Gogo Inc. (NASDAQ:GOGO) Q4 2022 Results Conference Call February 28, 2023 8:30 AM ET Company Participants Will Davis - Vice President of Investor Relations Oakleigh Thorne - Chairman and CEO Barry Rowan - Executive Vice President and CFO Jessi Betjemann - Senior Vice President, Finance, Chief Accounting Officer and Treasurer Conference Call Participants Ric Prentiss - Raymond James Scott Searle - ROTH Capital Markets Lance Vitanza - Cowen Louie DiPalma - William Blair Operator Thank you for standing by. And ...

Preliminary Information [Introductory Note](index=4&type=section&id=Introductory%20Note) This section clarifies company references and states that the Commercial Aviation (CA) business, sold on December 1, 2020, is presented as discontinued operations in all periods. It also mentions the ATG Network Sharing Agreement with Intelsat - References to 'we,' 'us,' 'our,' 'Gogo,' or the 'Company' refer to Gogo Inc. and its directly and indirectly owned subsidiaries as a combined entity[5](index=5&type=chunk) - On December 1, 2020, Gogo completed the sale of its commercial aviation ('CA') business to Intelsat for **$400.0 million** in cash, with all periods presented in the report conforming to present the CA business as discontinued operations[5](index=5&type=chunk) - Upon closing the transaction, Gogo and Intelsat entered into an ATG Network Sharing Agreement, where Gogo provides certain in-flight connectivity services on its ATG network to Intelsat, with revenue sharing obligations and exclusive commercial aviation access for Intelsat in North America[5](index=5&type=chunk) [Cautionary Note Regarding Forward-Looking Statements](index=4&type=section&id=Cautionary%20Note%20Regarding%20Forward-Looking%20Statements) This section provides a standard cautionary note regarding forward-looking statements within the report, emphasizing that such statements are subject to risks and uncertainties that may cause actual results to differ materially from expectations - The report contains forward-looking statements concerning industry, business strategy, market position, international expansion, future technologies, operations, profitability, capital expenditures, liquidity, and other financial/operating information[6](index=6&type=chunk) - Forward-looking statements are based on current expectations and assumptions subject to risks and uncertainties that could cause actual results to differ materially[6](index=6&type=chunk) - Risks and uncertainties are described under 'Risk Factors,' 'Quantitative and Qualitative Disclosures about Market Risk,' and 'Management’s Discussion and Analysis of Financial Condition and Results of Operations'[6](index=6&type=chunk) [Summary of Risk Factors](index=5&type=section&id=Summary%20of%20Risk%20Factors) This section provides a concise overview of the principal factors that make an investment in Gogo speculative or risky, categorized into risks related to business, technology and intellectual property, litigation and regulation, indebtedness, and common stock - Key business risks include the ability to generate revenue from connectivity services, reliance on OEMs and dealers, competition, global supply chain issues, inflation, international expansion, employee retention, pandemics, adverse economic conditions, and ESG matters[8](index=8&type=chunk) - Technology and intellectual property risks involve the development and deployment of Gogo 5G and Global Broadband, maintaining ATG spectrum rights, service interruptions, intellectual property infringement, and protection of proprietary rights[8](index=8&type=chunk) - Litigation and regulation risks cover compliance with foreign ownership limitations, government regulation (internet, conflict minerals), personal information handling, FCC Reimbursement Program participation, anti-bribery laws, and litigation expenses[8](index=8&type=chunk) - Risks related to indebtedness include substantial debt, ability to obtain additional financing, restrictions in debt agreements, interest rate increases, and assets being secured by debt[10](index=10&type=chunk) - Common stock risks include stock price volatility, utilization of tax losses, dilutive impact of future stock issuances, stockholder concentration, public company obligations, and anti-takeover provisions[10](index=10&type=chunk) Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Gogo Inc. is the world's largest provider of broadband connectivity services for the business aviation market, primarily in North America, with plans for global expansion through Gogo 5G and Global Broadband. The company's strategy focuses on leveraging its technology, distribution relationships, and innovative culture to meet evolving customer demands and drive market penetration - Gogo is the **world's largest provider** of broadband connectivity services for the business aviation market, serving it