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Classified in: Tourism and vacations, Transportation, Science and technology, Business, Covid-19 virus
Subjects: ERN, ERP

Gogo Announces Record Results and Updates 2022 Guidance


Second Quarter Revenue of $97.8 million, up 19% Year-over-Year; Net Income from Continuing Operations of $22.0 million; and Adjusted EBITDA(1) of $41.2 million, up 12% Year-over-Year

BROOMFIELD, Colo., Aug. 5, 2022 /PRNewswire/ -- Gogo Inc. (NASDAQ: GOGO) ("Gogo" or the "Company"), the world's largest provider of broadband connectivity services for the business aviation market, today announced its financial results for the quarter ended June 30, 2022.

Q2 2022 Highlights

"Customer excitement is growing as we prepare for the launch of Gogo 5G, which will provide a 5-10x bandwidth improvement for current Gogo customers," said Oakleigh Thorne, Chairman and CEO. "With the announcement of our Global Broadband initiative, we continue to leverage our AVANCE platform to provide an easy upgrade path for aircraft of all sizes to further boost performance and expand our addressable market."

"The strength of the BA market combined with solid execution drove record performance in the quarter, positioning us well for continuing revenue and Free Cash Flow growth," said Barry Rowan, Gogo's Executive Vice President and CFO. "Based on our continuing strong performance we are raising several key elements of our guidance, including 2022 revenue; 2022 Adjusted EBITDA at the high end of our range in spite of $9 million in strategic investments and litigation expenses; and our long-term revenue growth rate, based on the contribution from our Global Broadband initiative."

Updated 2022 Financial Guidance

The Company updates its guidance for 2022 as follows:

     (1)     See "Non-GAAP Financial Measures" below.

Updated Long-Term Financial Targets

The Company updates its long-term targets as follows:

Free Cash Flow and Adjusted EBITDA in 2022 and 2023 do not reflect the potential impact of Gogo 5G timing.

The Company's 2022 financial guidance and long-term targets include Global Broadband but do not reflect the impact of other new strategic investments or the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program, as the Company awaits further information regarding whether Congress will appropriate additional funds for eligible expenditures under the Program.    

Conference Call

The Company will host its second quarter conference call on August 5, 2022, at 9:30 a.m. ET. A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company's investor website at https://ir.gogoair.com.

Participants can also join the call by dialing +1 844-543-0451 (within the United States and Canada). Please click on the below link to retrieve your unique conference ID to use to access the earnings call:

https://register.vevent.com/register/BI17160ac541d64e8a9a122b802daa77b8

Non-GAAP Financial Measures

We report certain non-GAAP financial measurements, including Adjusted EBITDA and Free Cash Flow, in the supplemental tables below, and we refer to Adjusted EBITDA Margin in our discussion of long-term baseline targets above. Management uses Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. These supplemental performance measures also provide another basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are not recognized measurements under accounting principles generally accepted in the United States, or GAAP; when analyzing our performance with Adjusted EBITDA or Adjusted EBITDA Margin or liquidity with Free Cash Flow, as applicable, investors should (i) evaluate each adjustment in our reconciliation to the corresponding GAAP measure, and the explanatory footnotes regarding those adjustments, (ii) use Adjusted EBITDA and Adjusted EBITDA Margin in addition to, and not as an alternative to, net income (loss) attributable to common stock as a measure of operating results, and (iii) use Free Cash Flow in addition to, and not as an alternative to, consolidated net cash provided by (used in) operating activities when evaluating our liquidity. No reconciliation of the forecasted range for Adjusted EBITDA for fiscal 2022, Adjusted EBITDA Margin for fiscal 2022, 2023 and 2026 and Free Cash Flow for fiscal 2023 and 2025 is included in this release because we are unable to quantify certain amounts that would be required to be included in the corresponding GAAP measure without unreasonable efforts and we believe such reconciliation would imply a degree of precision that would be confusing or misleading to investors.

Cautionary Note Regarding Forward-Looking Statements

Certain disclosures in this press release and related comments by our management include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our business outlook, industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future technologies, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words "anticipate," "assume," "believe," "budget," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "future" and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release. Forward-looking statements are based on our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: our ability to attract and retain customers and generate revenue from the provision of our connectivity and entertainment services; our reliance on our key OEMs and dealers for equipment sales; our ability to develop and deploy Gogo 5G and Global Broadband; the impact of competition; the impact of the COVID-19 pandemic and the measures implemented to combat it; global supply chain and logistics issues and the possible impact of inflation; our ability to evaluate or pursue strategic opportunities; our reliance on third parties for equipment and services; our ability to recruit, train and retain highly skilled employees; the impact of adverse economic conditions; our ability to maintain our rights to use our licensed 3 MHz of ATG spectrum in the United States and obtain rights to additional spectrum if needed; the impact of our use of open source software; the impact of equipment failures or material software defects; the impact of service disruptions caused by, among other things, force majeure events, cyber attacks or other malicious activities; the impact of assertions by third parties of infringement, misappropriation or other violations; our ability to innovate and provide products and services; the impact of government regulation of the internet and conflict minerals; our possession and use of personal information; the extent of expenses, liabilities or business disruption resulting from litigation; our ability to protect our intellectual property rights; our substantial indebtedness, limitations and restrictions in the agreements governing our current and future indebtedness and our ability to service our indebtedness; fluctuations in our operating results; our ability to fully utilize portions of our deferred tax assets; and other events beyond our control that may result in unexpected adverse operating results.

