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Gogo Announces Record First Quarter Results and Updates 2022 Guidance

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First Quarter Revenue of $92.8 million, up 26% Year-over-Year, Net Income from Continuing Operations of $22.2 million, and Adjusted EBITDA(1)of $42.8 million also up 26% Year-over-Year

Gogo 5G on Track for Commercial Launch in the Second Half of 2022

BROOMFIELD, Colo., May 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 March 31, 2022.

Q1 2022 Highlights
  • Record total revenue of $92.8 million increased 26% compared to Q1 2021 fueled by strong growth in both service and equipment revenue.
    • Record service revenue of $70.7 million increased 19% compared to Q1 2021 and 2% compared to Q4 2021.
    • Equipment revenue of $22.1 million increased 52% compared to Q1 2021 and decreased 4% compared to Q4 2021.
  • Total ATG aircraft online ("AOL") reached 6,526, an increase of 11% compared to Q1 2021 and 2% compared to Q4 2021.
    • Total AVANCE units online grew to 2,699, an increase of 42% compared to Q1 2021 and 8% compared to Q4 2021. AVANCE units comprised more than 41% of total AOL as of March 31, 2022, up from 32% as of March 31, 2021.
  • Average Monthly Revenue per ATG aircraft online ("ARPU") of $3,321 increased 8% compared to Q1 2021 and 1% compared to Q4 2021.
  • Net income from continuing operations increased to $22.2 million from a net loss of $5.9 million in Q1 2021, primarily due to lower interest expense and higher operating income compared to the prior year period, as well as a loss on settlement of convertible notes of $4.4 million recognized in Q1 2021.
    • Basic earnings per share from continuing operations was $0.20. Diluted earnings per share from continuing operations was $0.18.
  • Record Adjusted EBITDA(1) of $42.8 million increased 26% compared to Q1 2021 and 8% compared to Q4 2021.
  • Cash provided by operating activities from continuing operations of $17.9 million in Q1 2022 decreased from $24.6 million in the prior year period primarily due to the timing of interest payments.
    • Free Cash Flow(1) was $8.8 million compared to $23.9 million in the prior year period due to the timing of interest payments and an increase in capital expenditures primarily tied to Gogo 5G.
    • Cash and cash equivalents totaled $152.8 million as of March 31, 2022 compared to $145.9 million as of December 31, 2021.

"Given the continued unprecedented demand for connectivity in business aviation coupled with the strong performance of our supply chain management team, we have increased our projection for ATG equipment unit shipments to 1,300 in 2022, up nearly 50% year over year versus prior expectations for 25% growth," said Oakleigh Thorne, Chairman and CEO of Gogo.  "We remain on track for commercial deployment of our 5G ATG network in the second half of 2022."

"Strong first quarter results and our increased 2022 guidance provide a solid foundation for generating significant Free Cash Flow growth in 2023 and beyond," said Barry Rowan, Gogo's Executive Vice President and CFO.  "Our financial performance and continued de-leveraging also create the flexibility for strategic investments to further enhance our growth and return of capital to shareholders over time."      

Updated 2022 Financial Guidance

The Company updates its guidance for 2022 as follows:

  • Total revenue in the range of $390 million to $400 million versus prior guidance of $380 million to $395 million
  • Adjusted EBITDA(1) at the high end of the previously guided range of $150 million to $160 million, which includes $5 million of estimated litigation expenses
  • Free Cash Flow(1) of $35 million to $45 million versus prior guidance of $25 million to $45 million, which includes capital expenditures of approximately $65 million, with approximately $50 million of the capital expenditures tied to Gogo 5G
Long-Term Financial Targets

The Company reiterates its baseline long-term targets as follows:

  • Revenue growth at a compound annual growth rate of approximately 15% from 2021 through 2026
  • Annual Adjusted EBITDA Margin(1) approaching 50% in 2026, up from the low 40%'s in 2022 and 2023
  • Free Cash Flow(1) of approximately $125 million in 2023 following the deployment of the Gogo 5G network in 2022, increasing to over $200 million beginning in 2025

The Company's 2022 guidance and long-term targets are derived from the Company's baseline forecast and long-term plan and include planned investments in Gogo 5G but do not include potential strategic investments currently under consideration (including a global broadband initiative).

(1)

See "Non-GAAP Financial Measures" below.

Conference Call

The Company will host its first quarter conference call on May 5, 2022 at 8:30 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 website at http://ir.gogoair.com. Participants can access the call by dialing (844) 464-3940 (within the United States and Canada) or (765) 507-2646 (international dialers) and entering conference ID number: 3438308

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; the impact of competition; the impact of the COVID-19 pandemic and the measures implemented to combat it, including global shortages of certain electronic components and global logistics issues; 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 report on Form 10-Q as filed with the SEC on May 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 March 31, 2022, Gogo reported 2,699 business aircraft flying with Gogo's AVANCE L5 or L3 system installed, 6,526 aircraft flying with its ATG systems onboard, and 4,522 aircraft with narrowband satellite connectivity installed. Connect with us at business.gogoair.com.

