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): August 11, 2014
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.) |
1250 North Arlington Heights Rd. Itasca, IL |
60143 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: 630-647-1400
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)) |
Item 7.01 | REGULATION FD DISCLOSURE. |
Representatives of Gogo Inc. (the Company) will use the attached presentation in various meetings with investors from time to time. A copy of the investor presentation is attached hereto as Exhibit 99.1.
Item 9.01 | FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits
Exhibit No. |
Description | |
99.1 | Investor Presentation |
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/ Norman Smagley | |
Norman Smagley | ||
Executive Vice President and Chief Financial Officer |
Date: August 11, 2014
EXHIBIT INDEX TO CURRENT REPORT ON FORM 8-K
Dated August 11, 2014
99.1 | Investor Slides |
Roadshow Presentation
August 2014
Exhibit 99.1 |
GOGOAIR.COM | 2
Safe Harbor Statement
This
presentation
contains
forward-looking
statements
that
are
based
on
managements
beliefs
and
assumptions
and
on
information
currently
available
to
management.
Most
forward-looking
statements
contain
words
that
identify
them
as
forward-looking,
such
as
anticipates,
believes,
continues,
could,
seeks,
estimates,
expects,
intends,
may,
plans,
potential,
predicts,
projects,
should,
will,
would
or similar expressions and the negatives of those terms that relate to future events.
Forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause Gogos actual results, performance or achievements to be
materially different from any projected results, performance or achievements expressed
or implied by the forward-looking statements. Forward-looking statements represent the
beliefs and assumptions of Gogo only as of the date of this presentation and Gogo
undertakes no obligation to update or revise publicly any such forward-looking statements,
whether as a result of new information, future events or otherwise. As such,
Gogos future results may vary from any expectations or goals expressed in, or implied by, the
forward-looking statements included in this presentation, possibly to a material
degree. Gogo cannot assure you that the assumptions made in preparing any of the
forward-looking statements will prove accurate or that any long-term financial or operational goals
and targets will be realized. In particular, the availability and performance of
certain technology solutions yet to be implemented by the Company set forth in this presentation
represent aspirational long-term goals based on current expectations. For a
discussion of some of the important factors that could cause Gogos results to differ materially from
those expressed in, or implied by, the forward-looking statements included in this
presentation, investors should refer to the disclosure contained under
the
heading
Risk
Factors
in
the
Companys
Annual
Report
on
Form
10-K
filed
with
the
SEC
on
March
14,
2014
and
Special
Note
Regarding
Forward-Looking
Statements
in the Companys Quarterly Report on Form 10-Q filed with the SEC on August
11, 2014. Note to Certain Operating and Financial Data
In
addition
to
disclosing
financial
results
that
are
determined
in
accordance
with
U.S.
generally
accepted
accounting
principles
(GAAP),
Gogo
also
discloses
in
this
presentation
certain
non-GAAP
financial
information,
including
Adjusted
EBITDA
and
Cash
CapEx.
These
financial
measures
are
not
recognized
measures
under GAAP and
are not intended to be, and should not be, considered in isolation or as a substitute
for, or superior to, the financial information prepared and presented in accordance with
GAAP. In addition, this presentation contains various customer metrics and operating
data, including numbers of aircraft or units online, that are based on internal company
data, as well as information relating to the commercial and business aviation market,
and our position within those markets. While management believes such information and
data are reliable, they have not been verified by an independent
source and there are inherent challenges and limitations involved in compiling data
across various geographies and from various sources.
DISCLAIMER |
GOGOAIR.COM | 3
GOGOS MISSION
Advance aviation by connecting every aircraft
with the most trusted communications services on
and above our planet |
GOGOAIR.COM | 4
WHY INVEST IN GOGO
Gogo is a leading aero communications service provider for the
global aviation
industry.
Our
scale
position
supports
superior
unit
economics,
operational
excellence,
and industry-leading R&D investments.
Gogo
is
a
pure
play.
We
are
the
only
telecom
company
that
focuses
solely
on
the
unique requirements of connecting aircraft.
