Gogo(GOGO) - 2025 Q2 - Quarterly Results

Executive Summary Gogo reported strong Q2 2025 financial results with significant revenue and profit growth driven by the Satcom Direct acquisition, alongside operational expansion and increased 2025 financial guidance Q2 2025 Financial and Operating Highlights Gogo reported strong second quarter 2025 financial results, significantly boosted by the acquisition of Satcom Direct, with substantial growth in revenue, net income, and Adjusted EBITDA, alongside operational growth in AVANCE ATG aircraft online and unit sales Q2 2025 Financial Highlights | Metric | Q2 2025 (Millions) | YoY Change | QoQ Change | Satcom Direct Contribution (Q2 2025) | | :-------------------------------- | :------------------- | :--------- | :--------- | :----------------------------------- | | Total Revenue | $226.0 | +121% | -2% | $122.8 million | | Service Revenue | $194.0 | +137% | -2% | - | | Equipment Revenue | $32.1 | +59% | +1% | - | Q2 2025 Profitability Highlights | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :---------------- | :------------------- | :------------------- | :--------- | | Net Income | $12.8 | $0.8 | Significant Increase | | Adjusted EBITDA | $61.7 | - | +103% | - Total AVANCE ATG aircraft online grew to 4,791 as of June 30, 2025, an increase of 14% compared to June 30, 2024, and 2% compared to March 31, 2025 AVANCE units comprised approximately 71% of total ATG AOL, up from 60% YoY[5] - AVANCE equipment unit sales in Q2 2025 totaled 276, marking the highest sales in two years, an increase of 19% compared to Q2 2024 and 15% compared to Q1 2025[5] Recent Company Highlights Gogo's CEO emphasized the strategic value of the Satcom Direct merger and strong market demand for broadband improvements, with Gogo 5G and Galileo expected to launch this year, while the CFO announced increased 2025 financial guidance and projected 2026 Free Cash Flow growth - CEO Chris Moore highlighted the strategic value and successful integration of the Satcom Direct-Gogo merger, noting significant demand for broadband performance improvements and the upcoming launch of Gogo 5G and Galileo in 2025[7] - CFO Zac Cotner announced an increase in 2025 financial guidance to the high-end of previous ranges for revenue, Adjusted EBITDA, and Free Cash Flow, anticipating 2026 Free Cash Flow growth from integration synergies, new product revenue, and the wind-down of a three-year product investment cycle[7] Operational and Financial Metrics | Metric | Q2 2025 | Q2 2024 | Change | | :------------------------------------------ | :------ | :------ | :----- | | Broadband GEO AOL | 1,321 | 11 | +1,310 units | | Net cash provided by operating activities | $36.7M | $24.9M | +$11.8M | | Free Cash Flow | $33.5M | $24.9M | +$8.6M | | Cash and cash equivalents (as of June 30) | $102.1M | - | +$60.3M (vs. Dec 31, 2024) | - Gogo reiterates the anticipated Q4 2025 launch timing for 5G, following Airspan's successful completion of the first end-to-end 5G call using commercial equipment and the Gogo 5G aircard[8] - The Company's C-1 solution has received STC approval for 42 aircraft models, covering 70% of current ATG customers, designed to enable connectivity for Classic ATG customers on Gogo's LTE network when it comes online in May 2026[8] Financial Guidance Gogo increased its 2025 financial guidance to the high end of previous ranges and anticipates releasing longer-term targets later in 2025, with preliminary targets indicating strong revenue growth and Adjusted EBITDA margins Updated 2025 Financial Guidance Gogo has increased its 2025 financial guidance to the high end of previously provided ranges for total revenue, Adjusted EBITDA, and Free Cash Flow, incorporating the potential impact of global tariffs, while net capital expenditures remain consistent but gross capital expenditures are higher due to increased strategic investments Updated 2025 Financial Guidance | Metric | Previous Range | Updated Guidance | | :-------------------------- | :------------- | :--------------- | | Total Revenue | $870M - $910M | High end of range | | Adjusted EBITDA | $200M - $220M | High end of range | | Free Cash Flow | $60M - $90M | High end of range | | Net Capital Expenditures | $40M | $40M (Consistent) | | Gross Capital Expenditures | $60M | $90M (Increased) | - Adjusted EBITDA guidance includes approximately $20 million in operating expenses for strategic and operational initiatives (Gogo 5G and Gogo Galileo), a reduction from prior guidance of $25 million[10] - Free Cash Flow guidance includes $60 million for strategic initiatives, net of reimbursements from the FCC Reimbursement Program, compared to prior guidance of $70 million Net capital expenditures assume $50 million in FCC reimbursement, up from prior expectations of $20 million[11][12] - Gross capital expenditures of $90 million include $75 million in strategic investments for Gogo 5G, Gogo Galileo, and the LTE network build, an increase from prior guidance of $45 million[12] Longer-Term Financial Targets Gogo expects to release longer-term financial targets later in 2025, with preliminary targets for the combined company, announced with the Satcom Direct acquisition, including 10% revenue growth and Adjusted EBITDA percentage margins in the mid-20s - The Company expects to provide longer-term financial targets later in 2025[13] - Preliminary targets for the combined company (Gogo and Satcom Direct) included 10% revenue growth and Adjusted EBITDA percentage margins in the mid-20s[13] Corporate Information & Disclosures This section provides details on the Q2 2025 conference call, introduces Gogo's use of non-GAAP financial measures and key operating metrics, includes a cautionary note on forward-looking statements, and offers an overview of Gogo's business as a leading in-flight connectivity provider Conference Call Details Gogo hosted its second quarter conference call on August 7, 2025, at 8:30 a.m. ET, with a live webcast and replay available on the Investor Relations section of the company's website - Gogo hosted its second quarter conference call on August 7, 2025, at 8:30 a.m. ET[14] - A live webcast and replay are available on the Investor Relations section of the Company's investor website at https://ir.gogoair.com[14](index=14&type=chunk) Non-GAAP Financial Measures (Introduction) Gogo uses non-GAAP financial measures like Adjusted EBITDA and Free Cash Flow for business planning, performance measurement, and liquidity assessment, emphasizing that these measures are not GAAP recognized and should be evaluated in conjunction with GAAP results - Management uses Adjusted EBITDA and Free Cash Flow for business planning, managing against internal projections, and measuring performance and liquidity[15] - These supplemental measures provide a basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items[15] - Adjusted EBITDA and Free Cash Flow are not recognized under GAAP and should be used in addition to, not as an alternative to, GAAP measures like net income (loss) and consolidated net cash provided by (used in) operating activities[15] Key Operating Metrics (Introduction) Gogo's management regularly reviews key operating metrics to evaluate business performance and guide strategic decisions, with metrics presented primarily for the Gogo Business Aviation (BA) segment due to insufficient time for full Satcom Direct integration - Management reviews key operating metrics to evaluate business performance, execute business plans, allocate resources, and make corporate strategies[18] - The metrics in this press release are only for the Gogo BA segment and do not include metrics for the Satcom Direct segment, except for GEO aircraft online, due to insufficient time post-acquisition[18] - As part of the integration, management plans to develop a new set of key financial and operating metrics for the combined Gogo BA and Satcom Direct business[18] Cautionary Note Regarding Forward-Looking Statements This report contains forward-looking statements regarding Gogo's business outlook, strategy, future operations, and financial performance, which are subject to various known and unknown risks, uncertainties, and factors, and Gogo undertakes no obligation