Gogo Inc. · NASDAQ:GOGO
Gogo — Q1 2017 Earnings Presentation
22 slides from Gogo's earnings presentation, May 4, 2017
Slide 1: 1st Quarter 2017 Earnings Results
1st Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan– Incoming Chief Financial Officer May 4, 2017
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: Strong Start to 2017
STRONG START TO 2017 Q1 ’17 Service Q1 Total Revenue ($MM) Revenue Growth (y/y) $165 $142 $19 $23 CA-NA 16% $146 17% $119 y/y Growth BA 30% Q1 '16 Q1 '17 CA-ROW 104% Service Revenue Equipment Revenue Overall revenue up 17% y/y with strong service revenue growth across all segments Virgin Australia s
Slide 4: Winning Strategy for Satellite Capacity
WINNING STRATEGY FOR SATELLITE CAPACITY Ample capacity – now and for the foreseeable future Lowest bandwidth cost – superior antenna, higher utilization, benefits from innovation New agreement with SES to serve flights to Hawaii, Alaska and over the Pacific 4 ©2017 Gogo Inc. and Affiliates. Propriet
Slide 5: Setting the New Industry Standard
SETTING THE NEW INDUSTRY STANDARD 2Ku antenna 2Ku delivers industry-leading performance today Ongoing performance improvements with new modem and HTS satellites Expected results and availability based on management estimates. 5 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 6: Significant Progress with OEMs
SIGNIFICANT PROGRESS WITH OEMS Signed agreement with Airbus to offer 2Ku OEM installs (A320, A330 and A380 aircraft) First A350 to be installed this year – other Airbus installs expected to begin in 2018 Bombardier to install 2Ku for Delta ©2017 Gogo Inc. and Affiliates. Proprietary & Confiden
Slide 7: On Track with Installs & Product Launches
ON TRACK WITH INSTALLS & PRODUCT LAUNCHES 2Ku Installations On Track More than 170 2Ku aircraft installed for 8 different airlines* Expect significant 2Ku install ramp after Labor Day Doubled 2Ku STC coverage to 2/3 of the world’s applicable CA aircraft Reaffirm annual guidance of 450-550 2K
Slide 8: Introducing New CFO
INTRODUCING NEW CFO Barry Rowan joined as EVP, Finance and will become Chief Financial Officer following the filing of the Q1 ’17 10-Q Previously CFO at multiple public companies including Vonage and Nextel Partners Long track record of success in achieving significant value creation ©2017 Gog
Slide 9: Q1'17 Strong Financial Performance
Q1’17 STRONG FINANCIAL PERFORMANCE Total Revenue ($MM) $160 $165 $142 $148 $147 $20 $18 $21 $19 17% • Q1’17 revenue up 17% y/y $23 y/y Growth $119 $128 $129 $139 $146 • Service revenue up 23% y/y Q1'16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Service Revenue Equipment Revenue • Q1 ’17 Adjusted EBITDA 1 Adjusted
Slide 10: CA-NA – Continued Service Revenue Growth
CA-NA – CONTINUED SERVICE REVENUE GROWTH Service Revenue ($MM) $95 $97 $90 $89 • Service revenue driven by ARPA $83 16% growth and increases in aircraft y/y Growth online Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Aircraft Online 2,676 (End of Period) 2,714 • 38 net aircraft installed in Q1 ’17, 2,596 2,629
Slide 11: CA-NA – ARPA Strengthens in Quarter
