Gogo Announces Fourth Quarter and 2023 Results
- Record Q4 service revenue of $80.9 million, up 5% YoY.
- Total revenue for Q4 2023 was $97.8 million, down 10% YoY.
- Q4 net income stood at $14.5 million, with adjusted EBITDA of $35.1 million.
- Full-year 2023 revenue decreased by 2% to $397.6 million, while service revenue increased by 7% to $318.0 million.
- Gogo plans to launch Gogo Galileo and Gogo 5G, targeting long-term revenue growth of 15-17% from 2023-2028.
- Equipment revenue for Q4 2023 decreased by 45% YoY.
- Net income in Q4 2023 decreased by 48% YoY.
- Adjusted EBITDA for Q4 2023 decreased by 24% YoY.
- Cash provided by operating activities in Q4 2023 decreased from the prior year period.
- The Company repurchased shares in Q4 2023 and January 2024.
Insights
The financial results released by Gogo Inc. illustrate a mixed performance with a notable 10% year-over-year decline in total revenue, despite a 5% increase in record fourth-quarter service revenue. The decrease in net income by 48% from the previous year is a substantial dip, which could be indicative of rising costs or operational challenges. However, the record Free Cash Flow increase in Q4 suggests a strong underlying cash generation capability, which is a positive sign for liquidity and potential future investments.
Investors should consider the company's guidance for 2024, which anticipates total revenue in the range of $410 million to $425 million and Adjusted EBITDA between $110 million to $125 million. This forecast includes strategic investments in Gogo 5G and Gogo Galileo, which are expected to drive future growth. The anticipated capital expenditures of approximately $45 million, with a significant portion allocated to these strategic initiatives, indicate a focus on enhancing the company's competitive edge in connectivity services.
The long-term financial targets are also noteworthy, with a compound annual growth rate of 15%-17% from 2023 through 2028. This ambitious target, coupled with the goal of achieving an Adjusted EBITDA Margin of 40% by 2028, suggests confidence in the company's strategic direction. However, it is imperative for stakeholders to scrutinize the achievability of these targets, especially considering the current year's revenue contraction and the competitive dynamics of the broadband connectivity market.
Gogo's focus on expanding its AVANCE platform and transitioning customers from its Classic product to more advanced offerings is a strategic move to solidify its position within the business aviation market. The growth in AVANCE units and their increasing percentage of total AOL (Aircraft Online) is a positive trend, reflecting customer adoption of newer technologies. This transition is also a preparatory step for the integration of Gogo 5G and Gogo Galileo services.
Understanding the company's market position requires analyzing the average monthly revenue per ATG aircraft online (ARPU), which has remained relatively stable. This metric is crucial for evaluating the company's pricing power and customer loyalty. In the context of Gogo's recent 10-year connectivity agreement with NetJets, it's essential to assess how such deals may affect ARPU and contribute to the long-term revenue growth targets.
The upcoming product rollouts, including Gogo 5G and Gogo Galileo, are pivotal for Gogo's future growth. The company's ability to deliver significant improvements in network speeds and expand its global total addressable market will be critical in maintaining its competitive edge. Investors should monitor the adoption rate and operational execution of these new technologies, as they are likely to be significant growth drivers.
The telecommunications sector is highly dynamic, with advancements in technology swiftly altering competitive landscapes. Gogo's introduction of Gogo Galileo and Gogo 5G represents a strategic investment in next-generation connectivity solutions, a necessary step to remain relevant in a market that demands constant innovation. The company's ability to secure a new 10-year connectivity agreement with NetJets underscores its commitment to long-term partnerships and market expansion.
However, the significant decrease in equipment revenue and the reduced number of AVANCE equipment units shipped in Q4 2023 raise questions about market demand and product lifecycle. This could be a result of market saturation, shifts in consumer preferences, or anticipation of new product releases. The SmartSky litigation expenses also warrant attention as legal challenges can have unforeseen financial and reputational impacts on the company.
From an industry perspective, the Secure and Trusted Communications Networks Reimbursement Program by the FCC is a notable factor that could financially benefit Gogo. The $45 million reimbursement included in the Free Cash Flow guidance for 2024 may provide temporary relief, but it is not indicative of the company's core operational performance. Stakeholders should discern between one-time benefits and sustainable financial health.
