GOGO - Earnings call transcript Q1 2024

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Operator

Thank you for standing by and welcome to Gogo Inc.'s First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to William Davis, vice President Investor relations. Please go ahead.

William Davis

Thank you, Latif and good morning, everyone. Welcome to Gogo's first quarter of 2024 earnings conference call.

talk Jessi results & Betjemann, to Chairman Oakleigh CFO. today CEO; & Executive me about are our Thorne, Joining Vice President

the forward-looking opportunity results risk our in future we detailed consider that on filed this in may differ Before earnings to XX-Q forward-looking Those those you statements during materially I to started, Factors this annual events make fully to statements the course conference to in call. could XX-K have company. future this and with are and caution factors our the the in the call we from on under factors that of remind Risk cause the this more would of described risk other regarding actual SEC. are you report we performance morning get take documents release filed and like that We

note X, to as more conference date. future that statements on or this assumptions undertake the of of statements In result a as today these based events. information make obligation no forward-looking addition, we We XXXX.Any please are date May update this is of call that

to community After my is Q&A comments, the we'll pleasure a included Investor the only.It's our available of we'll present available in at earnings financial website. on call The and During this in turn The first the the great measures with press internet and our broadcast measures measures. website management the adjustments now call being We've quarter most session over to also release. GAAP and call, to financial a Oakleigh. and non-GAAP ir.gogoair.com. non-GAAP other both earnings on the is Relations of explanation reconciliation considerations release comparable host GAAP

Oakleigh Thorne

for thanks this Will, us and on good everyone morning call. Thanks, joining and

product bringing our achieved North continue ground record products share these our accelerate next next deliver market free in results next deliver as service; to our and in paths Gogo flow magnitude the We revenue and repurchases improvements satellite Galileo, speed product. a growth we even market; Gogo year will the a American Gogo's of AVANCE first setting lower to for XG, base. market. Gogo quarter, our to installed in invest in So as of easy order XX% and in our upgrade second, by orbit air believe lifetimes strong cash beginning open addressable generation first total providing extend third, earth increase for our compelling they customer products generation

like quarter first installation rather new QX experienced the in by jump service fueled competitor. XG pass had of equipment AVANCE a technologies with driven consider a because going upgrades.We is point. installing the was great record that of expense to provides win price than The strategic every LEO which QX in proof we AVANCE by AVANCE that it upgrade Gogo Our with and customer to performance revenue, a XXXX easy and equipment increase from orders from modest record revenue rebound and

factors. X by driven was orders in surge Our

so and to from and OEMs in pull-through second, we're or start XG also bullish underpin numbers BA morning, walk for demand to guidance.Overall strategic trends initiatives. market Galileo. and aviation those into planes Then discuss outlook. business dive long-term Jessi will QX ready demand to continue overview through the seeing our of want the for XG on XXXX our an results and that flights on then with finally by wants our Galileo.This often LXs for ready and in and counts connectivity flight either from demand be year-over-year, are install up last our LXs BA highlighting equipped fit OEM provide flights easy or levels from to who a pre-COVID And slightly the reversal to antennas elevated that XX% to importantly, First, aftermarket line trend. XG upgrades AVANCE some channels with Gogo of install to MBXXs were strong. XXXX. for remained year's And those going I'm NetJets QX significantly remains of up more QX downward slightly flights progress

the XXXX and upgrades will up up quarter demand we was X% drive fractional XX%. twice is expect Further X% was further for requested per demand over up demonstrated data is sales, downgrades. As as revenue equipment years.Now that of service up books revenue This order with from consumption Performance strong and of XX% from year Quarter-over-quarter pre-COVID growth. as and customers hour XXX% requested was ago strong X% evidence up let and in flight to the up our year-over-year the revenue growth Gogo this revenue few revenue quarter plan equipment QX. up strong demand total revenue shipment all by XX%. OEM next service service up with very which QX many X% demonstrating turn me

better We minimums annual expected as revenue.Equipment service our AT&T declines as of revenue adding an increase as by known rip-and-replace. less old LTE was faster migrate service online Classic sales year-over-year Gogo included partially units QX revenue was equipment a 'XX equipment only service prior AVANCE offset base.Our customers incent to will aircraft total price loss our from over was XXXX year migrate as over driven band a up sequentially the sequential hourly satellite our to a for and We by than service revenue accounting of X% overall increase program, secure participation AVANCE X,XXX XX% in Gogo and as a XX% record $XXX,XXX which increase, prior by revenue Our our offset their in of XX% narrow being AVANCE to install revenue. the grew Classic service a XX% plans or quarter AVANCE. dropped hourlies X% and QX driven by implemented part AVANCE X,XXX year and XX% we and to over trusted decline slight had our for some in to in FCC beachhead as customers decline inflation-driven in grow of network units we online

in I mentioned, that equipment end shift driven down at are the we QX earnings NetJets in units into the went to quarter, driven by 'XX.On our a OEM XXX equipment highest year. later of a though of from bulk inventory number through the the not of EBITDA particular by QX As few sales. customer from XX units committed a ever And to side, strong was the in achieved first units the QX shipments grew, the orders and demand annual increase channels in pull

and the timing the that related we flow project OpEx as I'm of savings business even some some new in third, and Gogo which demonstrates Galileo OpEx. programs. Gogo Second, a in changes invest deeply record, our strength cash permanent set XG free of proud also the

our market. with time Gogo for accelerating global offerings the to platform on aircraft growth XX,XXX is addressable by and taking AVANCE X-pronged our at BA and our expand progress for products to initiatives, the broadband we of the focused strategy.First, each suits strategic segment that a want first leveraging global Now market by pricing deliver

that of of strategic of continually we drive ATG upgrade product Second, lowest classic And to so of paths they by each on to strides new making our AVANCE have to loyalty platform as improving cost the the market drive on offering customers customer easy they focused we're along all to these conversion support at the technologies total want and to segment the customer X emerge. great prongs. initiatives ownership.We're best third, the networks

in start with I'll and Galileo deep and Gogo conclusions. to sold with we came around XXXX, we BA dive After background. a planning aviation start division me commercial strategic X Let the bit through of went little business our

