Gogo Inc. (NASDAQ:GOGO) is one of the stocks that will double in 2026. On December 9, William Blair downgraded Gogo to Market Perform from Outperform The company faces significant pressure from several fronts: intensifying competition due to Elon Musk’s Starlink rolling out service to commercial aircraft, Gogo’s currently elevated net debt position, and the expectation that Air-to-Ground net additions will likely remain strained for the next several quarters as the company completes its migration of custom ...

Core Insights - The communication services sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1][2] Group 1: Oversold Stocks - Gogo Inc (NASDAQ:GOGO) has an RSI of 26.4, with a recent stock price of $5.61 after a 2.8% gain, but has seen a 19% decline over the past five days and a 52-week low of $5.20 [6] - Zhihu Inc (NYSE:ZH) has an RSI of 25.6, closing at $3.39 after a 1.6% drop, with a 20% decline over the past month and a 52-week low of $3.19 [6] - Brera Holdings PLC (NASDAQ:SLMT) has an RSI of 24.2, with shares closing at $2.43 after a 4.3% decline, experiencing a 67% drop over the past month and a 52-week low of $1.80 [6]

Core Insights - Gogo Inc. reported an EPS of -$0.01 for Q3 2025, missing the estimated EPS of $0.11, but exceeded revenue expectations with $223.6 million, surpassing the estimated $222.2 million [1][4]. Financial Performance - The company achieved a significant revenue increase of 122.4% year-over-year, reaching $223.6 million, which slightly exceeded the Zacks Consensus Estimate of $223.13 million, resulting in a positive surprise of 0.2% [2][4]. - Despite the EPS being lower than the previous year's $0.12, it surpassed the consensus estimate of $0.07 by 42.86% [2]. Valuation Metrics - The price-to-sales ratio is approximately 1.48, indicating that investors are paying $1.48 for every dollar of sales [3]. - The enterprise value to sales ratio stands at around 2.64, reflecting the company's total valuation in relation to its sales [3]. - The enterprise value to operating cash flow ratio is approximately 32.79, suggesting a higher valuation compared to the cash flow generated from operations [3]. - Gogo's earnings yield is about 0.71%, which is relatively low [3]. - The debt-to-equity ratio is approximately 8.86, indicating a significant level of debt compared to its equity [3]. - The current ratio is around 1.71, suggesting a reasonable level of liquidity to cover short-term liabilities [3].

Financial Performance - Total revenue for Q3 2025 was $223.6 million, representing a 122% increase year-over-year, but a 1% decrease compared to Q2 2025[4] - Service revenue reached $190.0 million, up 132% year-over-year, while equipment revenue was $33.6 million, an 80% increase year-over-year[4] - Adjusted EBITDA for the quarter was $56.2 million, a 61% increase compared to Q3 2024, but a 9% decrease from Q2 2025[6] - Net loss for Q3 2025 was $1.9 million, which included a $15 million pre-tax acquisition-related earn-out accrual[4] - Total revenue for Q3 2025 reached $223,585,000, a significant increase from $100,529,000 in Q3 2024, representing a growth of 122%[22] - Service revenue for the nine months ended September 30, 2025, was $582,533,000, up from $245,459,000 in the same period of 2024, marking a 137% increase[22] - Business aviation service revenue accounted for $162,622,000 in Q3 2025, compared to $81,857,000 in Q3 2024, reflecting a growth of 99%[28] - Operating income for the nine months ended September 30, 2025, was $99,891,000, compared to $75,426,000 in the same period of 2024, an increase of 32%[22] - The company reported a net loss of $1,930,000 for Q3 2025, compared to a net income of $10,630,000 in Q3 2024[22] - Adjusted EBITDA for the three months was $56.2 million, up from $34.8 million in the same period of 2024[36] - Free cash flow for the three months was $30.6 million, compared to $24.6 million in the same period of 2024[36] Cash Flow and Assets - Free Cash Flow for Q3 2025 was $30.6 million, up from $24.6 million in the prior-year period[6] - Cash and cash equivalents at the end of Q3 2025 were $133,572,000, up from $41,765,000 at the end of Q4 2024[24] - Total current assets increased to $423,608,000 as of September 30, 2025, compared to $323,093,000 at the end of Q4 2024, a growth of 31%[24] - The company expects full-year free cash flow to range between $60 million and $90 million for FY 2025[37] Product Development and Launches - Year-to-date shipments of Gogo's new Low Earth Orbit HDX antenna exceeded 200 as of November 4, 2025[4] - Gogo completed 19 HDX Supplemental Type Certificates out of a total of 40 under contract, indicating progress in product development[6] - The company confirmed a year-end 2025 launch for its new high-speed 5G Air-to-Ground network[4] Aircraft and Connectivity - Total AVANCE ATG aircraft online grew to 4,890, a 12% increase compared to September 30, 2024[6] - The number of ATG aircraft online increased to 6,529, compared to 7,016 in the previous year, with AVANCE aircraft online at 4,890[30] - Average monthly connectivity service revenue per ATG aircraft was $3,407, slightly down from $3,497 in the previous year[30] - The number of ATG units sold in the three months was 437, compared to 214 in the same period of 2024[30] Costs and Liabilities - Cost of service revenue increased significantly to $91.6 million, a 380.8% increase from $19.1 million year-over-year[33] - The total liabilities as of September 30, 2025, were $1,188,146,000, compared to $1,159,907,000 at the end of Q4 2024[24] - The company incurred interest expense of $50,650,000 for the nine months ended September 30, 2025, compared to $26,193,000 in the same period of 2024, an increase of 93%[22]

