Exhibit 99.1 November 2014 Investor Presentation |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 2 DISCLAIMER Safe Harbor Statement This presentation contains “forward-looking statements” that are based on management’s beliefs and assumptions and on information currently available to management. Most forward-looking statements contain words that identify them as forward-looking, such as “anticipates,” “believes,” “continues,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms that relate to future events. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Gogo’s actual results, performance or achievements to be materially different from any projected results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements represent the beliefs and assumptions of Gogo only as of the date of this presentation and Gogo undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. As such, Gogo’s future results may vary from any expectations or goals expressed in, or implied by, the forward-looking statements included in this presentation, possibly to a material degree. Gogo cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or that any long-term financial or operational goals and targets will be realized. In particular, the availability and performance of certain technology solutions yet to be implemented by the Company set forth in this presentation represent aspirational long-term goals based on current expectations. For a discussion of some of the important factors that could cause Gogo’s results to differ materially from those expressed in, or implied by, the forward-looking statements included in this presentation, investors should refer to the disclosure contained under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2014 and “Special Note Regarding Forward-Looking Statements” in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 10, 2014. Note to Certain Operating and Financial Data In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Gogo also discloses in this presentation certain non-GAAP financial information, including Adjusted EBITDA and Cash CapEx. These financial measures are not recognized measures under GAAP and are not intended to be, and should not be, considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. In addition, this presentation contains various customer metrics and operating data, including numbers of aircraft or units online, that are based on internal company data, as well as information relating to the commercial and business aviation market, and our position within those markets. While management believes such information and data are reliable, they have not been verified by an independent source and there are inherent challenges and limitations involved in compiling data across various geographies and from various sources. |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 3 GOGO’S MISSION Advance aviation by connecting every aircraft with the most trusted communications services on and above our planet |
4 WHY INVEST IN GOGO Gogo is a leading aero communications service provider for the global aviation industry. Our scale position supports superior unit economics, operational excellence, and industry-leading R&D investments. Gogo is a pure play. We are the only telecom company that focuses solely on the unique requirements of connecting aircraft. Our growth opportunity is large, well-defined and early stage. ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 5 INDUSTRY LEADING SCALE Market Position (1) CA–NA CA–ROW BA ATG #1 #3 #1 Market Share (1) 71% 4% 87% Gogo Installed Aircraft 2,044 35 2,637 2,500+ 305 2,637 Total Awarded Aircraft (2) BA Satellite (Iridium) #1 63% 5,294 5,294 (1) Market share is as of 9/30/2014 and based on following: CA-NA – based on publicly available information as of 9/30/14 for Panasonic, Thales / LiveTV, Global Eagle Entertainment, and ViaSat; CA-ROW – based on backlog of awarded aircraft that may include aircraft that fly both North American and International routes and management estimates of Panasonic, Global Eagle, LiveTV and ViaSat backlog; BA ATG – based on aircraft online and estimated ViaSat Yonder aircraft online in North America; BA Satellite – based on management estimates of Iridium telecommunication systems and TrueNorth and ICG aircraft online (2) Net of de-installs |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 6 LARGEST MARKET SHARE IN CA NORTH AMERICA Aircraft Online as of September 30, 2014 (1) Based on management estimates, trade publications and other public sources as of 9/30/2014. 