CHICAGO, Aug. 5, 2021 /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, 2021.

Q2 2021 Highlights

  • Total revenue of $82.4 million, an increase of 16% compared to Q2 2019, 51% compared to Q2 2020 and 12% compared to Q1 2021, fueled by strong growth in both service and equipment revenue.
  • Record service revenue of $64.8 million increased more than 18% compared to Q2 2019, 47% compared to Q2 2020 and 9% compared to Q1 2021.
  • Equipment revenue of $17.6 million increased 7% compared to Q2 2019, 66% compared to Q2 2020 and 21% compared to Q1 2021.
  • Net loss from continuing operations of $66.4 million compared to a net loss from continuing operations of $14.2 million in Q2 2020, primarily due to a $79.6 million loss on extinguishment of debt (recognized in connection with the Company's comprehensive refinancing) and settlement of convertible notes. Earnings per share for Q2 2021 was $(0.63), of which $(0.73) related to the loss on extinguishment of debt and settlement of convertible notes.
  • Record Adjusted EBITDA(1) of $36.7 million increased 70% compared to Q2 2020 and 8% compared to Q1 2021.
  • Total ATG aircraft online ("AOL") reached 6,036, an increase of 12% compared to Q2 2020 and 2.4% compared to Q1 2021.
  • Average monthly service revenue per ATG aircraft online ("ARPU") of $3,296, which includes a $1.8 million recognition of deferred revenue related to a customer contract. Excluding this recognition, ARPU was $3,195, an increase of 24% compared to Q2 2020 and 4% compared to Q1 2021.
  • Total AVANCE units online grew to 2,067, an increase of 51% compared to Q2 2020. AVANCE units comprised more than 34% of total AOL as of June 30, 2021, up from 25% as of June 30, 2020.
  • Total cash and cash equivalents totaled $109.2 million on June 30, 2021. Free cash flow1 for the six months ending June 30, 2021 was $7.8 million compared to an outflow of $6.3 million in the prior year period.

"Accelerating business aviation demand and our industry-leading AVANCE platform drove Gogo's record results," said Oakleigh Thorne, Chairman and CEO of Gogo. "We'll further enhance the performance of AVANCE when we launch the Gogo 5G network in 2022."

"Our increased guidance reflects Gogo's record equipment backlog and growing AVANCE penetration," said Barry Rowan, Gogo's Executive Vice President and CFO.  "Gogo is at an exciting inflection point as we expect to achieve sustainable positive net income beginning in the third quarter of 2021."

Updated 2021 Financial Guidance

  • Total revenue in the range of $325 million to $335 million versus prior guidance of $310 million to $325 million.
  • Adjusted EBITDA of at least $130 million, excluding approximately $3 million of separation and migration costs related to the sale of the CA division, versus prior guidance of $115 million to $125 million.
  • Capital expenditures in the range of $20 million to $25 million, with the majority tied to Gogo 5G, versus prior guidance of $25 million to $30 million.
  • Free cash flow1 in the range of $25 million to $35 million, including cash interest payments of approximately $71 million, versus prior guidance of $10 million to $20 million.

 

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

Conference Call

The Company will host its second quarter conference call on August 5, 2021 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: 2472347

