Gogo Inc. · NASDAQ:GOGO
Gogo — Q3 2017 Earnings Presentation
28 slides from Gogo's earnings presentation, Nov 2, 2017
Slide 1: 3rd Quarter 2017 Earnings Results
3rd Quarter 2017 Earnings Results Michael Small – Chief Executive Officer John Wade – Chief Operating Officer Barry Rowan – Chief Financial Officer November 2, 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: 2Ku transforming our business
2Ku transforming our business Increased bandwidth: 1. Improves customer experience across the North American networks 2. Accelerates take rate growth 3. Enables new products and services This transformation will drive revenue growth and long-term profitability ©2017 Gogo Inc. and Affiliates. Proprie
Slide 4: Strong execution continues
Strong execution continues Total Revenue ($MM) $173 $147 17% Total revenue up 17% Y/Y Y/Y Growth Q3 '16 Q3 '17 Adjusted EBITDA ($MM) $13 $10 30% Adj. EBITDA up $3M sequentially Q/Q Growth Q2 '17 Q3 '17 Cash*($MM) $380 $411 Added $110M in cash, on the 8% Q/Q Growth strength of airline wins Q2 '17 Q3
Slide 5: Expanding our leading market position
Expanding our leading market position Awarded Alaska & Virgin America fleets, totaling 250+ aircraft Awarded 100 aircraft with largest airline in South America More than 1,900+ awards for 2Ku ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 5
Slide 6: High bandwidth is arriving
High bandwidth is arriving 76 2Ku aircraft installed in October 320+ 2Ku aircraft installed year-to-date 450 550 to On target to hit 2Ku install guidance Y/Y growth in bandwidth per aircraft 47% in CA-NA Y/Y growth in bandwidth per aircraft 20% in BA ~1/3 CA-NA fleet will be 2Ku by end of 2018 6 ©20
Slide 7: Engaging more passengers
Engaging more passengers 15% Y/Y increase in CA-NA take rate to 7.5% Expanding partnerships to deliver free connectivity to the passenger Gogo Vision Touch leverages our existing connectivity system ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. 7
Slide 8: Business Aviation growing and innovating
Business Aviation growing and innovating BA Service Revenue ($MM) $43 $33 30% Y/Y Growth Service revenue up 30% Y/Y Q3 '16 Q3 '17 Launched Gogo AVANCE platform L3 and L5 connectivity systems 8 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 9: Key takeaways - CEO
Key takeaways - CEO Dedicated networks delivering leading bandwidth, coverage and reliability Performance driving wins Setting records for getting more aircraft online Engaging more passengers with more bandwidth enables cutting-edge products and services 9 ©2017 Gogo Inc. and Affiliates. Proprietar
Slide 10: Strong operational execution
Strong operational execution 76 2Ku aircraft installed in October 322 2Ku aircraft installed in year-to-date 36 Hour 2Ku installation achieved 10 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 11: Progress with OEMs
Progress with OEMs A350s installed and delivered by Airbus with 3 2Ku installed Expect first Boeing 2Ku installation to be B787 completed around year-end Expect first Bombardier production installation C Series in May of 2018 11 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 12: Gogo Vision Touch evolved from our customer's need
Gogo Vision Touch evolved from our customer’s need Seatback entertainment solution • Without the weight, cost and complexity of legacy solutions Engages even more passengers Simplicity and cost savings are driving interest from other carriers ©2017 Gogo Inc. and Affiliates. Proprietary & Confidentia
Slide 13: Business Aviation continues to expand market share
Business Aviation continues to expand market share Strong market demand for Gogo Avance L5 connectivity system • 86 sold year to date • Selected as a factory option by Dassault and Embraer Announced a global Ku band connectivity solution 13 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 14: Key takeaways - COO
Key takeaways - COO Industry-leading operational execution On track with OEM installed aircraft deliveries and accelerating Business Aviation market position and competitive strengths are formidable advantage 14 ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential.