for over **25 years**[12](index=12&type=chunk) - The company is the **leading provider** of in-flight connectivity in North America, which comprises approximately **63%** of the worldwide business aviation fleet[12](index=12&type=chunk) - Gogo expects to commercially launch its fourth ATG network, Gogo 5G, in the **fourth quarter of 2023**[12](index=12&type=chunk) - In **May 2022**, Gogo announced plans to launch Global Broadband service for business aviation, utilizing an electronically steered antenna (ESA) designed with Hughes and operating on OneWeb's LEO satellite network[12](index=12&type=chunk) Aircraft Online as of December 31, 2022 | Category | Number of Aircraft | | :------- | :----------------- | | ATG | 6,900 | | AVANCE | 3,300 | | Gogo Biz | 3,600 | - The 'Now and Next Strategy' aims to penetrate the global business aviation market while strengthening leadership in North America, focusing on product line expansion, customer service enhancement, and balanced capital allocation[13](index=13&type=chunk) - Gogo holds approximately **457 U.S. and international patents**, primarily related to network technology, demonstrating its innovative culture[16](index=16&type=chunk) [Company Overview and Strategy](index=7&type=section&id=Company%20Overview%20and%20Strategy) [Products, Services, Customers and Customer Support](index=8&type=section&id=Products%2C%20Services%2C%20Customers%20and%20Customer%20Support) [Competition](index=10&type=section&id=Competition) [Licenses and Regulation](index=10&type=section&id=Licenses%20and%20Regulation) [Intellectual Property](index=14&type=section&id=Intellectual%20Property) [Human Capital](index=15&type=section&id=Human%20Capital) [Corporate Information](index=16&type=section&id=Corporate%20Information) [Available Information](index=16&type=section&id=Available%20Information) [Item 1A. Risk Factors](index=17&type=section&id=Item%201A.%20Risk%20Factors) This section outlines the significant risks that could adversely impact Gogo's business, financial condition, and operational results. These risks encompass operational dependencies, competitive pressures, technological development, regulatory compliance, financial leverage, and stock market volatility - Business risks include reliance on connectivity service revenue, key OEMs and dealers for equipment sales, intense competition, global supply chain issues, inflation, international expansion challenges, and the ability to recruit and retain skilled employees[44](index=44&type=chunk)[45](index=45&type=chunk)[48](index=48&type=chunk) - Technological and intellectual property risks involve potential delays or failures in developing and deploying Gogo 5G or Global Broadband, maintaining ATG spectrum rights, service interruptions, cyber-attacks, and intellectual property infringement claims[65](index=65&type=chunk)[66](index=66&type=chunk)[68](index=68&type=chunk) - Litigation and regulation risks cover compliance with foreign ownership limitations, FAA and FCC regulations, privacy and data security laws, potential participation in the FCC Reimbursement Program, anti-bribery laws, and the financial impact of ongoing litigation[78](index=78&type=chunk)[80](index=80&type=chunk)[81](index=81&type=chunk) - Risks related to indebtedness highlight substantial debt, limitations on obtaining additional financing, restrictive covenants in debt agreements, exposure to variable interest rates (transitioning to SOFR), and the fact that substantially all assets secure existing debt[90](index=90&type=chunk)[91](index=91&type=chunk)[93](index=93&type=chunk) - Risks related to common stock include price volatility, potential limitations on utilizing deferred tax assets (NOLs) due to ownership changes, dilution from future stock issuances, concentration of stockholder influence, and the costs and complexities of being a public company[98](index=98&type=chunk)[102](index=102&type=chunk)[104](index=104&type=chunk) [Risks Related to Our Business](index=17&type=section&id=Risks%20Related%20to%20Our%20Business) [Risks Related to Our Technology and Intellectual Property](index=22&type=section&id=Risks%20Related%20to%20Our%20Technology%20and%20Intellectual%20Property) [Risks Related to Litigation and Regulation](index=26&type=section&id=Risks%20Related%20to%20Litigation%20and%20Regulation) [Risks Related to Our Indebtedness](index=29&type=section&id=Risks%20Related%20to%20Our%20Indebtedness) [Risks Related to Our Common Stock](index=32&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) [Item 1B. Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) This section states that there are no unresolved staff comments from the SEC regarding the company's previous filings [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties) Gogo Inc. leases its primary business facilities in Broomfield, Colorado, and Chicago, Illinois, and believes these existing facilities are adequate for its foreseeable needs - Gogo leases approximately **120,000 square feet** for its business in Broomfield, CO, under a lease agreement expiring in **2029**[111](index=111&type=chunk) - The company also leases approximately **11,700 square feet** in Chicago, IL, with a lease agreement expiring on **May 31, 2032**[111](index=111&type=chunk) - Management believes that existing facilities will be adequate for the foreseeable future[111](index=111&type=chunk) [Item 3. Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) Gogo is involved in various legal proceedings, including a patent infringement suit by SmartSky Networks, LLC concerning Gogo 5G, and previously settled securities class action and derivative lawsuits. Litigation can lead to significant costs, management distraction, and potential business disruptions - Gogo is subject to several lawsuits arising from its business operations, as detailed in Note 17, 'Commitments and Contingencies,' to its consolidated financial statements[112](index=112&type=chunk) - The company cannot predict the outcome of litigation with certainty, and such proceedings can have a material adverse impact due to injunctive relief, damages, settlement costs, diversion of management resources, and defense expenses[112](index=112&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item states that the disclosures regarding mine safety are not applicable to Gogo Inc.'s operations Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Gogo Inc.'s common stock is listed on the NASDAQ Global Select Market under the symbol 'GOGO'. As of February 24, 2023, there were 33 stockholders of record and 127,910,134 shares outstanding. The company did not engage in recent repurchases of equity securities or sales of unregistered securities - Gogo's common stock has been listed on the NASDAQ Global Select Market under the symbol '**GOGO**' since **June 21, 2013**[114](index=114&type=chunk) - As of **February 24, 2023**, there were **33 stockholders of record**, and **127,910,134 shares** of **$0.0001 par value** common stock were outstanding[2](index=2&type=chunk)[115](index=115&type=chunk) - The aggregate market value of voting and non-voting stock held by non-affiliates was **$1,054,416,152** as of **June 30, 2022**[2](index=2&type=chunk) - No repurchases of equity securities or recent sales of unregistered securities were reported[115](index=115&type=chunk) [Item 6. Reserved](index=36&type=section&id=Item%206.%20Reserved) This item is intentionally left blank and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a comprehensive analysis of Gogo's financial performance, condition, liquidity, and capital resources for the fiscal years ended December 31, 2022, 2021, and 2020. It highlights revenue growth driven by increased ATG aircraft online and unit sales, changes in operating expenses, and the impact of debt refinancing and convertible note settlements on financial results. The discussion also covers key business metrics, critical accounting estimates, non-GAAP measures, and future capital needs - Gogo's operating and business performance is influenced by its technology roadmap implementation (Gogo 5G, Global Broadband), supply chain disruptions (electronic components), market demand, competition, and regulatory changes[123](index=123&type=chunk)[125](index=125&type=chunk) Key Operating Metrics | Metric | 2022 | 2021 | 2020 | | :------------------------------------------------ | :------ | :------ | :------ | | ATG Aircraft online (at period end) | 6,935 | 6,400 | 5,778 | | Satellite Aircraft online (at period end) | 4,475 | 4,567 | 4,702 | | Average monthly connectivity service revenue per ATG | $3,349 | $3,238 | $2,951 | | Average monthly connectivity service revenue per Satellite | $268 | $250 | $212 | | ATG Units sold | 1,334 | 869 | 667 | | Satellite Units sold | 206 | 205 | 199 | | Average equipment revenue per ATG unit sold (in thousands) | $68 | $71 | $68 | | Average equipment revenue per Satellite unit sold (in thousands) | $49 | $54 | $59 | Consolidated Statements of Operations (in thousands) | Metric | 2022 | 2021 | 2020 | | :----------------------------------------- | :---------- | :---------- | :---------- | | **Revenue:** | | | | | Service revenue | $296,329 | $259,583 | $211,987 | | Equipment revenue | $107,738 | $76,133 | $57,731 | | **Total revenue** | **$404,067**| **$335,716**| **$269,718**| | **Operating expenses:** | | | | | Cost of service revenue | $64,427 | $56,103 | $45,073 | | Cost of equipment revenue | $71,473 | $46,092 | $39,299 | | Engineering, design and development | $29,587 | $24,874 | $25,227 | | Sales and marketing | $25,471 | $20,985 | $15,135 | | General and administrative | $58,203 | $51,554 | $54,467 | | Depreciation and amortization | $12,580 | $15,482 | $14,166 | | **Total operating