Non-GAAP Financial Measures

We report certain non-GAAP financial measurements, including Adjusted EBITDA and Free Cash Flow, in the supplemental tables below. Management uses Adjusted EBITDA 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 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 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 in addition to, and not as an alternative to, net 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 2021 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," "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 reflect 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 compete effectively with other current or future providers of in-flight connectivity services and other products and services that we offer, including on the basis of price and performance; the impact of the COVID-19 pandemic and the measures implemented to combat it; 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 achievement of the anticipated benefits of the sale of the CA business or our ability to operate as a standalone business; the impact of adverse economic conditions; our ability to develop and deploy Gogo 5G; a revocation of, or reduction in, our right to use licensed spectrum, the availability of other air-to-ground spectrum to a competitor or the repurposing by a competitor of other spectrum for air-to-ground use; our use of open source software and licenses; the availability of additional ATG spectrum in the United States or internationally; the effects of service interruptions or delays, technology failures and equipment failures or malfunctions arising from defects or errors in our software or defects in or damage to our equipment; 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; our possession and use of personal information; the extent of expenses or liabilities resulting from litigation; our ability to protect our intellectual property; 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; the utilization of our tax losses; 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, 2020 as filed with the Securities and Exchange Commission ("SEC") on March 11, 2021 and our quarterly reports on Form 10-Q as filed with the SEC on May 6, 2021 and August 5, 2021.

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, 2021, Gogo reported 2,067 business aircraft flying with Gogo's AVANCE L5 or L3 system installed, 6,036 aircraft flying with its ATG systems onboard, and 4,587 aircraft with 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



For the Six Months




Ended June 30,



Ended June 30,




2021



2020



2021



2020


Revenue:

















Service revenue


$

64,767



$

44,033



$

124,122



$

101,759


Equipment revenue



17,608




10,599




32,122




23,800


Total revenue



82,375




54,632




156,244




125,559



















Operating expenses:

















Cost of service revenue



15,177




10,167




29,272




21,174


Cost of equipment revenue



10,932




6,982




19,214




15,493


Engineering, design and development



6,541




5,498




12,034




12,855


Sales and marketing



4,826




2,516




8,555




6,966


General and administrative



11,746




9,133




22,119




23,839


Depreciation and amortization



3,547




3,218




7,664




6,797


Total operating expenses



52,769




37,514




98,858




87,124


Operating income



29,606




17,118




57,386




38,435



















Other (income) expense:

















Interest income



(54)




(75)




(111)




(653)


Interest expense



16,340




31,253




45,634




62,396


Loss on extinguishment of debt and settlement of convertible notes



79,564




-




83,961




-


Other (income) expense



(127)




1




(132)




-


Total other expense



95,723




31,179




129,352




61,743



















Loss from continuing operations before income taxes



(66,117)




(14,061)




(71,966)




(23,308)


Income tax provision



277




140




312




281


Net loss from continuing operations



(66,394)




(14,201)




(72,278)




(23,589)


Net loss from discontinued operations, net of tax



(2,854)




(71,778)




(4,655)




(147,168)


Net loss


$

(69,248)



$

(85,979)



$

(76,933)



$

(170,757)



















Net loss attributable to common stock per share – basic and diluted:

















Net loss from continuing operations


$

(0.61)



$

(0.17)



$

(0.74)



$

(0.29)


Net loss from discontinued operations



(0.02)




(0.88)




(0.05)




(1.81)


Net loss


$

(0.63)



$

(1.05)



$

(0.79)



$

(2.10)



















Weighted average number of shares—basic and diluted



109,060




81,757




96,884




81,482


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands)




June 30,



December 31,




2021



2020


Assets









Current assets:









Cash and cash equivalents


$

109,174



$

435,345


Accounts receivable, net of allowances of $753 and $1,044, respectively



39,999




39,833


Inventories



27,422




28,114


Prepaid expenses and other current assets



11,802




8,934


Total current assets



188,397




512,226


Non-current assets:









Property and equipment, net



59,207




63,493


Intangible assets, net



49,453




52,693


Operating lease right-of-use assets



31,150




33,690


Other non-current assets, net of allowances of $397 and $375, respectively



23,829




11,486


Total non-current assets



163,639




161,362


Total assets


$

352,036



$

673,588


Liabilities and stockholders' deficit









Current liabilities:









Accounts payable


$

14,725



$

11,013


Accrued liabilities



61,843




83,009


Deferred revenue



2,474




3,113


Current portion of long-term debt



109,080




341,000


Total current liabilities



188,122




438,135


Non-current liabilities:









Long-term debt



697,035




827,968


Non-current operating lease liabilities



34,589




38,018


Other non-current liabilities



9,572




10,581


Total non-current liabilities



741,196




876,567


Total liabilities



929,318




1,314,702


Stockholders' deficit









Common stock



11




9


Additional paid-in capital



1,234,111




1,088,590


Accumulated other comprehensive loss



(1,305)




(1,013)


Treasury stock, at cost



(128,803)




(98,857)


Accumulated deficit



(1,681,296)




(1,629,843)


Total stockholders' deficit



(577,282)




(641,114)


Total liabilities and stockholders' deficit


$

352,036



$

673,588


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)




For the Six Months




Ended June 30,




2021



2020


Operating activities from continuing operations:









Net loss


$

(72,278)



$

(23,589)


Adjustments to reconcile net loss to cash provided by operating activities:









Depreciation and amortization



7,664




6,797


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



(2)




74


Provision for expected credit losses



(15)



852


Deferred income taxes



90




89


Stock-based compensation expense



4,741




3,603


Amortization of deferred financing costs



2,781




2,872


Accretion and amortization of debt discount and premium



188




6,762


Losses on extinguishment of debt and settlement of convertible notes



83,961




-


Changes in operating assets and liabilities:









Accounts receivable



871




12,848


Inventories



692




(2,287)


Prepaid expenses and other current assets



(2,238)




(1,015)


Contract assets



(3,314)




(5,252)


Accounts payable



3,349




4,132


Accrued liabilities



(6,483)




(7,935)


Deferred revenue



(632)




271


Accrued interest



(8,576)




(5)


Other non-current assets and liabilities



(1,198)




600


Net cash provided by (used in) operating activities from continuing operations



9,601




(1,183)











Investing activities from continuing operations:









Purchases of property and equipment



(1,284)




(258)


Acquisition of intangible assetscapitalized software



(542)




(4,812)


Purchase of interest rate cap



(8,629)




-


Net cash used in investing activities from continuing operations



(10,455)




(5,070)











Financing activities from continuing operations:









Proceeds from credit facility draw



-




22,000


Repayments of amounts drawn from credit facility



-




(5,000)


Repurchase of convertible notes



-




(2,498)


Redemption of senior secured notes



(1,023,146)




-


Proceeds from term loan, net of discount



721,375




-


Payment of debt issuance costs



(20,251)




-


Payments on financing leases



(154)




-


Stock-based compensation activity



(2,752)




(262)


Net cash provided by (used in) financing activities from continuing operations



(324,928)




14,240


Cash flows from discontinued operations:









Cash used in operating activities



(800)




(7,373)


Cash used in investing activities



-




(15,942)


Cash used in financing activities



-




(310)


Net cash used in discontinued operations



(800)




(23,625)











Effect of exchange rate changes on cash



(89)




(90)











Decrease in cash, cash equivalents and restricted cash



(326,671)




(15,728)


Cash, cash equivalents and restricted cash at beginning of period



435,870




177,675


Cash, cash equivalents and restricted cash at end of period


$

109,199



$

161,947











Cash, cash equivalents and restricted cash at end of period


$

109,199



$

161,947


Less: current restricted cash



25




560


Less: non-current restricted cash



-




5,101


Cash and cash equivalents at end of period


$

109,174



$

156,286











Supplemental Cash Flow Information:









Cash paid for interest


$

51,259



$

53,080


 

Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics



For the Three Months



For the Six Months



Ended June 30,



Ended June 30,



2021



2020



2021



2020


Aircraft online (at period end)
















ATG


6,036




5,399




6,036




5,399


Satellite


4,587




4,704




4,587




4,704


Average monthly service revenue per aircraft online
















ATG

$

3,296



$

2,570



$

3,192



$

2,867


Satellite


249




185




244




205


Units Sold
















ATG


182




100




317




225


Satellite


67




67




147




123


Average equipment revenue per unit sold (in thousands)
