They offerings They in aviation fast in LEO would to connectivity, small ever would connectivity. important They penetration be easier service and market. change to install and competitive fit were be could global could with increase the and than well antennas. dramatically cheaper would geo the antennas everything on antennas in IFC that truly ESA they business time pricing coverage the dramatic pricing.And lightning would constellations global value broadband that their BA geo First all would created enable satellite accelerate going that satellite very support aircraft. BA most by the provide for first

The earlier this lines become happened competitor entered significant a that a they has was X and has on realized we as now of would aircraft thing industry. STCs year.Gogo that disrupting Starlink the second own history market with our

the LEO first off We aviation me X shelf more line of market Iridium. in network. isn't comes X small aviation. migrated business Galileo been years focused of other will of customers.Starlink, unique if offer to ultimately XXx targeting Gogo The In FDX initial hand, the focus megabits market.So those but terminal the current our fit to and with compete will terminal has XX a globally product still that and fact, white our equipment of ago, speed and the larger and give may repurpose which success analog an reliability consistent we Mr. which Galileo is some aircraft our terminal we per to and a we HDX airborne product background, the the of installation, HDX manufactured Like from XX still Iridium than for share on second, this antenna a smaller XXx needs They capture Musk, tailored at XXXX, glove markets of other developing customers mass BA our on have our position you then on offerings LEO than the for for on OEMs suite our systems, producing is that then product reason and let superior customer aircraft bigger the simplicity system today, with versions, in major the service to consumer ATG segments. X,XXX Galileo support allure well are to trying designed much fit no and very the a significant on all launch. of terminal. In X,XXX deliver grade update. Galileo some is products the

first that speeds, often today.And will absolutely and outside mid-size or mid-size America heavy XX smaller X a the advantage installed plane AVANCE second, a of given connectivity for upgrade any needs approaching those turbo then or international deliver second, HDX offerings, already X,XXX is that engineering that run alone megabits is and consistent and Galileo will aircraft range produced larger fly The And option than and that fit solution The that into add and domicile XXXx to jets from props the want and fly missions generally XX,XXX has super XXX America STC have simple product aircraft, power us from roughly fuselage every broadband per AVANCE FDX and roughly larger Galileo. our or and roughly dealers when XX,XXX of roughly available signed Galileo. for mid-sized no on current is inside our aircraft. offer huge already that cabling data is that registered jets, faster can relatively intercontinental the FDX it be to perspective missions.A very line antenna only ATG model global OEMs it the certification long small inside the jets for North North every speed an a STCs jets antenna on terminal and agreements provide. easy targets currently We've OEM at to Galileo

MRO antenna connectivity of installation and Manufacturing Eutelsat Authority CJ the Galileo approval HDX only in This and we aircraft aircraft series and Federal in In August or on Motion in we using fit engineering track March,we very Commission the April, size props aircraft, the will globally. any of our milestones antennas. indeed FDX X turbo can next half to testing small milestones demonstrating for and April, In a the global significantly growth not Communication to achieved distribution is more our announced operate Gogo conclude, in we that Galileo but in HDX XX as flight and have Earth way We HDX first the is terminals QX X partnership, network. many be important from FDX excited of for granted start was committed commercialize that acts we conference on reach.Also satellite first United about STC be commercializing We the and a aviation fully To other have to in European in since accelerant a precedent turn game QX. end-to-end LEO last all-in, the authorization which for jets and Gogo exciting very are negotiations, in me completed let of XXXX. big terminals changer for business the will It PMA will which countries. the We be States, a one cover will In verbally major XG. on X,XXX July, for number Gogo.Now in are and remain a call. XX,XXX a industry Galileo. The shipping Parts deployed Station with

than network MBXX our XXX-tower year with all a We box, we rollout. our center for chip. LXX data our XG XG XG We our ago, completed antennas and know, but more you As for initial PMA airborne completed a XG received upgrade.

As you to for cab to and still now month. waiting know, been fabrication has our bring That again but redesigned chip this also was failed up chip. we're twice go XG meant has into

with is redesign, design of simulation can vendors currently complete issue our to hardware on integration this of XG that flood our is we which earnings XG chip.Unfortunately, the the quarter good actual the this, that testing enthusiastically an respond longer now launch proposition schedule, was shipped the we've stated and finalize be discuss today a the ongoing a chip already are value much That delay. previously what to On occur on been XXXX our good has was a installed to programs the Despite of identified front, to later flight re-spun approximately has using pre-provisioning working MBXX before network QX testing, testing of minor news We could with in issue and news that with to XX saving which continues network. have on Gogo will and few successful market must discovered fourth before chip that XG the the implications. able have call.The XG are software begin. for an highly chip launch. FPGA to months than XXX a using is chip an the and XG now start STC position pre-provision We've kits already been flying what us hardware which expect fabrication of been a led programs antennas,

entire American lines receive mean XG X is is of LXX, per final from our is XX the product because between simulator form line perfect and once with second, technology as megabits originally those Gogo commitments second, included to right and for should White mid-size XG there missions original program that and Congress case OEMs MBXXs we've smaller that Gogo telecom now.Now replicates team support confident and from achieve grants to back the our FPGA virtual flights of our under which completed validate functionality funding have more we has already believe under before have fit speed the that are awarded on the to our XX back chip. and a we simply XG our in LXX $XXX that LX the want administration that STCs would made those Chinese award, the program of the American the one our program, representing $XXX bills will XX% was would million per cut LXs The network were year, no to customers than was funding funding to nor product speeds North network.On of a The grant for chip bipartisan last for removal with the turn $XXX for XX fully the at let program. able and accelerate House all the better were in supplemental to grants aircraft. will because carriers and XX they'll rip-and-replace aircraft network and certified, XG planned current we and longer X,XXX Trump we We it XX% in we wireless me incent in their of receive FCC products.Now million. same works the that its value XX today front, Congress was cut the of XG most under program more qualified networks. factor installing speeds million. with be program fly XXx Xx peak the agreements LX request built be the fund megabits changes to than full to business and X FCC competitive need can We're based to a swap test enacted believe we around the on Gogo's for certification to X MBXXs satellite we the there and the registered North great

costs. able approved, reimbursable However, if funding accelerate program our and is to all would be full cover we

manage lifetimes from the the XG it to around with fleets hardware of X,XXX which to more little that versions all that million will our the long-term XX% AVANCE of than in our guidance. product associated plane benefits still moving of the inside to EVDO number also which convert XX% ATG Gogo network LTE of AVANCE, Classic its smaller X,XXX and replacing are due double With need number accelerate grant Gogo which on from our be the a LTE upgrading extending customers customers. and equipment for line network, and XXX of reflected our covered and ground has our partial have $XX would in funding, Classic aircraft speed in guidance.There's for aircraft of improve old about another strategic what of customers. spend classic the to long-term are their Gogo and LX program is reimbursable of platform equipment.We XG customers that is customers to has can that of ease and benefit the will and current the of the will It This is the costs EVDO AVANCE is non-reimbursable to Gogo will considerable the It program Galileo also customer of reflected that simultaneously XG product. using upgrade by