expenses** | **$261,741**| **$215,090**| **$193,367**| | **Operating income** | **$142,326**| **$120,626**| **$76,351** | | **Other (income) expense:** | | | | | Interest income | $(2,386) | $(191) | $(722) | | Interest expense | $38,872 | $67,472 | $125,787 | | Loss on extinguishment of debt and settlement of convertible notes | $0 | $83,961 | $0 | | Other (income) expense, net | $123 | $25 | $(9) | | **Total other expense** | **$36,609** | **$151,267**| **$125,056**| | **Income (loss) from continuing operations before income taxes** | **$105,717**| **$(30,641)**| **$(48,705)**| | Income tax provision (benefit) | $13,658 | $(187,230)$ | $(146) | | **Net income (loss) from continuing operations** | **$92,059** | **$156,589**| **$(48,559)**| | Net loss from discontinued operations, net of tax | $0 | $(3,854) | $(201,477)$ | | **Net income (loss)** | **$92,059** | **$152,735**| **$(250,036)**| - Total revenue increased by **20.4%** to **$404.1 million** in 2022, driven by a **14.2%** increase in service revenue and a **41.5%** increase in equipment revenue[144](index=144&type=chunk) - Adjusted EBITDA increased to **$173.8 million** in 2022 from **$151.0 million** in 2021, and Free Cash Flow increased to **$57.8 million** in 2022 from **$49.4 million** in 2021[160](index=160&type=chunk)[161](index=161&type=chunk) - The company expects its cash, cash equivalents, cash flows from operating activities, and access to capital markets to be sufficient to meet cash requirements for at least the next twelve months and the foreseeable future[164](index=164&type=chunk) Contractual Obligations and Commitments (as of Dec 31, 2022, in thousands) | Obligation Type | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :---------------------------------- | :------------ | :--------------- | :------------ | :------------ | :---------------- | | Finance lease obligations | $147 | $141 | $4 | $2 | $0 | | Operating lease obligations | $113,682 | $14,499 | $29,314 | $27,239 | $42,630 | | Purchase obligations | $369,180 | $123,731 | $64,909 | $10,500 | $170,040 | | Term Loan Facility | $714,125 | $7,250 | $14,500 | $14,500 | $677,875 | | Interest and fees on the Facilities | $309,035 | $59,240 | $116,839 | $114,278 | $18,678 | | Deferred revenue arrangements | $3,430 | $3,418 | $12 | $0 | $0 | | Other long-term obligations | $41,405 | $9,146 | $4,723 | $1,865 | $25,671 | | **Total** | **$1,551,004**| **$217,425** | **$230,301** | **$168,384** | **$934,894** | [Company Overview](index=39&type=section&id=Company%20Overview) [Factors and Trends Affecting Our Results of Operations](index=39&type=section&id=Factors%20and%20Trends%20Affecting%20Our%20Results%20of%20Operations) [Key Business Metrics](index=40&type=section&id=Key%20Business%20Metrics) [Key Components of Consolidated Statements of Operations](index=41&type=section&id=Key%20Components%20of%20Consolidated%20Statements%20of%20Operations) [Critical Accounting Estimates](index=42&type=section&id=Critical%20Accounting%20Estimates) [Recent Accounting Pronouncements](index=43&type=section&id=Recent%20Accounting%20Pronouncements) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) [Non-GAAP Measures](index=45&type=section&id=Non-GAAP%20Measures) [Liquidity and Capital Resources](index=47&type=section&id=Liquidity%20and%20Capital%20Resources) [Contractual Obligations and Commitments](index=49&type=section&id=Contractual%20Obligations%20and%20Commitments) [Cash Flows](index=50&type=section&id=Cash%20Flows) [Capital Expenditures](index=51&type=section&id=Capital%20Expenditures) [Debt Instruments](index=52&type=section&id=Debt%20Instruments) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=52&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Gogo's primary market risk exposure is to interest rate fluctuations on its variable-rate debt, which is partially mitigated by interest rate caps. The company also assesses minimal interest rate risk on its cash and short-term investments, and notes that inflation has not materially affected its operations - Gogo is exposed to interest rate risk on its variable rate indebtedness, including borrowings under the Term Loan Facility and Revolving Facility[185](index=185&type=chunk) - The company uses interest rate cap agreements to hedge a portion of its exposure to interest rate movements, with a notional amount of **$650.0 million** as of December 31, 2022[185](index=185&type=chunk) - A hypothetical one percentage point change in the applicable interest rate would impact annual interest expense by approximately **$1.2 million** for the next twelve-month period (including interest rate caps) or **$7.1 million** (excluding interest rate caps)[185](index=185&type=chunk) - The company amended its 2021 Credit Agreement on **February 2, 2023**, to transition from LIBOR to the secured overnight financing rate (SOFR) for applicable interest