Group 1 - The article discusses the potential revenue growth for Gogo Inc. due to new 5G technologies expected in 2025 and 2026, indicating that the company is currently undervalued [1] - The author has a background in equity research and investment banking, focusing on small and medium-cap companies across various regions including Europe, the United States, and South America [1] - The investment strategy includes targeting mature industries such as mining, oil and gas, and real estate, with a preference for M&A deals, deep value investments, and dividend investing [1] Group 2 - The author aims for an internal rate of return of approximately 5%-7% on investments [1] - The article emphasizes the importance of reader feedback on stock ownership, highlighting the author's intent to share personal opinions rather than provide financial advice [1] - There is a disclaimer regarding the potential inaccuracies in future financial projections, including EPS, net revenue, and free cash flow [1]

Core Viewpoint - Gogo has received Supplemental Type Certification (STC) for its Gogo C1 line replaceable unit (LRU), which will support 42 aircraft models and ensure compatibility with its upcoming LTE network upgrade, enhancing inflight connectivity for legacy air-to-ground (ATG) customers [1][2][5]. Group 1: Product and Certification Details - The Gogo C1 LRU has been certified for 42 aircraft models, covering 70% of North American Gogo legacy ATG customer aircraft [1][2]. - The certification allows seamless transition for customers using legacy ATG systems to the upgraded Gogo Biz North American 850MHz Licensed LTE network, set to launch in May 2026 [2][3]. - The C1 features a dual-technology aircard that connects to the existing network and will automatically switch to the new LTE network when available [3]. Group 2: Installation and Incentives - Gogo is offering a $35,000 installation incentive for customers who complete the C1 installation before December 31, 2025 [4]. - The installation process is designed to be straightforward, requiring minimal downtime due to the C1's form-fit replacement design [3][4]. Group 3: Strategic Partnerships and Future Plans - Metrea Aerospace Design (MASD) collaborated with Gogo to generate the AML STC, enhancing the certification process for various aircraft models [2][8]. - Gogo is working with its dealer network to ensure a streamlined installation process for customers transitioning to the Gogo AVANCE products, which offer higher connection speeds and additional features [4][6].

Company Overview - Gogo (GOGO) shares increased by 14.9% to close at $14.40, with trading volume significantly higher than usual, compared to a 2% gain over the past four weeks [1] - The recent surge is attributed to the successful delivery of the first 5G air-to-ground (ATG) connectivity using Gogo's 5G chip, validating the Gogo 5G ATG system [2] Market Developments - Gogo has made significant advancements in the 5G market, including receiving formal approval from the Federal Aviation Administration for manufacturing advanced solutions, investing in a network of 170 5G towers, and developing a new 5G aircraft antenna [3] - The company is expected to report quarterly earnings of $0.12 per share, reflecting a year-over-year increase of 20%, with revenues projected at $220 million, up 115.6% from the previous year [4] Earnings Estimates and Stock Performance - The consensus EPS estimate for Gogo has remained unchanged over the last 30 days, indicating that stock price movements may not continue without trends in earnings estimate revisions [5] - Gogo currently holds a Zacks Rank of 2 (Buy), suggesting positive market sentiment [5]

Core Insights - Gogo has successfully completed its first end-to-end call using next-generation 5G technology, marking a significant milestone in its journey to deliver 5G air-to-ground connectivity to North American operators [1][2]. Group 1: Technology Development - GCT Semiconductor delivered a new 5G chipset to Airspan in May, enabling the successful integration of the microchip into hardware and software for the end-to-end call [2]. - The Gogo 5G ATG system is designed specifically for business aviation users, providing high-speed broadband for improved video conferencing, streaming, and multi-device activities [3]. Group 2: Infrastructure and Approvals - Gogo has received FAA approval to produce and manufacture the AVANCE LX5 Line Replaceable Unit (LRU), which features a smaller form factor for streamlined installation [4]. - The company has invested in a network of 170 5G towers across the U.S. and parts of Canada, along with the installation of a new '5G core' at its data center and the development of a new 5G aircraft antenna [4]. Group 3: Market Readiness - Gogo's North American tower network is 5G-ready, with antennas prepared for shipping, and the technology is in place to enable connections across North America through the AVANCE LX5 LRUs [5]. - More than 300 aircraft are pre-provisioned for Gogo 5G connectivity, with installation expected to take approximately two weeks for customers operating within the CONUS region [5].

