false00015370540001537054us-gaap:PreferredStockMember2023-02-282023-02-2800015370542023-02-282023-02-280001537054us-gaap:CommonStockMember2023-02-282023-02-28

 

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): February 28, 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. ☐

 

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Item 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On February 28, 2023, Gogo Inc. issued a press release announcing its results of operations for the fourth quarter ended December 31, 2022. 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 February 28, 2023.
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

 

 

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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/ Barry Rowan

Barry Rowan
Executive Vice President and

Chief Financial Officer

 

Date: February 28, 2023

 

 

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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 Record Fourth Quarter and 2022 Results, Provides 2023 Guidance and Updates Long Term Targets

 

Record Fourth Quarter Revenue of $108.2 million, up 17% Year-over-Year; Net Income from Continuing Operations of $27.7 million; and Record Adjusted EBITDA(1) of $46.2 million, up 17% Year-over-Year

 

Record Full Year Revenue of $404.1 million, up 20% Year-over-Year; Net Income from Continuing Operations of $92.1 million; and Adjusted EBITDA of $173.8 million

 

BROOMFIELD, CO - February 28, 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 and full-year ended December 31, 2022.

 

Q4 2022 Highlights

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Full Year 2022 Highlights

 

“Our equipment revenue surged, which bodes well for future service revenue, as Gogo met extraordinary demand for inflight connectivity and delivered a 50% increase in equipment shipments despite global supply chain constraints in 2022,” said Oakleigh Thorne, Chairman and CEO. “We’re also on track to commercially launch our 5G service in Q4 this year, and our LEO-based Global Broadband product in the second half of 2024.”

 

“Our strong financial results underpin our confidence in our financial targets,” said Barry Rowan, Executive Vice President and CFO. “We have extended our long-term revenue growth target of 17% from 2022 through 2027 and reiterate our target for over $200 million in Free Cash Flow beginning in 2025.”

 

2023 Financial Guidance and Long-Term Financial Targets

 

The Company is providing the following guidance for 2023:

 

The Company provides the following long-term financial targets:

 

The Company’s 2023 financial guidance and long-term targets include Gogo 5G and Global Broadband but do not reflect the impact of the Federal Communications Commission’s Secure and Trusted Communications Networks Reimbursement Program (the “FCC Program”), as the Company awaits further information regarding whether Congress will appropriate additional funds.

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Conference Call

 

The Company will host its fourth quarter conference call on February 28, 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 click on the below link to retrieve your unique conference ID to use to access the earnings call:

 

https://register.vevent.com/register/BI289cacc58c4d42f7a3edc43627bc60a0

 

Non-GAAP Financial Measures

 

We report certain non-GAAP financial measurements, including Adjusted EBITDA and Free Cash Flow, in the supplemental tables below, and we refer to Adjusted EBITDA Margin in our discussion of long-term baseline targets 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 and 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 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

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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, including the COVID-19 pandemic, and the measures implemented to combat them; the impact of adverse economic conditions; our ability to fully utilize portions of our deferred tax assets; the impact of increased attention to climate change, ESG matters and conservation measures; our ability to evaluate or pursue strategic opportunities; our ability to develop and deploy Gogo 5G, Global Broadband or other next generation technologies; 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; the impact of government regulation of the internet and conflict minerals; our possession and use of personal information; risks associated with participation in the FCC Program, should we decide to participate; 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 on February 28, 2023.

 

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.

 

 

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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 December 31, 2022, Gogo reported 3,279 business aircraft flying with Gogo’s AVANCE L5 or L3 system installed, 6,935 aircraft flying with its ATG systems onboard, and 4,475 aircraft with narrowband satellite connectivity installed. Connect with us at business.gogoair.com.

