Gogo Inc. · NASDAQ:GOGO
Gogo — Investor Presentation (December 2014)
31 slides from Gogo's investor presentation, December 2014
Slide 1: Investor Presentation
Investor Presentation December 2014 Michael Small President and CEO
Slide 2: Disclaimer: Safe Harbor Statement
DISCLAIMER Safe Harbor Statement This presentation contains “forward-looking statements” that are based on management’s beliefs and assumptions and on information currently available to management. Most forward-looking statements contain words that identify them as forward-looking, such as “anticipa
Slide 3: Gogo's Mission
GOGO’S MISSION Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 3
Slide 4: Why Invest in Gogo
WHY INVEST IN GOGO Gogo is a leading aero communications service provider for the global aviation industry. LARGE GROWTH OPPORTUNITY LEADING POSITION EXPERIENCE & SCALE HIGH BARRIERS TO ENTRY ATTRACTIVE ECONOMICS ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 4
Slide 5: 50 Billion Things Are Getting Connected
50 BILLION THINGS ARE GETTING CONNECTED(1) Monitoring to detect dangerous Patient biometrics sent patterns in land conditions. directly to doctors. Radios embedded in protected trees track illegal deforestation. Tractors feed data back to the manufacturer. Detection of rubbish levels to optimize tra
Slide 6: Connectivity Transforms Aviation
CONNECTIVITY TRANSFORMS AVIATION Airline connectivity Cockpit connectivity(1) Cabin crew connectivity(1) Passenger inflight connectivity and wireless entertainment Remote Diagnostics(1) (1) Gogo currently provides cabin crew connectivity to certain airline partners. Gogo expects to offer cockpit con
Slide 7: Passenger Connectivity Is Only the Starting Point
PASSENGER CONNECTIVITY IS ONLY THE STARTING POINT ARPA(1) in ($000s) $1 Million Connected Aircraft - Cabin Crew Connectivity - Cockpit Connectivity - Remote Diagnostics $125 43% $115 $100 CAGR $101 Passenger Entertainment $84 $75 $72 $52 $50 $24 Passenger Connectivity $25 2009 2010 2011 2012 2013 20
Slide 8: Large Market of Global Aircraft to Connect
LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT… Commercial Aviation Commercial Aviation Business Aviation North America Rest of World North America 17,000 10,500 2,500 1,300 2,500 2,600 600 300 400 Gogo Awarded Competitor Uncommitted Gogo Awarded Competitor (1)Uncommitted Gogo Awarded Competitor (1)Unco
Slide 9: Market & Company Overview
MARKET & COMPANY OVERVIEW
Slide 10: Connected Aircraft Is a Large Growth Opportunity
CONNECTED AIRCRAFT IS A LARGE GROWTH OPPORTUNITY Aircraft Amount Spent in 2013 ($B) Commercial Aviation(1) 17,000 $710 Up 5% from 2012 Business Aviation(2) 27,000 $23 Up 24% from 2012 Total Aviation Industry 44,000 $733 AIRCRAFT ARE EXPECTED TO NEARLY DOUBLE IN THE NEXT 20 YEARS(3) (1) Commercial Av
Slide 11: Connecting Aircraft Is More Valuable Than You Think
CONNECTING AIRCRAFT IS MORE VALUABLE THAN YOU THINK Connected Connected Connected home car aircraft 0.97% of asset 0.71% of asset 0.84% of asset value per year value per year value per year $1.0M ARPA $0.7M ARPA $0.8M ARPA $17B–$35B industry(1) $12B–$25B industry(1) $14B–$30B industry(1) (1) Industr
Slide 12: Gogo's Large Install Base Is a Significant Competitive Advantage
GOGO’S LARGE INSTALL BASE IS A SIGNIFICANT COMPETITIVE ADVANTAGE 2,044 35 2,637 5,322 CA-NA CA-ROW BA - Broadband BA - Satellite Aircraft Online Aircraft Online Aircraft Online Aircraft Online(1) Gogo Touches Over 20% Of The World’s Aircraft Aircraft Online as of 9/30/2014 (1) Satellite Aircraft Onl
Slide 13: Strong Execution
STRONG EXECUTION Total Revenue Service Revenue Adjusted EBITDA(1) ($MM) ($MM) ($MM) 73% $392 100% $303 CAGR CAGR $79 $328 $250 $49 $69 $41 $8 $9 $37 $(89) $16 2009 2013 2014 Q3 2009 2013 2014 Q3 LTM LTM 2009 2013 2014 Q3 LTM Adjusted EBITDA CA-ROW Segment Loss (1) Please see reconciliation of Adjust
Slide 14: Industry Track Record in Winning Aircraft
INDUSTRY TRACK RECORD IN WINNING AIRCRAFT Global Commercial Aviation Business Aviation Gogo won 52%(1) of Gogo installed 590 all commercial business aircraft with aircraft awarded in broadband connectivity 2014: in 2014 – nearly 100%(2) United Airlines RJs of all BA broadband Air Canada Aerome
Slide 15: Why We Win
WHY WE WIN 1 Specialize in global aviation 2 End-to-end service provider 3 Superior technology and roadmap 4 Deliver excellent reliability ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 15
Slide 16: We Specialize in Aircraft and Are Far Ahead of the Competition