to update these statements - Forward-looking statements cover business outlook, strategy, market position, international expansion, future technologies, operations, profitability, capital expenditures, and liquidity[19] - These statements are based on current expectations but are subject to various known and unknown risks, uncertainties, and factors that could cause actual results to differ materially[19] - Key risks include the ability to generate revenue, reliance on OEMs and third-party providers, competition, global supply chain issues, integration of Satcom Direct, development of Gogo 5G/Galileo, and compliance with regulations[19][20] - Gogo does not guarantee future performance and undertakes no obligation to publicly update or revise any forward-looking statements[21] About Gogo Gogo is a leading global provider of multi-orbit, multi-band in-flight connectivity services for business and military/government aviation, offering purpose-built technology, including Air-to-Ground (ATG) and multiple satellite constellations, supported by a comprehensive suite of software, hardware, advanced infrastructure, and 24/7 customer support - Gogo is the sole multi-orbit, multi-band in-flight connectivity provider offering technology purpose-built for business and military/government mobility aviation[22] - Its product portfolio provides best-in-class solutions for all aircraft types, from small to large and heavy jets[22] - The Gogo offering integrates Air-to-Ground technology and access to multiple satellite constellations for consistent, global connectivity, supported by software, hardware, advanced infrastructure, and 24/7 customer support[23] Condensed Consolidated Financial Statements This section presents Gogo's unaudited condensed consolidated financial statements, highlighting significant Q2 2025 revenue and net income growth, increased total assets, and positive cash flow from operating activities Unaudited Condensed Consolidated Statements of Operations Gogo's unaudited condensed consolidated statements of operations show significant revenue growth for Q2 and H1 2025 compared to the prior year, primarily driven by the Satcom Direct acquisition, with Q2 2025 total revenue reaching $226.0 million and net income at $12.8 million Unaudited Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Service revenue | $193,965 | $81,929 | $392,577 | $163,602 | | Equipment revenue | $32,073 | $20,130 | $63,768 | $42,779 | | Total revenue | $226,038 | $102,059 | $456,345 | $206,381 | | Operating income | $35,961 | $21,681 | $71,148 | $56,355 | | Net income | $12,807 | $839 | $24,849 | $31,329 | | Net income attributable to common stock per share (Diluted) | $0.09 | $0.01 | $0.18 | $0.24 | - Cost of service revenue increased significantly to $91.4 million in Q2 2025 from $18.9 million in Q2 2024, reflecting the expanded operations post-acquisition[25] - Interest expense more than doubled to $16.4 million in Q2 2025 from $8.1 million in Q2 2024[25] Unaudited Condensed Consolidated Balance Sheets Gogo's unaudited condensed consolidated balance sheet as of June 30, 2025, shows an increase in total assets to $1,262.97 million from $1,229.23 million at December 31, 2024, primarily driven by an increase in cash and cash equivalents and accounts receivable, with a notable rise in total stockholders' equity Unaudited Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Cash and cash equivalents | $102,085 | $41,765 | | Total current assets | $385,855 | $323,093 | | Total assets | $1,262,970 | $1,229,231 | | Total current liabilities | $225,609 | $182,028 | | Long-term debt | $832,513 | $831,581 | | Total liabilities | $1,160,180 | $1,159,907 | | Total stockholders' equity | $102,790 | $69,324 | - Goodwill increased to $192.17 million as of June 30, 2025, from $184.83 million at December 31, 2024[27] - Accrued liabilities significantly increased to $122.08 million from $81.89 million over the six-month period[27] Unaudited Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, Gogo generated $69.18 million in net cash from operating activities, an increase from $54.61 