May 11, 2015 Investor Presentation Exhibit 99.1 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 2 SAFE HARBOR STATEMENT 2 This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 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 headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2015. 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 when analyzing our performance or liquidity, as applicable, investors should (i) 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 (ii) use Cash CAPEX in addition to, and not as an alternative to, consolidated capital expenditures when evaluating our liquidity. 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. |
WHY INVEST IN GOGO LARGE GROWTH OPPORTUNITY HIGH BARRIERS TO ENTRY EXPERIENCE & SCALE LEADING POSITION ATTRACTIVE ECONOMICS ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 3 |
MARKET & COMPANY OVERVIEW |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. AVIATION INTERNET TRENDS 5 1 2 3 4 5 Connected aircraft transform global aviation – the last frontier of internet connectivity Cost, coverage, capacity and reliability are just now reaching critical inflection points Next gen technologies expected to increase speeds from 10 to 100Mbps within 5 years with a comparable reduction in costs More bandwidth drives demand from business traveler connectivity today to every person and most ‘things’ on aircraft in 10 years Airlines will demand ‘Always Available Everywhere for Every Plane’ |
CA - North America (“CA-NA”) CA - Rest of World (“CA-ROW”) (1) Source: Boeing Current Market Outlook 2014 – 2033, excludes: cargo aircraft. (2) Source: JetNet iQ Report Q4 2014; General Aviation Manufacturers Association 2014 Statistical Databook, excludes Rest of World turbo props. ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. ADDRESSABLE CONNECTED AIRCRAFT Commercial Aviation (“CA”) Business Aviation (“BA”) 2.6x size of CA-NA A LARGE AND GROWING GLOBAL CONNECTED AVIATION MARKET The connected aircraft industry is worth up to $30 billion 6 5,300 7,300 2013 2033F 13,900 32,000 2013 2033F 30,300 37,800 2014 2024F (1) (2) 1.4x 2.3x 1.2x |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. Largest Market Share in CA-NA GOGO’S IMPRESSIVE SCALE AND REACH Largest Market Share in BA 68% of connected aircraft Note: Data based on management estimates, trade publications and other public sources as of 3/31/2015 (1) Gogo satellite business aircraft includes 5,402 aircraft online comprised of 5,353 Iridium equipped aircraft and 49 SwiftBroadband equipped aircraft as of 3/31/15 (2) Based on management estimates as of 3/31/2015 (3) Includes Gogo awarded aircraft as of 5/7/2015 Broadband Narrowband #1 Global in-flight connectivity provider Leader in North America and expanding internationally 7 Untapped CA-ROW market 88% of broadband aircraft 63% of Iridium satellite aircraft 1 (2) (2) (2) 2Ku – Leading global satellite technology – 300+ aircraft to be installed w/ 2Ku 2,200 524 349 154 2,983 400 318 10,700 5,353 3,144 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. LONG-TERM PARTNERSHIPS WITH OUR MAJOR AVIATION PARTNERS 8 North America Original Equipment Manufacturers Fractional Jet Operators Commercial Aviation Business Aviation International |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 9 WHY WE WIN Specialize in aviation and telecom Excellent reliability Superior technology & economics End-to-end service provider 1 2 3 4 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 10 WE SPECIALIZE IN AIRCRAFT AND HAVE A TRACK RECORD OF INNOVATION 1 2 3 4 EXPERTISE IN INTERNET, AVIATION AND TELECOM ATG / ATG-4 1 st generation of technology North America coverage 2Ku 2 nd generation of technology Global coverage Intellectual Property 100+ patents globally Other Aviation Innovations Leader in wireless in-flight entertainment: 1,800+ aircraft installed Other industry leading IFC & IFE product innovations: Crew Connect, Text & Talk, Universal Cabin System, and others |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. GOGO’S TECHNOLOGY AGAIN DISRUPTS THE GLOBAL AVIATION INDUSTRY ATG-4: North America coverage 2Ku: Global coverage 11 ATG-4 Antenna 2Ku Antenna 70 Mbps at launch, 100 Mbps when spot beam Ku-band satellites are launched Low cost producer – estimated half the bandwidth cost compared to other satellite solutions Most complete global coverage Half the height of traditional antenna – lower drag, fuel savings Leverages Gogo’s existing Ku-band network and future high throughput Ku satellites 10 Mbps regional solution, North America coverage Proprietary solution enabling overnight installs Years of experience delivering broadband service Gogo is the only ATG solution provider: network, equipment, service |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. Technology Region Peak Speed Key Attributes Iridium Global 2.4 Kbps - Low data speeds Swift Broadband Global 432 Kbps - Low data speeds ATG / ATG-4 Regional 3.1 / 9.8 Mbps - Overnight install - Suits all aircraft types - Lower latency vs. satellite 2Ku Global 70-100 Mbps - 2x spectrally efficient vs. Ku / Ka band - Lower profile radome - More robust and reliable Expected 2015 Launch Ku Band Global 50 Mbps - Global coverage - Multiple suppliers Ka Band Global 50 Mbps - Spot beam technology - Next Generation Expected 2015 