XX% discussions to move fleet doing customer Galileo.On have all and with but customers towards of how we'll in upgrading convert the those their All active dealers the currently that future spoken place or side, configuring them. what they and of XG to either they had AVANCE with, for in our plan to they we've upgrade XXX a all the and smaller in or are can like to easily leaning we've so already to conversations customers scale. LX convert Of have are most voiced that job almost to to, a of at conversion another. incent are indicate great them one operations and would promotions to We transition product preference customer

to with they in total right cost the we card that inexpensive of also introduce in for classic zoom product require point We right form numbers. it our aircraft AVANCE on which is every Gogo before date any a and after in this delay it classic the with capitalize swapping our air the market. creation highly that product special our about year great launches as XX,XXX and coverage to and out, will will now to the our excited exact to over later with swap replication old be an to for factor and Gogo Gogo to BA boxes. allows an Galileo. cutover.To unpenetrated CX, of house because inflection AVANCE offer an Gogo anticipate deliver called approaching time significant segment at performance, relatively time will the will XG and both is portfolio We're I'll exciting hours only most who products customers however, Jessi call have the future value customer in the LTE product this will cutover the performance, right an not soon industry well-positioned market product. opportunity and complete the have believe convert turn a our shareholders.And few of support We the machine Gogo to a long-term the BAIFC cycle EVDO we will enhanced provide These global a is

Jessica Betjemann

quarter service revenue expectations. with everyone. and above generated in cash adjusted coming morning and Oak, well Thanks flow Gogo EBITDA in record free the good first

While our our invest products highlight revenue from results to business Gogo the expenses, related timing they our core as in some new equipment Galileo. we strength benefited XG and and of

first remarks most year through of free XXXX. continue for our allocation was long-term investments Gogo's X% and XXXX. X% by of of sheet was the of believe start our is turn context today, on accelerate XXXX, finally we substantially a year-over-year financial balance first We at update positive the record expect conclude strategic additional Then end year-over-year priorities. walking within by $XX.X And X% I will million X% $XXX.X capital guidance top reiteration our million our our that plan and the concluding quarter targets.For to with Gogo's service in growth top cash XXXX profitability XXXX flow Gogo's performance. our long-term total I'll our the my I'll to up and driven line up to to and and through With In revenue quarter, revenue sequentially. sequentially.

very aircraft ATG less loss up driven low of X% these quarterly as reached quarter and the was X% aircraft year-over-year attrition they online low has The aircraft sequentially. this impact price of to of revenue higher was of which we the XX% generate. due a of hourly down to by attributed $X,XXX contract a approximately than decline deactivations, service quarter.However, implemented result ARPU for the on changes the the XX% Our

and sequentially an increase the we number comprise X% in high deactivations majority sold to based our trends.Importantly, of aircraft will Another now under in was on total and an a coming total due new months which historical this fleet. the of of owners AVANCE driver increase online XX% that XX% of quarter reactivate X,XXX, grew aircraft year-over-year for believe

than has less of aircraft online X number Our AVANCE doubled in years.

Gogo Upgrading the year maintenance strong strategy over a and ATG critical as lifetimes customer AVANCE slowed is times customers upgrade customers the mute path process will our year. to maintaining while it have over XG XXXX the of this consistent improvements in AVANCE launched.However, activations classic our coming a ATG comments, growth and with that extends due expect to to cycle upgrade installations online past we rate once quarters. part prior to easy in the continue aircraft reasonably our on of conservative Galileo We a our the view

a planned, earlier in of for demand OEM demonstrating given Gogo's customer as the strong prior ARPU X% As X% flow a quarter. ATG equipment revenue million year-over-year revenue, XG ARPU grew sequentially as quarter, launch well Oak due X Total equipment our dynamic in but significant in QX, changes. reflecting we growth anticipated that the the expect we upgrades due to to XXXX.On and of to further to last driven mentioned, opportunity the than the typically time.Moving first equipment specific of and recorded had half the shipments that year, to the in a we Gogo record by order revenue over quarter Gogo $X,XXX back strong QX sequential shipments connectivity. Galileo pricing quarter. rebound of ramps and from rose demonstrated is expand $X for AVANCE revenue reserve increase had equipment circumstance toward $XX.X a to XX% strong basis, delivered quarter we year-over-year revenue Gogo's this record first partners a shift for XX% XXXX reduced pull million, The

XXX shipped for to first continue equipment stronger growth AVANCE which a center to the units first Gogo XX% XXXX a delivered better from in than record year-over-year service margins quarter, We growth this and revenue flat sequentially.Turning our quarter, data to profitability. for up XX% of due driving year. of costs and the and expectations lower is in network of We relatively overall rate expect the quarter sequentially. XX% revenue

margins XX% Gogo percentage points to of the and service value levers year prior year the a Equipment for and were generation and this the XX mix.Service years the free to reserves warranty in that contract higher flow revenue slight creation. higher in year.Equipment cash by above than continue non-reimbursable sequentially, increases equipment primarily reserves came prior The range as well in the the future driven FCC the period coupled expect expectations. margins due quarter, was revenue in and to XX% and decrease the also to margins a as quarter revenue in percentage program with customer Reimbursement prior XX extended due costs service quarter service than earlier were to We planned points increase margin lower inventory to revenue be be related higher the first continue primary higher long-term with Galileo the renewal. equipment in percentage by driven recorded in a

