shares		2,500
Issuance of common stock upon vesting of restricted stock units and restricted stock awards, Shares		393,361
Tax withholding related to vesting of restricted stock units	(1,181)		(1,181)
Issuance of common stock in connection with employee stock purchase plan	1,556		1,556
Issuance of common stock in connection with employee stock purchase plan, Shares		320,905
Issuance of 2022 Convertible Notes (including issuance costs)	47,421		47,421
Impact of the adoption of ASC 606	22,726				22,726
Ending Balance at Dec. 31, 2018	$ (268,761)	$ 9	$ 963,458	$ (3,554)	$ (1,228,674)
Ending Balance, Shares at Dec. 31, 2018		87,560,694

Background

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Background

Gogo (“we,” “us,” “our”) is the global leader in providing broadband connectivity solutions and wireless in-flight entertainment to the aviation industry. We operate through the following three segments: Commercial Aviation North America, or “CA-NA,” Commercial Aviation Rest of World, or “CA-ROW,” and Business Aviation, or “BA.” Services provided by our CA-NA and CA-ROW businesses include Passenger Connectivity, which allows passengers to connect to the Internet from their personal Wi-Fi-enabled devices; Passenger Entertainment, which offers passengers the opportunity to enjoy a broad selection of in-flight entertainment options on their personal Wi-Fi enabled devices; and Connected Aircraft Services (“CAS”), which offers airlines connectivity for various operations and currently include, among other services, real-time credit card transaction processing, electronic flight bags and real-time weather information. Services are provided by CA-NA on commercial aircraft flying routes that generally begin and end within North America, which for this purpose includes the United States, Canada and Mexico. CA-ROW provides service on commercial aircraft operated by foreign-based commercial airlines and flights outside of North America for North American-based commercial airlines. The routes included in our CA-ROW segment are those that begin and/or end outside of North America (as defined above) on which our international service is provided. BA provides in-flight Internet connectivity and other voice and data communications products and services and sells equipment for in-flight telecommunications to the business aviation market. BA services include Gogo Biz, our in-flight broadband service, Passenger Entertainment, our in-flight entertainment service, and satellite-based voice and data services through our strategic alliances with satellite companies.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Principles of Consolidation

–

The consolidated financial statements include our wholly owned subsidiaries. All intercompany transactions and account balances have been eliminated.

Use of Estimates

—The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates the significant estimates and bases such estimates on historical experience and on various other assumptions believed to be reasonable under the circumstances. However, actual results could differ materially from those estimates.

Reclassifications

- To conform to the current year presentation, certain amounts in our 2017 and 2016 consolidated statements of cash flows have been reclassified. Specifically, for the years ended December 31, 2017 and 2016, current deferred rent of $174 thousand and $73 thousand, respectively, has been combined with accrued liabilities, and non-current deferred rent of $798 thousand and $120 thousand, respectively, has been combined with other non-current assets and liabilities. Additionally, warranty reserves is now separately stated in its own line, which was included in accrued liabilities previously.

Significant Risks and Uncertainties

—Our operations are subject to certain risks and uncertainties, including without limitation those associated with continuing losses, fluctuations in operating results, funding of business expansion, strategic alliances, capacity constraints, managing rapid growth and expansion, relationships with customers, suppliers and distributors, financing arrangement terms that may restrict operations, regulatory issues, competition, the economy, technology trends and evolving industry standards.

Cash, Cash Equivalents and Short-Term Investments—

We consider cash and cash equivalents to be short-term, highly liquid investments that have the following characteristics: readily convertible to known amounts of cash, so near their maturities that there is insignificant risk of changes in value due to any changes in market interest rates, and having maturities of three months or less when purchased. We continually monitor positions with, and the credit quality of, the financial institutions with which we invest. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate the fair market value of these assets.

We consider short-term investments to be investments with maturities of twelve months or less (but greater than three months). Currently all our short-term investments are comprised of U.S. Treasury bills, which we intend to hold to maturity.

Certain cash amounts are restricted as to use and are classified outside of cash and cash equivalents. See Note 7, “Long-term Debt and Other Liabilities,” for further details.

