Gogo Inc. · NASDAQ:GOGO

Gogo — Q2 2017 Earnings Presentation

20 slides from Gogo's earnings presentation, Aug 7, 2017

  1. Slide 1: 2nd Quarter 2017 Earnings Results

    2nd Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan – Chief Financial Officer August 7, 2017

  2. 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

  3. Slide 3: On track to deliver value

    On track to deliver value Total Revenue ($MM) $173 $148 17% y/y Growth Service revenue up 21% y/y Q2 '16 Q2 '17 2Ku now installed on 248 aircraft Launched 2Ku service on 5 airlines in Q2 Reaffirm 2019 free cash flow guidance ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 3

  4. Slide 4: Momentum building across the business

    Momentum building across the business CA-NA take rate up +20% y/y to 7.7% CA-ROW revenue up 145% y/y $226,000 ARPA, up 56% y/y BA service revenue up 30% y/y Segment profit margin of 44% ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 4

  5. Slide 5: 2Ku delivering industry leading performance

    2Ku delivering industry leading performance 15 Mbps + per passenger 98 % + coverage of global flight hours On all satellite connected aircraft 98 % + service availability New satellite modem increased throughput unlocks bandwidth of HTS satellites 5 ©2017 Gogo Inc. and Affiliates. Proprietary & Conf

  6. Slide 6: Accelerating 2Ku installations

    Accelerating 2Ku installations 450 550 to 2017 2Ku install guidance reaffirmed <2 Day 2Ku installs achieved 80% 2017 planned installs covered by STCs A350 First 2Ku OEM installation completed 6 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.

  7. Slide 7: BA continuing strong performance

    BA continuing strong performance Gogo Biz 4G began shipping in Q2 Next gen ATG on track for delivery in 2018 First 2Ku equipped private aircraft now operational Increased adoption for smaller and older aircraft 7 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.

  8. Slide 8: Strong revenue growth

    Strong revenue growth Total Revenue ($MM) $160 $165 $173 Q2 ’17 revenue up 17% y/y $148 $147 $19 17% $21 $19 $20 $18 y/y Growth Service revenue up 21% y/y $128 $129 $139 $146 $154 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Service Equipment Adjusted EBITDA ($MM) Q2 ’17 Adjusted EBITDA of $10 31% $23 million

  9. Slide 9: CA-NA: Continued service revenue growth

    CA-NA: Continued service revenue growth Service Revenue ($MM) $97 $99 Service revenue up 10% driven by: $95 $90 $89 10% • 2,791 aircraft online, up 195 aircraft y/y y/y Growth • $141,000 annualized ARPA, up 3% y/y • 7.7% take rate, up +20% y/y Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Segment Profit ($MM)

  10. Slide 10: CA-ROW: Revenue doubled for second consecutive quarter

    CA-ROW: Revenue doubled for second consecutive quarter Total Revenue ($MM) $14 Revenue of $14.1 million, up 145% $10 145% from Q2 ’16 y/y Growth $8 $7 $6 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Annualized ARPA ($M) Annualized ARPA up 56% to a new $226 record of $226,000 $202 $174 $172 56% y/y Growth $145

  11. Slide 11: CA-ROW: Launched four new airlines

    CA-ROW: Launched four new airlines Aircraft Online (End of Period) 318 267 281 28% Aircraft online up 69 y/y, to 318 249 256 y/y Growth • Launched four new airlines • 2Ku awarded but not yet installed aircraft approximately 620 at 6/30/2017 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Segment Loss ($MM) Q2 '1

  12. Slide 12: BA: Continuing strong revenue growth

    BA: Continuing strong revenue growth Total Revenue ($MM) $56 $58 Total revenue increased 18% y/y, $49 $49 $52 $16 $16 18% to $58 million $17 $16 $15 y/y Growth Service revenue increased 30% $32 $33 $36 $40 $42 y/y to $42 million Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Service Equipment ATG Aircraft Onlin

  13. Slide 13: BA: Outstanding profitability profile

    BA: Outstanding profitability profile Segment Profit ($MM) $26 $25 Segment profit increased $23 33% 33% y/y, to $25 million $19 $21 46% y/y Growth 42% 45% 44% 39% Segment profit margin of 44% • Up 5 percentage points from prior year Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Segment Profit Segment Profit Ma

  14. Slide 14: Increased Cash CapEx for 2Ku installations

    Increased Cash CapEx for 2Ku installations Cash CAPEX ($MM) Cash CapEx spend primarily to $66 bring new aircraft online $59 $26MM y/y Increase • 70% of 2017 Cash CapEx for airborne $40 equipment purchases (success-based) $36 $34 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Note: Minor differences exist due to

  15. Slide 15: Outlook

    Outlook On track to achieve 450-550 2Ku installs in 2017, including approximately 150 in CA-ROW Expect 2017 revenue to be at the high end of $670-$695 million guidance range Adjusted EBITDA expected to approximately double in the second half of 2017 and to be at the low end of $60-$75 million guidan

  16. Slide 16: Q&A

    Q&A ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 16

  17. Slide 17: Appendix

    Appendix ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 17

  18. Slide 18: Gogo installed and awarded aircraft as of 6/30/2017

    Gogo installed and awarded aircraft as of 6/30/2017 Gogo Aircraft Online & Awarded as of 6/30/2017 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 845 - 845 ATG-4 Aircraft Online 1,783 - 1,783 Ku Aircraft Online - 261 261 2Ku Aircraft Online 163 57 220 Total Aircraft Online 2,791 318 3,109 2K

  19. Slide 19: Adjusted EBITDA reconciliation ($mm)

    Adjusted EBITDA reconciliation ($mm) 2016 2016 2016 2016 2017 2017 Q1 Q2 Q3 Q4 Q1 Q2 Net Income (24) (40) (33) (27) (41) (44) Interest Income (0) (0) (1) (1) (1) (1) Interest Expense 16 18 25 25 27 27 Depreciation & Amortization 24 25 27 30 30 31 EBITDA 17 2 18 27 16 13 Stock-based Compensation Expe

  20. Slide 20: Cash CapEx reconciliation ($mm)

    Cash CapEx reconciliation ($mm) 2016 2016 2016 2016 2017 2017 Q1 Q2 Q3 Q4 Q1 Q2 Purchases of Property and Equipment (31) (40) (36) (41) (64) (65) Acquisition of Intangible Assets (Capitalized Software) (6) (8) (8) (7) (8) (9) Consolidated Capital Expenditures (37) (48) (44) (48) (72) (74) Change in

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