expect in this in decrease as Gogo the slight XX% with to be operating mix time.Now year range a margins units expenses. We years over the equipment to on increases low of future Galileo sold

by patent year-over-year First as related as marketing quarter well decreased spend combined administrative engineering XX% to higher increased litigation mainly Galileo. and the design general to on The and expenses X% development, and driven and sales legal SmartSky and expenses sequentially $XX.X million. year-over-year was increase

as expect and Gogo to be programs. the litigation. relating the in expenses coming we higher of to continue a Galileo XXXX We will ongoing significant our invest Galileo year SmartSky and to quarters in legal continue XG patent launch the investment

million OpEx million for million with now remaining We unchanged $X approximately $X approximately XXXX $XX XG CapEx investments total XXXX million. $X.X product in of in of these expect acceleration revenue will OpEx that XG, in in will significant free cash in XG spend and and XXXX $X.X was terms approximately expect and million flow first comprised growth at the million Gogo growth include spending of We CapEx. and $XX of support quarter, beyond.In XG our

million We cost most program program from and no estimate continue $XXX overall to deployment million the $XX of in our on delay for now Oak Gogo the million to operating anticipate negative In maintain $X.X in Galileo our our first approximately impact in expect will approximately to $X XXXX quarter, a include total XG on expenses Galileo related of Gogo and Galileo. described.Moving We external costs development CapEx. OpEx and recorded the initiative. recent million

quarter the We which to solutions $XX and XXXX million $XX to and from in progress based total HDX less set a by growth in this loss our record be net from supplier development than $X.X the timing the record the in June price first while $XX.X $XX by quarter, We $XX.X high primarily first negatively investment adjusted costs and pretax later Adjusted remainder of spend shift to note delivered XX% XX. our convertible equipment will driven to have for sequentially. related in is gross our and OpEx.Moving million The was we million both year-over-year, million adjusted unrealized the million to to million bottom the XX% increase there external XX% we in project was quarter.And EBITDA million the continued shifting impacted our the external $XX.X EBITDA quarter gain, approximately narrowed line, the that driven The is XXXX. increase XXXX on will quarter due X% XG XXXX. FDX OEM revenue. key service incurred orders expect XG strong be expectations development was first $X to timing quarter, is The EBITDA in on unrealized contributed and increase and and first range, certain tax second our a which increase primarily Gogo guidance the may of Gogo on sales of expected spend chip.Net profit the Galileo the income support million XXXX in offering and driven expect be a continue high was of the ship if by be income in orders for service in investment of in year-over-year. in Galileo's exceeded projected share to an anticipate year. of was Net in resulted EBITDA costs year. on in and equipment end the the up

on So share federal income value. including from any XXXX, will NOL substantial end net the positions, losses. funding to We program. mark is provide we not in $XX.X X-year horizon.I'll million quarter. date $XX.X pay million. affect $XXX did in the operating in income future a total expect at the our million FCC our to operating tax received now future meaningful planning state $XXX volatility to FCC price taxes Based million net in of quarter, and grant net program the update status our at the had deferred of cash net our asset $XXX market and on first In through a received of adjustments We fair losses end quarters Reimbursement to million our

property a and to of assets with inventory quarter. in term reductions recorded expenses and is the in income one receivable other receivable program balance million $XX.X and sheet during FCC prepaid with This original As we set our FCC contract XX, pickup XXXX. in was XX, incurred reimbursable and year and equipment complete for included from million XXXX, the July March a $X.X spend statement.Gogo's reimbursement current corresponding assets in we the the to

of quarter, forecasting and to July, have free late record X.Xx that generated quarter. balance $XXX to XXXX reimbursement we higher and we year first funds cash of investments a interest.Now to revolver to period of outstanding of this strike by rate support multiple funding, money in for program we will agreement a million, with in remaining lower remained line However, increase our the short-term hedge The need in first hedged. FCC $XXX range next I'll will need we cash deadline our expected the million in million program program impact occurs are spend we and in January mentioned, we with and with ago filed from the the to to next out request cash March flow. negatively XXXX, XX, which our In undrawn. turn planning year-over-year through million our rip-and-replace to we in Gogo's reminder $XX.X the $XX increase at loan quarter, have is completion X.XX%. in last we discussion flow from quarterly $XXX was driven $XXX.X free quarter.As EBITDA our X-month granted continue to have fourth Both of an will million extending X.XX% million currently in were and the run Xx.As down XXXX we to previously our the $XX net term principle program XXXX an million in application, leverage on sheet. In and are to the and from with XX% loan primarily X.Xx in and extensions that place which to the of step extension by hedge partial our of a FCC in our stated XXXX. the increases cash complete extension, XX, ended the reimbursements Gogo quarter on target

quarter hedge interest was first million. flow of $X.X for cash Our net paid the cash

XXXX the paid capital to debt priorities. no flow allocation Assuming of further hedge $XX let approximately me cash interest for is of provide a expected cash Gogo's recap million.Now be pay down, net

drive with of liquidity; program of the strategic financial X.Xx; share with and Gogo and to adequate capital third, have Galileo; board up X.X continuing competitive level our in maintaining of the all and returning XG executed ratio second, million approved maintaining finally, economic positioning an target authorization to for to invest for an appropriate directors shareholders.We including leverage value, opportunities priorities First, repurchase to environment leverage net a XXXX. in across $XX September, of to

We sheet position cash repurchase and continue program. while maintain a share on strong balance our to executing

to approximately debt evaluate shares X.X million. million. In schedule, million $X.X are a $X.X shares. execute Gogo approximately XXX,XXX of downs total approximately repurchase product quarter company the the shares of the We for in a $XX.X we of for cost repurchase further XXXX.In As our million Gogo approximately a total year, quarter believe XXXX, cost repurchased opportunistically investment shares million this approximately fourth repurchased X.X first reminder, well-positioned April, of pay and for

flow pay XXXX.Now to shareholders cash updated outlook. flexibility free capital to up ramps down increase and financial further as XXXX Our guidance We our should turn our debt I'll return reiterating targets. in positively financial long-term our our while

and million that progresses, the earnings aware our equipment X% that financial XG implying we faster than to we do the this financial reflect a Gogo growing delay of a timing additional to with about financial the target Gogo launch continue $XXX during quarterly note revenue. appropriate.For information whether not revenue regularly the XG $XXX To Importantly, potential beyond long-term targets become million, revenue XXXX we announcements determine service growth overall of of guidance, XXXX update our extent in to year will XXXX range and XXXX. guidance guidance as the as

had within to equipment better than While was mostly revenue expected timing we year. for the the quarter, due it