2,044 477 208 152 Gogo Global Eagle LiveTV Panasonic (1) (1) (1) 71% of connected aircraft >4x the closest competitor |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 7 THE INTERNATIONAL MARKET IS LARGE & UNTAPPED (1) Based on Boeing Current Market Outlook 2013 (2) Based on management estimates as of 9/30/2014 Total Aircraft ~4,000 ~13,000 Uncommitted 13% 79% Committed to IFC 87% 21% North America Rest of World 13% 79% (1) (2) …and growing at 2x the rate of the North American market |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 8 VALUABLE LONG-TERM PARTNERSHIPS (1) (1) Letter of Intent (1) NORTH AMERICA COMMERCIAL AVIATION BUSINESS AVIATION ORIGINAL EQUIPMENT MANUFACTURER INTERNATIONAL FRACTIONAL JET OPERATORS Subsidiary of |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 9 OUR VERSATILE, PROPRIETARY PLATFORM ENGAGES EVERY PASSENGER, AIRCRAFT OWNER & OPERATOR AIRCRAFT OWNERS & OPERATORS PASSENGERS, AIRLINES & MEDIA PARTNERS Gogo Connectivity & Gogo Biz Gogo Vision Gogo Text & Talk Gogo Signature Services Operations-Oriented Communication Services PASENGERS |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 10 LARGE MARKET OF GLOBAL AIRCRAFT TO CONNECT (1) Includes 36,000 aircraft for CA in 2033 and 37,000 aircraft for BA in 2023. Sources: Boeing Current Market Outlook 2013 – 2032, excludes: cargo aircraft JetNet iQ Report Q1 2014; General Aviation Manufacturers Association 2012 Statistical Databook; excludes rest of world turbo props. 17,000 27,000 44,000 Global Commercial Aircraft Global Business Aircraft Global Aircraft Today ~73,000 (1) Future Global Aircraft |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 11 WHY WE WIN Specialize in aviation Specialize in aviation Superior technology and roadmap Superior technology and roadmap End-to-end service provider End-to-end service provider Deliver excellent reliability Deliver excellent reliability Flexible business model Flexible business model 1 2 3 4 5 |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 12 SPECIALIZED END-TO-END SERVICE PROVIDER AIRCRAFT AIRCRAFT OPERATIONS OPERATIONS REGULATORY REGULATORY APPROVAL APPROVAL NETWORK & NETWORK & BANDWIDTH BANDWIDTH MANAGEMENT MANAGEMENT CUSTOMER CARE CUSTOMER CARE & MARKETING & MARKETING SUPPORT SUPPORT NETWORK NETWORK ENGINEERING ENGINEERING & DESIGN & DESIGN AIRCRAFT AIRCRAFT CONNECTIVITY CONNECTIVITY SOLUTIONS SOLUTIONS ENGINEERING ENGINEERING AIRLINE AIRLINE CONNECTIVITY CONNECTIVITY PRODUCTS & PRODUCTS & SERVICES SERVICES DEVELOPMENT DEVELOPMENT COMPLETE BACK-OFFICE INFRASTRUCTURE AND SUPPORT |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 13 SUPERIOR TECHNOLOGY AND ROADMAP Technology Region Peak Speed Key Attributes Iridium Global 2.4 Kbps - Primarily telecom service - Low data speeds - Satellite SwiftBroadband Global 432 Kbps - Low data speeds - Satellite Air-to-Ground (EvDo Rev A) Regional 3.1 Mbps - Overnight install - Suits all aircraft types Air-to-Ground 4 (EvDo Rev B) Regional 9.8 Mbps -Triples the peak speed - More reliable than ATG - Overnight install Ku Band Global 50 Mbps - Global coverage - Multiple suppliers - Available today Ka Band Global 50 Mbps - High data speeds - Spot beam - Next Generation Expected 2015 Launch Expected 2015 Launch (Regional) (Regional) Ground-to-Orbit (Hybrid) Regional 70 Mbps+ - More spectrally efficient - Lower profile - More robust & reliable Expected 2015 Launch 2Ku Global 70 Mbps+ - More spectrally efficient - Lower profile - More robust & reliable Expected 2015 Launch Global Eagle |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 14 RECENT DEVELOPMENTS – EXTENDING OUR TECHNOLOGY LEAD Revolutionary 2Ku and GTO connectivity systems announced Strong results from ATG-4 upgrade program Operationalized International: network, STCs, aircraft online Boeing line-fit program progressing well Launched Delta Studio with Delta Air Lines powered by Gogo Vision platform Launched in-flight text messaging with T-Mobile Introduced next generation Gogo Vision system