Our
growth
opportunity
is
large,
well-defined
and
early
stage. |
GOGOAIR.COM | 5
INDUSTRY LEADING SCALE
(1) Market position is as of 6/30/2014 and based on following:
CA-NA
based on publicly available information as of 6/30/14 for Panasonic, Thales / LiveTV,
Global Eagle Entertainment, and ViaSat; CA-ROW
based on backlog of awarded aircraft that may include aircraft that fly both North
American and International routes and management estimates of Panasonic, Global Eagle, LiveTV and ViaSat backlog;
BA ATG
based on aircraft online and ViaSat Yonder aircraft online in North America;
BA Satellite
based on aircraft online with Iridium telecommunication systems
and TrueNorth and ICG estimated aircraft online
Market Position
(1)
CANA
CAROW
BA ATG
Market Share
(1)
Gogo Installed
Aircraft
Total Awarded
Aircraft
BA Satellite
#1
73%
2,058
2,300+
332
2,415
#2
#1
#1
3%
95%
63%
19
2,415
5,224
5,224
GOGOAIR.COM | 5 |
GOGOAIR.COM | 6
LARGEST MARKET SHARE IN CA NORTH AMERICA
73% of connected aircraft
>4x the closest competitor
Aircraft
Online
as
of
June
30,
2014
(1)
1) Based on management estimates, trade publications and other public sources as of
6/30/2014. GOGOAIR.COM | 6 |
GOGOAIR.COM | 7
THE INTERNATIONAL MARKET IS LARGE & UNTAPPED
AND GROWING AT 2X THE RATE OF THE NORTH AMERICAN MARKET
1.
Based on Boeing Current Market Outlook 2013
2.
Based on management estimates as of 6/30/2014
Total Aircraft
1
~4,000
~13,000
Uncommitted
15%
81%
Committed to IFC
2
85%
19%
North America
Rest of World
15%
81%
GOGOAIR.COM | 7 |
GOGOAIR.COM | 8
VALUABLE LONG-TERM PARTNERSHIPS
International
North America
Subsidiary of
Original Equipment Manufacturers
Fractional Jet Operators
COMMERCIAL AVIATION
BUSINESS AVIATION
(1)
(1) Letter of Intent
(1) |
GOGOAIR.COM | 9
OUR VERSATILE, PROPRIETARY PLATFORM ENGAGES
EVERY PASSENGER, AIRCRAFT OWNER & OPERATOR
Gogo
Vision
Gogo
Signature
Services
Operations-Oriented
Communication
Services
Gogo Connectivity
& Gogo Biz
AIRCRAFT
OWNERS &
OPERATORS
PASSENGERS,
AIRLINES &
MEDIA
PARTNERS
PASSENGERS
Gogo
Text & Talk |
GOGOAIR.COM | 10
LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT
1) Includes 36,000 aircraft for CA in 2033 and 37,000 aircraft for BA in 2023.
Sources: Boeing Current Market Outlook 2013
2032, excludes: cargo aircraft JetNet iQ Report Q1 2014; General Aviation Manufacturers
Association 2012 Statistical Databook; excludes rest of world turbo props.
17,000
27,000
44,000
+
=
Global
Commercial
Aircraft
Global
Business
Aircraft
Global
Aircraft
Today
Future
~73,000
(1)
Global
Aircraft |
GOGOAIR.COM | 11
WHY WE WIN
GOGOAIR.COM | 11
Specialize in aviation
End-to-end service provider
Superior technology and roadmap
Deliver excellent reliability
Flexible business model
1
2
3
4
5 |
GOGOAIR.COM | 12
SPECIALIZED END-TO-END SERVICE PROVIDER
AIRCRAFT
OPERATIONS
REGULATORY
APPROVAL
NETWORK &
BANDWIDTH
MANAGEMENT
CUSTOMER CARE
& MARKETING
SUPPORT
NETWORK
ENGINEERING
& DESIGN
AIRCRAFT
CONNECTIVITY
SOLUTIONS
ENGINEERING
COMPLETE
BACK-OFFICE
INFRASTRUCTURE
AND SUPPORT
AIRLINE
CONNECTIVITY
PRODUCTS &
SERVICES
DEVELOPMENT
GOGOAIR.COM | 12 |
GOGOAIR.COM | 13
SUPERIOR TECHNOLOGY AND ROADMAP
Technology
Region
Peak
Speed
Key Attributes
Iridium
Global
2.4 Kbps
-
Primarily telecom service
-
Low data speeds
-
Satellite
SwiftBroadband
Global
432 Kbps
-
Low data speeds
-
Satellite
Air-to-Ground
(EvDo Rev A)
Regional
3.1 Mbps
-
Overnight install
-
Suits all aircraft types
Air-to-Ground 4
(EvDo Rev B)
Regional
9.8 Mbps
-Triples the peak speed
-
More reliable than ATG
-
Overnight install
Ku Band
Global
50 Mbps
-
Global coverage
-
Multiple suppliers
-
Available today
Ka Band
Global
50 Mbps
-
High data speeds
-
Spot beam
-
Next Generation
Expected
2015
Launch
Expected
2015
Launch
(Regional)
(Regional)
Ground-to-Orbit
(Hybrid)
Regional
70 Mbps+
-
More spectrally efficient
-
Lower profile
-
More robust & reliable
Expected
2015
Launch
2Ku
Global
70 Mbps+
-
More spectrally efficient
-
Lower profile
-
More robust & reliable
Expected