Concentrations of Credit Risk—

Financial instruments that potentially subject us to a concentration of credit risk consist principally of cash and cash equivalents, short-term investments and accounts receivable. All cash and cash equivalents are invested with creditworthy financial institutions. We perform ongoing credit evaluations and generally do not require collateral to support receivables. Our short-term investments are all comprised of U.S. Treasury bills.

See Note 11, “Business Segments and Major Customers,” for further details.

Income Tax—

We use an asset- and liability-based approach in accounting for income taxes. Deferred income tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities, applying enacted statutory tax rates in effect for the year in which the tax differences are expected to reverse. Valuation allowances are provided against deferred tax assets which are not likely to be realized. On a regular basis, management evaluates the recoverability of deferred tax assets and the need for a valuation allowance. We also consider the existence of any uncertain tax positions and, as necessary, provide a reserve for any uncertain tax positions at each reporting date.

See Note 14, “Income Tax,” for further details.

Inventories—

Inventories consist primarily of telecommunications systems and parts, and are recorded at the lower of cost (average cost) or market. We evaluate the need for write-downs associated with obsolete, slow-moving and nonsalable inventory by reviewing net realizable inventory values on a periodic basis.

Historically, inventories were solely related to the BA segment. Starting in 2018, the airborne equipment within our CA-NA and CA-ROW segments became increasingly deployed under airline-directed model agreements (see “Revenue Recognition,” below for additional details), and we now allocate uninstalled airborne equipment between property and equipment, net, and inventories, based on our forecasts of estimated future installations by contract type. Prior to this allocation, uninstalled airborne equipment for the CA-NA and CA-ROW segments was classified as property and equipment, net, as the majority of installations were performed under our turnkey model agreements. See “Arrangements with Commercial Airlines,” below for additional information on the turnkey model treatment.

See Note 5, “Composition of Certain Balance Sheet Accounts,” for further details.

Property and Equipment and Depreciation—

Property and equipment, including leasehold improvements, are stated at historical cost, less accumulated depreciation. Network asset inventory and construction in progress, which include materials, transmission and related equipment, and interest and other costs relating to the construction and development of our network, are not depreciated until they are put into service. Network equipment consists of switching equipment, antennas, base transceiver stations, site preparation costs, and other related equipment used in the operation of our network. Airborne equipment consists of routers, modems, radomes, antennas and related equipment, and accessories installed or to be installed on aircraft under the turnkey model.

Depreciation expense totaled $107.1 million, $120.6 million and $84.1 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives for owned assets, which are as follows:

Office equipment, furniture, fixtures and other		3-7 years
Leasehold improvements		3-13 years
Airborne equipment		7 years
Network equipment		5-25 years

See Note 5, “Composition of Certain Balance Sheet Accounts,” for further details.

Improvements to leased property are amortized over the shorter of the useful life of the improvement or the term of the related lease. Repairs and maintenance costs are expensed as incurred.

Due to advances in technology and changes in agreements with our airline partners, with respect to upgrading equipment, we periodically reassess the useful lives of our property and equipment. Such reassessment has resulted in the useful life of specific assets being adjusted to a shorter period than originally estimated, resulting in an increase in annual depreciation expense for those assets.

Goodwill and Other Intangible Assets—

Goodwill and other intangible assets with indefinite lives are not amortized, but are reviewed for impairment at least annually or whenever events or circumstances indicate the carrying value of the asset may not be recoverable. Our FCC Licenses (as defined in Note 6, “Intangible Assets”) are our only indefinite-lived intangible assets. We perform our annual impairment tests of goodwill and our FCC Licenses during the fourth quarter of each fiscal year. We assess qualitative factors to determine the likelihood of impairment. Our qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment, industry and market conditions, financial performance versus budget and any other events or circumstances specific to goodwill and the FCC Licenses. If it is more likely than not that the fair value of goodwill and the FCC Licenses is greater than the carrying value, no further testing is required. Otherwise, we will apply the quantitative impairment test method.