1. WE SPECIALIZE IN AIRCRAFT… AND ARE FAR AHEAD OF THE COMPETITION CA - NA Aircraft Online Getting Technology Right Matters Deploying ATG provided six years of 2,044 leadership 1,811 Years ahead on experience curve 1,345 Leading scale and roadmap Gogo Has Required Skill Set 837 692 For Connect
Slide 17: End-to-End Service Provider
2. END-TO-END SERVICE PROVIDER AIRCRAFT REGULATORY NETWORK OPERATIONS APPROVAL ENGINEERING & DESIGN CONNECTIVITY NETWORK & PRODUCTS & BANDWIDTH SERVICES MANAGEMENT AIRLINE DEVELOPMENT CUSTOMER CARE & MARKETING AIRCRAFT SUPPORT COMPLETE CONNECTIVITY BACK-OFFICE SOLUTIONS INFRASTRUCTURE ENGINEERING AN
Slide 18: Superior Technology and Roadmap
3. SUPERIOR TECHNOLOGY AND ROADMAP Peak Global Eagle Technology Region Speed Key Attributes - Primarily telecom service Iridium Global 2.4 Kbps - Low data speeds - Satellite SwiftBroadband Global 432 Kbps - Low data speeds - Satellite - Overnight install ATG / ATG 4 Regional 3.1 / 9.8 Mbps -
Slide 19: Gogo Delivers Excellent Reliability
4. GOGO DELIVERS EXCELLENT RELIABILITY 65+ million 8,000+ flights 98% + sessions per day ATG End-to-End System Availability ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 19
Slide 20: Gogo Four Point Strategy to Increase Shareholder Value
GOGO FOUR POINT STRATEGY TO INCREASE SHAREHOLDER VALUE 1 Gain global share 2 Increase bandwidth to aircraft 3 Grow ARPA 4 Deliver consistent execution ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 20
Slide 21: Why Invest in Gogo
WHY INVEST IN GOGO LARGE GROWTH OPPORTUNITY LEADING POSITION EXPERIENCE & SCALE HIGH BARRIERS TO ENTRY ATTRACTIVE ECONOMICS ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 21
Slide 22: Q&A
Q&A ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 22
Slide 23: Gogo Five Point Strategy
Gogo Five Point strategy to increase shareholder value 1 Gain global share 2 Grow ARPA in CA-NA 3 Evolve technology roadmap to address market needs 4 Accelerate BAAPPENDIX growth 5 Deliver consistent execution ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 23
Slide 24: Growing Revenue Drives Profitability
GROWING REVENUE DRIVES PROFITABILITY Revenue ($MM) Adjusted EBITDA (1) ($MM) $392 $79 $328 $49 73% $69 CAGR(1) $24 $41 $234 $14 $9 $8 $9 ($1) $160 CA-ROW Segment Loss $95 ($45) Adjusted EBITDA $37 ($89) 2009 2010 2011 2012 2013 2014 Q3 2009 2010 2011 2012 2013 2014 Q3 LTM LTM (1) Please see reconcil
Slide 25: Our Segments Are in Different Phases
OUR SEGMENTS ARE IN DIFFERENT PHASES BA Segment Profit Margin 1. BA: (% of Revenue) 41% Strong revenue growth 34% 40% Strong segment profitability and FCF 11% 2009 2011 2013 2014 Q3 LTM 2. CA-NA: CA-NA Segment Profit Margin (% of Revenue) Strong revenue growth -1% 7% Segment profitability -30% 3. CA
Slide 26: BA High-Margin Service Revenue Drives Segment Profitability
1. BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT PROFITABILITY AND CASH FLOW ATG Aircraft Online (1) Service Revenue Segment Profit ($MM) ($MM) 54x 2,637 69% 107% $63 Increase CAGR $67 CAGR $51 2,047 $52 $36 1,455 $34 $6 $3 49 2009 2012 2013 2014 Q3 2009 2012 2013 2014 Q3 2009 2012 2013 2014 Q3 LTM
Slide 27: CA-NA Service Revenue Growth
2. CA-NA SERVICE REVENUE GROWTH Aircraft Online(1) ARPA ($ ‘000s) Service Revenue ($MM) ~3x ~5x Increase Increase 115% $235 CAGR $122 2,032 2,044 $197 1,811 $101 $84 $133 692 $24 $9 (2) 2009 2012 2013 2014 Q3 2009 2012 2013 2014 Q3 2009 2012 2013 2014 Q3 LTM (1) End of period. (2) Annualized. Note:
Slide 28: CA Rest of World Investment Positions Gogo for Future Growth
3. CA REST OF WORLD INVESTMENT POSITIONS GOGO FOR FUTURE GROWTH International Aircraft Wins Operationalizing International (cumulative) Global Satellite Network established 1.7x 305 All Delta & Japan Airline STCs obtained 257 International service operationalized 180 Low profile, high spectr
Slide 29: Evolving Capex Model
EVOLVING CAPEX MODEL Capital Expenditures ($MM) $137 $121 ATG4 retrofit expense will $104 $109 decline over time $77 $77 $79 Airlines pay for airborne equipment $58 ATG network build-out expense is declining, network is largely built 2009 2012 2013 2014 Q3 LTM Gross CapEx Cash CapEx (1) (1) Ca
Slide 30: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2013 Q4 2014 Q1 2014 Q2 2014 Q3 Net Income (142) (140) (18) (96) (146) (22) (17) (19) (25) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 7 9 Income Tax Provision – 3 1 1 1 – – – – Depreciation & Amor
Slide 31: Cash Capex Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2013 2014 2014 2014 2009 2010 2011 2012 2013 Q4 Q1 Q2 Q3 Purchases of Property and (69) (33) (33) (67) (105) (22) (32) (28) (35) Equipment Acquisition of Intangible Assets (Capitalized (8) (7) (10) (12) (16) (5) (4) (5) (5) Software) Gross CapEx (77) (40) (43) (79) (1