Provides 2024 Financial Guidance and Updates Long-Term Targets
Total Revenue of
Q4 Net Income of
Q4 2023 Highlights
- Total revenue of
$97.8 million 10% compared to Q4 2022.- Record service revenue of
$80.9 million 5% compared to Q4 2022 and2% compared to Q3 2023. - Equipment revenue of
$16.9 million 45% compared to Q4 2022 and decreased8% compared to Q3 2023.
- Record service revenue of
- AVANCE equipment units shipped totaled 202, a decrease of
48% compared to Q4 2022 and an increase of5% compared to Q3 2023. - Total ATG aircraft online ("AOL") reached 7,205, an increase of
4% compared to Q4 2022 and an increase of1% compared to Q3 2023. - Total AVANCE AOL grew to 3,976, an increase of
21% compared to Q4 2022 and5% compared to Q3 2023. AVANCE units comprised approximately55% of total AOL as of December 31, 2023, up from47% as of December 31, 2022.- Average Monthly Revenue per ATG aircraft online ("ARPU") of
$3,387 $3,370 $3,373
- Average Monthly Revenue per ATG aircraft online ("ARPU") of
- Net income of
$14.5 million 48% from$27.7 million - Diluted earnings per share was
$0.11 $0.21
- Diluted earnings per share was
- Adjusted EBITDA(1) of
$35.1 million $1.9 million 24% compared to Q4 2022 and19% compared to Q3 2023. - Cash provided by operating activities of
$26.2 million $31.5 million - Record Free Cash Flow(1) of
$28.4 million $25.0 million - Cash, cash equivalents and short-term investments totaled
$139.0 million $110.8 million
- Record Free Cash Flow(1) of
- In Q4 2023, the Company repurchased approximately 480,000 shares for a total cost of approximately
$4.8 million $5.2 million - Gogo signed a new 10-year connectivity agreement with NetJets.
Full Year 2023 Highlights
- Total revenue of
$397.6 million 2% compared to 2022.- Record service revenue of
$318.0 million 7% compared to 2022. - Equipment revenue of
$79.6 million 26% compared to 2022.
- Record service revenue of
- ARPU of
$3,380 1% compared to 2022. - Net income increased to
$145.7 million $92.1 million $48.1 million - Adjusted EBITDA(1) of
$162.1 million 7% compared to 2022. - Cash provided by operating activities decreased to
$79.0 million $103.4 million - Free Cash Flow(1) increased to
$82.7 million $57.8 million
"The launches of Gogo Galileo and Gogo 5G later this year will provide order-of-magnitude improvements in the network speeds we deliver to customers and significantly increase our global total addressable market," said Oakleigh Thorne, Chairman and CEO. "And our LTE replacement program will drive conversion of our Classic product customers to our AVANCE platform, which will provide them with easy upgrade pathways to 5G and Galileo in the future."
"Gogo's ability to reiterate its
2024 Financial Guidance and Long-Term Financial Targets
The Company provides the following guidance for 2024, which includes the impact of the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program ("FCC Reimbursement Program").
- Total revenue in the range of
$410 million $425 million - Adjusted EBITDA(1) in the range of
$110 million $125 million $40 million $4 million - Free Cash Flow(1) in the range of
$20 million $40 million $45 million - Capital expenditures of approximately
$45 million $25 million
The Company provides the following long-term financial targets:
- Revenue growth at a compound annual growth rate of approximately
15% -17% from 2023 through 2028 versus the prior target of 15-17% from 2022 through 2027. The Company continues to expect that Gogo Galileo will contribute revenue beginning in 2025. - Annual Adjusted EBITDA Margin(1) reaching
40% in 2028 versus the prior target in the mid-40% range in 2027. - Reiterates Free Cash Flow(1) in the range of
$150 million $200 million
(1) See "Non-GAAP Financial Measures" below
Conference Call
The Company will host its fourth quarter conference call on February 28, 2024 at 8:30 a.m. ET. A live webcast of the conference call, as well as a replay, will be available online on the Investor Relations section of the Company's investor website at https://ir.gogoair.com.