rates[94](index=94&type=chunk) - Inflation has not had a material effect on Gogo's results of operations, though future impacts are uncertain[186](index=186&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=54&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Gogo Inc.'s audited consolidated financial statements for the fiscal years ended December 31, 2022, 2021, and 2020, along with the independent auditor's report. It includes the balance sheets, statements of operations, comprehensive income (loss), cash flows, stockholders' equity (deficit), and detailed notes to the financial statements, covering accounting policies, debt, equity, and other financial disclosures - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified opinion on Gogo's consolidated financial statements and the effectiveness of its internal control over financial reporting as of **December 31, 2022**[191](index=191&type=chunk) - The critical audit matter identified was management's determination of the realizability of deferred tax assets, due to significant judgments related to taxable income estimates[194](index=194&type=chunk) Consolidated Balance Sheets (in thousands) | Assets | December 31, 2022 | December 31, 2021 | | :------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | :---------------- | :---------------- | | Cash and cash equivalents | $150,550 | $145,913 | | Short-term investments | $24,796 | $0 | | Total cash, cash-equivalents and short-term investments | $175,346 | $145,913 | | Accounts receivable, net | $54,210 | $37,730 | | Inventories | $49,493 | $33,976 | | Prepaid expenses and other current assets | $45,100 | $32,295 | | **Total current assets** | **$324,149** | **$249,914** | | Property and equipment, net | $104,595 | $63,672 | | Intangible assets, net | $49,509 | $49,554 | | Operating lease right-of-use assets | $75,261 | $70,989 | | Other non-current assets, net | $43,355 | $28,425 | | Deferred income taxes | $162,657 | $185,133 | | **Total non-current assets** | **$435,377** | **$397,773** | | **Total assets** | **$759,526** | **$647,687** | | Liabilities and stockholders' deficit | | | | Accounts payable | $13,646 | $17,203 | | Accrued liabilities | $60,056 | $59,868 | | Deferred revenue | $3,418 | $1,825 | | Current portion of long-term debt | $7,250 | $109,620 | | **Total current liabilities** | **$84,370** | **$188,516** | | Long-term debt | $690,173 | $694,760 | | Non-current operating lease liabilities | $79,241 | $77,329 | | Other non-current liabilities | $7,611 | $7,236 | | **Total non-current liabilities** | **$777,025** | **$779,325** | | **Total liabilities** | **$861,395** | **$967,841** | | Total stockholders' deficit | $(101,869)$ | $(320,154)$ | | **Total liabilities and stockholders' deficit** | **$759,526** | **$647,687** | Consolidated Statements of Cash Flows (in thousands) | | 2022 | 2021 | 2020 | | :-------------------------------------------------------------------------------------------------------------------------------------- | :------------- | :------------ | :------------ | | Net cash provided by operating activities | $103,405 | $66,697 | $4,513 | | Net cash used in investing activities | $(70,418) | $(16,289) | $(8,990) | | Net cash provided by (used in) financing activities | $(28,388) | $(331,037) | $44,479 | | Net cash provided by (used in) discontinued operations | $0 | $(9,013) | $(220,139) | | Effect of foreign exchange rate changes on cash | $13 | $40 | $(1,946) | | Increase (decrease) in cash, cash equivalents and restricted cash | $4,612 | $(289,602) | $258,195 | | Cash, cash equivalents and restricted cash at end of period | $150,880 | $146,268 | $435,870 | [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) [Consolidated Balance Sheets](index=59&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Operations](index=60&type=section&id=Consolidated%20Statements%20of%20Operations) [Consolidated Statements of Comprehensive Income (Loss)](index=61&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) [Consolidated Statements of Cash Flows](index=62&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Consolidated Statements of Stockholders' Equity (Deficit)](index=63&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity%20(Deficit)) [Notes to Consolidated Financial Statements](index=64&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) This section provides detailed disclosures and explanations for the figures presented in the consolidated financial statements, covering accounting policies, earnings per share, revenue recognition, balance sheet accounts, reserves, intangible assets, debt, derivatives, interest costs, equity, fair value measurements, stock-based compensation, income tax, leases, commitments, and discontinued operations [1. Background](index=64&type=section&id=1.