Our quantitative impairment testing of the FCC Licenses uses the Greenfield method, an income-based approach. When performing this quantitative impairment testing, we estimate the fair value of the goodwill and FCC Licenses asset balances based primarily on projected future operating results, discounted cash flows, and other assumptions. Projected future operating results and cash flows used for valuation purposes may reflect considerable improvements relative to historical periods with respect to, among other things, revenue growth and operating margins. Although we believe our projected future operating results and cash flows and related estimates regarding fair values are based on reasonable assumptions, projected operating results and cash flows may not always be achieved. The failure to achieve one or more of our assumptions regarding projected operating results and cash flows in the near term or long term could reduce the estimated fair value below carrying value and result in the recognition of an impairment charge. The results of our annual goodwill and indefinite-lived intangible asset impairment assessments for 2018, 2017 and 2016 indicated no impairment.

Intangible assets that are deemed to have a finite life are amortized over their useful lives as follows:

Software		3-8 years
OEM and dealer relationships		10 years
Service customer relationships		5-7 years
Other intangible assets		4-10 years

See Note 6, “Intangible Assets,” for further details.

Long-Lived Assets—

We review our long-lived assets to determine potential impairment whenever events indicate that the carrying amount of such assets may not be recoverable. We do this by comparing the carrying value of the long-lived assets with the estimated future undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. If we determine an impairment exists, the asset is written down to estimated fair value. There were no impairments of long-lived assets in 2018, 2017 and 2016.

Arrangements with Commercial Airlines—

Pursuant to contractual agreements with our airline partners, we place our equipment on commercial aircraft operated by the airlines for the purpose of delivering our service to passengers on the aircraft. There are currently two types of commercial airline arrangements: turnkey and airline-directed. See “Revenue Recognition,” below for additional information on the airline-directed model.

Under the turnkey model, we account for equipment transactions as operating leases of space for our equipment on the aircraft. We may be responsible for the costs of installing and/or deinstalling the equipment. Under the turnkey model, the equipment transactions involve the transfer of legal title but do not meet sales recognition for accounting purposes because the risks and rewards of ownership are not fully transferred due to our continuing involvement with the equipment, the length of the term of our agreements with the airlines, and restrictions in the agreements regarding the airlines’ use of the equipment. Under the this model, we refer to the airline as a “partner.”

Under the turnkey model, the assets are recorded as airborne equipment on our consolidated balance sheets, as noted in Note 5, “Composition of Certain Balance Sheet Accounts.” Any upfront equipment payments are accounted for as lease incentives and recorded as deferred airborne lease incentives on our consolidated balance sheets and are recognized as a reduction of the cost of service revenue on the straight-line basis over the term of the agreement with the airline.

See Note 15, “Leases,” for further details.

Transition to Airline-Directed Model

—The accounting treatment for one of our airline agreements transitioned from our turnkey model to our airline-directed model in January 2018 due to specific provisions elected by the airline that resulted in the transfer of control of the previously installed connectivity equipment. Upon transition to the airline-directed model, the net book value of all previously delivered equipment classified within property and equipment was reclassified to cost of equipment revenue. Additionally, the unamortized proceeds previously received for equipment and classified within current and non-current deferred airborne lease incentives were eliminated and included as part of estimated contract value, which was then allocated amongst the various performance obligations under the agreement. The value allocated to previously delivered equipment was immediately recognized as equipment revenue in our consolidated financial statements; see “Revenue Recognition,” below for additional disclosures relating to the allocation of consideration among identified performance obligations. For amounts recognized in equipment revenue that were in excess of the amounts billed, we recorded current and non-current contract assets included within prepaid expenses and other current assets and other non-current assets, respectively; see “Revenue Recognition,” below for additional details. In connection with the transition of this airline agreement to the airline-directed model, we also established warranty reserves related to previously sold equipment that are still under a warranty period, which is included within accrued liabilities. See Note 5, “Composition of Certain Balance Sheet Accounts,” for additional information. This transition from the turnkey model to the airline-directed model occurred on January 4, 2018 and

the total financial statement effect on our consolidated balance sheet and consolidated statement of operations was as follows (

in thousands

	Increase (decrease)
Consolidated balance sheet
Prepaid expense and other current assets	$	6,603
Property and equipment, net		(32,716	)
Other non-current assets		18,783
Accrued liabilities		2,000
Current deferred airborne lease incentive		(13,592	)
Non-current deferred airborne lease incentive		(17,289	)
Consolidated statement of operations
Equipment revenue		45,396
Cost of equipment revenue		23,845