Investor Relations Contact:

Media Relations Contact:

Will Davis

Dave Mellin

+1 917-519-6994

+1 720-840-4788

wdavis@gogoair.com

dmellin@gogoair.com

 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)




For the Three Months
Ended March 31,




2022



2021


Revenue:







     Service revenue


$

70,667



$

59,355


     Equipment revenue



22,083




14,514


          Total revenue



92,750




73,869


Operating expenses:







     Cost of service revenue (exclusive of items shown below)



14,634




14,095


     Cost of equipment revenue (exclusive of items shown below)



14,281




8,282


     Engineering, design and development



5,406




5,493


     Sales and marketing



6,231




3,729


     General and administrative



13,458




10,373


     Depreciation and amortization



3,791




4,117


          Total operating expenses



57,801




46,089


Operating income



34,949




27,780


Other (income) expense:







     Interest income



(47)




(57)


     Interest expense



10,889




29,294


     Loss on settlement of convertible notes






4,397


     Other income, net



(26)




(5)


          Total other expense



10,816




33,629


Income (loss) from continuing operations before income taxes



24,133




(5,849)


     Income tax provision



1,937




35


Net income (loss) from continuing operations



22,196




(5,884)


Net loss from discontinued operations, net of tax






(1,801)


Net income (loss)


$

22,196



$

(7,685)









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







  Continuing operations


$

0.20



$

(0.07)


  Discontinued operations






(0.02)


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


$

0.20



$

(0.09)









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







  Continuing operations


$

0.18



$

(0.07)


  Discontinued operations






(0.02)


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


$

0.18



$

(0.09)









Weighted average number of shares







  Basic



111,414




84,649


  Diluted



134,095




84,649


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands)





March 31,



December 31,




2022



2021


Assets







  Current assets:







     Cash and cash equivalents


$

152,829



$

145,913


     Accounts receivable, net of allowances of $1,127 and $894, respectively



42,102




37,730


     Inventories



36,467




33,976


     Prepaid expenses and other current assets



39,654




32,295


          Total current assets



271,052




249,914


  Non-current assets:







     Property and equipment, net



71,596




63,672


     Intangible assets, net



49,159




49,554


     Operating lease right-of-use assets



70,973




70,989


     Other non-current assets, net of allowances of $515 and $455, respectively



44,561




28,425


     Deferred income taxes



177,934




185,133


          Total non-current assets



414,223




397,773


Total assets


$

685,275



$

647,687


Liabilities and stockholders' deficit







  Current liabilities:







     Accounts payable


$

18,119



$

17,203


     Accrued liabilities



58,683




59,868


     Deferred revenue



1,599




1,825


     Current portion of long-term debt



109,897




109,620


               Total current liabilities



188,298




188,516


  Non-current liabilities:







     Long-term debt



693,617




694,760


     Non-current operating lease liabilities



77,074




77,329


     Other non-current liabilities



7,326




7,236


          Total non-current liabilities



778,017




779,325


          Total liabilities



966,315




967,841


Stockholders' deficit







     Common stock



11




11


     Additional paid-in capital



1,259,223




1,258,477


     Accumulated other comprehensive income



17,961




1,789


     Treasury stock, at cost



(128,803)




(128,803)


     Accumulated deficit



(1,429,432)




(1,451,628)


          Total stockholders' deficit



(281,040)




(320,154)


Total liabilities and stockholders' deficit


$

685,275



$

647,687


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)




For the Three Months
Ended March 31,




2022



2021


Operating activities from continuing operations:







  Net income (loss)


$

22,196



$

(5,884)


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







     Depreciation and amortization



3,791




4,117


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



14




(100)


     Provision for expected credit losses



259




15


     Deferred income taxes



1,887




95


     Stock-based compensation expense



4,007




1,849


     Amortization of deferred financing costs and interest rate caps



947




1,703


     Accretion of debt discount



115




84


     Loss on settlement of convertible notes






4,397


     Changes in operating assets and liabilities:







          Accounts receivable



(4,571)




3,586


          Inventories



(2,491)




(446)


          Prepaid expenses and other current assets



392




(375)


          Contract assets



(2,407)




(1,886)


          Accounts payable



(857)




292


          Accrued liabilities



(5,926)




(10,424)


          Deferred revenue



(226)




646


          Accrued interest



1,349




27,559


          Other non-current assets and liabilities



(613)




(654)


               Net cash provided by operating activities from continuing operations



17,866




24,574


Investing activities from continuing operations:







          Purchases of property and equipment



(7,598)




(360)


          Acquisition of intangible assets—capitalized software



(1,457)




(342)


               Net cash used in investing activities from continuing operations



(9,055)




(702)


Financing activities from continuing operations:







          Payments on term loan



(1,813)





          Payment of debt issuance costs






(550)


          Payments on financing leases



(43)




(124)


          Stock-based compensation activity



(23)




(2,646)


               Net cash used in financing activities from continuing operations



(1,879)




(3,320)


Cash flows from discontinued operations:







          Cash used in operating activities






(748)


          Cash used in investing activities







          Cash used in financing activities







               Net cash used in discontinued operations






(748)


     Effect of exchange rate changes on cash



(16)