Industry Overview - The Zacks Wireless National industry is facing high capital expenditures for infrastructure upgrades, uncertainty from tariff threats, supply-chain disruptions due to geopolitical tensions, and high customer inventory levels. However, it is expected to benefit from accelerated 5G rollout and increased fiber densification in the long run [1][4]. Current Market Dynamics - T-Mobile US, Verizon Communications, and Gogo are positioned to gain from rising demand for scalable infrastructure to support sustainable networks, driven by the proliferation of the Internet of Things (IoT), wireless traction, and solid broadband momentum [2]. Industry Description - The industry includes firms providing a wide range of communication services such as wireless, wireline, data/broadband, video, managed networking, and cloud-based services to both retail consumers and businesses. It also encompasses edge computing services for optimized application traffic routing [3]. Challenges Facing the Industry - High raw material prices and tariff impositions have disrupted supply chains and inflated equipment costs, impacting profitability. Increased competition from over-the-top service providers and price-sensitive customer retention strategies are expected to intensify challenges [4][6]. Growth Opportunities - The deployment of 4G LTE Advanced technologies and expansion of fiber optic networks are enhancing data speeds and capacity. The use of C-Band spectrum is expected to improve coverage in both rural and urban areas, leading to significant customer experience enhancements as the 5G ecosystem evolves [5]. Financial Performance - The Zacks Wireless National industry has outperformed the S&P 500 and the broader Zacks Computer and Technology sector over the past year, with a growth of 27.3% compared to 10.8% for the S&P 500 and 9.2% for the sector [9]. Valuation Metrics - The industry is currently trading at a trailing 12-month enterprise value-to-EBITDA (EV/EBITDA) of 9.38X, significantly lower than the S&P 500's 16.85X and the sector's 16.58X. Over the past five years, the industry has seen a range from 5.88X to 9.78X [12]. Notable Companies - **Gogo**: Focused on business aviation connectivity, Gogo has restructured its business model post-divestiture of its commercial in-flight connectivity division, improving liquidity and unlocking new opportunities. It has delivered an earnings surprise of 129.5% on average over the last four quarters [14]. - **T-Mobile**: A leading national wireless service provider, T-Mobile has achieved record-low churn rates and significant postpaid customer growth, supported by its Ultra Capacity 5G network. The stock has gained 37.1% over the past year with a long-term earnings growth expectation of 17.2% [17]. - **Verizon**: As a full-service wireless carrier, Verizon is expanding its fiber-optic networks and deploying advanced technologies to enhance data speeds. The stock has gained 5.5% over the past year and maintains a strong operational focus [20].

Core Insights - Michael (Mike) Dion is an FP&A leader with diverse finance experience across various industries including Telecom, Media and Entertainment, Hospitality, and Construction [1] - He founded Mike's F9 Finance, a platform aimed at helping finance professionals enhance their careers [1] - Dion's investment strategy focuses on identifying value opportunities where market reactions to news are disproportionate, emphasizing strong fundamentals and a preference for dividend-paying stocks [1] - The importance of cash flow is highlighted, being critical not only for companies but also for investors at all levels [1]

Core Viewpoint - Gogo (GOGO) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, particularly influenced by institutional investors [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations for stocks, prompting institutional buying or selling, which affects stock prices [4]. Gogo's Earnings Outlook - Gogo is projected to earn $0.44 per share for the fiscal year ending December 2025, reflecting a year-over-year decline of 2.2% [8]. - Over the past three months, the Zacks Consensus Estimate for Gogo has increased by 5.6%, indicating a positive trend in earnings estimates [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - Gogo's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Core Viewpoint - Gogo Inc reported strong first-quarter results and maintained its 2025 guidance, with a price target set at $11 by JPMorgan analyst Sebastiano C Petti, who holds a Neutral rating on the stock [1]. Financial Performance - Gogo's first-quarter results exceeded expectations, prompting Petti to raise his 2025 EBITDA forecast by 4% to $217 million, which is at the high end of the guidance range of $210 million to $220 million [2][6]. - The updated fiscal year 2025 revenue is projected at $906 million, slightly above the guidance of $870 million to $910 million, driven by a 3% increase in service revenue to $767 million [6]. Growth Strategy and Future Outlook - Gogo is expected to ramp up service revenue growth in 2026, supported by strong free cash flow generation anticipated in that year, aided by easing program investments and synergy realization [3][4]. - The company is on track for significant free cash flow acceleration, which should facilitate rapid de-leveraging over the next 12-18 months, with share buybacks expected to resume in the second half of 2026 [4]. Revenue and Cash Flow Projections - Petti raised the second-quarter total company revenue estimate to $220 million, reflecting higher service revenue from GEO and Narrowband, although offset by weaker equipment ARPU and lower ATG service revenue [5]. - The projected free cash flow for 2025 is $76 million, slightly higher due to improved EBITDA, while the 2026 free cash flow is expected to reach $137 million, significantly above the previous estimate of $123 million [7]. Market Performance - Gogo shares experienced a notable increase of 13.64%, trading at $12.50 at the time of publication [8].