2015
Launch |
GOGOAIR.COM | 14
RECENT DEVELOPMENTS
EXTENDING OUR TECHNOLOGY LEAD
Revolutionary 2Ku and GTO connectivity systems announced
Strong results from ATG-4 upgrade program
Global Ku satellite network established, Ku aircraft flying
7 Ku STCs obtained, more underway
Boeing line-fit program underway
Launched Delta Studio with Delta Air Lines
Certified Gogo Vision standalone system
Developed ACPU2 -
next generation airborne server
Launched next generation Iridium satellite
communication solution by BA
Announced Future Air Navigation System (FANS)
over Iridium solutions and SwiftBroadband airtime service plans
|
GOGOAIR.COM | 15
DELIVER EXCELLENT RELIABILITY
60+ million
sessions
8,000+ flights
per day
98% +
ATG End-to-End
System Availability |
GOGOAIR.COM | 16
FLEXIBLE BUSINESS MODEL
Gogo
Per session to the
passenger
% of revenue, paid by
Gogo to airline
Included
Airline
Per megabyte to the
airline
No revenue share
between parties
Charged per service
to airline
TURNKEY MODEL
AIRLINE DIRECTED
MODEL
Passenger Interaction
Pricing
Revenue Share
Back-end Services |
GOGOAIR.COM | 17
FORMULA FOR REVENUE GROWTH:
REVENUE = AIRCRAFT X ARPA
TODAY
North America
In-Flight Connectivity
Global
In-Flight Connectivity
Gogo Vision
Gogo Text Messaging
Gogo Operations-Oriented
Communications Services
TOMORROW
INCREASE
AIRCRAFT
INCREASE
ARPA
$
Business Passengers
All Passengers
Advertising, eCommerce partners
Aircraft Operators |
GOGOAIR.COM | 18
FINANCIALS
GOGOAIR.COM | 18 |
GOGOAIR.COM | 19
Adjusted EBITDA*
($M)
GROWING REVENUE DRIVES PROFITABILITY
$49
$24
CA-ROW
Segment Loss
Revenue
($M)
73%
CAGR
* Please see reconciliation of Adjusted EBITDA in appendix.
$71
Note: Minor differences exist due to rounding.
GOGOAIR.COM | 19 |
GOGOAIR.COM | 20
Consolidated COGS
Consolidated COGS excl. CA-ROW
Consolidated COGS excl. CA-ROW and
assuming no change to Rev Share %
(1)
PROVEN OPERATING LEVERAGE
Cost of Goods Sold
(% of revenue)
Engineering, Design
& Development
(% of revenue)
General &
Administrative
(% of revenue)
Sales &
Marketing
(% of revenue)
(1) Revenue share percentage earned by our airline partners was 11.6% or $9.7 million
for the year ended December 31, 2011, 18.5% or $24.5 million for the year ended December 31, 2012, 20.9% or $41.1 million for the year ended
December 31, 2013, and 20.9% or $46.5 million for the twelve months ended June 30,
2014. The line footnoted above represents Cost of Goods Sold as Percentage of Revenue using the average revenue share percentage earned by
our airline partners during the year ended December 31, 2011 for
all subsequent years. We expect the revenue share percentages under certain of
our connectivity agreements to increase in future periods due to the occurrence of
contractually stipulated triggering events that have yet to occur. We currently
estimate that such increases will amount to approximately 2% of the CA-NA segments service revenue.
2011
GOGOAIR.COM | 20 |
GOGOAIR.COM | 21
Q2 FINANCIAL RESULTS DEMONSTRATE SCALEABILITY
$100
$79
2013 Q2
2014 Q2
Note: Minor differences exist due to rounding.
CA-NA
BA
CA-ROW
CA-NA
BA CA-ROW Total
25%
Revenue
($M)
Segment Profit
($M)
GOGOAIR.COM | 21 |
GOGOAIR.COM | 22
OUR SEGMENTS ARE IN DIFFERENT PHASES
Strong revenue growth
Strong segment profitability and FCF
Strong revenue growth
Segment profitability
Start-up phase
Focusing on signing airlines and
investing for growth
BA:
CA-NA:
CA-ROW:
GOGOAIR.COM | 22 |
GOGOAIR.COM | 23
BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT
PROFITABILITY AND CASH FLOW
ATG Aircraft Online
(1)
Note: Minor differences exist due to rounding.
Service Revenue
($M)
Segment Profit
($M)
(1)
End of period.
49x
Increase
107%
CAGR
69%
CAGR
GOGOAIR.COM | 23 |
GOGOAIR.COM | 24
CA NORTH AMERICA INCREASE IN AIRCRAFT ONLINE
AND REVENUE PER AIRCRAFT DRIVE REVENUE GROWTH
Aircraft
Online
(1)
Note: Minor differences exist due to rounding.
~3x
Increase
Annualized ARPA
($ 000s)
Revenue
($M)
~5x
Increase
107%
CAGR
(1)
End of period.