Participants can also join the call by dialing +1 844-543-0451 (within
https://register.vevent.com/register/BI3011162f8c914b139642ae3b02fcf993
Non-GAAP Financial Measures
We report certain non-GAAP financial measurements, including Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow in the discussion above. Management uses Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. These supplemental performance measures also provide another basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measurements may vary from and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA, Adjusted EBITDA Margin and Free Cash Flow are not recognized measurements under accounting principles generally accepted in
Cautionary Note Regarding Forward-Looking Statements
Certain disclosures in this press release and related comments by our management include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our business outlook, industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future technologies, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words "anticipate," "assume," "believe," "budget," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "future" and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this press release. Forward-looking statements are based on our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following: our ability to continue to generate revenue from the provision of our connectivity services; our reliance on our key OEMs and dealers for equipment sales; the impact of competition; our reliance on third parties for equipment components and services; the impact of global supply chain and logistics issues and inflationary trends; our ability to expand our business outside of
our ability to obtain additional financing to refinance or repay our existing indebtedness; the impact of restrictions and limitations in the agreements and instruments governing our debt; the impact of increases in interest rates; the impact of a substantial portion of our indebtedness being secured by substantially all of our assets; the impact of a downgrade, suspension or withdrawal of the rating assigned by a rating agency; the volatility of our stock price; our ability to fully utilize our tax losses; the dilutive impact of future stock issuances; the impact of our stockholder concentration and of our CEO and Chair of the Board being a significant stockholder; our ability to fulfill our obligations associated with being a public company; and the impact of anti-takeover provisions, ownership provisions and certain other provisions in our charter, our bylaws,
Additional information concerning these and other factors can be found under the caption "Risk Factors" in our annual report on Form 10-K for the year ended December 31, 2023 as filed with the Securities and Exchange Commission ("SEC") on February 28, 2024 and in our subsequent quarterly reports on Form 10-Q as filed with the SEC.
Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this report ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
About Gogo
Gogo is the world's largest provider of broadband connectivity services for the business aviation market. We offer a customizable suite of smart cabin systems for highly integrated connectivity, inflight entertainment and voice solutions. Gogo's products and services are installed on thousands of business aircraft of all sizes and mission types from turboprops to the largest global jets, and are utilized by the largest fractional ownership operators, charter operators, corporate flight departments and individuals.
As of December 31, 2023, Gogo reported 7,205 business aircraft flying with its broadband ATG systems onboard, 3,976 of which are flying with a Gogo AVANCE L5 or L3 system; and 4,341 aircraft with narrowband satellite connectivity installed. Connect with us at www.gogoair.com.
Gogo Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | ||||||||||||||||
For the Three Months | For the Years | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Revenue: | ||||||||||||||||
Service revenue | $ | 80,908 | $ | 77,346 | $ | 318,015 | $ | 296,329 | ||||||||