%20Background) [2. Summary of Significant Accounting Policies](index=64&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) [3. Earnings (Loss) Per Share](index=68&type=section&id=3.%20Earnings%20(Loss)%20Per%20Share) [4. Revenue Recognition](index=70&type=section&id=4.%20Revenue%20Recognition) [5. Inventories](index=70&type=section&id=5.%20Inventories) [6. Composition of Certain Balance Sheet Accounts](index=71&type=section&id=6.%20Composition%20of%20Certain%20Balance%20Sheet%20Accounts) [7. Composition of Certain Reserves and Allowances](index=72&type=section&id=7.%20Composition%20of%20Certain%20Reserves%20and%20Allowances) [8. Intangible Assets](index=73&type=section&id=8.%20Intangible%20Assets) [9. Long-Term Debt and Other Liabilities](index=74&type=section&id=9.%20Long-Term%20Debt%20and%20Other%20Liabilities) [10. Derivative Instruments and Hedging Activities](index=77&type=section&id=10.%20Derivative%20Instruments%20and%20Hedging%20Activities) [11. Interest Costs](index=78&type=section&id=11.%20Interest%20Costs) [12. Common Stock and Preferred Stock](index=78&type=section&id=12.%20Common%20Stock%20and%20Preferred%20Stock) [13. Fair Value of Financial Assets and Liabilities](index=79&type=section&id=13.%20Fair%20Value%20of%20Financial%20Assets%20and%20Liabilities) [14. Stock-Based Compensation and 401(k) Plan](index=80&type=section&id=14.%20Stock-Based%20Compensation%20and%20401(k)%20Plan) [15. Income Tax](index=82&type=section&id=15.%20Income%20Tax) [16. Leases](index=84&type=section&id=16.%20Leases) [17. Commitments and Contingencies](index=85&type=section&id=17.%20Commitments%20and%20Contingencies) [18. Accumulated Other Comprehensive Income (Loss)](index=87&type=section&id=18.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) [19. Condensed Financial Information of Registrant](index=88&type=section&id=19.%20Condensed%20Financial%20Information%20of%20Registrant) [20. Discontinued Operations](index=89&type=section&id=20.%20Discontinued%20Operations) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=91&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section confirms that there have been no changes in or disagreements with the company's independent accountants regarding accounting principles or financial disclosure during the reported period [Item 9A. Controls and Procedures](index=91&type=section&id=Item%209A.%20Controls%20and%20Procedures) Gogo's management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of December 31, 2022. Furthermore, management assessed and confirmed the effectiveness of internal control over financial reporting, which was also attested to by the independent registered public accounting firm - Management, with CEO and CFO participation, evaluated the effectiveness of disclosure controls and procedures and concluded they were effective as of **December 31, 2022**[318](index=318&type=chunk) - Management assessed and concluded that Gogo's internal control over financial reporting was effective as of **December 31, 2022**, based on the COSO framework[319](index=319&type=chunk) - Deloitte & Touche LLP, the independent registered public accounting firm, issued an unqualified attestation report on the effectiveness of the company's internal control over financial reporting[319](index=319&type=chunk)[322](index=322&type=chunk) - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter[320](index=320&type=chunk) [Item 9B. Other Information](index=91&type=section&id=Item%209B.%20Other%20Information) This item states that there is no other information required to be disclosed that has not been previously reported [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=91&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item states that the disclosure regarding foreign jurisdictions that prevent inspections is not applicable to Gogo Inc Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=93&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding Gogo's directors, executive officers, and corporate governance practices is incorporated by reference from the company's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information required by this item is incorporated by reference to the company's definitive Proxy Statement for its Annual Meeting of Stockholders scheduled to be held **June 6, 2023**[3](index=3&type=chunk) [Item 11. Executive Compensation](index=93&type=section&id=Item%2011.