ATG

$

76



$

69



$

77



$

73


Satellite


42




53




44




56


 

  • 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 service revenue per satellite aircraft online. We define average monthly service revenue per satellite aircraft online as the aggregate satellite 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

(in thousands, unaudited)




For the Three Months



% Change




For the Six Months



% Change




Ended June 30,



2021 over




Ended June 30 30,



2021 over




2021



2020



2020



2021



2020



2020


Service revenue


$

64,767



$

44,033




47.1

%


$

124,122



$

101,759




22.0

%

Equipment revenue



17,608




10,599




66.1

%



32,122




23,800




35.0

%

Total revenue


$

82,375



$

54,632




50.8

%


$

156,244



$

125,559




24.4

%

 



For the Three Months



% Change



For the Six Months



% Change




Ended June 30,



2021 over



Ended June 30,



2021 over




2021



2020



2020



2021



2020



2020


Cost of service revenue (1)


$

15,177



$

10,167




49.3

%


$

29,272



$

21,174




38.2

%

Cost of equipment revenue (1)


$

10,932



$

6,982




56.6

%


$

19,214



$

15,493




24.0

%


(1)        Excludes depreciation and amortization expense.

 

Gogo Inc. and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

(in thousands, unaudited)




For the Three Months



For the Six Months




Ended June 30,



Ended June 30,




2021



2020



2021



2020


Adjusted EBITDA:

















Net loss attributable to common stock (GAAP)


$

(69,248)



$

(85,979)



$

(76,933)



$

(170,757)


Interest expense



16,340




31,253




45,634




62,396


Interest income



(54)




(75)




(111)




(653)


Income tax provision



277




140




312




281


Depreciation and amortization



3,547




3,218




7,664




6,797


EBITDA



(49,138)




(51,443)




(23,434)




(101,936)


Stock-based compensation expense



2,892




1,281




4,741




3,603


Loss from discontinued operations



2,854




71,778




4,655




147,168


Loss on extinguishment of debt and settlement of convertible notes



79,564




-




83,961




-


Separation costs related to CA sale



575




-




720




-


Adjusted EBITDA


$

36,747



$

21,616



$

70,643



$

48,835



















Free Cash Flow:

















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


$

(14,973)



$

(25,073)



$

9,601



$

(1,183)


Consolidated capital expenditures (1)



(1,124)




(4,194)




(1,826)




(5,070)


Free cash flow


$

(16,097)



$

(29,267)



$

7,775



$

(6,253)




















(1) See unaudited condensed consolidated statement of cash flows































 



For the Three Months Ended




March 31,




2021


Adjusted EBITDA:





Net loss attributable to common stock (GAAP)


$

(7,685)


Interest expense



29,294


Interest income



(57)


Income tax provision



35


Depreciation and amortization



4,117


EBITDA



25,704


Stock-based compensation expense



1,849


Loss from discontinued operations



1,801


Loss on settlement of convertible notes



4,397


Separation costs related to CA sale



145


Adjusted EBITDA


$

33,896


 

Gogo Inc. and Subsidiaries

Reconciliation of Estimated Full-Year GAAP Net Cash

Provided by Operating Activities to Non-GAAP Measures

(in millions, unaudited)



FY 2021


Free Cash Flow:








Net cash provided by operating activities (GAAP)

$

50


to

$

55


Consolidated capital expenditures


(25)


to


(20)


Free cash flow

$

25


to

$

35




























Definition of Non-GAAP Measures

EBITDA represents net 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 of the infrequently occurring nature of these activities.

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 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 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.

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.

Investor Relations Contact:

Media Relations Contact:

Will Davis 

Dave Mellin

+1 917-519-6994

+1 303-301-3606

wdavis@gogoair.com

pr@gogoair.com



 

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SOURCE Gogo Inc.

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