Equipment revenue | 16,902 | 30,817 | 79,562 | 107,738 | ||||||||||||
Total revenue | 97,810 | 108,163 | 397,577 | 404,067 | ||||||||||||
Operating expenses: | ||||||||||||||||
Cost of service revenue (exclusive of items shown below) | 17,836 | 16,744 | 69,568 | 64,427 | ||||||||||||
Cost of equipment revenue (exclusive of items shown below) | 15,400 | 21,063 | 63,383 | 71,473 | ||||||||||||
Engineering, design and development | 10,424 | 8,241 | 36,683 | 29,587 | ||||||||||||
Sales and marketing | 8,049 | 6,932 | 29,797 | 25,471 | ||||||||||||
General and administrative | 16,546 | 13,914 | 57,280 | 58,203 | ||||||||||||
Depreciation and amortization | 4,679 | 2,574 | 16,701 | 12,580 | ||||||||||||
Total operating expenses | 72,934 | 69,468 | 273,412 | 261,741 | ||||||||||||
Operating income | 24,876 | 38,695 | 124,165 | 142,326 | ||||||||||||
Other expense (income): | ||||||||||||||||
Interest income | (1,894) | (1,455) | (7,403) | (2,386) | ||||||||||||
Interest expense | 8,249 | 9,430 | 33,056 | 38,872 | ||||||||||||
Loss on extinguishment of debt | — | — | 2,224 | — | ||||||||||||
Other (income) expense, net | (582) | 11 | (1,315) | 123 | ||||||||||||
Total other expense | 5,773 | 7,986 | 26,562 | 36,609 | ||||||||||||
Income before income taxes | 19,103 | 30,709 | 97,603 | 105,717 | ||||||||||||
Income tax (benefit) provision | 4,636 | 3,039 | (48,075) | 13,658 | ||||||||||||
Net income | $ | 14,467 | $ | 27,670 | $ | 145,678 | $ | 92,059 | ||||||||
Net income attributable to common stock per share: | ||||||||||||||||
Basic | $ | 0.11 | $ | 0.22 | $ | 1.12 | $ | 0.75 | ||||||||
Diluted | $ | 0.11 | $ | 0.21 | $ | 1.09 | $ | 0.71 | ||||||||
Weighted average number of shares | ||||||||||||||||
Basic | 130,061 | 128,447 | 129,753 | 123,268 | ||||||||||||
Diluted | 132,931 | 133,053 | 133,283 | 133,923 | ||||||||||||
Gogo Inc. and Subsidiaries Unaudited Condensed Consolidated Balance Sheets (in thousands) | ||||||||
December 31, | December 31, | |||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 139,036 | $ | 150,550 | ||||
Short-term investments | - | 24,796 | ||||||
Total cash, cash-equivalents and short-term investments | 139,036 | 175,346 | ||||||
Accounts receivable, net of allowances of | 48,233 | 54,210 | ||||||
Inventories | 63,187 | 49,493 | ||||||
Prepaid expenses and other current assets | 64,138 | 45,100 | ||||||
Total current assets | 314,594 | 324,149 | ||||||
Non-current assets: | ||||||||
Property and equipment, net | 98,129 | 104,595 | ||||||
Intangible assets, net | 55,647 | 49,509 | ||||||
Operating lease right-of-use assets | 70,552 | 75,261 | ||||||
Other non-current assets, net of allowances of | 25,979 | 43,355 | ||||||
Deferred income taxes | 216,638 | 162,657 | ||||||
Total non-current assets | 466,945 | 435,377 | ||||||
Total assets | $ | 781,539 | $ | 759,526 | ||||
Liabilities and stockholders' equity (deficit) | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 16,094 | $ | 13,646 | ||||
Accrued liabilities | 47,649 | 60,056 | ||||||
Deferred revenue | 1,003 | 3,418 | ||||||
Current portion of long-term debt | 7,250 | 7,250 | ||||||
Total current liabilities | 71,996 | 84,370 | ||||||
Non-current liabilities: | ||||||||
Long-term debt | 587,501 | 690,173 | ||||||
Non-current operating lease liabilities | 73,047 | 79,241 | ||||||
Other non-current liabilities | 8,270 | 7,611 | ||||||
Total non-current liabilities | 668,818 | 777,025 | ||||||
Total liabilities | 740,814 | 861,395 | ||||||
Stockholders' equity (deficit) | ||||||||
Common stock | 14 | 14 | ||||||
Additional paid-in capital | 1,402,003 | 1,385,933 | ||||||
Accumulated other comprehensive income | 15,796 | 30,128 | ||||||
Treasury stock, at cost | (163,197) | (158,375) | ||||||
Accumulated deficit | (1,213,891) | (1,359,569) | ||||||
Total stockholders' equity (deficit) | 40,725 | (101,869) | ||||||
Total liabilities and stockholders' equity (deficit) | $ | 781,539 | $ | 759,526 | ||||
Gogo Inc. and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | ||||||||
For the Years | ||||||||
2023 | 2022 | |||||||
Operating activities: | ||||||||
Net income | $ | 145,678 | $ | 92,059 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 16,701 | 12,580 | ||||||