Part I. Financial Information [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Gogo Inc.'s unaudited condensed consolidated financial statements for Q1 2025, reflecting the Satcom Direct acquisition and key financial positions and performance [Unaudited Condensed Consolidated Balance Sheets](index=3&type=section&id=Unaudited%20Condensed%20Consolidated%20Balance%20Sheets) The balance sheets show total assets at **$1.238 billion** and total liabilities at **$1.155 billion** as of March 31, 2025, with increased cash and stockholders' equity Condensed Consolidated Balance Sheet Data (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $70,282 | $41,765 | | Total current assets | $354,275 | $323,093 | | Total assets | $1,238,388 | $1,229,231 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $192,167 | $182,028 | | Long-term debt | $832,035 | $831,581 | | Total liabilities | $1,155,440 | $1,159,907 | | Total stockholders' equity | $82,948 | $69,324 | [Unaudited Condensed Consolidated Statements of Operations](index=4&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue for Q1 2025 increased to **$230.3 million** due to the Satcom Direct acquisition, while net income decreased to **$12.0 million** due to higher expenses Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Service revenue | $198,612 | $81,673 | | Equipment revenue | $31,695 | $22,649 | | **Total revenue** | **$230,307** | **$104,322** | | Operating income | $35,187 | $34,674 | | **Net income** | **$12,042** | **$30,490** | | Diluted EPS | $0.09 | $0.23 | [Unaudited Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Unaudited%20Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities was **$32.5 million** in Q1 2025, contributing to a **$28.5 million** increase in cash and cash equivalents Consolidated Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32,472 | $29,657 | | Net cash used in investing activities | ($2,435) | ($2,604) | | Net cash used in financing activities | ($1,574) | ($13,296) | | **Increase in cash, cash equivalents and restricted cash** | **$28,518** | **$13,784** | [Notes to Unaudited Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes detail significant accounting policies, the Satcom Direct acquisition impact, revenue recognition, FCC Reimbursement Program, debt structure, and ongoing litigation with SmartSky - The company completed its acquisition of Satcom Direct on December 3, 2024, for a total consideration including **$375 million** in cash, **5 million** restricted shares, and up to **$225 million** in potential earnout payments, creating two reportable segments: Gogo BA and Satcom Direct[21](index=21&type=chunk)[28](index=28&type=chunk)[30](index=30&type=chunk) - As of March 31, 2025, the company had approximately **$595 million** in remaining performance obligations (RPO), primarily from connectivity and entertainment service revenues expected to be recognized over the next ten years[42](index=42&type=chunk) - The company is participating in an FCC Reimbursement Program to replace certain network equipment, with up to approximately **$334 million** in approved reimbursements, with the completion deadline extended to May 8, 2026[46](index=46&type=chunk)[47](index=47&type=chunk) - Gogo is involved in multiple lawsuits with SmartSky Networks, LLC, including patent infringement allegations against Gogo 5G and a countersuit by Gogo, with a trial for the initial suit scheduled for November 17, 2025[119](index=119&type=chunk)[121](index=121&type=chunk)[122](index=122&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the Satcom Direct acquisition's impact, Q1 2025 results for the Gogo BA segment, key operating metrics, liquidity, capital resources, and non-GAAP measures [Key Operating Metrics](index=40&type=section&id=Key%20Operating%20Metrics) Key operating metrics for the Gogo BA segment show a decrease in total ATG aircraft online to **6,902**, while AVANCE aircraft online increased to **4,716** Gogo BA Segment Key Operating Metrics | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total ATG aircraft online | 6,902 | 7,136 | | - AVANCE aircraft online | 4,716 | 4,110 | | - Gogo Biz aircraft online | 2,186 | 3,026 | | GEO aircraft online | 1,280 | 9 | | Average monthly connectivity service revenue per ATG aircraft (ARPU) | $3,451 | $3,458 | | ATG units sold | 317 | 258 | - The reported metrics are for the Gogo BA segment only, with management planning to develop new metrics for the combined business in the future[137](index=137&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Gogo BA segment's total revenue decreased by **2.9%** to **$101.3 million** in Q1 2025, with increased cost of equipment revenue and general and administrative expenses Gogo BA Segment Revenue (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Service revenue | $79,515 | $81,673 | (2.6)% | | Equipment revenue | $21,799 | $22,649 | (3.8)% | | **Total revenue** | **$101,314** | **$104,322** | **(2.9)%** | - Gogo BA's cost of service revenue increased **2.8%** due to higher personnel costs, while cost of equipment revenue increased **26.8%** due to higher sales of lower margin products[152](index=152&type=chunk)[153](index=153&type=chunk) - General and administrative expenses for Gogo BA increased by **65.7%** to **$24.3 million**, primarily due to **$4.4 