 

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Gogo Inc. and Subsidiaries

Unaudited Consolidated Statements of Operations

(in thousands, except per share amounts)

		For the Three Months Ended December 31,								For the Years Ended December 31,
		2022				2021				2022				2021
Revenue:
Service revenue		$	77,346			$	69,257			$	296,329			$	259,583
Equipment revenue			30,817				23,043				107,738				76,133
Total revenue			108,163				92,300				404,067				335,716
Operating expenses:
Cost of service revenue (exclusive of items shown below)			16,744				13,846				64,427				56,103
Cost of equipment revenue (exclusive of items shown below)			21,063				14,510				71,473				46,092
Engineering, design and development			8,241				6,882				29,587				24,874
Sales and marketing			6,932				6,892				25,471				20,985
General and administrative			13,914				14,185				58,203				51,554
Depreciation and amortization			2,574				3,658				12,580				15,482
Total operating expenses			69,468				59,973				261,741				215,090
Operating income			38,695				32,327				142,326				120,626
Other (income) expense:
Interest income			(1,455	)			(46	)			(2,386	)			(191	)
Interest expense			9,430				10,895				38,872				67,472
Loss on extinguishment of debt and settlement of convertible notes			—				—				—				83,961
Other expense, net			11				14				123				25
Total other expense			7,986				10,863				36,609				151,267
Income (loss) from continuing operations before income taxes			30,709				21,464				105,717				(30,641	)
Income tax provision (benefit)			3,039				(187,673	)			13,658				(187,230	)
Net income from continuing operations			27,670				209,137				92,059				156,589
Net income (loss) from discontinued operations, net of tax			—				9,572				—				(3,854	)
Net income		$	27,670			$	218,709			$	92,059			$	152,735
Net income (loss) attributable to common stock per share—basic:
Continuing operations		$	0.22			$	1.89			$	0.75			$	1.50
Discontinued operations			—				0.09				—				(0.04	)
Net income attributable to common stock per share—basic		$	0.22			$	1.98			$	0.75			$	1.46
Net income attributable to common stock per share—diluted:
Continuing operations		$	0.21			$	1.57			$	0.71			$	1.28
Discontinued operations			—				0.03				—				—
Net income attributable to common stock per share—diluted		$	0.21			$	1.60			$	0.71			$	1.28
Weighted average number of shares
Basic			128,447				109,907				123,268				103,400
Diluted			133,053				134,027				133,923				127,205

 

 

 

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Gogo Inc. and Subsidiaries

Unaudited Consolidated Balance Sheets

(in thousands)

		December 31,				December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	150,550			$	145,913
Short-term investments			24,796				-
Total cash, cash-equivalents and short-term investments			175,346				145,913
Accounts receivable, net of allowances of $1,778 and $894, respectively			54,210				37,730
Inventories			49,493				33,976
Prepaid expenses and other current assets			45,100				32,295
Total current assets			324,149				249,914
Non-current assets:
Property and equipment, net			104,595				63,672
Intangible assets, net			49,509				49,554
Operating lease right-of-use assets			75,261				70,989
Other non-current assets, net of allowances of $501 and $455, respectively			43,355				28,425
Deferred income taxes			162,657				185,133
Total non-current assets			435,377				397,773
Total assets		$	759,526			$	647,687
Liabilities and stockholders’ deficit
Current liabilities:
Accounts payable		$	13,646			$	17,203
Accrued liabilities			60,056				59,868
Deferred revenue			3,418				1,825
Current portion of long-term debt			7,250				109,620
Total current liabilities			84,370				188,516
Non-current liabilities:
Long-term debt			690,173				694,760
Non-current operating lease liabilities			79,241				77,329
Other non-current liabilities			7,611				7,236
Total non-current liabilities			777,025				779,325
Total liabilities			861,395				967,841
Stockholders’ deficit
Common stock			14				11
Additional paid-in capital			1,385,933				1,258,477
Accumulated other comprehensive income			30,128				1,789
Treasury stock, at cost			(158,375	)			(128,803	)
Accumulated deficit			(1,359,569	)			(1,451,628	)
Total stockholders’ deficit			(101,869	)			(320,154	)
Total liabilities and stockholders’ deficit		$	759,526			$	647,687

 

 

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Gogo Inc. and Subsidiaries

Unaudited Consolidated Statements of Cash Flows

(in thousands)