that works without connectivity to the Launched next generation Iridium satellite communication solution by BA Announced Future Air Navigation System (FANS) over Iridium solutions Introduced SwiftBroadband airtime service plans for BA ground for digital rights management |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 15 DELIVER EXCELLENT RELIABILITY 65+ million sessions 8,000+ flights per day 98% + ATG End-to-End System Availability |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 16 FLEXIBLE BUSINESS MODEL Gogo Per session to the passenger % of revenue, paid by Gogo to airline Included Airline Per megabyte & per aircraft to the airline No revenue share between parties Charged per service to airline TURNKEY MODEL AIRLINE DIRECTED MODEL Passenger Integration Pricing Revenue Share Back-end Services |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 17 FORMULA FOR REVENUE GROWTH: REVENUE = AIRCRAFT X ARPA TODAY North America In-Flight Connectivity Global In-Flight Connectivity Wireless In-Flight Entertainment Text Messaging Operations-Oriented Communications Services TOMORROW INCREASE AIRCRAFT INCREASE ARPA $ Business Passengers All Passengers Advertising, eCommerce partners Aircraft Operators |
FINANCIALS |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 19 GROWING REVENUE DRIVES PROFITABILITY * Please see reconciliation of Adjusted EBITDA in appendix. Note: Minor differences exist due to rounding. Adjusted EBITDA* ($M) $49 $24 CA-ROW Segment Loss Revenue ($M) $79 $37 $95 $160 $234 $328 $392 2009 2010 2011 2012 2013 2014 Q3 LTM 73% CAGR ($89) ($45) ($1) 2009 2010 2011 2012 2013 2014 Q3 LTM $14 $9 $8 $41 $69 $9 |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 20 PROVEN OPERATING LEVERAGE Consolidated COGS Consolidated COGS excl. CA-ROW Consolidated COGS excl. CA-ROW and assuming no change to Rev Share % (1) Cost of Goods Sold (% of revenue) Engineering, Design & Development (% of revenue) General & Administrative (% of revenue) Sales & Marketing (% of revenue) 2011 (1) Revenue share percentage earned by our airline partners was 11.6% or $9.7 million for the year ended December 31, 2011, 18.5% or $24.5 million for the year ended December 31, 2012, 20.9% or $41.1 million for the year ended December 31, 2013, and 20.6% or $48.4 million for the twelve months ended September 30, 2014. The line footnoted above represents Cost of Goods Sold as Percentage of Revenue using the average revenue share percentage earned by our airline partners during the year ended December 31, 2011 for all subsequent years. We expect the revenue share percentages under certain of our connectivity agreements to increase in future periods due to the occurrence of contractually stipulated triggering events that have yet to occur. We currently estimate that such increases will amount to approximately 2% of the CA-NA segment’s service revenue. 130% 48% 51% 52% 44% 39% 2009 2012 2013 2014 Q3 LTM 59% 15% 15% 15% 2009 2012 2013 2014 Q3 LTM 77% 21% 21% 20% 2009 2012 2013 2014 Q3 LTM 75% 11% 9% 10% 2009 2012 2013 2014 Q3 LTM |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 21 Q3 FINANCIAL RESULTS $104 $85 2013 Q3 2014 Q3 Note: Minor differences exist due to rounding. CA-NA BA CA-ROW CA-NA BA CA-ROW Total Revenue ($M) Segment Profit (Loss) ($M) 2013 Q3 2014 Q3 $35 $40 $51 $63 22% ($2) $15 ($11) $2 $6 $15 ($19) $1 |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 22 OUR SEGMENTS ARE IN DIFFERENT PHASES BA: CA-NA: CA-ROW: Strong revenue growth Strong segment profitability and FCF Strong revenue growth Segment profitability Start-up phase Focusing on signing airlines and investing for growth |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 23 BA HIGH-MARGIN SERVICE REVENUE DRIVES SEGMENT PROFITABILITY AND CASH FLOW ATG Aircraft Online (1) Note: Minor differences exist due to rounding. Service Revenue ($M) Segment Profit ($M) (1) End of period. 1,455 2,047 2,637 2009 2012 2013 2014 Q3 49 69% CAGR 107% CAGR 54x Increase 2009 2012 2013 2014 Q3 2009 2012 2013 2014 Q3 $6 $34 $52 $67 $3 $36 $51 $63 LTM LTM |