3


Increase in cash, cash equivalents and restricted cash



6,916




19,807


Cash, cash equivalents and restricted cash at beginning of period



146,268




435,870


Cash, cash equivalents and restricted cash at end of period


$

153,184



$

455,677


Cash, cash equivalents and restricted cash at end of period


$

153,184



$

455,677


Less: current restricted cash



25




525


Less: non-current restricted cash



330





Cash and cash equivalents at end of period


$

152,829



$

455,152


Supplemental Cash Flow Information:







          Cash paid for interest


$

8,577



$

31


          Cash paid for taxes


$



$

1


Non-cash investing activities:







          Purchases of property and equipment in current liabilities


$

7,993



$

663


 

Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics




For the Three Months
Ended March 31,




2022



2021


Aircraft online (at period end)







     ATG



6,526




5,892


     Satellite



4,522




4,614


Average monthly connectivity service revenue per aircraft online







     ATG


$

3,321



$

3,085


     Satellite



235




239


Units Sold







     ATG



246




135


     Satellite



69




80


Average equipment revenue per unit sold (in thousands)







     ATG


$

73



$

78


     Satellite



46




46


  • ATG aircraft online. We define ATG aircraft online as the total number of business aircraft for which we provide ATG services as of the last day of each period presented. This number excludes aircraft receiving ATG service as part of the ATG Network Sharing Agreement with Intelsat.
  • Satellite aircraft online. We define satellite aircraft online as the total number of business aircraft for which we provide satellite services as of the last day of each period presented.
  • Average monthly connectivity service revenue per ATG aircraft online. We define average monthly connectivity service revenue per ATG aircraft online as the aggregate ATG connectivity service revenue for the period divided by the number of months in the period, divided by the number of ATG aircraft online during the period (expressed as an average of the month end figures for each month in such period). Revenue share earned from the ATG Network Sharing Agreement with Intelsat is excluded from this calculation.
  • Average monthly connectivity service revenue per satellite aircraft online. We define average monthly connectivity service revenue per satellite aircraft online as the aggregate satellite connectivity service revenue for the period divided by the number of months in the period, divided by the number of satellite aircraft online during the period (expressed as an average of the month end figures for each month in such period).
  • Units sold. We define units sold as the number of ATG or satellite units for which we recognized revenue during the period.
  • Average equipment revenue per ATG unit sold. We define average equipment revenue per ATG unit sold as the aggregate equipment revenue from all ATG units sold during the period, divided by the number of ATG units sold.
  • Average equipment revenue per satellite unit sold. We define average equipment revenue per satellite unit sold as the aggregate equipment revenue earned from all satellite units sold during the period, divided by the number of satellite units sold.

 

Gogo Inc. and Subsidiaries

Supplemental Information – Revenue and Cost of Revenue




For the Three Months
Ended March 31,



% Change




2022



2021



2022 over 2021


Service revenue


$

70,667



$

59,355




19.1

%

Equipment revenue



22,083




14,514




52.1

%

Total revenue


$

92,750



$

73,869




25.6

%




For the Three Months
Ended March 31,



% Change




2022



2021



2022 over 2021


Cost of service revenue (1)


$

14,634



$

14,095




3.8

%

Cost of equipment revenue (1)


$

14,281



$

8,282




72.4

%





(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 March 31,



For the Three
Months Ended
December 31,




2022



2021



2021


Adjusted EBITDA:










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


$

22,196



$

(7,685)



$

218,709


     Interest expense



10,889




29,294




10,895


     Interest income



(47)




(57)




(46)


     Income tax provision (benefit)



1,937




35




(187,673)


     Depreciation and amortization



3,791




4,117




3,658


     EBITDA



38,766




25,704




45,543


     Stock-based compensation expense



4,007




1,849




3,201


     Loss (income) from discontinued operations






1,801




(9,572)


     Loss on settlement of convertible notes






4,397





     Separation costs related to CA sale






145




380


   Adjusted EBITDA


$

42,773



$

33,896



$

39,552












Free Cash Flow:










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


$

17,866



$

24,574



$

30,342


   Consolidated capital expenditures (1)



(9,055)




(702)




(4,656)


   Free cash flow


$

8,811



$

23,872



$

25,686






(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


Free Cash Flow:






     Net cash provided by operating activities (GAAP)

$

100


to

$

110


          Consolidated capital expenditures


(65)


to


(65)


     Free cash flow

$

35


to

$

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 and the gain on the sale of CA, (iii) loss on 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 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 during 2021 because of the non-recurring nature of these activities.

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 and the acquisition of intangible assets. We believe that Free Cash Flow provides meaningful information regarding our liquidity.

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About GOGO

in air. online. gogo is the essential flight upgrade, granting access to exclusive in-air experiences that keep you connected to life. don’t leave ground without it. we empower passengers who travel with their wi-fi enabled devices, such as laptops and handhelds, and allow them to surf the web, check e-mail, instant message, access corporate vpns, and basically stay connected to life. it’s all part of our mission to become everyone’s favorite part of flying. you can also follow gogo on twitter.com/gogo and facebook.com/gogo