		For the Years Ended December 31,
		2022				2021
Operating activities from continuing operations:
Net income		$	92,059			$	156,589
Adjustments to reconcile net income (loss) to cash provided by operating activities:
Depreciation and amortization			12,580				15,482
Loss on asset disposals, abandonments and write-downs			1,577				141
Provision for expected credit losses			1,047				284
Deferred income taxes			13,170				(187,320	)
Stock-based compensation expense			19,065				13,345
Amortization of deferred financing costs and interest rate caps			3,215				4,661
Accretion of debt discount			456				419
Loss on extinguishment of debt and settlement of convertible notes			—				83,961
Changes in operating assets and liabilities:
Accounts receivable			(17,482	)			1,925
Inventories			(15,517	)			(5,862	)
Prepaid expenses and other current assets			8,351				(20,844	)
Contract assets			(2,164	)			(5,638	)
Accounts payable			(2,540	)			3,806
Accrued liabilities			(12,031	)			14,099
Deferred revenue			1,589				(1,282	)
Accrued interest			3,647				(8,604	)
Other non-current assets and liabilities			(3,617	)			1,535
Net cash provided by operating activities from continuing operations			103,405				66,697
Investing activities from continuing operations:
Proceeds from sale of property and equipment			—				1,000
Purchases of property and equipment			(43,914	)			(4,264	)
Acquisition of intangible assets—capitalized software			(6,000	)			(4,396	)
Proceeds from (purchase of) interest rate caps			4,292				(8,629	)
Purchases of short-term investments			(24,796	)			—
Net cash used in investing activities from continuing operations			(70,418	)			(16,289	)
Financing activities from continuing operations:
Redemption of senior secured notes			—				(1,023,146	)
Proceeds from term loan, net of discount			—				721,375
Payment of debt issuance costs			—				(21,103	)
Repurchases of common stock			(18,375	)			—
Payments on term loan			(7,250	)			(3,625	)
Payments on finance leases			(184	)			(145	)
Stock-based compensation activity			(2,579	)			(4,393	)
Net cash used in financing activities from continuing operations			(28,388	)			(331,037	)
Cash flows from discontinued operations:
Net cash used in operating activities			—				(1,211	)
Net cash used in investing activities			—				(7,802	)
Net cash used in financing activities			—				—
Net cash used in discontinued operations			—				(9,013	)
Effect of foreign exchange rate changes on cash			13				40
Increase (decrease) in cash, cash equivalents and restricted cash			4,612				(289,602	)
Cash, cash equivalents and restricted cash at beginning of period			146,268				435,870
Cash, cash equivalents and restricted cash at end of period		$	150,880			$	146,268
Cash, cash equivalents and restricted cash at end of period		$	150,880			$	146,268
Less: current restricted cash			—				25
Less: non-current restricted cash			330				330
Cash and cash equivalents at end of period		$	150,550			$	145,913
Supplemental Cash Flow Information:
Cash paid for interest		$	41,209			$	71,114
Cash paid for taxes			377				376
Non-cash investing activities:
Purchases of property and equipment in current liabilities		$	10,688			$	6,126

 

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Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics

		For the Three Months Ended December 31,								For the Years Ended December 31,
		2022				2021				2022				2021
Aircraft online (at period end)
ATG			6,935				6,400				6,935				6,400
Satellite			4,475				4,567				4,475				4,567
Average monthly connectivity service revenue per aircraft online
ATG		$	3,370			$	3,301			$	3,349			$	3,238
Satellite			284				254				268				250
Units sold
ATG			390				286				1,334				869
Satellite			62				36				206				205
Average equipment revenue per unit sold (in thousands)
ATG		$	67			$	69			$	68			$	71
Satellite			44				63				49				54

 

 

Gogo Inc. and Subsidiaries

Supplemental Information – Revenue and Cost of Revenue

(in thousands, unaudited)