Additional information concerning these and other factors can be found under the caption "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2021 as filed with the Securities and Exchange Commission (the "SEC") on March 3, 2022 and in our quarterly reports on Form 10-Q as filed with the SEC on May 5, 2022 and August 5, 2022.

Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

About Gogo

Gogo is the world's largest provider of broadband connectivity services for the business aviation market. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment and voice solutions. Gogo's products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals.

As of June 30, 2022, Gogo reported 2,893 business aircraft flying with Gogo's AVANCE L5 or L3 system installed, 6,654 aircraft flying with its ATG systems onboard, and 4,462 aircraft with narrowband satellite connectivity installed. Connect with us at business.gogoair.com.

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)



For the Three Months

Ended June 30,



For the Six Months

Ended June 30,




2022



2021



2022



2021


Revenue:













Service revenue


$

73,064



$

64,767



$

143,731



$

124,122


Equipment revenue



24,772




17,608




46,855




32,122


Total revenue



97,836




82,375




190,586




156,244


Operating expenses:













Cost of service revenue (exclusive of items shown below)



15,752




15,177




30,386




29,272


Cost of equipment revenue (exclusive of items shown below)



16,868




10,932




31,149




19,214


Engineering, design and development



7,952




6,541




13,358




12,034


Sales and marketing



6,068




4,826




12,299




8,555


General and administrative



15,357




11,746




28,815




22,119


Depreciation and amortization



3,499




3,547




7,290




7,664


Total operating expenses



65,496




52,769




123,297




98,858


Operating income



32,340




29,606




67,289




57,386


Other (income) expense:













Interest income



(194)




(54)




(241)




(111)


Interest expense



9,772




16,340




20,661




45,634


Loss on extinguishment of debt and settlement of convertible notes



?




79,564




?




83,961


Other expense (income), net



43




(127)




17




(132)


Total other expense



9,621




95,723




20,437




129,352


Income (loss) from continuing operations before income taxes



22,719




(66,117)




46,852




(71,966)


Income tax provision



702




277




2,639




312


Net income (loss) from continuing operations



22,017




(66,394)




44,213




(72,278)


Net loss from discontinued operations, net of tax



?




(2,854)




?




(4,655)


Net income (loss)


$

22,017



$

(69,248)



$

44,213



$

(76,933)















Net income (loss) attributable to common stock per share - basic:













Continuing operations


$

0.18



$

(0.61)



$

0.38



$

(0.74)


Discontinued operations



?




(0.02)




?




(0.05)


Net income (loss) attributable to common stock per share - basic


$

0.18



$

(0.63)



$

0.38



$

(0.79)















Net income (loss) attributable to common stock per share - diluted:













Continuing operations


$

0.17



$

(0.61)



$

0.35



$

(0.74)


Discontinued operations



?




(0.02)




?




(0.05)


Net income (loss) attributable to common stock per share - diluted


$

0.17



$

(0.63)



$

0.35



$

(0.79)















Weighted average number of shares













Basic



123,252




109,060




117,375




96,884


Diluted



134,718




109,060




134,474




96,884


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands)



June 30,



December 31,




2022



2021


Assets







Current assets:







Cash and cash equivalents


$

163,993



$

145,913


Accounts receivable, net of allowances of $1,311 and $894, respectively



44,570




37,730


Inventories



42,543




33,976


Prepaid expenses and other current assets



48,895




32,295


Total current assets



300,001




249,914


Non-current assets:







Property and equipment, net



84,586




63,672


Intangible assets, net



48,842




49,554


Operating lease right-of-use assets



72,384




70,989


Other non-current assets, net of allowances of $524 and $455, respectively



41,980




28,425


Deferred income taxes



175,773




185,133


Total non-current assets



423,565




397,773


Total assets


$

723,566



$

647,687


Liabilities and stockholders' deficit







Current liabilities:







Accounts payable


$

20,662



$

17,203


Accrued liabilities



62,254




59,868


Deferred revenue



1,507




1,825


Current portion of long-term debt



7,250




109,620


Total current liabilities



91,673




188,516


Non-current liabilities:







Long-term debt



692,482




694,760


Non-current operating lease liabilities



77,744




77,329


Other non-current liabilities



7,293




7,236


Total non-current liabilities



777,519




779,325


Total liabilities



869,192




967,841


Stockholders' deficit







Common stock



13




11


Additional paid-in capital



1,379,356




1,258,477


Accumulated other comprehensive income



22,420




1,789


Treasury stock, at cost



(140,000)




(128,803)


Accumulated deficit



(1,407,415)




(1,451,628)


Total stockholders' deficit



(145,626)




(320,154)


Total liabilities and stockholders' deficit


$

723,566



$

647,687


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)



For the Six Months

Ended June 30,




2022



2021


Operating activities from continuing operations:







Net income (loss)


$

44,213



$

(72,278)


Adjustments to reconcile net income (loss) to cash provided by operating activities:







Depreciation and amortization



7,290




7,664


Loss (gain) on asset disposals, abandonments and write-downs



114




(2)


Provision for expected credit losses



498




(15)


Deferred income taxes



2,540




90


Stock-based compensation expense



9,411




4,741


Amortization of deferred financing costs and interest rate caps



1,777




2,781


Accretion of debt discount



231




188


Loss on extinguishment of debt and settlement of convertible notes



?




83,961


Changes in operating assets and liabilities:







Accounts receivable



(7,270)




871


Inventories



(8,567)




692


Prepaid expenses and other current assets



(79)




(2,238)


Contract assets



(2,748)




(3,314)


Accounts payable



858




3,349


Accrued liabilities



(2,043)




(6,483)


Deferred revenue



(318)




(632)


Accrued interest



(164)




(8,576)


Other non-current assets and liabilities



(1,503)




(1,198)


Net cash provided by operating activities from continuing operations



44,240




9,601


Investing activities from continuing operations:







Purchases of property and equipment



(17,481)




(1,284)


Acquisition of intangible assets?capitalized software



(2,469)




(542)


Purchase of interest rate cap



?




(8,629)


Net cash used in investing activities from continuing operations



(19,950)




(10,455)


Financing activities from continuing operations:







Redemption of senior secured notes



?




(1,023,146)


Proceeds from term loan, net of discount



?




721,375


Payments on term loan



(3,625)




?


Payment of debt issuance costs



?




(20,251)


Payments on financing leases



(103)




(154)


Stock-based compensation activity



(2,515)




(2,752)


Net cash used in financing activities from continuing operations



(6,243)




(324,928)


Cash flows from discontinued operations:







Cash used in operating activities



?




(800)


Cash used in investing activities



?




?


Cash used in financing activities



?




?


Net cash used in discontinued operations



?




(800)


Effect of exchange rate changes on cash



8




(89)


Increase (decrease) in cash, cash equivalents and restricted cash



18,055




(326,671)


Cash, cash equivalents and restricted cash at beginning of period



146,268




435,870


Cash, cash equivalents and restricted cash at end of period


$

164,323



$

109,199


Cash, cash equivalents and restricted cash at end of period


$

164,323



$

109,199


Less: current restricted cash



?




25


Less: non-current restricted cash



330




?


Cash and cash equivalents at end of period


$

163,993



$

109,174


Supplemental Cash Flow Information:







Cash paid for interest


$

19,680



$

51,259


Cash paid for taxes


$

112



$

276


Non-cash investing activities:







Purchases of property and equipment in current liabilities


$

13,089



$

97


 

Gogo Inc. and Subsidiaries

Supplemental Information ? Key Operating Metrics



For the Three Months

Ended June 30,



For the Six Months

Ended June 30,




2022



2021



2022



2021


Aircraft online (at period end)













ATG



6,654




6,036




6,654




6,036


Satellite



4,462




4,587




4,462




4,587


Average monthly connectivity service revenue per aircraft online













ATG


$

3,328



$

3,296



$

3,324



$

3,192


Satellite



257




249




246




244


Units sold













ATG



310




182




556




317


Satellite



32




67




101




147


Average equipment revenue per unit sold (in thousands)













ATG


$

67



$

76



$

70



$

77


Satellite



73




42




55




44


Gogo Inc. and Subsidiaries

Supplemental Information ? Revenue and Cost of Revenue

(in thousands, unaudited)



For the Three Months

Ended June 30,



% Change



For the Six Months

Ended June 30,



% Change




2022



2021



2022 over 2021



2022



2021



2022 over 2021


Service revenue


$

73,064



$

64,767




12.8

%


$

143,731



$

124,122




15.8

%

Equipment revenue



24,772




17,608




40.7

%



46,855




32,122




45.9

%

Total revenue


$

97,836



$

82,375




18.8

%


$

190,586



$

156,244




22.0

%



For the Three Months

Ended June 30,



% Change



For the Six Months

Ended June 30,



% Change




2022



2021



2022 over 2021



2022



2021



2022 over 2021


Cost of service revenue (1)


$

15,752



$

15,177




3.8

%


$

30,386



$

29,272




3.8

%

Cost of equipment revenue (1)


$

16,868



$

10,932




54.3

%


$

31,149



$

19,214




62.1

%

(1)

Excludes depreciation and amortization expense.