Revenue Recognition

—

Our revenue is primarily earned from providing connectivity and entertainment services and through sales of equipment. Additionally, to a lesser extent, we earn revenue from providing ancillary services, including installation and CAS.

We determine revenue recognition through the following steps:

•

Identification of the contract, or contracts, with a customer;

•

Identification of the performance obligations in the contract;

•

Determination of the transaction price;

•

Allocation of the transaction price to the performance obligations in the contract; and

•

Recognition of revenue as we satisfy the performance obligations.

For CA-NA and CA-ROW, pursuant to contractual agreements with our airline partners, we place our equipment on commercial aircraft operated by the airlines in order to deliver our service to passengers on the aircraft. We currently have two types of commercial airline arrangements: turnkey and airline-directed. Under the airline-directed model, we have transferred control of the equipment to the airline and therefore the airline is our customer in these transactions. Under the turnkey model, while our airline partner generally has legal title to our equipment, we do not transfer control of our equipment to our airline partner and, as a result, the airline passenger is deemed to be our customer. Transactions with our airline partners under the turnkey model are accounted for as an operating lease of space on an aircraft. See “Arrangements with Commercial Airlines,” above for additional information on the turnkey model.

CA-NA and CA-ROW Service Revenue

CA-NA and CA-ROW revenue consists of service revenue primarily derived from connectivity services, and, to a lesser extent, from Entertainment services and CAS. Connectivity is provided to our customers using both our ATG and satellite technologies.

Airline-directed connectivity revenue

As noted above, under the airline-directed model, the airline is our customer and we earn service revenue as connectivity services are consumed directly by the airline or indirectly by passengers.

Turnkey connectivity revenue (passenger connectivity):

Under the turnkey model, passenger connectivity revenue is generated by services paid for by passengers, airlines and third parties.

Passenger paid revenue represents point-of-sale sessions (which may be flight-based, time-based, multiple individual session packages (“multi-pack”) or subscriptions). Flight-based, time-based and multi-pack revenue is recognized when the sessions are used. Subscription revenue is recognized evenly throughout the subscription period, regardless of the number of times the customer uses the network.

Third party and airline-paid revenue is generated by sales of connectivity services to airlines or third parties in sponsorship, wholesale, enterprise and roaming arrangements. Sponsorship revenue is recognized over the sponsorship term. Revenue from wholesale, enterprise and roaming arrangements is recognized as sessions are used by the passenger.

Entertainment revenue:

Entertainment revenue consists of entertainment services we provide to the airline for use by its passengers. Revenue is recognized as the services are provided to the airline.

CAS:

CAS includes, among other things, real-time credit card transaction processing, electronic flight bags and real-time weather information. Revenue is recognized as the service is provided.

BA Service Revenue

BA service revenue primarily consists of monthly subscription and usage fees paid by aircraft owners and operators for telecommunication, data, and in-flight entertainment services. Revenue is recognized as the services are provided to the customer.

Equipment Revenue

Equipment revenue primarily consists of the sale of ATG and satellite connectivity equipment and the sale of entertainment equipment. CA-NA and CA-ROW recognize equipment revenue upon acceptance by our airline customers. BA recognizes equipment revenue when the equipment is shipped to OEMs and dealers.

Equipment revenue also includes revenue generated by the installation of the connectivity or entertainment equipment on commercial aircraft, which is recognized when the installation is complete.