Slide 15: Strong revenue growth
Strong revenue growth Total Revenue ($MM) $160 $165 $173 $173 Q3 ’17 revenue up 17% Y/Y $147 $19 $20 17% $21 $19 Y/Y Growth $18 Service revenue up 19% Y/Y $146 $154 $153 • Growth across all segments $129 $139 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Service Equipment Adjusted EBITDA ($MM) Q3 ’17 Adjusted
Slide 16: CA-NA: Continued service revenue growth
CA-NA: Continued service revenue growth Service Revenue ($MM) $97 $99 Service revenue up 7% $95 $89 $94 7% • 2,817 aircraft online, up 188 aircraft Y/Y Y/Y Growth Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Average Revenue Per ARPA flat Y/Y at $133k Aircraft (ARPA) ($k) $141 $142 $141 • Satellite ARPA $220k
Slide 17: CA-NA: Expanding engagement through multi-payer strategy
CA-NA: Expanding engagement through multi- payer strategy Connectivity Take Rate 8.3% Take rate up 15%: 6.5% 7.3% 7.7% 7.5% 15% • Increased passenger engagement due Y/Y Growth to airline and 3rd party paid offerings Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Segment Profit ($MM) Segment profit of $16 millio
Slide 18: CA-ROW: Revenue doubled for third consecutive quarter year-over-year
CA-ROW: Revenue doubled for third consecutive quarter year-over-year Service Revenue ($MM) $16 Service revenue of $15.7 million, $13 117% up 117% from Q3 ’16 $9 Y/Y Growth • $226k annualized ARPA, $7 $7 up 30% Y/Y • Aircraft equivalents online increased 41% Y/Y Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 • 1
Slide 19: CA-ROW: Scaling our international business
CA-ROW: Scaling our international business Aircraft Online (End of Period) 352 318 38% Aircraft online up 96 Y/Y, to 352 267 281 256 Y/Y Growth • 680 2Ku awarded but not yet installed as of 10/24/17 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Segment Loss ($MM) Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Segment loss
Slide 20: BA: Continuing strong revenue growth
BA: Continuing strong revenue growth Total Revenue ($MM) $58 $61 Total revenue increased 24% Y/Y, $56 $49 $52 24% to $61 million $16 $16 $17 Y/Y Growth $16 $15 Service revenue increased 30% $36 $40 $42 $43 Y/Y to $43 million $33 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Service Equipment ATG Aircraft Onlin
Slide 21: BA: Strong AVANCE platform adoption
BA: Strong AVANCE platform adoption ATG Units Sold (End of Period) 210 L5 shipments drove 11% growth in 189 197 27% 165 179 Y/Y Growth equipment revenue • 66 L5 units sold in Q3 ’17 Opportunity to expand: • Further penetrate light & turbo jet markets • Serve business aircraft flying globally Q3 '16
Slide 22: Investing in rapid 2Ku installations
Investing in rapid 2Ku installations Cash CapEx ($MM) Cash CapEx Y/Y increase reflects $66 investment in installing aircraft with $59 $17MM $53 Y/Y Increase 2Ku $36 $34 Q3 '16 Q4 '16 Q1 '17 Q2 '17 Q3 '17 Note: Minor differences exist due to rounding. Note: Cash CAPEX is a non-GAAP measure. See Appen
Slide 23: Outlook
Outlook 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 compared to the first half of 2017 and to be at the low end of $60- $75 million guidance range, excluding the $4.5 million in charges we i
Slide 24: Q&A
Q&A ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 24
Slide 25: Appendix
Appendix ©2017 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGOAIR.COM | 25
Slide 26: Gogo installed and awarded aircraft as of 9/30/2017
Gogo installed and awarded aircraft as of 9/30/2017 Gogo Aircraft Online & Awarded as of 9/30/2017 Aircraft Online CA-NA CA-ROW Total ATG Aircraft Online 828 - 828 ATG-4 Aircraft Online 1,749 - 1,749 Ku Aircraft Online - 261 261 2Ku Aircraft Online 240 91 331 Total Aircraft Online 2,817 352 3,169 2K
Slide 27: Adjusted EBITDA reconciliation ($MM)
Adjusted EBITDA reconciliation ($MM) 2016 2016 2016 2016 2017 2017 2017 Q1 Q3 Q3 Q4 Q1 Q2 Q3 Net Income (24) (40) (33) (27) (41) (44) (45) Interest Income (0) (0) (1) (1) (1) (1) (1) Interest Expense 16 18 25 25 27 27 28 Depreciation & Amortization 24 25 27 30 30 31 36 EBITDA 17 2 18 27 16 13 18 Sto
Slide 28: Cash CapEx reconciliation ($MM)
Cash CapEx reconciliation ($MM) 2016 2016 2016 2016 2017 2017 2017 Q1 Q3 Q3 Q4 Q1 Q2 Q3 Purchases of Property and Equipment (31) (40) (36) (41) (64) (65) (62) Acquisition of Intangible Assets (Capitalized Software) (6) (8) (8) (7) (8) (9) (7) Consolidated Capital Expenditures (37) (48) (44) (48) (72