Loss on asset disposals, abandonments and write-downs | 362 | 1,577 | ||||||
Provision for expected credit losses | 1,233 | 1,047 | ||||||
Deferred income taxes | (49,172) | 13,170 | ||||||
Stock-based compensation expense | 21,288 | 19,065 | ||||||
Amortization of deferred financing costs and interest rate caps | 3,894 | 3,215 | ||||||
Accretion of debt discount | 403 | 456 | ||||||
Gain on sale of equity investment | (1,343) | — | ||||||
Loss on extinguishment of debt | 2,224 | — | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 4,833 | (17,482) | ||||||
Inventories | (13,694) | (15,517) | ||||||
Prepaid expenses and other current assets | (49,891) | 8,351 | ||||||
Contract assets | 3,217 | (2,164) | ||||||
Accounts payable | 3,658 | (2,540) | ||||||
Accrued liabilities | 4,351 | (12,031) | ||||||
Deferred revenue | (2,411) | 1,589 | ||||||
Accrued interest | (9,409) | 3,647 | ||||||
Other non-current assets and liabilities | (2,952) | (3,617) | ||||||
Net cash provided by operating activities | 78,970 | 103,405 | ||||||
Investing activities: | ||||||||
Purchases of property and equipment | (16,267) | (43,914) | ||||||
Acquisition of intangible assets—capitalized software | (7,821) | (6,000) | ||||||
Proceeds from FCC Reimbursement Program for property, equipment and intangibles | 1,130 | — | ||||||
Proceeds from interest rate caps | 26,675 | 4,292 | ||||||
Redemptions of short-term investments | 74,179 | — | ||||||
Purchases of short-term investments | (49,383) | (24,796) | ||||||
Purchase of equity investment | (5,000) | — | ||||||
Proceeds from sale of equity investment | 6,343 | — | ||||||
Net cash provided by (used in) investing activities | 29,856 | (70,418) | ||||||
Financing activities: | ||||||||
Repurchases of common stock | (4,822) | (18,375) | ||||||
Payments on term loan | (107,250) | (7,250) | ||||||
Payments on finance leases | (132) | (184) | ||||||
Stock-based compensation activity | (8,230) | (2,579) | ||||||
Net cash used in financing activities | (120,434) | (28,388) | ||||||
Effect of foreign exchange rate changes on cash | 94 | 13 | ||||||
(Decrease) increase in cash, cash equivalents and restricted cash | (11,514) | 4,612 | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 150,880 | 146,268 | ||||||
Cash, cash equivalents and restricted cash at end of period | $ | 139,366 | $ | 150,880 | ||||
Cash, cash equivalents and restricted cash at end of period | $ | 139,366 | $ | 150,880 | ||||
Less: current restricted cash | — | — | ||||||
Less: non-current restricted cash | 330 | 330 | ||||||
Cash and cash equivalents at end of period | $ | 139,036 | $ | 150,550 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 68,145 | $ | 41,209 | ||||
Cash paid for taxes | 1,004 | 377 | ||||||
Non-cash investing activities: | ||||||||
Purchases of property and equipment in current liabilities | $ | 4,801 | $ | 10,688 | ||||
Gogo Inc. and Subsidiaries Supplemental Information – Key Operating Metrics | ||||||||||||||||
For the Three Months | For the Years | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
Aircraft online (at period end) | ||||||||||||||||
ATG AVANCE | 3,976 | 3,279 | 3,976 | 3,279 | ||||||||||||
Gogo Biz | 3,229 | 3,656 | 3,229 | 3,656 | ||||||||||||
Total ATG | 7,205 | 6,935 | 7,205 | 6,935 | ||||||||||||
Narrowband satellite | 4,341 | 4,475 | 4,341 | 4,475 | ||||||||||||
Average monthly connectivity service revenue per aircraft online | ||||||||||||||||
ATG | $ | 3,387 | $ | 3,370 | $ | 3,380 | $ | 3,349 | ||||||||
Narrowband satellite | 301 | 284 | 298 | 268 | ||||||||||||
Units sold | ||||||||||||||||
ATG | 202 | 390 | 894 | 1,334 | ||||||||||||
Narrowband satellite | 42 | 62 | 174 | 206 | ||||||||||||
Average equipment revenue per unit sold (in thousands) | ||||||||||||||||
ATG | $ | 69 | $ | 67 | $ | 72 | $ | 68 | ||||||||
Narrowband satellite | 38 | 44 | 46 | 49 | ||||||||||||
- ATG AVANCE aircraft online. We define ATG AVANCE aircraft online as the total number of business aircraft equipped with our AVANCE L5 or L3 system for which we provide ATG services as of the last day of each period presented.