Contract price and allocation considerations

Our CA-NA and CA-ROW airline-directed contracts contain multiple performance obligations, which primarily include the sale of equipment, installation services, connectivity services and entertainment services. For these contracts, we account for each distinct good or service as a separate performance obligation. We allocate the contract’s transaction price to each performance obligation using the relative standalone selling price, which is based on the actual selling price for any good or service sold separately to a similar class of customer, if available. To the extent a good or service is not sold separately, we use our best estimate of the standalone selling price and maximize the use of observable inputs. The primary method we use to estimate the standalone selling price is the expected cost-plus margin approach.

The contractual consideration used for allocation purposes includes connectivity and entertainment services, which may be based on a fixed monthly fee per aircraft or a variable fee based on the volume of connectivity activity, or a combination of both. Examples of variable consideration within our contracts include megabyte overages and pay-per-use sessions. We constrain our estimates to reduce the probability of a significant revenue reversal in future periods, allocate such variable consideration to the identified performance obligations and recognize revenue in the period the services are provided. Our estimates are based on historical experience, anticipated future performance, market conditions and our best judgment at the time.

A significant change in one or more of these estimates could affect our estimated contract value, and we regularly review and update our estimates and recognize adjustments under the cumulative catch-up method. Any adjustment under this method is recorded as a cumulative adjustment in the period identified and revenue for future periods is recognized using the new adjusted estimate.

Research and Development Costs—

Expenditures for research and development are charged to expense as incurred and totaled $72.7 million, $78.1 million and $45.9 million for the years ended December 31, 2018, 2017, and 2016, respectively. Research and development costs are reported as a component of engineering, design and development expenses in our consolidated statements of operations.

Software Development Costs—

We capitalize costs for network and non-network software developed or obtained for internal use during the application development stage. These costs include purchased software and direct costs associated with the development and configuration of internal use software that supports the operation of our service offerings. These costs are included in goodwill and intangible assets, net in our consolidated balance sheets and, when the software is placed in service, are amortized on a straight-line basis over their estimated useful lives. Costs incurred in the preliminary project and post-implementation stages, as well as maintenance and training costs, are expensed as incurred.

With respect to software sold as part of our equipment sales, we capitalize software development costs once technological feasibility has been established. Capitalized software costs are amortized on a product-by-product basis, based on the greater of the ratio that current gross revenues for a product bear to the total of current and anticipated future gross revenues for that product or the straight-line method over the remaining estimated economic life of the product.

Warranty—

We provide warranties on parts and labor related to our products. Our warranty terms range from two to ten years. Warranty reserves are established for costs that are estimated to be incurred after the sale, delivery and installation of the products under warranty. The warranty reserves are determined based on known product failures, historical experience and other available evidence, and are included in accrued liabilities in our consolidated balance sheets.

See Note 5, “Composition of Certain Balance Sheet Accounts,” for the details of the changes in our warranty reserve.

Asset Retirement Obligations—

We have certain asset retirement obligations related to contractual commitments to remove our network equipment and other assets from leased cell sites upon termination of the site lease and to remove equipment from aircraft when the service contracts terminate. The asset retirement obligations are classified as a noncurrent liability in our consolidated balance sheets.

See Note 5, “Composition of Certain Balance Sheet Accounts,” for the details of the changes in our asset retirement obligations.

Fair Value of Financial Instruments—

We group financial assets and financial liabilities measured at fair value into three levels of hierarchy based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value.

See Note 10, “Fair Value of Financial Assets and Liabilities,” for further information.

Derivatives –

In March 2015, we entered into a prepaid forward transaction in which we purchased 7.2 million shares of our common stock for approximately $140 million, with an expected settlement date on or around

March 1, 2020

. Because the transaction is indexed to our own stock and classified within stockholders’ equity, we do not account for the prepaid forwards as a derivative instrument in accordance with Accounting Standards Codification (“ASC”) 815,

Derivatives and Hedging

See Note 7, “Long-Term Debt and Other Liabilities,” Note 9, “Common Stock and Preferred Stock,” and Note 10, “Fair Value of Financial Assets and Liabilities,” for further information.