CA-NA – ARPA STRENGTHENS IN QUARTER Annualized ARPA ($M) • Annualized ARPA of $142K, up $138 $141 $142 6% y/y $134 $134 6% - Driven by strong entertainment revenue y/y Growth growth and the multi-payer strategy - Expect ARPA growth to continue throughout 2017 Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Segme
Slide 12: CA-ROW – Robust Revenue Growth
CA-ROW – ROBUST REVENUE GROWTH Total Revenue ($MM) $10.3 • Revenue of $10.3 million, up 123% $7.6 123% $5.7 $7.4 y/y Growth from Q1 ’16 $4.6 - Aircraft online growth of 19% - ARPA growth of 45% Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Aircraft Online (End of Period) • 281 aircraft online, up 44 aircraft y
Slide 13: CA-ROW – ARPA Continues Strong Growth
CA-ROW – ARPA CONTINUES STRONG GROWTH Annualized ARPA ($M) • Annualized ARPA grew 45% to $202 45% $202K $174 $172 y/y Growth - Driven by higher airline paid and third party $139 $145 paid usage Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Segment Loss ($MM) • Segment loss increased to $27 million - Driven by
Slide 14: Growth in BA Service Revenue Continues
GROWTH IN BA SERVICE REVENUE CONTINUES Service Revenue ($MM) 71% 71% 66% 68% 61% $40.0 $30.7 $32.4 $33.3 $36.4 30% y/y Growth • Service revenue increased 30% y/y to $40 million Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 Service Revenue Service Revenue as a % of Total BA Revenue ATG Aircraft Online (End of P
Slide 15: Service Revenue Drives Strong Segment Margin Growth
SERVICE REVENUE DRIVES STRONG SEGMENT MARGIN GROWTH Total Revenue ($MM) $50.1 $49.1 $48.9 $51.5 $56.3 • BA equipment revenue decreased $16.3 $19.4 $16.7 $15.6 $15.1 12% to $16 million y/y Growth $32.4 $33.3 $36.4 $40.0 $30.7 • Deferred equipment revenue will Q1 '16 Q2 '16 Q3 '16 Q4 '16 Q1 '17 be rec
Slide 16: Success-Based Cash CAPEX to Drive Growth
SUCCESS-BASED CASH CAPEX TO DRIVE GROWTH Cash CAPEX ($MM) • Q1 ’17 y/y changes in Cash CAPEX $59 - Due primarily to increased airborne equipment purchases for 2Ku installations $40 $36 $34 $35MM $24 y/y Increase • Q1 has seasonally high working capital impact driven by interest Q1 '16 Q2 '16 Q3 '16
Slide 17: Q1 Key Takeaways
Q1 KEY TAKEAWAYS Strong financial performance in Q1 Reaffirming 2017 and long-term guidance ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 17
Slide 18: Q&A
Q&A
Slide 19: Appendix
Appendix
Slide 20: Gogo Installed and Awarded Aircraft as of 3/31/2017
GOGO INSTALLED AND AWARDED AIRCRAFT AS OF 3/31/2017 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 836 - 836 ATG-4 Aircraft Online 1,772 - 1,772 Ku Aircraft Online - 260 260 2Ku Aircraft Online 106 21 127 Total Aircraft Online 2,714 281 2,995 2Ku Aircraft Installed & Awarded But Not Yet Inst
Slide 21: Adjusted EBITDA Reconciliation ($MM)
ADJUSTED EBITDA RECONCILIATION ($MM) 2016 2016 2016 2016 2017 Q1 Q2 Q3 Q4 Q1 Net Income (24) (40) (33) (27) (41) Interest Income (0) (0) (1) (1) (1) Interest Expense 16 18 25 25 27 Depreciation & Amortization 24 25 27 30 30 EBITDA 17 2 18 27 16 Stock-based Compensation Expense 4 4 5 5 4 Amortization
Slide 22: Cash CAPEX Reconciliation ($MM)
CASH CAPEX RECONCILIATION ($MM) 2016 2016 2016 2016 2017 Q1 Q2 Q3 Q4 Q1 Purchases of Property and Equipment (31) (40) (36) (41) (64) Acquisition of Intangible Assets (Capitalized (6) (8) (8) (7) (8) Software) Consolidated Capital Expenditures (37) (48) (44) (48) (72) Change in Deferred Airborne Leas