		For the Three Months Ended December 31,								% Change				For the Years Ended December 31,								% Change
		2022				2021				2022 over 2021				2022				2021				2022 over 2021
Service revenue		$	77,346			$	69,257				11.7	%		$	296,329			$	259,583				14.2	%
Equipment revenue			30,817				23,043				33.7	%			107,738				76,133				41.5	%
Total revenue		$	108,163			$	92,300				17.2	%		$	404,067			$	335,716				20.4	%
		For the Three Months Ended December 31,								% Change				For the Years Ended December 31,								% Change
		2022				2021				2022 over 2021				2022				2021				2022 over 2021
Cost of service revenue (1)		$	16,744			$	13,846				20.9	%		$	64,427			$	56,103				14.8	%
Cost of equipment revenue (1)		$	21,063			$	14,510				45.2	%		$	71,473			$	46,092				55.1	%

 

 

 

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Gogo Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)

		For the Three Months Ended December 31,								For the Years Ended December 31,								For the Three Months Ended September 30,
		2022				2021				2022				2021				2022
Adjusted EBITDA:
Net income attributable to common stock (GAAP)		$	27,670			$	218,709			$	92,059			$	152,735			$	20,176
Interest expense			9,430				10,895				38,872				67,472				8,781
Interest income			(1,455	)			(46	)			(2,386	)			(191	)			(690	)
Income tax provision (benefit)			3,039				(187,673	)			13,658				(187,230	)			7,980
Depreciation and amortization			2,574				3,658				12,580				15,482				2,716
EBITDA			41,258				45,543				154,783				48,268				38,963
Stock-based compensation expense			4,964				3,201				19,065				13,345				4,690
(Income) loss from discontinued operations			—				(9,572	)			—				3,854				—
Loss on extinguishment of debt and settlement of convertible notes			—				—				—				83,961				—
Separation costs related to CA sale			—				380				—				1,550				—
Adjusted EBITDA		$	46,222			$	39,552			$	173,848			$	150,978			$	43,653
Free Cash Flow:
Net cash provided by operating activities (GAAP)		$	31,466			$	30,342			$	103,405			$	66,697			$	27,699
Consolidated capital expenditures			(9,982	)			(4,656	)			(49,914	)			(8,660	)			(19,982	)
Proceeds from (purchase of) interest rate caps			3,489				—				4,292				(8,629	)			803
Free cash flow		$	24,973			$	25,686			$	57,783			$	49,408			$	8,520

 

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)	$	85			$	105
Consolidated capital expenditures		(30	)			(40	)
Proceeds from interest rate caps		25				25
Free cash flow	$	80			$	90

 

 

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 included in the results of continuing operations, (ii) the results of discontinued operations, including stock-based compensation expense, (iii) loss on extinguishment of debt and settlement of convertible notes and (iv) separation costs related to the sale of CA. 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.

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We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA is appropriate given the significant variation in expense that can result from using the Black-Scholes model to determine the fair value of such compensation. The fair value of our stock options is determined using the Black-Scholes model and varies based on fluctuations in the assumptions used in this model, including inputs that are not necessarily directly related to the performance of our business, such as the expected volatility, the risk-free interest rate and the expected life of the options. Therefore, we believe that the exclusion of this cost provides a clearer view of the operating performance of our business. Further, stock option 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 results of our discontinued operations from Adjusted EBITDA because they are not part of our ongoing operations.

 

We believe it is useful for an understanding of our operating performance to exclude the loss on extinguishment of debt and settlement of convertible notes 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 separation costs related to the sale of CA from Adjusted EBITDA for the three and twelve months ended December 31, 2021 because of the non-recurring 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 from our interest rate caps, less purchases of property and equipment and the acquisition of intangible assets and cash paid to purchase our interest rate caps. We believe that Free Cash Flow provides meaningful information regarding our liquidity.

 

To conform to current year presentation, we included the cash paid for our interest rate caps in Free Cash Flow for the twelve-month period ended December 31, 2021. We believe it is useful for an understanding of our liquidity to include the cash flows associated with interest rate caps to facilitate a more consistent comparison of net cash paid for interest and the interest rate changes for which we are hedged.

 

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