Gogo Inc. · NASDAQ:GOGO
Gogo — Q4 2017 Earnings Presentation
30 slides from Gogo's earnings presentation, Feb 22, 2018
Slide 1: 4th Quarter 2017 Earnings Results
4th Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan – Chief Financial Officer February 22, 2018
Slide 2: Safe harbor statement
Safe harbor statement Safe Harbor Statement This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based on management’s beliefs and assumptions and on information current
Slide 3: Record quarterly results
Record quarterly results Total Revenue ($MM) $188 $160 18% Total revenue up 18% Y/Y Y/Y Growth Q4 '16 Q4 '17 Adjusted EBITDA ($MM) $25 $23 Adj. EBITDA up $2M Y/Y 8% Y/Y Growth to a record $25M Q4 '16 Q4 '17 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential. 3
Slide 4: Major progress on strategic objectives
Major progress on strategic objectives Awarded 200 additional aircraft Now 2,000+ 2Ku awards 225+ Aircraft installed with 2Ku in Q4 ‘17 Weighted avg. peak speed per Next Gen commercial aircraft increased 30% Modem Q/Q and nearly 100% Y/Y ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential. 4
Slide 5: New products drive increased engagement
New products drive increased engagement Messaging passes increasing passenger engagement, take rate up 36% Y/Y GOL launches Gogo TV Gogo Vision Touch on Delta C-Series Lightweight, low-cost seatback solution Unified Portal: Delivering a consistent passenger experience across IFC providers 5 ©2018 Go
Slide 6: Business Aviation's strong growth trajectory
Business Aviation’s strong growth trajectory 20,000+ Complete in-flight internet portfolio to Business Aviation address all business aircraft Aircraft 2Ku penetrating the VVIP market Ku tail mount antenna to target large, global business jets ATG-NG extends leadership position 6 ©2018 Gogo Inc. and
Slide 7: Looking ahead to 2018
Looking ahead to 2018 Bandwidth 2Ku installs, modem upgrades, Growth HTS satellites & launch of ATG-NG Win Aircraft More bandwidth will drive aircraft Grow ARPA awards and ARPA BA: Continued Strong revenue and profitability Growth growth 7 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 8: Strong operational execution
Strong operational execution 227 2Ku aircraft installed in Q4 473 2Ku aircraft installed in 2017 16X New modem increases throughput 16X <1/2 Installation times less than half of the competition 8 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 9: OEM Progress
OEM Progress Aircraft expected to be installed with IFC 9,000 through OEM programs over next 10 years Expects first 2Ku line-fit order in first Airbus half of 2018 Delta Air Lines to take delivery of first 2Ku and C-Series Gogo Vision Touch line-fit C-Series in 2018 Expects first delivery of 2Ku 737
Slide 10: Delivering more bandwidth globally
Delivering more bandwidth globally 1,100 Total 2Ku aircraft online at end of 2018 to 1,200 450 CA-ROW 2Ku aircraft online at end of 2018 ~2X Growth in 2Ku aircraft online over 2017 ATG-NG commercially available in late 2018 10 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 11: Business Aviation continues to extend market reach
Business Aviation continues to extend market reach Current customers upgrading and recommitting to Gogo • 200 Avance L5 units shipped in 2017 • Streaming class internet experience Solutions for every aircraft: 20,000+ • AVANCE L3 & L5 Business Aviation • ATG-NG Aircraft • Ku tail mount 11 ©2018 Gogo
Slide 12: Key takeaways - COO
Key takeaways - COO Relationships built on over 25 years of experience Continually enhancing our capabilities Business Aviation set for a strong 2018 and to capitalize on long-term growth opportunities 12 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 13: Strong revenue growth
Strong revenue growth Total Revenue ($MM) $188 $160 $165 $173 $173 18% Q4 ’17 revenue up 18% Y/Y $19 $20 $24 $21 $19 Y/Y Growth Service revenue up 18% Y/Y $139 $146 $154 $153 $164 • CA-ROW up 119% • BA up 25% Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Service Equipment Adjusted EBITDA ($MM) Q4 ’17 Adjusted
Slide 14: CA-NA: Continued service revenue growth
CA-NA: Continued service revenue growth Service Revenue ($MM) $103 Service revenue of $103M up 8% $99 $95 $97 $94 8% • 2,840 aircraft online, up 164 aircraft Y/Y Y/Y Growth Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Average Revenue Per Annualized ARPA up 2% Y/Y Aircraft (ARPA) ($k) to $144k $141 $142 $141 $
Slide 15: CA-NA: Expanding engagement through multi-payer strategy
CA-NA: Expanding engagement through multi- payer strategy Connectivity Take Rate 9.9% Take rate up 36% Y/Y: 8.3% 7.7% 36% • Increased passenger engagement with 7.3% 7.5% airline paid and third party paid offerings Y/Y Growth Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Segment Profit ($MM) Segment profit of $