- Gogo Biz aircraft online. We define Gogo Biz aircraft online as the total number of business aircraft not equipped with our AVANCE L5 or L3 system for which we provide ATG services as of the last day of each period presented. This number excludes commercial aircraft operated by Intelsat's airline customers receiving ATG service.
- Narrowband satellite aircraft online. We define narrowband satellite aircraft online as the total number of business aircraft for which we provide narrowband satellite services as of the last day of each period presented.
- Average monthly connectivity service revenue per ATG aircraft online. We define average monthly connectivity service revenue per ATG aircraft online as the aggregate ATG connectivity service revenue for the period divided by the number of months in the period, divided by the number of ATG aircraft online during the period (expressed as an average of the month end figures for each month in such period). Revenue share earned from the ATG Network Sharing Agreement with Intelsat is excluded from this calculation.
- Average monthly connectivity service revenue per narrowband satellite aircraft online. We define average monthly connectivity service revenue per narrowband satellite aircraft online as the aggregate narrowband satellite connectivity service revenue for the period divided by the number of months in the period, divided by the number of narrowband satellite aircraft online during the period (expressed as an average of the month end figures for each month in such period).
- Units sold. We define units sold as the number of ATG or narrowband satellite units for which we recognized revenue during the period.
- Average equipment revenue per ATG unit sold. We define average equipment revenue per ATG unit sold as the aggregate equipment revenue from all ATG units sold during the period, divided by the number of ATG units sold.
- Average equipment revenue per narrowband satellite unit sold. We define average equipment revenue per narrowband satellite unit sold as the aggregate equipment revenue earned from all narrowband satellite units sold during the period, divided by the number of narrowband satellite units sold.
Gogo Inc. and Subsidiaries Supplemental Information – Revenue and Cost of Revenue (in thousands, unaudited) | ||||||||||||||||||||||||
For the Three Months | % Change | For the Years | % Change | |||||||||||||||||||||
2023 | 2022 | 2023 over 2022 | 2023 | 2022 | 2023 over 2022 | |||||||||||||||||||
Service revenue | $ | 80,908 | $ | 77,346 | 4.6 | % | $ | 318,015 | $ | 296,329 | 7.3 | % | ||||||||||||
Equipment revenue | 16,902 | 30,817 | (45.2) | % | 79,562 | 107,738 | (26.2) | % | ||||||||||||||||
Total revenue | $ | 97,810 | $ | 108,163 | (9.6) | % | $ | 397,577 | $ | 404,067 | (1.6) | % | ||||||||||||
For the Three Months | % Change | For the Years | % Change | |||||||||||||||||||||
2023 | 2022 | 2023 over 2022 | 2023 | 2022 | 2023 over 2022 | |||||||||||||||||||
Cost of service revenue (1) | $ | 17,836 | $ | 16,744 | 6.5 | % | $ | 69,568 | $ | 64,427 | 8.0 | % | ||||||||||||
Cost of equipment revenue (1) | $ | 15,400 | $ | 21,063 | (26.9) | % | $ | 63,383 | $ | 71,473 | (11.3) | % | ||||||||||||
(1) Excludes depreciation and amortization expense. | ||||||||||||||||||||||||
Gogo Inc. and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures (in thousands, unaudited) | ||||||||||||||||||||
For the Three Months | For the Years | For the Three | ||||||||||||||||||
2023 | 2022 | 2023 | 2022 | 2023 | ||||||||||||||||
Adjusted EBITDA: | ||||||||||||||||||||
Net income attributable to common stock (GAAP) | $ | 14,467 | $ | 27,670 | $ | 145,678 | $ | 92,059 | $ | 20,913 | ||||||||||
Interest expense | 8,249 | 9,430 | 33,056 | 38,872 | 8,025 | |||||||||||||||
Interest income | (1,894) | (1,455) | (7,403) | (2,386) | (1,622) | |||||||||||||||
Income tax provision (benefit) | 4,636 | 3,039 | (48,075) | 13,658 | 6,728 | |||||||||||||||