million in the prior year period, contributing to a $60.25 million increase in cash and cash equivalents, reaching $102.09 million by June 30, 2025 Unaudited Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------ | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $69,183 | $54,606 | | Net cash used in investing activities | $(7,221) | $(2,685) | | Net cash used in financing activities | $(2,269) | $(29,453) | | Increase in cash, cash equivalents and restricted cash | $60,250 | $22,514 | | Cash and cash equivalents at end of period | $102,085 | $161,550 | - Depreciation and amortization expense significantly increased to $29.26 million for the six months ended June 30, 2025, from $7.73 million in the prior year[29] - Cash paid for interest for the six months ended June 30, 2025, was $39.99 million, up from $28.35 million in the same period last year[29] Supplemental Financial and Operating Data This section provides detailed disaggregated revenue, key operating metrics, revenue and cost analysis, and reconciliations and definitions for non-GAAP financial measures, highlighting the impact of the Satcom Direct acquisition Disaggregated Revenue Gogo's disaggregated revenue for Q2 and H1 2025 highlights the significant contribution from the Satcom Direct acquisition, particularly in Satellite broadband and Narrowband and other service revenues, as well as the new Military/Government market segment, leading to substantial overall service and equipment revenue increases Q2 2025 Service Revenue by Type (in thousands) | Service Revenue Type | Gogo BA | Satcom Direct | Total | | :------------------- | :------ | :------------ | :---- | | Satellite broadband | $698 | $76,008 | $76,706 | | ATG broadband | $74,214 | — | $74,214 | | Narrowband and other | $2,650 | $40,395 | $43,045 | | Total Service Revenue | $77,562 | $116,403 | $193,965 | Q2 2025 Service Revenue by Market (in thousands) | Service Revenue Market | Gogo BA | Satcom Direct | Total | | :--------------------- | :------ | :------------ | :---- | | Business aviation | $77,562 | $87,804 | $165,366 | | Military / Government | — | $28,599 | $28,599 | | Total Service Revenue | $77,562 | $116,403 | $193,965 | Q2 2025 Equipment Revenue by Type (in thousands) | Equipment Revenue Type | Gogo BA | Satcom Direct | Total | | :--------------------- | :------ | :------------ | :---- | | Satellite broadband | $1,762 | $2,801 | $4,563 | | ATG broadband | $21,786 | — | $21,786 | | Narrowband and other | $2,176 | $3,548 | $5,724 | | Total Equipment Revenue | $25,724 | $6,349 | $32,073 | Key Operating Metrics (Detailed) Gogo's key operating metrics for Q2 2025 show continued growth in AVANCE ATG aircraft online, reaching 4,791 units, while Gogo Biz ATG aircraft online decreased, and the acquisition of Satcom Direct significantly boosted GEO aircraft online to 1,321, with average monthly connectivity service revenue per ATG aircraft online (ARPU) remaining relatively stable Aircraft Online (at period end) | Metric | June 30, 2025 | June 30, 2024 | | :------------ | :------------ | :------------ | | ATG AVANCE | 4,791 | 4,215 | | Gogo Biz | 1,939 | 2,816 | | Total ATG | 6,730 | 7,031 | | GEO aircraft online | 1,321 | 11 | Average Monthly Connectivity Service Revenue per ATG Aircraft Online (ARPU) | Period | ARPU | | :------------------------------------------ | :----- | | Three Months Ended June 30, 2025 | $3,445 | | Three Months Ended June 30, 2024 | $3,468 | | Six Months Ended June 30, 2025 | $3,448 | | Six Months Ended June 30, 2024 | $3,463 | ATG Units Sold | Period | Units Sold | | :------------------------------------------ | :--------- | | Three Months Ended June 30, 2025 | 405 | | Three Months Ended June 30, 2024 | 231 | | Six Months Ended June 30, 2025 | 722 | | Six Months Ended June 30, 2024 | 489 | - Definitions for key operating metrics include AVANCE aircraft online, Gogo Biz aircraft online, GEO aircraft online (with pro-forma Q2 2024 data of 1,144), Average monthly connectivity service revenue per ATG aircraft online (ARPU), and ATG units sold[37] Revenue and Cost of Revenue Analysis Gogo's Q2 and