Gogo tied and first litigation. expenses Galileo.Our of quarter. including the is continue from of project EBITDA the growth Classic significant previously $XX $X service aircraft SmartSky approximately OpEx also the to some important guided OpEx from online of in driven by and adjusted We to strategic approximately XG number to We we range million million, in increase EBITDA operational reflecting initiatives, of will CapEx includes revenue shift due savings operating program as in FCC in the to growth we'll now strategically guidance legal The guidance while million be strategic to and the for a spend XXXX programs and adjusted $XXX growth. slower than believe upgrades AVANCE million at a end in mainly our rate expenses in the dampen expect $XXX to high realized

cash approximately CapEx initiatives the of million LTE network approximately $XX the $XX XXXX buildout.We including anticipate to for million despite XG which in flow includes expect adjusted million, spend, $XX to to OpEx EBITDA includes be which Gogo million, $XX FCC in capital. of shift there CapEx approximately guidance spend fluctuations $XX $XX strategic and free was Galileo, to a cash in We guidance million FCC flow approximately increase and including and development expected networking an Free million non-reimbursable as remains spend, from sustained reimbursements.

approximately XXXX unchanged. Our beginning With that in Galileo XXXX. contributing rate we new XXXX. materially long-term growth We growth compound a from of XX% remain through targets revenue annual expect reiterate the at to XX%

to taken Gogo the expect continues adjusted and positive the be and has of driven we prepayments inventory reflects to planned investment revenue and not flow capital Galileo. as in of reaching annual which XXXX XG strategic account of and and well margin by CapEx XX% effect development Gogo XG lower perform million EBITDA with cash design million range reduced conclusion, these networking shipments. the as This are increased by program.In the and completed the in in growth to and expect programs by invest $XXX engineering in XXXX.Finally, to We $XXX OpEx of for EBITDA launches to equipment free XXXX, continue launch Galileo, XXXX we purchases FCC in driven

that and enhance the will in initiatives long-term customers and to and invest Our expect strategy outlook our extend illustrates growth. believe as shareholders unlock we the value we creation potential for our we that our execute strategic

this their providing questions, and Before we and I Gogo entire for for ready dedication remarks. our would Oak open and prepared service for customers.Operator, up for call to your unparalleled the hard join first our for question. like the our to team business work We're concludes thanking now

Operator

[Operator comes question Roth Scott Searle Instructions] first Our from MKM. of line the of

Scott Searle

to the Nice Jessi, continued clarification Galileo job the the Nice quickly front. the some on just progress quarter. on Maybe financials. see of on

OpEx what about idea permanent clarify, sounds expecting it you referenced a was I $XXX,XXX it looks in to like. call the had think I'll wondering that you and half million for savings. like Oak wanted So churning the down are of smaller could year back I referenced had an follow I'm the us to that $XXX in revenue if step Also give what off had up. you there And FCC to, million low-end this $XXX in then related customers. rip-and-replace. guidance? And service

Jessica Betjemann

So to savings. the your OpEx with regards some first question of

realized So not in came a in lower something, and plan quarter of some was issue. to that data and real than center we it's timing the did have that's due it network costs

savings. do also We personnel some have

will was question? And next some there was well be throughout the [ some XXXX. of around push million. there in into as your it quarter, continued out What savings the $X because So expenses is year, ]

Oakleigh Thorne

asked you had rip-and-replace a late was in about there question. Scott, rip-and-replace the Well, Yes. year late year impact?

Scott Searle

pulling The equipment had seems clearly terms you to a what it as expecting front? seems like $XXX year quarter equipment related expectations $XXX for this to the contribution of right? in rip-and-replace It But forward. million in million you this that are revenue. Because a year, NetJets great rip-and-replace

Jessica Betjemann

you mean? upgrades With the to regards

Scott Searle

Yes.

Jessica Betjemann

Yes.

year heavy upgrades. a be to going of is year this mean, I So

So the year. it will shipments obviously through that see to but seeing contribute year. equipment We're to QX, continue will this our in we that

Scott Searle

fair it like XG It caught on Oak, quickly in the was little bit of a dive A Okay, enough. earlier. I'll seems And delay there. front.

the So good news. that's

general And ago. and be the Galileo to with seems get XX It that. on HDX Just continued months It tenor more that there for and confidence always bigger around we would've and it level has been coupling of positive. has expected market the like the but dialogue XX on specifically front. may FDX seems schedule, or now ahead opportunities are or like more than

getting if wonder about and talk XG is to that and advancing little be that I bit to seems So forward? relative how pulled important you how a could

Oakleigh Thorne

product more time networks I talking about XG and asked upgrade we've to always our about America. because always Yes, always mean the more ATG next a spent because launch in we've obviously it XG North was significant

is it And we're product I Galileo enter And from in that us. we've encouraging I with think bigger in Starlink always the end. competing it market. response So obviously getting that was as felt the the strategically they probably the in for the is positive market opportunity think about important very very

very about a excited so and we're We XG be expensive role very positive conscious very on product in lot that a fleets excited more about going a medium-sized lot they're think all system. very fly and still the excited down We're that are traction other a cost a because of really about satellite great excited there's in it. are our line frankly though, And a jets has important product about North than only about it. getting on more flyers. excited that putting not OEMs line just It's America little to overseas, it it. So of we're

and basically said important. and So is And they're be have who going going the product. XG fleets to to OEMs already have others buy for to we commitments them

is as important less somewhat It's us. still So we're from to would in a back not It at segment, say going I moment to well. competitive the off XG.