Revenue Performance - Total revenue for the three months ended September 30, 2025, was $223.6 million, a 122.4% increase compared to $100.5 million in the same period of 2024[151]. - Service revenue reached $190.0 million for the three months ended September 30, 2025, up 132.1% from $81.9 million in the prior-year period, primarily due to the acquisition of Satcom Direct[152]. - Equipment revenue increased to $33.6 million for the three months ended September 30, 2025, representing an 80.1% rise from $18.7 million in the same period of 2024, also attributed to the Satcom Direct acquisition[153]. Active Connections - The number of ATG aircraft online as of September 30, 2025, was 6,529, compared to 7,016 in the prior year, indicating a decrease in active connections[139]. - Average monthly connectivity service revenue per ATG aircraft online was $3,407 for the three months ended September 30, 2025, slightly down from $3,497 in the same period of 2024[139]. - The company expects service revenue to decline in the near term due to a decrease in ATG services sold, but anticipates future growth as more aircraft come online with Gogo 5G and Gogo Galileo[154]. Operating Income and Expenses - Operating income for the three months ended September 30, 2025, was $28.7 million, compared to $19.1 million in the same period of 2024[149]. - Total operating expenses for the three months ended September 30, 2025, were $194.8 million, up from $81.5 million in the prior-year period[149]. - The company reported a net loss of $1.9 million for the three months ended September 30, 2025, compared to a net income of $10.6 million in the same period of 2024[149]. Cost Analysis - Cost of service revenue increased 380.8% to $91.6 million for the three months ended September 30, 2025, compared to $19.1 million in the prior year[155]. - Cost of equipment revenue rose 104.6% to $31.0 million for the three months ended September 30, 2025, compared to $15.2 million in the prior year[156]. - Engineering, design, and development expenses increased 60.7% to $15.7 million for the three months ended September 30, 2025, compared to $9.8 million in the prior year[158]. - Sales and marketing expenses increased 57.5% to $13.5 million for the three months ended September 30, 2025, compared to $8.6 million in the prior year[160]. - General and administrative expenses increased 11.8% to $27.9 million for the three months ended September 30, 2025, compared to $24.9 million in the prior year[162]. - Depreciation and amortization expense increased 278.9% to $15.2 million for the three months ended September 30, 2025, compared to $4.0 million in the prior year[164]. - Total other expense increased to $29.3 million for the three months ended September 30, 2025, compared to $6.9 million in the prior year[167]. Tax and Cash Flow - The effective income tax rate for the three months ended September 30, 2025, was (242.8)%, compared to 12.5% in the prior year[169]. - Free Cash Flow is defined as net cash provided by operating activities, plus proceeds from the FCC Reimbursement Program, less purchases of property and equipment[179]. - For the nine months ended September 30, 2025, net cash provided by operating activities was $115.987 million, compared to $79.740 million for the same period in 2024, representing a year-over-year increase of approximately 45%[195]. - Free cash flow for the nine months ended September 30, 2025, was $94.126 million, compared to $81.515 million for the same period in 2024, indicating an increase of about 15.5%[1]. Capital Expenditures and Debt - Capital expenditures for the nine months ended September 30, 2025, were $34.732 million, significantly higher than $18.894 million for the same period in 2024, marking an increase of approximately 83.9%[200]. - The company announced a share repurchase program allowing for the repurchase of up to $50 million of common stock, with approximately $12.1 million remaining available as of September 30, 2025[186]. - The company prepaid $100 million of the outstanding principal amount of the 2021 Term Loan Facility on May 3, 2023, satisfying the required amortization payments for the remaining term[189]. - As of September 30, 2025, cash and cash equivalents at the end of the period were $133.572 million, down from $176.678 million at the end of the same period in 2024[183]. Interest Expense and Risk Management - Interest expense for the nine months ended September 30, 2025, was $50.650 million, compared to $26.193 million for the same period in 2024, reflecting an increase of approximately 93.5%[1]. - The company expects its cash and cash equivalents, along with cash flows from operating activities, to be sufficient to meet its cash requirements for at least the next twelve months[184]. - Capital expenditures are expected to increase in the near term due to the LTE network build-out related to the FCC Reimbursement Program, but this increase will be partially offset by reimbursements from the FCC[201]. - The company has minimal interest rate risk, as a 10% decrease in the average interest rate on its portfolio would have resulted in immaterial reductions in interest income for the three- and nine-month periods ended September 30, 2025 and 2024[209]. Investment Policy and Inflation - The primary objective of the company's investment policy is to preserve capital and maintain liquidity while limiting concentration and counterparty risk[205]. - The company has not used derivative financial instruments for speculation or trading purposes, focusing instead on preserving capital for funding operations[205]. - Inflation has not had a material effect on the company's results of operations, although future impacts cannot be ruled out[210].