Depreciation and amortization | 4,679 | 2,574 | 16,701 | 12,580 | 4,692 | |||||||||||||||
EBITDA | 30,137 | 41,258 | 139,957 | 154,783 | 38,736 | |||||||||||||||
Stock-based compensation expense | 5,559 | 4,964 | 21,288 | 19,065 | 5,235 | |||||||||||||||
Loss on extinguishment of debt | — | — | 2,224 | — | — | |||||||||||||||
Gain on sale of equity investment | (570) | — | (1,343) | — | (773) | |||||||||||||||
Adjusted EBITDA | $ | 35,126 | $ | 46,222 | $ | 162,126 | $ | 173,848 | $ | 43,198 | ||||||||||
Free Cash Flow: | ||||||||||||||||||||
Net cash provided by operating activities (GAAP) (1) | $ | 26,152 | $ | 31,466 | $ | 78,970 | $ | 103,405 | $ | 18,677 | ||||||||||
Consolidated capital expenditures (1) | (5,371) | (9,982) | (24,088) | (49,914) | (5,355) | |||||||||||||||
Proceeds from FCC Reimbursement Program for property, equipment and intangibles (1) | 1,127 | — | 1,130 | — | 3 | |||||||||||||||
Proceeds from interest rate caps (1) | 6,510 | 3,489 | 26,675 | 4,292 | 7,676 | |||||||||||||||
Free cash flow | $ | 28,418 | $ | 24,973 | $ | 82,687 | $ | 57,783 | $ | 21,001 | ||||||||||
(1) See Unaudited Condensed Consolidated Statements of Cash Flows | ||||||||||||||||||||
Gogo Inc. and Subsidiaries
(in millions, unaudited) | |||||||
FY 2024 Range | |||||||
Low | High | ||||||
Free Cash Flow: | |||||||
Net cash provided by operating activities (GAAP) | $ | 37 | $ | 57 | |||
Consolidated capital expenditures | (45) | (45) | |||||
Proceeds from FCC Reimbursement Program for property, equipment and intangibles | 8 | 8 | |||||
Proceeds from interest rate caps | 20 | 20 | |||||
Free cash flow | $ | 20 | $ | 40 | |||
Definition of Non-GAAP Measures
EBITDA represents net income attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization expense.
Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense, (ii) loss on extinguishment of debt and (iii) gain on sale of equity investment . Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.
We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA provides a clearer view of the operating performance of our business and is appropriate given that grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.
We believe it is useful for an understanding of our operating performance to exclude the gain on sale of equity investment from Adjusted EBITDA because this activity is not related to our operating performance.
We believe it is useful for an understanding of our operating performance to exclude the loss on extinguishment of debt from Adjusted EBITDA because of the infrequently occurring nature of this activity.
We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our consolidated financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.
Adjusted EBITDA Margin represents Adjusted EBITDA divided by total revenue. We present Adjusted EBITDA Margin as a supplemental performance measure because we believe that it provides meaningful information regarding our operating efficiency.
Free Cash Flow represents net cash provided by operating activities, plus the proceeds received from the FCC Reimbursement Program and the interest rate caps, less purchases of property and equipment and the acquisition of intangible assets. We believe that Free Cash Flow provides meaningful information regarding our liquidity. Management believes that Free Cash Flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in property and equipment to support the Company's ongoing business operations and provides them with the same measures that management uses as the basis of making capital allocation decisions.
Investor Relations Contact: | Media Relations Contact: |
Will Davis | Dave Mellin |
+1 917-519-6994 | +1 720-840-4788 |
View original content:https://www.prnewswire.com/news-releases/gogo-announces-fourth-quarter-and-2023-results-302073606.html
SOURCE Gogo Inc.
FAQ
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