Slide 16: CA-ROW: Revenue doubled year-over-year for fourth consecutive quarter
CA-ROW: Revenue doubled year-over-year for fourth consecutive quarter Service Revenue ($MM) $16 $15 Service revenue doubled Y/Y for $13 119% the 4th consecutive quarter to $15.3 $9 Y/Y Growth million $7 • Aircraft equivalents online increased 57% Y/Y • $201k annualized ARPA, Q4 '16 Q1 '17 Q2 '17 Q3
Slide 17: CA-ROW: Scaling our international business
CA-ROW: Scaling our international business Annualized ARPA ($k) Annualized ARPA up 17% to $201k $226 $226 • Sequentially, growth in ARPA for existing $202 $201 aircraft offset by new aircraft. New $172 17% aircraft represented ~40% of aircraft Y/Y Growth online • ARPA for airlines launched prior to
Slide 18: CA-ROW: On path to profitability
CA-ROW: On path to profitability Segment Loss ($MM) Segment loss approximately Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 equivalent Y/Y Path to profitability: • Expect continued operating leverage as aircraft are brought $(25) $(24) $(25) online $(27) $(31) • 770 awarded but not yet installed aircraft at 1
Slide 19: BA: Continuing strong revenue growth
BA: Continuing strong revenue growth Total Revenue ($MM) $66 Service revenue increased 25% $56 $58 $61 $52 $21 28% Y/Y to a record $45 million $16 $16 $17 Y/Y Growth $15 Total revenue increased 28% Y/Y, $40 $42 $43 $45 to $66 million $36 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Service Equipment ATG Aircr
Slide 20: BA: Strong AVANCE platform adoption
BA: Strong AVANCE platform adoption Equipment Revenue ($MM) L5 shipments drove 36% growth in $21 $16 $17 36% equipment revenue $16 $15 Y/Y Growth • ATG units shipped up 31% to 235 • 108 L5 units shipped in Q4 ’17 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Segment Profit ($MM) $26 $25 $27 Segment profit incr
Slide 21: Investing in rapid 2Ku installations
Investing in rapid 2Ku installations Cash CAPEX ($MM) Cash CAPEX Y/Y increase reflects $66 $59 $10MM 2Ku installations $53 $43 Y/Y Increase • ~70% of Cash CAPEX related to $34 airborne investment • Expected co-investment in airborne equipment to decline to less than $200 thousand per aircraft for 20
Slide 22: 2017 Full Year Highlights
2017 Full Year Highlights Met or exceeded all major full-year 2017 guidance: 2017 Guidance Revenue $699 million $670 - $695 million 1 Adjusted EBITDA $ 63 million $60 - $75 million Cash CAPEX $221 million $230 - $260 million 2Ku installations 473 installs 450 - 550 installs (1) Adjusted EBITDA exclu
Slide 23: Revenue Recognition Standard (ASC 606)
Revenue Recognition Standard (ASC 606) Adoption of Revenue Recognition Standard 606: • No impact to cash flow • Record higher equipment revenues in the current period for commercial agreements under the airline directed model • Supplemental material on the Gogo IR website ©2018 Gogo Inc. and Affilia
Slide 24: 2018 Guidance
2018 Guidance $ in millions 606 Revenue 605 Revenue Y/Y Growth under Standard Standard 605 Standard Total Revenue $865 - $935 $750 - $790 7% - 13% CA-NA Revenue $445 - $485 $380 - $415 (5%) - 4% Equipment Revenue ~20% CA-ROW Revenue $125 - $165 $75 - $90 30% - 56% Equipment Revenue ~50% BA Revenue $
Slide 25: 2018 Guidance
2018 Guidance Increase in 2Ku aircraft online 550 - 650 Increase in CA-ROW 2Ku aircraft online ~300 $ in millions Cash CAPEX $110 - $130 Related to airborne equipment ~35% Inventory purchases related to airline-directed installations $15 - $30 ©2018 Gogo Inc. and Affiliates. Proprietary & Confidenti
Slide 26: Q&A
Q&A ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 26
Slide 27: Appendix
Appendix ©2018 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 27
Slide 28: Gogo installed and awarded aircraft as of 12/31/2017
Gogo installed and awarded aircraft as of 12/31/2017 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 827 - 827 ATG-4 Aircraft Online 1,597 - 1,597 Ku Aircraft Online - 253 253 2Ku Aircraft Online 416 138 554 Total Aircraft Online 2,840 391 3,231 2Ku Aircraft Installed & Awarded But Not Yet In
Slide 29: Adjusted EBITDA reconciliation ($MM)
Adjusted EBITDA reconciliation ($MM) 2016 2016 2016 2016 2017 2017 2017 2017 Q1 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Net Income (24) (40) (33) (27) (41) (44) (45) (41) Interest Income (0) (0) (1) (1) (1) (1) (1) (1) Interest Expense 16 18 25 25 27 27 28 30 Income Tax Provision (Benefit) – – – – – – – (3) Depreciati
Slide 30: Cash CAPEX reconciliation ($MM)
Cash CAPEX reconciliation ($MM) 2016 2016 2016 2016 2017 2017 2017 2017 Q1 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Purchases of Property and Equipment (31) (40) (36) (41) (64) (65) (62) (62) Acquisition of Intangible Assets (Capitalized (6) (8) (8) (7) (8) (9) (7) (4) Software) Consolidated Capital Expenditures (37) (