GLOBALFOUNDRIES (NasdaqGS:GFS) Q3 2025 Earnings Call November 12, 2025 08:30 AM ET Speaker2Thank you for standing by, and welcome to the GlobalFoundries third quarter of fiscal 2025 financial results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star 11 on your telephone. If your question has been answered and you'd like to remove yourself fr ...

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]

Financial Data and Key Metrics Changes - Gogo's total revenue for Q1 2025 was $230.3 million, representing a 21% year-over-year increase and a 67% sequential increase [30] - Total service revenue reached $198.6 million, up 43% year-over-year and 67% sequentially [31] - Adjusted EBITDA for Q1 was $62.1 million, with an adjusted EBITDA margin of 27% [38] Business Line Data and Key Metrics Changes - The number of GEO aircraft online grew to 1,280, up 16% year-over-year and 31 units sequentially [32] - Advanced ATG aircraft online reached 4,716, up 15% from the prior year, comprising 68% of the total ATG fleet [31] - Advanced equipment units shipped increased by 19% sequentially to 241 [33] Market Data and Key Metrics Changes - The business aviation sector shows significant unmet demand, with only about one-third of the world's business jets having connectivity [13] - The military government mobility market is expected to grow, with the Department of Defense increasing its projected spending on LEO satellite services from $900 million to $13 billion over the next ten years [15] Company Strategy and Development Direction - Gogo aims to grow shareholder value by driving growth in high-margin recurring revenue customer relationships in business aviation and military government sectors [16] - The company is focused on integrating Gogo and Satcom Direct to enhance market positioning and product offerings [6] - Gogo's strategy includes leveraging its global sales and service network to expand its addressable market by 60% [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's resilience despite macroeconomic uncertainties, noting a diverse international customer base [49] - The company anticipates strong free cash flows in 2026, driven by higher-margin service revenue and realized cost synergies [13] - Management highlighted the positive impact of the Satcom Direct acquisition on future growth and financial performance [29] Other Important Information - Gogo has achieved over 85% of targeted synergy savings from the Satcom Direct acquisition, with expectations for full realization in 2026 [12] - The company is preparing for the launch of its 5G network, with 301 aircraft pre-provisioned for launch, a 29% increase from the previous year [22] Q&A Session Summary Question: Can you size the tariff impact in terms of dollar amount? - The tariff impact is around $5 million, split between EBITDA and working capital [48] Question: What portion of your customer base is economically sensitive? - Management noted no significant impact from macroeconomic fears, citing a diverse international customer base [49] Question: Can you break down the growth rate between GEO broadband and other segments? - The majority of growth was related to GEO broadband, with significant contributions from the military government segment [51] Question: How do you view the competitive environment in the ATG segment? - Management expressed confidence, stating that suspensions are primarily maintenance-related and not indicative of competitive losses [60] Question: What trends are seen in the MilGov business? - There is increasing demand for broadband solutions in the military sector, with opportunities emerging in European and Southeast Asian markets [86]