H1 2025 revenue and cost of revenue analysis demonstrates significant year-over-year growth across all categories, primarily due to the Satcom Direct acquisition, with service revenue increasing by 136.7% in Q2 2025 and equipment revenue growing by 59.3% Revenue Growth (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change (YoY) | H1 2025 | H1 2024 | % Change (YoY) | | :-------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Service revenue | $193,965 | $81,929 | 136.7% | $392,577 | $163,602 | 140.0% | | Equipment revenue | $32,073 | $20,130 | 59.3% | $63,768 | $42,779 | 49.1% | | Total revenue | $226,038 | $102,059 | 121.5% | $456,345 | $206,381 | 121.1% | Cost of Revenue Growth (in thousands) | Metric | Q2 2025 | Q2 2024 | % Change (YoY) | H1 2025 | H1 2024 | % Change (YoY) | | :---------------------- | :------ | :------ | :------------- | :------ | :------ | :------------- | | Cost of service revenue | $91,383 | $18,871 | 384.3% | $185,430 | $36,742 | 404.7% | | Cost of equipment revenue | $27,681 | $16,432 | 68.5% | $57,007 | $32,218 | 76.9% | Reconciliation of GAAP to Non-GAAP Measures Gogo provides reconciliations of GAAP net income to Adjusted EBITDA and GAAP net cash provided by operating activities to Free Cash Flow, with Q2 2025 Adjusted EBITDA at $61.72 million and Free Cash Flow at $33.54 million, both showing significant year-over-year increases Adjusted EBITDA Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Net income attributable to common stock (GAAP) | $12,807 | $839 | $24,849 | $31,329 | | EBITDA | $47,327 | $10,851 | $96,423 | $62,465 | | Stock-based compensation expense | $6,367 | $4,885 | $11,858 | $9,725 | | Acquisition and integration-related costs | $3,633 | — | $10,100 | — | | Adjusted EBITDA | $61,722 | $30,430 | $123,777 | $73,752 | Free Cash Flow Reconciliation (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :------------------------------------------ | :------ | :------ | :------ | :------ | | Net cash provided by operating activities (GAAP) | $36,711 | $24,949 | $69,183 | $54,606 | | Consolidated capital expenditures | $(5,937) | $(6,527) | $(12,106) | $(10,698) | | Proceeds from FCC Reimbursement Program | $(155) | $67 | $409 | $95 | | Proceeds from interest rate caps | $2,918 | $6,379 | $6,088 | $12,918 | | Free cash flow | $33,537 | $24,868 | $63,574 | $56,921 | Estimated Full-Year 2025 Free Cash Flow Guidance (in millions) | Metric | Low | High | | :------------------------------------------ | :-- | :--- | | Net cash provided by operating activities (GAAP) | $90 | $120 | | Consolidated capital expenditures | $(90) | $(90) | | Proceeds from FCC Reimbursement Program | $50 | $50 | | Proceeds from interest rate caps | $10 | $10 | | Free cash flow | $60 | $90 | Definition of Non-GAAP Measures Gogo defines EBITDA as net income before interest, taxes, depreciation, and amortization, with Adjusted EBITDA further adjusting for stock-based compensation, acquisition and integration-related costs, and changes in fair value, while Free Cash Flow is defined as net cash from operating activities plus FCC reimbursement and interest rate cap proceeds, less capital expenditures and intangible asset acquisitions - EBITDA is defined as net income attributable to common stock before interest expense, interest income, income taxes, and depreciation and amortization expense[41] - Adjusted EBITDA adjusts EBITDA for stock-based compensation expense, acquisition and integration-related costs (including amortization of acquisition-related inventory step-up costs and changes in fair value of the earnout liability), and change in fair value of convertible note investment[42] - Free Cash Flow represents net cash provided by operating activities, plus proceeds from the FCC Reimbursement Program and interest rate caps, less purchases of property and equipment and acquisition of intangible assets[48] - These non-GAAP measures are used by management and provided to investors to evaluate performance by excluding items believed to have less bearing on operating performance or to highlight trends in the core business[42][47][48]