Core Insights - Gogo reported a revenue of $223.59 million for the quarter ended September 2025, marking a significant increase of 122.4% year-over-year, and an EPS of $0.10, slightly down from $0.12 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate by 0.2%, while the EPS surpassed the consensus estimate by 42.86% [1] Financial Performance - Total ATG units online reached 6,529, slightly below the average estimate of 6,655 from three analysts [4] - Gogo sold 437 ATG units, exceeding the average estimate of 261 units [4] - Average monthly connectivity service revenue per aircraft online was $3,407, lower than the average estimate of $3,510.15 [4] - Service revenue was reported at $189.96 million, which is a 132.1% increase compared to the year-ago quarter, but below the estimated $192.16 million [4] - Equipment revenue stood at $33.63 million, surpassing the estimated $30.98 million, reflecting an 80.1% year-over-year increase [4] Stock Performance - Gogo's shares have declined by 4.6% over the past month, contrasting with a 1.3% increase in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total revenue for Q3 was $224 million, down 1% year-over-year on a pro forma basis, and total service revenue increased 132% over the prior year to $190 million [24][25] - Adjusted EBITDA was $56.2 million, with an adjusted EBITDA margin of 25%, consistent with long-term expectations [29][30] - Free cash flow generated in Q3 was $31 million, totaling $94 million year-to-date [31] Business Line Data and Key Metrics Changes - Total ATG aircraft online at the end of Q3 was 6,529, a decline of approximately 7% year-over-year [24] - Advanced AOL increased 12% year-over-year, now comprising 75% of the total ATG fleet [25] - Total equipment revenue in Q3 was $33.6 million, up 80% year-over-year, with ATG equipment shipments reaching a record 437 units [25][26] Market Data and Key Metrics Changes - Global business jet flights are about 30% above pre-COVID levels, with major OEMs reporting strong backlogs [5] - The global addressable market of 41,000 business aircraft is less than 25% penetrated with broadband connectivity, indicating significant growth potential [5][6] - The MilGov segment is expected to grow from 13% to 20% of total revenue over the long term [20] Company Strategy and Development Direction - The company aims to grow its position in the under-penetrated market by delivering new products that significantly improve performance [6] - Recent contract wins with major global fleet operators and OEMs validate the company's multi-orbit, multi-band strategy [8][12] - The focus on 5G and Galileo investments is expected to drive future service revenue growth [22][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving long-term sustained revenue and free cash flow growth due to new product launches and contract wins [4] - The company anticipates a return to modest year-over-year revenue growth in Q4, despite expected declines in adjusted EBITDA and free cash flow due to strategic investments [23][33] - Management noted that industry trends may pressure ATG online counts in the near term, but new product ramps and MilGov market progress are key to returning to service revenue growth [17] Other Important Information - The company received $6.6 million in FCC grant funding in Q3, bringing the total to $59.9 million [28] - The company expects to achieve over $30 million in annualized synergies from the SatCom acquisition, exceeding previous guidance [30] - The anticipated LTE cutover is expected in May 2026, with significant upgrades planned for the classic fleet [16][32] Q&A Session Summary Question: Can you elaborate on the fourth quarter implied guidance? - Management indicated that the ATG pressure continues, but they expect a less aggressive decline compared to previous quarters, with revenue anticipated to increase [36] Question: How is the transition from Classic to C1 expected to unfold? - Management noted that the transition is a mix, with customers looking forward to 5G and the C1 serving as a placeholder product [39] Question: What are the expectations for ARPU trends going into next year? - Management expects ARPU to increase as 5G services, which have higher pricing, begin to roll out [40] Question: Are there any impacts from the government shutdown on the business? - Management confirmed that while there has been some slowdown in government approvals, it has not significantly affected revenue outlook [44]