24 CA NORTH AMERICA INCREASE IN AIRCRAFT ONLINE AND REVENUE PER AIRCRAFT DRIVE REVENUE GROWTH Aircraft Online (1) ARPA ($ ‘000s) Service Revenue ($M) (1) End of period. (2) Annualized Note: Minor differences exist due to rounding. 692 1,811 2,032 2,044 2009 2012 2013 2014 Q3 $24 $84 $101 $122 2009 2012 2013 2014 Q3 (2) $9 $133 $197 $235 2009 2012 2013 2014 Q3 LTM ~3x Increase 5x Increase 115% CAGR ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 25 CA NORTH AMERICA SEGMENT DEMONSTRATES SIGNIFICANT OPERATING LEVERAGE Assuming constant revenue share % (1) Cost of Goods Sold (% of Revenue) Segment Profit (% of Revenue) Other Operating Expenses Excluding D&A (% of Revenue) Assuming constant revenue share % (1) -30% -9% -1% 7% 16% 2011 2012 2013 2014 Q3 LTM 59% 56% 52% 49% 40% 2011 2012 2013 2014 Q3 LTM 71% 52% 47% 43% 2011 2012 2013 2014 Q3 LTM (1) Revenue share percentage earned by our airline partners was 11.6% or $9.7 million for the year ended December 31, 2011, 18.5% or $24.5 million for the year ended December 31, 2012, 20.9% or $41.1 million for the year ended December 31, 2013, and 20.6% or $48.4 million for the twelve months ended September 30, 2014. The line footnoted above represents Cost of Goods Sold as Percentage of Revenue using the average revenue share percentage earned by our airline partners during the year ended December 31, 2011 for all subsequent years. We expect the revenue share percentages under certain of our connectivity agreements to increase in future periods due to the occurrence of contractually stipulated triggering events that have yet to occur. We currently estimate that such increases will amount to approximately 2% of the CA-NA segment’s service revenue. |
26 CA REST OF WORLD INVESTMENT POSITIONS FOR FUTURE GROWTH 2012 – Announced international expansion 2013 – Established global Ku network, began development of industry leading technology solutions 2014 – announced industry leading 2Ku, first Ku equipped aircraft flying, multiple STCs received In-flight connectivity service launched on Delta & Japan Airlines Virgin Atlantic & Vietnam Airlines partners announced ©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. $14 $41 $55 2012 2013 2014 Q3 YTD CA-ROW Segment Loss ($M) |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 27 EVOLVING CAPEX MODEL (1) Cash CAPEX represents capital expenditures net of airborne equipment proceeds received from the airlines and incentives paid to us by landlords under certain facilities leases. Gross CapEx Cash CapEx (1) TRANSITION N E T W O R K I N S T A L L GOGO RENTS GOGO PAYS AIRLINE PAYS GOGO BUILDS Capital Expenditures ($M) $77 $79 $121 $137 $77 $58 $104 $109 2009 2012 2013 2014 Q3 LTM |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 28 GOGO FIVE POINT STRATEGY TO INCRESE SHAREHOLDER VALUE Gain global share 1 Grow ARPA in CA-NA 2 Evolve technology roadmap to address market needs 3 Accelerate BA growth 4 Deliver consistent execution 5 |
APPENDIX |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 30 ADJUSTED EBITDA RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2013 Q4 2014 Q1 2014 Q2 2014 Q3 Net Income (142) (140) (18) (96) (146) (22) (17) (19) (25) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 7 9 Income Tax Provision – 3 1 1 1 – – – – Depreciation & Amortization 22 31 33 37 56 14 16 15 17 EBITDA (91) (106) 16 (49) (60) (0) 6 4 2 Fair Value Derivative Adjustments – 33 (59) (10) 36 – – – – Class A and Class B Senior Convertible Preferred Stock Return – 18 31 52 29 – – – – Accretion of Preferred Stock – 9 10 10 5 – – – – Stock-based Compensation Expense 1 2 2 4 6 2 2 2 3 Loss on Extinguishment of Debt 2 – – – – – – – – Write Off of Deferred Equity Financing Costs – – – 5 – – – – – Amortization of Deferred Airborne Lease Incentives – (1) (1) (4) (8) (3) (3) (3) (4) Adjusted EBITDA (89) (45) (1) 9 8 (0) 5 3 1 Note: Minor differences exist due to rounding |
©2014 Gogo Inc. and Affiliates. Proprietary & Confidential. 31 CASH CAPEX RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 Purchases of Property and Equipment (69) (33) (33) (67) (105) (32) (28) (35) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (4) (5) (5) Gross CapEx (77) (40) (43) (79) (121) (36) (33) (41) Change in Deferred Airborne Lease Incentives – 9 11 18 9 5 3 5 Amortization of Deferred Airborne Lease Incentives – 1 1 4 8 3 3 3 Landlord Incentives – – – – – – – 2 Cash CapEx (77) (30) (31) (58) (104) (29) (27) (30) Note: Minor differences exist due to rounding |