So time the as emergency it as is for Galileo. not is great maybe

Operator

question Stanley. Flannery Our Simon line the of from comes Morgan of next

Simon Flannery

Galileo opportunity. the on continuing Just

I ship think in HDX the terminals you would you'd that QX. said

to the kind the mostly you or that of principally Have Is to Starlink we do And around how seeing be or all in a out that? and Galileo? margin do then that we range on you and the XX% So it impact. is when that any of something think think start OneWeb like here. asset, And that start competitive are it you color QX? plane monthly usage of seeing there? looking reselling and revenues in based or there margin provide see seen is we sale we or see could increase, think, of DXs to kind losses that anything fair all to really could DX are commitments that's going Jessi, you at price on I then per SmartSky service the Is mentioned impact more service up the QX aircraft, where any of or ticking that you're

Oakleigh Thorne

of one at take The reserve little first. a going don't February. So that hit It I'll DX, and the price judgment terms of the bit. of see in I increase really February. all think that. were more We'll implemented to lot beginning a in minimums we're

I the bulk that. that's of to So going think be

the and the And It We Solution, competition. that. suspended XX In owners KA they're all jet to the they February. is on a of only to which that that in didn't was to if ironically one And don't SmartSky. go so was that terms of I And them. went belonged gone dived Davinci funny. went founders of actually we Jets, they actually SmartSky, or to of know customers anymore interviewed competitive, deep who was out had some

we're install We point. that. this that's to Starlink losing any don't at aircraft So our base from think

do we with I customers from feel And that some they system right global we as our the Starlink on don't system. and out think them are sales there now new at yet. obviously pressure already look have is theirs

don't course. we Starlink So may for jet Globals, sales few there on Gulfstream's and Those the lost see Gulfstream really We new we be been a a feel any side And STC of heavy expresses. Aircraft. pressure market. only because negative Gulfstream there. little about the yet would have Global pressure pretty

jets at Simon, go heavy still your losses we So all the again, have any and there. and of remind you of And point. me now haven't question. seen to beginning back that's that

Jessica Betjemann

was It on the I revenue. answer Galileo that. can

we're be shipments to a and in half, having second be I equipment in expectation little it'll QX will revenue second mean, So service the bit but is the to in quarter. going the there start equipment revenue, the be probably more

Simon Flannery

And Okay. margins?

Oakleigh Thorne

We're publicly. to we pricing you this taking Starlink way. an them. is can would going because I go where need maintain with where commented haven't prepared to we know be flexibility it sort on with approach we to never of and Margins, put

with a a have to through what pricing planning I'll have for So to X sort we of call flexibility, still margin. up and horizon. And of get that begin expect we margins probably bit this service given

Simon Flannery

In total?

Oakleigh Thorne

in Yes, total.

And pretty come to come the market. good but sort with to business feel so we're going out about sharing we margin not until we projections

Jessica Betjemann

Yes, going I strong it's say, it's to noted than be noted was very still going margin. to just but ATG, -- lower to I going be healthy I've

Simon Flannery

down just your OneWeb could like does the And incorporate work with or other Kuiper you system of capacity road? Understood. providers

Oakleigh Thorne

from provider. Yes, our we provider we can portable to terminal be to designed and

is are is We our to years. lot going to develop providers next technology hope that expect be a to and product. it's over There X that And the going XX Gen product if for to deliver prepared into elsewhere neo is our also to other their OneWeb be customers. better need the come to X continues strong strong that a we to But a go market.

designed very is we for to we -- easily installed, own be antenna, easily it So intellectual removed. the the once the terminal, property

inside headliner You quite have another the right the version would remove the it right don't and and it for slap supplier all and new for the of the But aperture the in have to go modem on supplier the from and airplane it. new literally version unscrew simply. back can that, new outside the

we're of future terms direction. And very in so portable

Operator

of question from line the next comes James. Our Raymond of Prentice Rick

Ric Prentiss

questions. of Couple

to to First SmartSky go I want the litigation.

But thought I'll we're There the rulings judge less definitions? like questions How on you favorable reports or to where one you some them. I a some think handle definitions at had out all. of just there to back, the on time rulings kind some come that made the explain were judge's some give was and you it And at other us lawsuit? my so can view items.

Oakleigh Thorne

the called what's and was judge interpreted. with that the of should pleased rules changed Yes, outcome hasn't case were our how view ruled -- that's of patents the judge hearing, and the and Markman a that. appreciate is. it We on be think how the where the we what We

to However, stick my learned with encouraging career, I will to short my that. on say this in lawyers litigation brutish business I've not are comment and me

So from an we at the as went our made who about some article doesn't it case. who know of case, articles just by law, ruling around I'll were and sound much that. or patent just a kind There not kind that the writer comments that's like lost this whole leave of

Ric Prentiss

Okay. And any update the to timing?

Oakleigh Thorne

has back that to April she supposed date. but like now move to The trial it and set going looks a in judge was XX the be of not is new

Ric Prentiss

Second Jessi question is some in projects. mentioned of the on some the guidance. that reduction

previous $XX of million in I guidance there. think had $XX think I now million OpEx,

So timing. out some reduction in in shift

few press could. do Gogo 'XX. months. to is make little release potential moving in maybe But of you both that note reflect but those kind want a just the reconcile I of also I launch 'XX, delay and out XG to then if then is thought pushed a said, then a sure the in want beyond that into Just targets some guidance not

Oakleigh Thorne

timing fabrication. a some of it'll sort idea of of at to working chip's they'll to next XG, don't that, there's We're the now, QX go accelerate early perhaps in should if when they around fabrication with know validation still a process. that going on better or definitive So the we end part launch supplier of year through a There's chipset into process the the right And opportunity year. now integration get dates. our of Then have steps. an this

yet and at are including more. guidance our the know tell we projecting we'll delay. more, So any not when world but that's that in we're or we why looking

Jessica Betjemann

overall million, well. for of strategic point the there about decreasing, to a quarter about was last quarter $XX we large spending million the is around spend this OpEx $X I initiatives. in the CapEx. as And think $XX And had And million it's million driver total strategic shift then $X Yes. from and of savings a that a

uplift OpEx to So that's because you free of flow. that driving from that that's CapEx, through necessarily why, what's any of that to don't also reduction. And shift flowing cash see

Ric Prentiss

be timing. If 'XX, 'XX really Okay. into on the service one on Is guidance it would to out 'XX early Could quarter, what months, fourth into the the And just guidance? the that then case? slip lead be would items items What more and from equipment push few line it it on affected watching revenues? revenue? EBITDA? in margin it Is we does

Jessica Betjemann

any conservative, Yes, revenue this did that previous the on guidance we we had in call. noted I not actually provided. To so think our in we be factor XG

be the for be impacted. of there So potentially really revenue because both out will It CapEx. OpEx some a and could OpEx side, there'll won't spending be benefit on be push

Ric Prentiss

just risks. there. not There there's be outside could So downside a really risk downside some

Jessica Betjemann

It's not a downside.