Convertible Notes –

Proceeds received from the issuance of 2022 Convertible Notes and 2020 Convertible Notes (as defined in Note 7, “Long-Term Debt and Other Liabilities”) are initially allocated between a liability component (long-term debt) and an equity component (additional paid-in capital), within the consolidated balance sheet. The fair value of the liability component is measured using rates determined for similar debt instruments without a conversion feature. The carrying amount of the equity component, representing the conversion option, is determined by deducting the fair value of the liability component from the aggregate face value of 2022 Convertible Notes and 2020 Convertible Notes.

See Note 7, “Long-Term Debt and Other Liabilities,” for further information.

Net Loss Per Share—

We calculate basic and diluted net loss per share using the weighted-average number of common shares outstanding during the period.

See Note 3, “Net Loss Per Share,” for further information.

Stock-Based Compensation Expense—

Compensation cost is measured and recognized at fair value for all stock-based payments, including stock options. For time-based vesting stock options, we estimate fair value using the Black-Scholes option-pricing model, which requires assumptions, such as expected volatility, risk-free interest rate, expected life, and dividends. Restricted stock units (“RSUs”) and restricted stock are measured based on the fair market value of the underlying stock on the date of grant. For awards with a market condition (which we have used on a limited basis), we estimated fair value using the Monte Carlo Simulation model, which requires assumptions, such as volatility, risk-free interest rate, expected life and dividends. Our stock-based compensation expense is recognized over the applicable vesting period, and is included in the same operating expense line items in the consolidated statements of operations as the base cash compensation paid to the underlying employees.

See Note 12, “Stock-Based Compensation,” for further information.

Leases—

In addition to our arrangements with commercial airlines which we account for as leases as noted above, we also lease certain facilities, equipment, cell tower space and base station capacity. We review each lease agreement to determine if it qualifies as an operating or capital lease.

For leases that contain predetermined fixed escalations of the minimum rent, we recognize the related rent expense on a straight-line basis over the term of the lease. We record any difference between the straight-line rent amounts and amounts payable under the lease as deferred rent, in either accrued liabilities or as a separate line within noncurrent liabilities, as appropriate, in our consolidated balance sheets.

For leases that qualify as a capital lease, we record a capital lease asset and a capital lease obligation at the beginning of the lease term at an amount equal to the present value of minimum lease payments during the term of the lease, excluding that portion of the payments that represent executory costs. The capital lease asset is depreciated on a straight-line method over the shorter of its estimated useful life or lease term.

See Note 15, “Leases,” for further information.

Advertising Costs—

Costs for advertising are expensed as incurred.

Debt Issuance Costs—

We defer loan origination fees and financing costs related to our various debt offerings as deferred financing costs. Additionally, we defer fees paid directly to the lenders related to amendments with our various debt offerings as deferred financing costs. We amortize these costs over the term of the underlying debt obligation using the effective interest method, and include them in interest expense in the consolidated statement of operations. The fees incurred but not paid directly to the lenders in connection with amendments are expensed as incurred to interest expense. Deferred financing costs associated with future debt issuances are written off in the period during which we determine that the debt will no longer be issued.

See Note 7, “Long-Term Debt and Other Liabilities” for further information.

Comprehensive Loss

Comprehensive loss for the years ended December 31, 2018, 2017 and 2016 is net loss plus unrealized gains and losses on foreign currency translation adjustments.

Recently Issued Accounting Pronouncements

Revenue recognition related new pronouncements:

On January 1, 2018, we adopted Accounting Standards Codification Topic 606,

Revenue From Contracts With Customers

(“ASC 606”) using the modified retrospective method. As a result, we recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings as of January 1, 2018. Our historical financial statements have not been restated and continue to be reported under the revenue accounting standard in effect for those periods.

Prior to the adoption of ASC 606, equipment revenue (and related cost) under some of our CA-NA and CA-ROW segment contracts was deferred and recognized over the life of the contract as the equipment and connectivity services did not meet the requirements to be treated as separate units of accounting. Under ASC 606, these same equipment transactions qualify as standalone performance obligations and, therefore, equipment revenue (and related cost) is recognized upon acceptance by our airline customers. Adoption of the new standard did not materially affect the amount or timing of equipment revenue recognized from our BA segment. Our service revenue across all segments continues to be recognized as the services are provided to customers.

