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Gogo Announces Second Quarter 2015 Financial Results Record quarterly revenue up 22 percent to $121 million

Aug. 6, 2015

Gogo Inc.announced its financial results for the quarter ended June 30, 2015.

Gogo reported record quarterly revenue of $121.2 million, up 22% year-over-year. Service revenue increased 28% to $101.4 million, exceeding $100 million in a single quarter for the first time. Adjusted EBITDA increased $7.7 million to a record $10.8 million.

"Q2 was another outstanding quarter for Gogo. We delivered record financial results; received the first of two certifications needed to fly 2Ku on our own aircraft; and signed a definitive agreement with GOL, a leading Brazilian airline, to equip its entire fleet of 140 aircraft with 2Ku, our next generation satellite technology," said Gogo's President and CEO, Michael Small. "We expect this year that 2Ku will begin to bring an industry leading combination of capacity, cost, reliability and global coverage to planes both in North America and internationally. I am very pleased with our progress to date in getting 2Ku to commercial deployment and with our continued success in winning airlines as we expand internationally."

Second Quarter 2015 Consolidated Financial Results

  • Revenue increased to $121.2 million, up 22% from $99.5 million in Q2 2014.  Service revenue increased 28% to a record $101.4 million.
  • Combined segment profit of CA-NA and BA increased 31% year-over-year to $28.8 million for Q2 2015. 
  • Adjusted EBITDA for Q2 2015 was $10.8 million, up from $3.1 million for Q2 2014.
  • Cash CAPEX decreased to
  •  $22.8 million from $26.9 million in Q2 2014, primarily due to an increase in airborne equipment proceeds received from our airline partners.
  • As of June 30, 2015, we had cash and cash equivalents of $392.1 million.

 

Second Quarter 2015 Business Segment Financial Results

Commercial Aviation - North America (CA-NA)

  • Total revenue increased to $75.6 million, up 22% from $62.1 million in Q2 2014.
  • During the quarter, we installed
  • 105 aircraft and our airline partners retired 56 installed aircraft primarily due to fleet-refresh programs. As a result, we ended the quarter with 2,249 aircraft online, up 49 since March 31, 2015.
  • Average monthly service revenue per aircraft online, or ARPA, increased to $11,324, up 13% year-over-year, driven primarily by connectivity service price increases.
  • Segment profit increased to $11.2 million, up 74% year-over-year, as a result of strong service revenue growth and increased operating leverage. Segment profit as a percent of segment revenue increased to a record 15% in Q2 2015, up from 10% in Q2 2014.

Business Aviation (BA)

  • Service revenue increased 39% year-over-year to a record $23.8 million, driven primarily by a 31% increase in ATG systems online to 3,170 at June 30, 2015 compared to June 30, 2014.
  • Equipment revenue of $19.5 million was down from $20.1 million in Q2 2014, driven primarily by changes in ATG product mix. We continue to implement our market segmentation strategy of selling ATG units to owners and operators of smaller aircraft which results in lower average revenue per ATG unit.
  • Total segment revenue increased to $43.3 million, up 17% from $37.1 million in Q2 2014.
  • Segment profit
  • increased to $17.5 million, up from $15.5 million in Q2 2014. Segment profit as a percentage of segment revenue was 41% in Q2 2015 compared to 42% in Q2 2014.

Commercial Aviation - Rest of World (CA-ROW)

  • We ended the quarter with 148 aircraft online, an increase of 32 aircraft from March 31, 2015, and more than 400 aircraft awarded but not yet installed.
  • We achieved a key milestone to get 2Ku ready for commercial launch by receiving the first of two required STCs. We expect to obtain the second required STC in the third quarter and launch 2Ku service commercially later this year.
  • Revenue increased to $2.3 million from $0.3 million in Q2 2014, driving a decrease in segment loss to $18.0 million from a segment loss of $18.8 million in Q2 2014.

Recent Developments

  • In June 2015, Gogo signed a definitive agreement with GOL, a leading Brazilian airline and Gogo's first South American airline partner, under which Gogo will provide 2Ku in-flight connectivity, wireless in-flight entertainment and our new IPTV solution – Gogo TV, on GOL's entire fleet.
  • NetJets further expanded its partnership with Gogo by selecting BA to provide broadband in-flight connectivity and our full suite of entertainment solutions utilizing the Gogo Universal Cabin System on up to 650 new aircraft to be delivered over the next several years.  
  • As part of our market segmentation strategy, BA announced the introduction of the ATG 1000 connectivity solution, which enables bandwidth solutions for light jets, turboprops and owner-flown aircraft.

Business Outlook

For the full year ending December 31, 2015, our guidance remains unchanged.

"We are very pleased with our strong financial performance," said Gogo's Executive Vice President and CFO, Norman Smagley. "We continue to see strong growth in service revenue and improved operating leverage in our CA-NA segment. While the second quarter profitability benefited in part from the timing of certain 2Ku and STC milestones spend, our strong results clearly demonstrate operating leverage inherent in our business."