%20Executive%20Compensation) Details concerning executive compensation are incorporated by reference from Gogo's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information required by this item is incorporated by reference to the company's definitive Proxy Statement for its Annual Meeting of Stockholders scheduled to be held **June 6, 2023**[3](index=3&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=95&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) This section incorporates by reference information on security ownership from the Proxy Statement and provides a table detailing the number of shares reserved for issuance under Gogo's equity compensation plans as of the end of 2022 - Information on security ownership of certain beneficial owners and management is incorporated by reference from the Proxy Statement for the **2023 Annual Meeting of Stockholders**[326](index=326&type=chunk) Securities Authorized for Issuance Under Equity Compensation Plans (as of Dec 31, 2022) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights () (a) | Weighted average exercise price of outstanding options, warrants and rights ($) (b) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))() (c) | | :------------------------------------------ | :------------------------------------------------------------------------------------------------ | :---------------------------------------------------------------------------------- | :----------------------------------------------------------------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 8,425,904 | 4.36 | 7,655,677 | | Equity compensation plans not approved by security holders | N/A | N/A | N/A | | **Total** | **8,425,904** | **4.36** | **7,655,677** | - As of **December 31, 2022**, **7,655,677 shares** remained available for future issuance under Gogo's equity compensation plans[327](index=327&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=96&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information concerning certain relationships, related transactions, and director independence is incorporated by reference from Gogo's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information required by this item is incorporated by reference to the company's definitive Proxy Statement for its Annual Meeting of Stockholders scheduled to be held **June 6, 2023**[3](index=3&type=chunk) [Item 14. Principal Accounting Fees and Services](index=96&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Details regarding principal accounting fees and services are incorporated by reference from Gogo's definitive Proxy Statement for the 2023 Annual Meeting of Stockholders - Information required by this item is incorporated by reference to the company's definitive Proxy Statement for its Annual Meeting of Stockholders scheduled to be held **June 6, 2023**[3](index=3&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=97&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all documents filed as part of the Annual Report on Form 10-K, including the consolidated financial statements and a comprehensive catalog of exhibits, many of which are incorporated by reference - The filing includes consolidated financial statements, such as the Report of Independent Registered Public Accounting Firm, Consolidated Balance Sheets, Statements of Operations, Comprehensive Income (Loss), Cash Flows, and Stockholders' Equity (Deficit), along with Notes to Consolidated Financial Statements[333](index=333&type=chunk) - All financial statement schedules have been omitted because they are not required, not applicable, or the information is otherwise included[333](index=333&type=chunk) - A detailed list of exhibits, including various agreements, certificates, and other documents, is provided, with many incorporated by reference from previous SEC filings[334](index=334&type=chunk)[335](index=335&type=chunk)[336](index=336&type=chunk) [Item 16. Form 10-K Summary](index=99&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item indicates that no Form 10-K Summary is provided in this annual report SIGNATURES [Signatures](index=102&type=section&id=Signatures) The Annual Report on Form 10-K is duly signed on behalf of Gogo Inc. by its Chief Executive Officer and Chairman of the Board, Oakleigh Thorne, and other principal officers and directors, confirming their authorization and responsibility for the report's content - The report is signed by Oakleigh Thorne, Chief Executive Officer and Chairman of the Board (Principal Executive Officer), and other key personnel including the Executive Vice President and Chief Financial Officer, and Senior Vice President, Finance, Chief Accounting Officer and Treasurer[341](index=341&type=chunk)[342](index=342&type=chunk) - A Power of Attorney is included, authorizing designated attorneys-in-fact to sign and file amendments to the Annual Report[342](index=342&type=chunk)

Gogo Inc. (NASDAQ:GOGO) Q3 2022 Earnings Conference Call November 3, 2022 8:30 AM ET Company Participants Will Davis – Vice President-Investor Relations Oakleigh Thorne – Chairman and Chief Executive Officer Barry Rowan – Executive Vice President and Chief Financial Officer Conference Call Participants Phil Cusick – JPMorgan Landon Park – Morgan Stanley Scott Searle – ROTH Capital Partners Louie DiPalma – William Blair Ric Prentiss – Raymond James Operator Good day, and thank you for standing by. Welcome to ...