In conjunction with the adoption of ASC 606, we also adopted Accounting Standard Codification Subtopic 340-40,

Other Assets and Deferred Costs – Contracts with Customers

(“ASC 340-40”), which requires the capitalization of costs incurred to obtain or fulfill a contract with a customer. Prior to the adoption of ASC 340-40, we expensed all fulfillment and other costs associated with airline-directed contracts, which were comprised predominantly of costs incurred to obtain supplemental type certificates (“STCs”); these costs are now required to be capitalized and amortized to expense over the life of the contract (and are included within engineering, design and development in our consolidated financial statements). Costs associated with our turnkey contracts are not eligible for capitalization under ASC 340-40 and will continue to be expensed as incurred.

The cumulative effect of the adoption of ASC 606 and ASC 340-40 to our consolidated balance sheet as of January 1, 2018 was as follows (

in thousands)

							Balances
	Balance at						with
	December 31,			Impact of			Adoption of
	2017			ASC 606			ASC 606
Assets
Inventories	$	45,543		$	974		$	46,517
Prepaid expenses and other current assets		20,310			603			20,913
Property and equipment, net		656,038			(4,405	)		651,633
Other non-current assets		67,107			(30,006	)		37,101
Liabilities
Current deferred revenue		43,448			(7,182	)		36,266
Other non-current liabilities		134,655			(48,378	)		86,277
Equity
Accumulated deficit		(1,089,369	)		22,726			(1,066,643	)

During the fourth quarter 2018, we identified an additional $0.9 million of property and equipment, net that should have been included in the transition adjustments as of January 1, 2018. The schedule above reflects the additional adjustment.

See Note 4, “Revenue Recognition,” for additional information.

On January 1, 2018, we adopted ASU 2016-04,

Recognition of Breakage for Certain Prepaid Stored-Value Products

(“ASU 2016-04”), which amends the guidance on extinguishing financial liabilities for certain prepaid stored-value products by requiring that entities that sell prepaid stored-value products recognize breakage proportionally as the prepaid stored-value product is being redeemed rather than immediately upon sale of the product. Adoption of this standard did not have a material impact on our consolidated financial statements.

All other new pronouncements:

In March 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02,

Leases

(“ASU 2016-02”), which introduces a lessee model that records most leases on the balance sheet. ASU 2016-02 also aligns certain underlying principles of the new lessor model with those in ASC 606, the FASB’s new revenue recognition standard. Furthermore, ASU 2016-02 eliminates the required use of bright-line tests used in current GAAP for determining lease classification. It also requires lessors to provide additional transparency into their exposure to the changes in value of their residual assets and how they manage that exposure. ASU 2016-02 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual reporting periods. ASU 2016-02 required entities to adopt the new leases standard using a modified retrospective method and initially apply the related guidance at the beginning of the earliest period presented in the financial statements. During July 2018, the FASB issued ASU 2018-11, which allows for an additional and optional transition method under which an entity would record a cumulative-effect adjustment at the beginning of the period of adoption (“cumulative-effect method”). We will adopt this guidance as of January 1, 2019 using the cumulative-effect method. We have finalized implementation of a new lease accounting information system and continue to evaluate the impact of the adoption of this guidance on our consolidated financial statements. We anticipate an increase in our assets and liabilities due to the recognition of the required right-of-use asset and corresponding lease obligations for leases that are currently classified as operating leases. The primary impact of ASU 2016-02 relates to our tower leases and base stations, and our leases of facilities and equipment. See Note 15, “Leases,” for further information on our lease arrangements.

On January 1, 2018, we adopted ASU 2016-15,

Classification of Certain Cash Receipts and Cash Payments

(“ASU 2016-15”), which amends ASC 230,

Statement of Cash Flows

, the FASB’s standard for reporting cash flows in general-purpose financial statements. The amendment addresses the diversity in practice related to the classification of certain cash receipts and payments including debt prepayment or debt extinguishment costs. We adopted this guidance using the full retrospective method. Adoption of this guidance did not have a material impact on our consolidated financial statements as we have historically reported debt prepayment and debt extinguishment costs in a manner consistent with ASU 2016-15.