GOGOAIR.COM | 24 |
GOGOAIR.COM | 25
Assuming constant
revenue share %
(1)
CA NORTH AMERICA SEGMENT DEMONSTRATES
SIGNIFICANT OPERATING LEVERAGE
Cost of Goods Sold
(% of Revenue)
Segment Profit
(% of Revenue)
Other Operating Expenses
Excluding D&A
(% of Revenue)
Assuming constant
revenue share %
(1)
(1) Revenue share percentage earned by our airline partners was 11.6% or $9.7 million
for the year ended December 31, 2011, 18.5% or $24.5 million for the year ended December 31, 2012, 20.9% or $41.1 million for the year ended
December 31, 2013, and 20.9% or $46.5 million for the twelve months ended June 30,
2014. The line footnoted above represents Cost of Goods Sold as Percentage of Revenue using the average revenue share percentage earned by
our airline partners during the year ended December 31, 2011 for
all subsequent years. We expect the revenue share percentages under certain of
our connectivity agreements to increase in future periods due to the occurrence of
contractually stipulated triggering events that have yet to occur. We currently
estimate that such increases will amount to approximately 2% of the CA-NA segments service revenue.
GOGOAIR.COM | 25 |
GOGOAIR.COM | 26
2012
Announced international expansion
2013
Established global Ku network, began
development of industry leading technology
solutions
2014
announced industry leading 2Ku, first
Ku equipped aircraft flying, multiple STCs
received
In-flight connectivity service launched on
Delta & Japan Airlines
19 connected aircraft in service at end of
Q2 14
CA REST OF WORLD INVESTMENT
POSITIONS FOR FUTURE GROWTH
CA-ROW
Segment
Loss
($M)
GOGOAIR.COM | 26 |
GOGOAIR.COM | 27
EVOLVING CAPEX MODEL
(1) Cash CAPEX represents capital expenditures net of airborne equipment proceeds
received from the airlines. Gross CapEx
Cash CapEx
(1)
TRANSITION
N
E
T
W
O
R
K
I
N
S
T
A
L
L
GOGO
RENTS
GOGO
PAYS
AIRLINE
PAYS
GOGO
BUILDS
Capital Expenditures
($M)
GOGOAIR.COM | 27 |
GOGOAIR.COM | 28
GOGO FIVE POINT STRATEGY
TO INCREASE SHAREHOLDER VALUE
Gain global share
1
Grow ARPA in CA-NA
2
Evolve technology roadmap to address
market needs
3
Accelerate BA growth
4
Deliver consistent execution
5 |
2014
GOGO INC. AND AFFILIATES. PROPRIETARY & CONFIDENTIAL.
GOGOAIR.COM | 29
APPENDIX |
GOGOAIR.COM | 30
RECONCILIATION OF ADJUSTED EBITDA ($MM)
Note: Minor differences exist due to rounding
2009
2010
2011
2012
2013
2014 Q1
2014 Q2
Net Income
(142)
(140)
(18)
(96)
(146)
(17)
(19)
Interest Income
(0)
(0)
(0)
(0)
(0)
(0)
(0)
Interest Expense
30
1
9
29
7
7
Income Tax Provision
3
1
1
1
0
0
Depreciation & Amortization
22
31
33
37
56
16
15
EBITDA
(91)
(106)
16
(49)
(60)
6
4
Fair Value Derivative Adjustments
33
(59)
(10)
36
-
-
Class
A and Class B Senior
Convertible Preferred Stock Return
18
31
52
29
-
-
Accretion of Preferred Stock
9
10
10
5
-
-
Stock-based Compensation Expense
1
2
2
4
6
2
2
Loss on Extinguishment of Debt
2
-
-
Write Off of Deferred Equity Financing
Costs
5
-
-
Amortization of Deferred Airborne
Lease Incentives
(1)
(1)
(4)
(8)
(3)
(3)
Adjusted EBITDA
(89)
(45)
(1)
9
8
5
3
GOGOAIR.COM | 30 |
GOGOAIR.COM | 31
RECONCILIATION OF CASH CAPEX ($MM)
2009
2010
2011
2012
2013
2014 Q1
2014 Q2
Purchases of Property
and Equipment
(69)
(33)
(33)
(67)
(105)
(32)
(28)
Acquisition of Intangible
Assets (Capitalized
Software)
(8)
(7)
(10)
(12)
(16)
(4)
(5)
Gross CapEx
(77)
(40)
(43)
(79)
(121)
(36)
(33)
Change in Deferred
Airborne Lease
Incentives
9
11
18
9
5
3
Amortization of Deferred
Airborne Lease
Incentives
1
1
4
8
3
3
Cash CapEx
(77)
(30)
(31)
(58)
(104)
(29)
(27)
Note: Minor differences exist due to rounding
GOGOAIR.COM | 31 |