 

Gogo Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)



For the Three Months

Ended June 30,



For the Six Months

Ended June 30,



For the Three
Months Ended
March 31,




2022



2021



2022



2021



2022


Adjusted EBITDA:
















Net income (loss) attributable to common stock (GAAP)


$

22,017



$

(69,248)



$

44,213



$

(76,933)



$

22,196


Interest expense



9,772




16,340




20,661




45,634




10,889


Interest income



(194)




(54)




(241)




(111)




(47)


Income tax provision



702




277




2,639




312




1,937


Depreciation and amortization



3,499




3,547




7,290




7,664




3,791


EBITDA



35,796




(49,138)




74,562




(23,434)




38,766


Stock-based compensation expense



5,404




2,892




9,411




4,741




4,007


Loss from discontinued operations



?




2,854




?




4,655




?


Loss on extinguishment of debt and settlement of convertible notes



?




79,564




?




83,961




?


Separation costs related to CA sale



?




575




?




720




?


Adjusted EBITDA


$

41,200



$

36,747



$

83,973



$

70,643



$

42,773


















Free Cash Flow:
















Net cash provided by (used in) operating activities (GAAP) (1)


$

26,374



$

(14,973)



$

44,240



$

9,601



$

17,866


Consolidated capital expenditures (1)



(10,895)




(1,124)




(19,950)




(1,826)




(9,055)


Payments for interest rate caps (1)



?




(8,629)




?




(8,629)




?


Free cash flow


$

15,479



$

(24,726)



$

24,290



$

(854)



$

8,811


(1)

See Unaudited Condensed Consolidated Statements of Cash Flows

 

Gogo Inc. and Subsidiaries

Reconciliation of Estimated Full-Year GAAP Net Cash

Provided by Operating Activities to Non-GAAP Measures


(in millions, unaudited)


FY 2022 Range



Low



High


Free Cash Flow:






Net cash provided by operating activities (GAAP)

$

96



$

106


Consolidated capital expenditures


(65)




(65)


Proceeds from interest rate caps


4




4


Free cash flow

$

35



$

45


Definition of Non-GAAP Measures

EBITDA represents net income (loss) attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization expense.

Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense included in the results of continuing operations, (ii) the results of discontinued operations, including stock-based compensation expense, (iii) loss on extinguishment of debt and settlement of convertible notes and (iv) separation costs related to the sale of CA. Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.

We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA is appropriate given the significant variation in expense that can result from using the Black-Scholes model to determine the fair value of such compensation. The fair value of our stock options is determined using the Black-Scholes model and varies based on fluctuations in the assumptions used in this model, including inputs that are not necessarily directly related to the performance of our business, such as the expected volatility, the risk-free interest rate and the expected life of the options. Therefore, we believe that the exclusion of this cost provides a clearer view of the operating performance of our business. Further, stock option grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.

We believe it is useful for an understanding of our operating performance to exclude the results of our discontinued operations from Adjusted EBITDA because they are not part of our ongoing operations.

We believe it is useful for an understanding of our operating performance to exclude the loss on extinguishment of debt and settlement of convertible notes from Adjusted EBITDA because this activity is not related to our operating performance.

We believe it is useful for an understanding of our operating performance to exclude separation costs related to the sale of CA from Adjusted EBITDA for the three- and six-month periods ended June 30, 2021 because of the non-recurring nature of this activity.

We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our consolidated financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.

Adjusted EBITDA Margin represents Adjusted EBITDA divided by total revenue. We present Adjusted EBITDA Margin as a supplemental performance measure because we believe that it provides meaningful information regarding our operating efficiency.

Free Cash Flow represents net cash provided by operating activities, less purchases of property and equipment, the acquisition of intangible assets and the cash flows associated with our interest rate caps. We believe that Free Cash Flow provides meaningful information regarding our liquidity.

To conform to current year presentation, we included the cash paid for our interest rate caps in Free Cash Flow for the three- and six- month periods ended June 30, 2021. We believe it is useful for an understanding of our liquidity to include the cash flows associated with interest rate caps to facilitate a more consistent comparison of net cash paid for interest and the interest rate changes for which we are hedged.

Investor Relations Contact:


Media Relations Contact:

Will Davis


Dave Mellin

+1 917-519-6994


+1 303-301-3606

[email protected]


[email protected]

 

SOURCE Gogo Inc.


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