On January 1, 2018, we adopted ASU 2016-16,

Intra-Entity Transfers of Assets Other Than Inventory

(“ASU 2016-16”), which removes the prohibition in ASC 740,

Income Taxes

, against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. This is intended to reduce the complexity of GAAP and diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. Adoption of this standard did not have a material impact on our consolidated financial statements.

On January 1, 2018, we adopted ASU 2016-18,

Restricted Cash – A Consensus of the FASB Emerging Issues Task Force

(“ASU 2016-18”), which amends ASC 230,

Statement of Cash Flows

, to clarify guidance on the classification and presentation of restricted cash in the statement of cash flows using the full retrospective method. Adoption of this standard did not have a material impact on our consolidated financial statements. See our consolidated statements of cash flows for the reconciliation of cash presented in the statements of cash flows to the cash presented on the balance sheet.

On January 1, 2018, we adopted ASU 2017-09,

Scope of Modification Accounting

(“ASU 2017-09”), which amends the scope of modification accounting for share-based payment arrangements. The ASU provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718,

Compensation – Stock Compensation

. Specifically, an entity would not apply modification accounting if the fair value, vesting conditions, and classification of the awards are the same immediately before and after the modification. Adoption of this standard did not have a material impact on our consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02,

Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income

(“ASU 2018-02”)

which permits entities to reclassify tax effects stranded in accumulated other comprehensive income as a result of tax reform to retained earnings. Companies that elect to reclassify these amounts must reclassify stranded tax effects for all items accounted for in accumulated other comprehensive income. ASU 2018-02 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of ASU 2018-02 on our consolidated financial statements and related disclosures.

In June 2018, the FASB issued ASU 2018-07,

Improvements to Nonemployee Share-Based Payment Accounting

(“ASU 2018-07”), which expands the scope of ASC 718,

Compensation – Stock Compensation

, to include share-based payment transactions for acquiring goods or services from nonemployees. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. Early adoption is permitted. We are currently assessing the impact of ASU 2018-07 on our consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13,

Fair Value Measurement

(“ASU 2018-13”), which changes the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019. Early adoption is permitted. We are currently assessing the impact of ASU 2018-13 on our disclosures.

Net Loss Per Share

12 Months Ended

Dec. 31, 2018

Earnings Per Share [Abstract]

Net Loss Per Share

Basic and diluted net loss per share have been calculated using the weighted-average number of common shares outstanding for the period.

The shares of common stock effectively repurchased in connection with the Forward Transactions (as defined and described in Note 7, “Long-Term Debt and Other Liabilities”) are considered participating securities requiring the two-class method to calculate basic and diluted earnings per share. Net earnings in future periods will be allocated between common shares and participating securities. In periods of a net loss, the shares associated with the Forward Transactions will not receive an allocation of losses, as the counterparties to the Forward Transactions are not required to fund losses. Additionally, the calculation of weighted average shares outstanding as of December 31, 2018, 2017 and 2016 excludes approximately 7.2 million shares that will be repurchased as a result of the Forward Transactions.

As a result of the net loss for each of the years ended December 31, 2018, 2017 and 2016 for the periods where such shares or securities were outstanding, all of the outstanding shares of common stock underlying stock options, deferred stock units and restricted stock units were excluded from the computation of diluted shares outstanding because they were anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share for the years ended December 31, 2018, 2017 and 2016; however, because of the undistributed losses, the shares associated with the Forward Transactions are excluded from the computation of basic earnings per share as undistributed losses are not allocated to these shares (

in thousands, except per share amounts

	For the Years Ended December 31,
	2018			2017			2016
Net loss	$	(162,031	)	$	(171,995	)	$	(124,505	)
Less: Participation rights of the Forward Transactions		—			—			—
Undistributed losses	$	(162,031	)	$	(171,995	)	$	(124,505	)
Weighted-average common shares outstanding-basic and diluted		80,038			79,407			78,915
Net loss attributable to common stock per share-basic and diluted	$	(2.02	)	$	(2.17	)	$	(1.58	)