Gogo(GOGO)2022-03-03 19:08Financial 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]