Gogo’s announces Q4 & 2023 results, offering 2024 financial guidance and updates long-term goals

Thursday, February 29, 2024

Gogo Inc. , a prominent supplier of broadband connectivity solutions tailored for the business aviation industry, has revealed its financial results for the quarter concluding on December 31, 2023.

Highlights for Q4 2023:
– Total revenue amounted to $97.8 million, marking a 10% decline from Q4 2022.
– Service revenue reached a record high of $80.9 million, up 5% from Q4 2022 and 2% from Q3 2023.
– Equipment revenue stood at $16.9 million, down 45% from Q4 2022 and 8% from Q3 2023.
– 202 AVANCE equipment units were shipped, reflecting a 48% decrease from Q4 2022 but a 5% increase from Q3 2023.
– Total ATG aircraft online reached 7,205, rising by 4% from Q4 2022 and 1% from Q3 2023.
– Total AVANCE aircraft online grew to 3,976, up 21% from Q4 2022 and 5% from Q3 2023. AVANCE units comprised approximately 55% of total aircraft online as of December 31, 2023, up from 47% as of December 31, 2022.
-The Average Monthly Revenue per ATG aircraft online (ARPU) stood at $3,387, showing a slight increase from $3,370 in Q4 2022 and $3,373 in Q3 2023.
– Net income totaled $14.5 million, down 48% from Q4 2022.
– Diluted earnings per share were $0.11, compared to $0.21 in Q4 2022.
– Adjusted EBITDA was $35.1 million, down 24% from Q4 2022 and 19% from Q3 2023.
-Cash generated from operating activities totaled $26.2 million in Q4 2023, reflecting a decrease from $31.5 million in the corresponding period of the previous year.
– Free Cash Flow reached a record $28.4 million in Q4 2023, up from $25.0 million in the same period of the prior year.
– Cash, cash equivalents, and short-term investments totaled $139.0 million as of December 31, 2023, compared to $110.8 million as of September 30, 2023.
– During Q4 2023, the Company repurchased approximately 480,000 shares for approximately $4.8 million.During January, the company bought back around 566,000 shares at an approximate cost of $5.2 million.
-Gogo inked a fresh 10-year connectivity deal with NetJets.

Full Year 2023 Highlights:
– Total revenue amounted to $397.6 million, a 2% decrease from 2022.
– Service revenue reached a record $318.0 million, up 7% from 2022.
– Equipment revenue totaled $79.6 million, down 26% from 2022.
– ARPU increased to $3,380, up 1% from 2022.
– Net income increased to $145.7 million compared to $92.1 million in 2022, including a $48.1 million tax benefit.
– Adjusted EBITDA was $162.1 million, down 7% from 2022.
-Cash provided by operating activities declined to $79.0 million, down from $103.4 million in 2022.- Free –Cash Flow increased to $82.7 million compared to $57.8 million in 2022.

“The launches of Gogo Galileo and Gogo 5G later this year will provide order-of-magnitude improvements in the network speeds we deliver to customers and significantly increase our global total addressable market,” said Oakleigh Thorne, Chairman and CEO. “And our LTE replacement program will drive conversion of our Classic product customers to our AVANCE platform, which will provide them with easy upgrade pathways to 5G and Galileo in the future.”

“Gogo’s ability to reiterate its $150 million to $200 million Free Cash Flow target in 2025 and target long-term revenue growth of approximately 15-17% from 2023-2028 is supported by our upcoming product roll outs, Gogo Galileo and Gogo 5G,” said Jessi Betjemann, Executive Vice President and CFO. “Gogo’s strategic investments will decline significantly after 2024, allowing for further flexibility for the return of capital to shareholders.”

2024 Financial Outlook and Long-Term Financial Objectives

For 2024, the Company offers the following financial guidance, incorporating the impact of the Federal Communications Commission’s Secure and Trusted Communications Networks Reimbursement Program (“FCC Reimbursement Program”):

– Total revenue is anticipated to be between $410 million and $425 million.
– Adjusted EBITDA(1) is expected to fall within the range of $110 million to $125 million. This reflects operating expenses of approximately $40 million for strategic and operational initiatives, such as Gogo 5G and Gogo Galileo, as well as $4 million in legal expenses linked to the SmartSky litigation.
-The projected Free Cash Flow(1) is expected to fall within the range of $20 million to $40 million, which includes $45 million in reimbursements associated with the FCC Reimbursement Program.
– Capital expenditures are estimated to be approximately $45 million, with $25 million allocated for strategic initiatives, including Gogo 5G, Gogo Galileo, and the LTE network build.

Additionally, the Company outlines the following long-term financial targets:

– Revenue growth is projected to achieve a compound annual growth rate of approximately 15%-17% from 2023 through 2028, compared to the previous target of 15-17% from 2022 through 2027. Revenue contributions from Gogo Galileo are expected to commence in 2025.
– The Annual Adjusted EBITDA Margin(1) is targeted to reach 40% in 2028, as opposed to the previous target within the mid-40% range in 2027.
– The Company reiterates its Free Cash Flow(1) projection of $150 million to $200 million in 2025, excluding the impact of the FCC Reimbursement program.

We use non-GAAP financial metrics like Adjusted EBITDA, Adjusted EBITDA Margin, and Free Cash Flow for business planning, performance evaluation, and liquidity assessment. These metrics exclude non-operational, unusual, or non-recurring items for better period-to-period comparison. However, they may differ from similar measures used by other companies and aren’t recognized under GAAP. Investors should assess adjustments, use these metrics in conjunction with GAAP measures, and understand that we can’t provide reconciliations for certain forecasted amounts due to complexity and variability.

This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 regarding our business outlook, strategies, financial projections, and market position. Words like “anticipate,” “estimate,” and “expect” signify these statements. While we believe these statements are reasonable, actual results may differ due to various risks and uncertainties such as competition, economic conditions, and regulatory changes. Other factors include technological developments, supply chain disruptions, and legal matters. We cannot guarantee the accuracy of these statements, given the complexity of the factors involved.

For further details on these and other elements, please refer to the section titled “Risk Factors” in our annual report on Form 10-K for the period ending December 31, 2023, submitted to the Securities and Exchange Commission (“SEC”) on February 28, 2024, as well as in subsequent quarterly reports on Form 10-Q filed with the SEC.

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