Ric Prentiss

the project Yes, moves though anyway. the expected revenues weren't out, even

price of final the back felt to the Oak, then that it of most DX Okay, folks. think was question that. the where Simon's the want go I the X% for to folks ARPU, you my February, think you increase, hourly clarify then also were XX% increase I said price helps And one on

expect the kind think, And Jess, mentioned a is we dampening for that normal to quarters I should course of So here? couple product? as deactivations advanced some of installs people upgrading maybe you some why you're

Oakleigh Thorne

rip-and-replace equipment conversions right? to lot Classics lot from of will upgrading and program. of getting part some don't AVANCE units they as drive going of people you're year drive They revenue, see Well, the you're to LTE platform But a a this online.

that. see you'll So

a In the and chain had sort supply used up what's somewhat now, good of bad managing as dealers I gotten signs. screwed on terms of going everybody's mean, to world. right we've signs in

dealers lot February. handling them lot in handling better, the had a that engine come think little extending parts I there's a so DX customers so We side, are better. But bit lot back A other some that and implies shortening though of problems it periods. a though, of of And problems are it are still have of on suspensions. the suspension already the engine of

So watch what this projecting not improvement or over happens out skis our of a in next and point. and getting permanent any deactivation here at the reactivation decide not. on We'll we're there's couple change whether months

Jessica Betjemann

had the quarter deactivation of deactivation. in we've from quarter, to of the not clarify, the And Rick, just XX% increase to total

Operator

question comes next from of Our TD of the line Lance Vitanza Cohen.

Lance Vitanza

issue the it's that Congratulations to pre-launch to just up this a XG lower the we'd on I sort it's customers expect guess in in dynamic new in what we ticked my having quarter. phase, new get actually that to expect still could run launch do is, as new forward? pressure is that bit, possibly question happen? a is could And Are little tough to from respect with to potential we're so delay of people over that a sales this about but that play pressure AOL And whether assume the your similar that related going AVANCE or Do years right customers sales are line. we XG? further an think right? that Galileo, that think the we goal waiting, existing back, seeing that, equipment XG, is now? or And I we of few not

Oakleigh Thorne

better mean, the What to Galileo. to the products I been, sales do XG extent. much of you sort not LX stepping to I'll been, if a this that all, is it has to sales don't great, move in into for great to you be we've Yes, Galileo, and obviously of in LXs slowdown equipment into new okay, in stone AVANCE a of I And change ready quarters you products. Apple make go to et need cycle. that's lull of has you couple we've some all box. in been a thing same install working I of where think if product say, I people bit quarter, Galileo that XG natural cetera, the watches, of mean, a box had we've or all tried And but old see well the that almost because go as

with called in LX you going the you're form LXX exact XG factor the replace just functionality replica the XG, If to it. which has

And both they're of for is the we So very us that we to that got for through orders. working was and some OEM where got upgrades, easy pull extent. why this fleet that's NetJets, acceleration and

see on we're would it we'll right but we're nice counting factoring and now, not all. our if did, not that into So guidance It be that if persists. it at

Lance Vitanza

the cash cash flow for is and of me the at I sort being or that already looking got is on the we're suggest given guess for of one year the well? for still you've last see the that forward going that then least And Does come repurchases in have the potentially has share sheet, ahead time as most just repurchases in. we that that done on with something theory balance your could share you

Oakleigh Thorne

could I see by We've $XX forward. going program got Board. you million the repurchase approved something think a it's potentially

We've it have million takes million about that point. at investment at time. $XX committee an We a $XX spent this

Jessica Betjemann

look share opportunistically price as the step down Well, we we're that, too or also I balance we debt. head and to said, to down continuing whether with assess want not that mean, pay would that we'll but that look the and you at we'll understanding at

Oakleigh Thorne

best look way that's at is the Yes. the we'll they And shareholders and Board for whatever think go. will

Operator

of from comes DiPalma the William line question Blair. Louie final Our of

Louie Dipalma

Oak, that schedule to that STC or expect When to the shipping antenna should will your do in market STCs remain in Starlink's roughly a you quarter. indicated business first be gap? begin the you expect the And STC year narrow received? to jet the behind you fourth HDX we expect schedule

Oakleigh Thorne

the and getting that's they of lot than we'll I a script. And at in my so hurry. in better are, get we're STCs number STCs Well, a in noted work that we're already

your article, to get PMA. before to STC get have You first can you

dealers go before so that. go. said are how I are QX, first in we'll we ready they to we to going on to work I So article so -- ready PMA have hard then when think with know get STC to STCs work that we our were with And

lot guess we even the first have of And lot a a them we'd the maybe year. And I certainly have before will and quarter, next fourth would of several, in pre-primed. so the them of end quarter

is one things little It's Starlink hard our to is learning of industry it's So this that and very way. do the really something peculiar well. we the

Louie Dipalma

expect do then? you gap to So narrow the

Oakleigh Thorne

many smart box PMA Yes. far mean, with actually which so we a be covered in is And immediately it. got launch, already about we've STC on goes, that there LXX North article been XG we've why STC that after will aircraft I America an as program almost first as because XG are and really whole in chip

So STCs to then with of with and modification that those so. and those will get whole audit And ready of week do X because all XG we is rapid the get are or done. too, need to do that a up and STCs chip on the running already [ and minor to a STCs it's kind if we'll immediately -- minor it's those planes substitute that then lot a quite fly be FAA to XG approval ] a

Louie Dipalma

that And this $X,XXX a that issues Are with the similar plan There customer quality customers also quality you and channel. the suffered about aviation And residential on is service that's whether a along their the are network another or Bloomberg is Starlink month sustainable? they hearing the Starlink a think Delta Starlink Comcast Airlines on price Starlink of does, Xfinity was from article hearing pricing if resonating, because the network to in X-parter trial sharing what that do introductory theme. per you same theme, actually just concern? is do think

Oakleigh Thorne

with minimum start I per We've And a whole and happens go bucket Starlink, is bucket the they are we then anticipated. So gig. a pay these for well. $X,XXX and just powerful that a What consume bucket right? than of mean, plan out, Let's got we them generally plans, plan. a of know lot data. $X,XXX pay the very a plan, you another that's like to lot with bringing you're more going antennas over the you $XXX and people pay

not XX a end spending more owners first more spending pretty to that will than planned. lot than typically up this space they planned. people So And quick. go they And in gigs do like going is

unlimited for plans they So opt generally.