Gogo Inc. (NASDAQ:GOGO) Q2 2022 Earnings Conference Call August 5, 2022 9:30 AM ET Company Participants William Davis - Vice President of Investor Relations Oakleigh Thorne - Chairman, and Chief Executive Officer Barry Rowan - Executive Vice President, and Chief Financial Officer Jessica Betjemann - Senior Vice President of Finance, and Chief Accounting Officer Conference Call Participants Scott Searle - ROTH Capital Partners Ric Prentiss - Raymond James Lance Vitanza - Cowen & Company Louie DiPalma - Willi ...

Gogo Inc. (NASDAQ:GOGO) Q1 2022 Earnings Conference Call May 5, 2022 8:30 AM ET Company Participants William Davis - Vice President, Investor Relations Oakleigh Thorne - Chairman & Chief Executive Officer Barry Rowan - Executive Vice President & Chief Financial Officer Conference Call Participants Lance Vitanza - Cowen Landon Park - Morgan Stanley Ric Prentiss - Raymond James Scott Searle - ROTH Capital Louie DiPalma - William Blair Anthony Klarman - Deutsche Bank Operator Good day, and thank you for standi ...

Financial Data and Key Metrics Changes - Gogo reported total revenue of $92.3 million for Q4 2021, a 19% increase year-over-year and a 6% sequential increase [38] - Service revenue reached a record $69.3 million, up 22% year-over-year, driven by more AVANCE units coming online and stronger ARPU [39] - Full-year 2021 total revenue was $335.7 million, up 24% from 2020, with adjusted EBITDA of $151 million, a 54% year-over-year increase [51][52] Business Line Data and Key Metrics Changes - Gogo achieved record equipment revenue of $23 million in Q4 2021, an 11% increase year-over-year, with 2,085 AVANCE product shipments, reflecting a 10% growth year-over-year [40][41] - The AVANCE platform saw a 40% year-over-year growth in shipments, with 887 total AVANCE shipments in fiscal 2021 [41][34] - The average revenue per user (ARPU) grew to $3,301, representing an 8% year-over-year increase [40] Market Data and Key Metrics Changes - Gogo ended Q4 2021 with 6,400 aircraft online, up 10.8% year-over-year [16] - Data consumption on business aircraft increased by 78% in Q4 2021 compared to pre-pandemic levels in Q4 2019, driven by a 38% increase in megabytes consumed per flight and a 29% increase in flights per day [15][40] - The company expects the percentage of business aircraft with broadband in-flight connectivity to grow from 30% to 50% by the end of 2025 [17] Company Strategy and Development Direction - Gogo is focused on enhancing its ATG network and driving penetration of its AVANCE platform, with a commercial launch of its Gogo 5G network expected in the second half of 2022 [21][22] - The company aims to capitalize on the growing demand for in-flight connectivity driven by an increase in high-net-worth individuals and data consumption [12][14] - Gogo's long-term targets include a revenue growth CAGR of approximately 15% from 2021 through 2026, with free cash flow expected to reach approximately $125 million in 2023 [60][62] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for business aviation connectivity, citing a sustainable growth trajectory due to changing consumer behaviors post-COVID [12][14] - The company anticipates continued strong growth in AVANCE shipments and service revenue, with a focus on maintaining a competitive edge through technological advancements [18][36] - Management highlighted the importance of securing supply chains to meet projected growth targets amid ongoing global supply chain challenges [66] Other Important Information - Gogo generated record free cash flow of $25.7 million in Q4 2021, reflecting strong top-line and adjusted EBITDA performance [49] - The company completed a comprehensive refinancing that reduced annualized interest expenses by over $70 million, enhancing financial flexibility [8][52] - Gogo's balance sheet showed a cash balance of $145.9 million at the end of 2021, with a net leverage ratio of 4.5 times adjusted EBITDA [52][53] Q&A Session Summary Question: Any update on supply chain for getting the ATB unit this year? - Management indicated that they have secured supply to meet their equipment budget and forecasted 25% unit growth, while also working on additional supply for future demand [66] Question: Can you breakout your expectations for equipment versus service revenue growth? - Management did not provide specific details but indicated that they expect strong growth in both service and equipment revenue, with equipment revenue likely growing at a higher rate [68] Question: On the CapEx spend in 2022, will some of that CapEx for 5G rollover into 2023? - Management confirmed that the majority of CapEx for 5G will be spent in the first three quarters of 2022, with some continuing into 2023 [70]