Core Insights - Gogo reported quarterly earnings of $0.10 per share, exceeding the Zacks Consensus Estimate of $0.07 per share, but down from $0.12 per share a year ago, representing an earnings surprise of +42.86% [1] - The company achieved revenues of $223.59 million for the quarter ended September 2025, surpassing the Zacks Consensus Estimate by 0.20% and significantly up from $100.53 million year-over-year [2] - Gogo has consistently surpassed consensus EPS estimates over the last four quarters, indicating strong performance [2] Financial Performance - The earnings surprise of +42.86% reflects a positive trend in Gogo's financial performance, with a previous quarter's surprise of +8.33% [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.05, with expected revenues of $226.45 million, while the estimate for the current fiscal year is $0.30 on revenues of $905.94 million [7] Market Position - Gogo shares have increased approximately 8.3% since the beginning of the year, underperforming compared to the S&P 500's gain of 15.6% [3] - The Zacks Industry Rank places the Wireless National sector in the bottom 33% of over 250 Zacks industries, which may impact Gogo's stock performance [8] Future Outlook - The sustainability of Gogo's stock price movement will depend on management's commentary during the earnings call and future earnings expectations [3][4] - The trend of estimate revisions for Gogo was mixed prior to the earnings release, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market [6]

Core Insights - Gogo Inc. reported total revenue of $223.6 million for Q3 2025, representing a 122% increase year-over-year, while service revenue reached $190.0 million, up 132% year-over-year [1][3][8] - The company experienced a net loss of $1.9 million, which included a $15 million pre-tax acquisition-related earn-out accrual [1][8] - Adjusted EBITDA was $56.2 million, reflecting a 61% increase compared to Q3 2024 [1][8] Financial Performance - Total revenue for Q3 2025 was $223.6 million, a 122% increase from Q3 2024, but a slight decrease of 1% from Q2 2025 [3][8] - Service revenue of $190.0 million increased by 132% year-over-year, while equipment revenue was $33.6 million, up 80% compared to Q3 2024 [3][8] - Year-to-date HDX equipment shipments exceeded 200 as of November 4, 2025, compared to 77 at the end of Q2 2025 [1][3] Operational Highlights - Gogo achieved an all-time record of 437 ATG quarterly equipment shipments in Q3 2025, an 8% increase sequentially [1][3] - The company is on track for the year-end 2025 launch of its new high-speed 5G Air-to-Ground network [1][5] - AVANCE units sold in Q3 totaled 208, a decrease of 3% compared to Q3 2024, while C-1 units sold increased by 78% compared to Q2 2025 [3][8] Market Position and Guidance - Gogo reiterated its 2025 financial guidance at the high end of the ranges for revenue, Adjusted EBITDA, and Free Cash Flow, expecting total revenue between $870 million and $910 million [2][6][7] - The company anticipates Free Cash Flow at the high end of the range of $60 million to $90 million, including $40 million for strategic investments in 2025 [9][10] - Gogo's AVANCE units comprised approximately 75% of total ATG aircraft online as of September 30, 2025, up from 62% a year earlier [3][8]

Core Insights - Gogo has initiated flight testing for its next-generation 5G air-to-ground connectivity network aimed at North American customers, utilizing a Pilatus PC-24 as the testing platform [1][6] - The testing program is expected to take 40 to 50 hours of flight time over several weeks to validate the performance of the Gogo 5G ATG broadband access [1][4] - Gogo anticipates full service activation of the 5G network by the end of 2025, with client activation and revenue generation expected in Q1 of 2026 [7] Testing Methodology - The flight testing campaign employs established trial techniques, starting with simple procedures and advancing to fully loaded tests that include video calling, streaming, and internet browsing on multiple devices [2] - The testing will take place using Gogo towers located in eastern Colorado and Nebraska, with plans to expand to other major cities [4] Technical Developments - The test program has already confirmed the functionality of the 5G chip on the ground, following its delivery to Airspan, Gogo's 5G partner, in May [5] - Gogo's 5G service is expected to provide unprecedented connectivity speeds of up to 80 Mbps for various aircraft types, enhancing the ability to stream video and meet data demands [6] Future Plans - After completing flight testing, Gogo will finalize the 5G AVANCE software and seek FAA approval for the Gogo AVANCE LX5 and Gogo X3 products, which have already received prior approval for the 4G chip [6] - The number of aircraft pre-provisioned for the new 5G service has increased from 300 to 400 in the last three months, indicating strong market interest [7]