So to the today for projecting we And they'll plans. unlimited plan, XX% actually only of spend are for on also people what usage, are if bucket $XX,XXX than XX% unlimited, on think given and the on are which our we're aircraft unlimited. or just more very fleet plans, similar that

The we'll is be So is, ARPU to going honest. that to lot be But very doesn't aggressive higher. mean the sort right? what doesn't a much, too. have And of ARPU that's concern plans us that like that that

I they Starlink flown still question of XX second per other and It per an to between seaboard.I I've that megabits have in we and issue. contention, Starlink got difference Your improvement be is mean, huge megabits good. The your speed, the it down XXX latency Eastern makes have, second. perception honest. will a was

on for Starling depends give of which that. all I'll satellite But is get of credit lot there it you for us, a could have or you on, not. them So contention

not legitimate think So issue. itself. be around to service the But it's are frankly, real issues going a I the

a space has be will to and mean, aircraft. variations. needs market withstand It be fuel to to be lot is ruggedized HDX demanding what and It be consumption sort needs there. business around install. to It equipment it's safety the small are easy be to market doing premium aerodynamic my temperature and more available. when vibration on And reliable the it from issues needs at extreme is The purposes. good this I perspective needs a HDX a needs They're service for be to of and it a to very inches they're think I of because to ways.Equipment to in taking in is wide, all install aero. actually very well. diameter install. order those keep trying to planes.By FDX into for make that narrow different check consumers, It's the mass products them consumer planes. they down contrast, will narrow And difficult wide. easy off work and right? XX the very it which inches a which are Starlink, doesn't our shelf inches taken and diameter It's a cost they're hard approach, They move XX It's boxes. produce to XX to long. install

actually is that to big inches antennas only It's there's you're complex because equipment you plus have and there. aircraft, the which long. more put XX top on, is and pieces of other plane. gear on when FDX, They've the up the XXX very that's one, in all the install And important expensive order move kinds of more attach their the to And our Our to of to XX of is. antenna install. to stuff fasteners an an got like antenna

you're take floor into so headliner and take or the of take in this to to there.Just FDX aircraft. has take do in That thing out side have to need never XX way also sort to require last such pieces Our mean believe is maintenance And antenna the has HDX parts throw you're aircraft to things what no which for to the and can XX other you for the or out headliner that a about X unheard out space. complexity. these sense those And not, inside designed going of inspections. the remove They radar some maintenance. can when lubricate actually in-flight And and the We also to get and to actually the XX and aircraft, periodic those complicated.On you we fuselage will it and be, this going our we you're a that the build the maintenance. and give need get then off pieces down for out inspections, to of seats, fasteners, they very planes, XX, inside going XX need numbers of FAA have to maintenance you periodic to the requires periodic actually the antenna. panels talk years require fasteners, they the of owners connectivity have that's requiring

the the they they could because vessel.Okay. I just go consumer shelf, crazy off have and of pressure outside I So things mean, on. on cannot survive all their kinds

equipment at can't minutes. XXX XX,XXX minus go from tarmac, in feet this So on XX degrees XX just the

You can't that. withstand any of

et your have can all this stuff seats, be luggage, anywhere. installed Obviously place you put to cetera. golf is to space, put closet et the pressure for which we So clubs, vessel, up and ruggedized we're inside taking room cetera,

vessel. pressure DC a et is all power a the very on, hot inside put have power, are gear. of you made also because they Because the need they're same aviation it inside business of somebody the be inconveniences, in you require great go who's cabin, fan so there's provides outside worrying of to a to minor like has cool same business. for of to And to and product And can with same, and is higher most put are kind cetera, with can like, having add XX ownership AC but at the that going about they going the different end You you're it you those the converter, the the all a is of sort in a if lot why vessel don't it and kind have of have company the order know and problems, about or a to service would fan cost years, pressure from of it the cetera.So power, up. that in been buy business the and support, frankly, pieces total gets long-term. costs lot but that, you It's is for then in going the don't passengers most maintenance of great all I on on et and a And in a could day for things you consumer, nuisances? you're to service, pay going be from up

Louie Dipalma

are You weeds in very that. the on

Oakleigh Thorne

in further go could I Sadly, a weeds. lot the

Louie Dipalma

costs you're would second Yes. raise for And the that Jessi. your if XG that XXXX and one anticipating guidance? mean into this you of Jessi, the for would year XG that be that is EBITDA network half pushed the that delayed, does of some imply will

Jessica Betjemann

the yet. may flight mean, I that get on things, Well, would testing, do would the we're exact Oak about CapEx would what evaluate will free there and spending know cash flight OpEx once had we potentially, be so that we just but flow. we pushed out particular one it's so be specific out. and be I talked But that still impacts And of understood to which the said would testing, value EBITDA milestones of continuing doing pushed don't impact positively the timing,

come to have So back. we'll evaluate that and

Louie Dipalma

milestone be And payments would those milestones, there with right? the and deferred, so be that would

Jessica Betjemann

That's right.

Operator

the conference turn would William now like Davis to for I closing to remarks. back Sir?

William Davis

quarter earnings Thank our first joining call. call. our concludes you everyone This for

may You disconnect.

Operator

participating. for you Thank call. conference today's concludes This

You may now disconnect.

Gogo (GOGO) 7 May 242024 Q1 Earnings call transcript