Launch Expected 2015 Launch (Regional) Expected 2015 Launch Broadest suite of technologies and full fleet connectivity solutions Proprietary 2Ku technology: higher peak speed (70-100 Mbps) than competitors at half the bandwidth cost ATG / ATG-4: fastest deployment time (overnight) and lightest equipment LARGEST TECHNOLOGY PORTFOLIO 12 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 13 EXCELLENT RELIABILITY 75+ million sessions 7,800+ flights per day 98% + ATG End-to-End System Availability Source: Company information |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 14 THE MOST COMPLETE END-TO-END AVIATION SERVICE PROVIDER Operations-focused connectivity services for airlines and crew Dedicated customer support services Network monitoring and bandwidth management Airborne equipment for ATG and satellite Certification, installation, maintenance, etc. Connectivity and wireless entertainment services across a range of passenger devices ATG / ATG-4 for North America 2Ku / Ku / Ka for global satellite service Passenger Services Equipment and Equipment Related Services Airline / Owner / Operator Services Operations-Oriented Communications Services Global Network Solutions |
FINANCIALS |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 16 GROWING REVENUE DRIVES PROFITABILITY Note: Minor differences exist due to rounding (1) Please see reconciliation of Adjusted EBITDA in appendix Adjusted EBITDA (1) ($MM) $49 CA-ROW Segment Loss Revenue ($MM) $89 Adjusted EBITDA $93 $37 $160 $328 $408 $428 2009 2011 2013 2014 Q1 2015 LTM ($89) ($1) $8 $11 $14 $41 $78 $80 2009 2011 2013 2014 Q1 2015 LTM 62% CAGR |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 17 CA - NA: REVENUE AND SEGMENT PROFIT GROWTH Note: Minor differences exist due to rounding (1) We define ARPA as the aggregate service revenue for the annual period divided by the number of aircraft online during that period Revenue ($MM) Annualized ARPA (1) ($000s) Segment Profit ($MM) 11% Margin Aircraft Online (End of Period) 102 Q/Q Increase $11 $251 $266 $24 $121 $127 2009 2014 Q1 2015 LTM 2009 2014 Q1 2015 LTM 692 2,098 2,200 2009 2014 Q1 2015 $(91) $26 $30 2009 2014 Q1 2015 LTM |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. BA: HIGH-MARGIN SERVICE REVENUE DRIVES PROFITABILITY AND CASH FLOW $26 $156 $159 Equipment Revenue Service Revenue Revenue ($MM) Segment Profit ($MM) Segment Profit Margin Segment Profit ATG Aircraft Online (End of Period) 186 Q/Q Increase ATG Units Shipped Note: Minor differences exist due to rounding. 43% CAGR ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 18 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 116 aircraft online as of 3/31/2015 Near global Ku-band satellite network 2Ku technology selected by 6 airlines for trial or adoption (1) Figures reflect aircraft under non-binding agreements (2) Includes Gogo awarded aircraft as of 5/7/2015 International Aircraft Wins (cumulative) Executing Our International Expansion CA-ROW Segment Loss ($MM) International Partners CA - ROW: FOCUS ON INTERNATIONAL EXPANSION (1) (2) 1 85 116 180 257 293 318 2012 2013 2014 Q1 2015 Aircraft Online (end of period) Cumulative Aircraft Awards $14 $41 $78 $80 2012 2013 2014 Q1 2015 LTM 19 |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 20 NORMALIZED CAPEX MODEL (1) Please see reconciliation of Cash CapEx in the Appendix Gross CapEx Capitalized software Airborne equipment Network equipment Over the past two years, Gogo’s Cash CapEx has been stable at ~$100 million Equipment proceeds received from airlines and landlord incentives Cash CapEx (1) |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. Why Does Gogo Win? Specialize in aviation and telecom End-to-end service provider Superior technology and cost Deliver excellent reliability Focused Strategy Gain global share Grow ARPA Increase bandwidth to aircraft Deliver consistent execution GOGO - A COMPELLING INVESTMENT OPPORTUNITY Gogo is a leading aero communications service provider for the global aviation industry 21 |
Q&A |
APPENDIX |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 24 ADJUSTED EBITDA RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Net Income (142) (140) (18) (96) (146) (17) (19) (25) (24) (20) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 9 9 10 Income Tax Provision – 3 1 1 1 – – – – – Depreciation & Amortization 22 31 33 37 56 16 15 17 17 19 EBITDA (91) (106) 16 (49) (60) 6 4 2 2 9 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 3 3 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) (4) (4) (4) Adjusted EBITDA (89) (45) (1) 9 8 5 3 1 1 8 Note: Minor differences exist due to rounding |
©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. 25 CASH CAPEX RECONCILIATION ($MM) 2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Purchases of Property and Equipment (69) (33) (33) (67) (105) (32) (28) (35) (37) (53) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (4) (5) (5) (3) (4) Consolidated Capital Expenditures (77) (40) (43) (79) (121) (36) (33) (41) (40) (57) Change in Deferred Airborne Lease Incentives – 9 11 18 9 5 3 5 17 9 Amortization of Deferred Airborne Lease Incentives – 1 1 4 8 3 3 3 4 4 Landlord Incentives – – – – – – – 2 7 12 Cash CapEx (77) (30) (31) (58) (104) (29) (27) (30) (12) (32) Note: Minor differences exist due to rounding |