million** in acquisition and integration-related costs[156](index=156&type=chunk) [Non-GAAP Measures](index=46&type=section&id=Non-GAAP%20Measures) Non-GAAP measures show Adjusted EBITDA increased to **$62.1 million** in Q1 2025, while Free Cash Flow was **$30.0 million** Reconciliation of GAAP to Non-GAAP Measures (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (GAAP) | $12,042 | $30,490 | | EBITDA | $49,096 | $51,614 | | **Adjusted EBITDA** | **$62,055** | **$43,322** | | Net cash provided by operating activities (GAAP) | $32,472 | $29,657 | | **Free cash flow** | **$30,037** | **$32,053** | - Adjusted EBITDA adds back stock-based compensation, acquisition/integration costs, and changes in the fair value of a convertible note investment[165](index=165&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=48&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by **$70.3 million** in cash and a **$122 million** undrawn revolving credit facility, with capital expenditures expected to increase for network build-outs - The company believes its cash, operating cash flows, and access to its revolving facility will be sufficient to meet cash requirements for at least the next twelve months[176](index=176&type=chunk) - No shares were repurchased in Q1 2025, with **$12.1 million** remaining available under the share repurchase program as of March 31, 2025[177](index=177&type=chunk) - Capital expenditures are expected to increase in the near term due to the build-out of the LTE network (related to the FCC Reimbursement Program) and Gogo 5G, before decreasing in 2026[191](index=191&type=chunk)[192](index=192&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on variable-rate debt, mitigated by interest rate cap agreements, with a **$5.7 million** impact from a 1% rate increase - The company is exposed to interest rate risk on its variable rate debt, where a hypothetical **1%** rate change would impact annual interest expense by approximately **$5.7 million**, net of interest rate cap effects[199](index=199&type=chunk)[200](index=200&type=chunk) - The company has interest rate cap agreements with a notional amount of **$350.0 million** as of March 31, 2025, to hedge a portion of its variable rate debt[199](index=199&type=chunk)[200](index=200&type=chunk) [Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective due to material weaknesses in internal control over financial reporting related to the Satcom Direct acquisition, with a remediation plan underway - Disclosure controls and procedures were deemed ineffective as of March 31, 2025, due to material weaknesses in internal control over financial reporting[203](index=203&type=chunk) - The material weaknesses relate to the Satcom Direct acquisition, including ineffective general IT controls, lack of control activities for financial reporting at Satcom Direct, and ineffective implementation of controls over purchase accounting[207](index=207&type=chunk)[208](index=208&type=chunk)[211](index=211&type=chunk) - A remediation plan is underway, focusing on implementing new controls over IT and financial reporting at Satcom Direct, strengthening acquisition accounting processes, and hiring additional qualified personnel[209](index=209&type=chunk)[212](index=212&type=chunk) Part II. Other Information [Legal Proceedings](index=56&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ongoing patent infringement and antitrust litigation with SmartSky Networks, LLC, and is vigorously defending its position - Gogo is defending against a patent infringement suit from SmartSky regarding Gogo 5G, with a trial scheduled for November 17, 2025[119](index=119&type=chunk) - SmartSky has also filed an antitrust lawsuit against Gogo, alleging illegal monopoly practices, for which Gogo has filed a motion to dismiss[122](index=122&type=chunk) - Gogo has filed its own patent infringement counterclaims against SmartSky, with a trial date set for March 8, 2027[121](index=121&type=chunk) [Risk Factors](index=56&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K - No material changes to risk factors from the 2024 10-K report[215](index=215&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=57&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) There were no unregistered sales of equity securities or issuer repurchases reported during the quarter - There were no unregistered sales of equity securities or issuer repurchases during the period[216](index=216&type=chunk) [Other Information](index=57&type=section&id=Item%205.%20Other%20Information) The company's EVP and COO adopted a Rule 10b5-1 trading plan for the potential sale of up to **107,136** shares of common stock - EVP & COO Mike Begler adopted a Rule 10b5-1 trading plan for the potential sale of up to **107,136** shares[219](index=219&type=chunk)

Press Release For Immediate Release Investor Relations Contact: Media Relations Contact: Will Davis Stacey Giglio +1 917-519-6994 +1 321-525-4607 59 HDX shipments year to date Reiterates 2025 Financial Guidance, which includes current impact of global tariffs BROOMFIELD, Colo. - May 9, 2025 – Gogo Inc. (NASDAQ: GOGO) ("Gogo" or the "Company"), a leading global provider of broadband connectivity services for the business and military/government mobility aviation markets, today announced its financial results ...