Attached files
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| 8-K - 8-K - Gogo Inc. | d948508d8k.htm |
 June 30,
2015 Investor
Presentation Exhibit 99.1 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
SAFE HARBOR STATEMENT
This presentation contains “forward-looking statements”
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that are based on management’s beliefs and assumptions and on information currently available to management. Most
forward-looking statements contain words that identify
them as forward-looking, such as “anticipates,” “believes,” “continues,” “could,” “seeks,” “estimates,” “expects,” “intends,” “may,” “plans,”
“potential,” “predicts,”
“projects,” “should,” “will,” “would” or similar expressions and the negatives of those terms that relate to future events. Forward-looking statements involve
known and unknown risks, uncertainties and other factors that may cause Gogo’s actual results, performance or achievements to be materially different from any projected results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking
statements represent the beliefs and assumptions of Gogo
only as of the date of this presentation and Gogo undertakes no obligation to update or revise publicly any such forward-looking statements, whether as a result of new information, future events or otherwise. As such, Gogo’s future results may vary from any
expectations or goals expressed in, or implied by, the
forward-looking statements included in this presentation, possibly to a material degree. Gogo cannot assure you that the assumptions made in preparing any of the forward-looking statements will prove accurate or
that any long-term financial or operational
goals and targets will be realized. In particular, the availability and performance of certain technology solutions yet to be implemented by the Company set forth in this presentation represent aspirational long-term goals based on current expectations. For a discussion of some of the important
factors that could cause Gogo’s results to differ
materially from those expressed in, or implied by, the forward-looking statements included in this presentation, investors should refer to the disclosure contained under the headings “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” in the
Company’s Annual Report on Form 10-K filed with the SEC on February 27, 2015. Note to Certain Operating and Financial Data In addition to disclosing financial results that are determined in accordance with U.S. generally accepted accounting principles (“GAAP”), Gogo also discloses in this presentation certain non-GAAP financial information, including Adjusted EBITDA and Cash CapEx. These financial measures are
not recognized measures under GAAP,
and when analyzing our performance or liquidity, as applicable, investors should (i) use Adjusted EBITDA in addition to, and not as an alternative to, net loss attributable to common stock as a measure of operating results, and (ii) use Cash CAPEX in addition to, and not as an alternative
to, consolidated capital expenditures when evaluating our
liquidity. In
addition,
this presentation contains various customer metrics and operating data, including numbers of aircraft or units online, that are based on internal company data, as well as information relating to the commercial and business aviation market, and our position within those markets. While
management believes such information
and data are reliable, they have not been verified by an independent source and there are inherent challenges and limitations involved in compiling data across various geographies and from various sources. GOGOAIR.COM | 2 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
GOGO’S MISSION
Advance aviation by connecting every aircraft with
the most trusted communications services on and
above our planet |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential. WHY INVEST IN GOGO LARGE GROWTH OPPORTUNITY LARGE GROWTH OPPORTUNITY HIGH BARRIERS TO ENTRY HIGH BARRIERS TO ENTRY EXPERIENCE & SCALE EXPERIENCE & SCALE LEADING POSITION LEADING POSITION ATTRACTIVE ECONOMICS ATTRACTIVE ECONOMICS GOGOAIR.COM | 4 |
 MARKET
& COMPANY OVERVIEW |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
AVIATION INTERNET TRENDS
1 2 3 4 5 Connected aircraft transform global aviation – the last frontier of internet connectivity Cost, coverage, capacity and reliability are just now reaching critical
inflection points
Next gen technologies expected to increase speeds from 10 to 100Mbps
within 5 years with a comparable reduction in
costs More
bandwidth
drives demand from business traveler connectivity today to every person and most ‘things’ on aircraft in 10 years Airlines will demand ‘Always Available Everywhere for Every Plane’ GOGOAIR.COM | 6 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
Better passenger experience - less cost A TRANSFORMATIVE OPPORTUNITY FOR AIRLINES Benefits Airline differentiation Direct revenue opportunities Operational efficiency Enhanced safety Enabling the Connected Aircraft GOGOAIR.COM | 7 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
BEYOND PASSENGER CONNECTIVITY –
ENABLING
THE AVIATION ECOSYSTEM
GOGOAIR.COM | 8
Inflight Services Flight Operations Aircraft Systems Maintenance Data |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
CA - North America (“CA-NA”) 1.4x 1.2x CA - Rest of World (“CA-ROW”) 2.3x (1) Source: Boeing Current Market Outlook 2014 – 2033, excludes: cargo aircraft. (2) Source: JetNet iQ Report Q4 2014; General Aviation Manufacturers Association 2014 Statistical Databook, excludes Rest of World turbo props. ADDRESSABLE CONNECTED AIRCRAFT ADDRESSABLE CONNECTED AIRCRAFT Commercial Aviation (“CA”) Commercial Aviation (“CA”) Business Aviation (“BA”) Business Aviation (“BA”) 2.6x size of CA-NA 2.6x size of CA-NA A LARGE AND GROWING GLOBAL CONNECTED AVIATION MARKET The connected aircraft industry is worth up to $30 billion The connected aircraft industry is worth up to $30 billion 5,300 7,300 2013 2033F 13,900 32,000 2013 2033F 30,300 37,800 2014 2024F (1) (2) GOGOAIR.COM | 9 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
Largest Market Share in CA-NA
Largest Market Share in CA-NA
GOGO’S IMPRESSIVE SCALE AND REACH
Largest Market Share in BA
Largest Market Share in BA
68% of connected aircraft
Note: Data based on management estimates, trade publications and other public sources as
of 3/31/2015 (1) Based on management estimates as of 3/31/2015
(2) Includes Gogo awarded aircraft as of 6/22/2015 #1 Global in-flight connectivity provider Leader in North America and expanding internationally #1 Global in-flight connectivity provider Leader in North America and expanding internationally (1) (1) Untapped CA-ROW market Untapped CA-ROW market Awarded Aircraft (2) GOGOAIR.COM | 10 Quickly expanding internationally 88% of broadband aircraft (1) |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
LONG-TERM PARTNERSHIPS WITH OUR MAJOR
AVIATION PARTNERS
North America
North America
Original Equipment Manufacturers
Original Equipment Manufacturers
Fractional Jet Operators
Fractional Jet Operators
Commercial Aviation
Commercial Aviation
Business Aviation
Business Aviation
International
International
GOGOAIR.COM | 11
|
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
STRONG EXECUTION
$37 $408 2009 2014 Total Revenue ($MM) $(89) $11 $78 2009 2014 Adjusted EBITDA CA-ROW Segment Loss $89 Adjusted EBITDA (1) ($MM) 62% CAGR (1) Please see reconciliation of Adjusted EBITDA in appendix. GOGOAIR.COM | 12 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
WHY WE WIN
Specialize in aviation and telecom
Specialize in aviation and telecom
Global networks with excellent reliability
Global networks with excellent reliability
Superior technology & economics
Superior technology & economics
End-to-end service provider
End-to-end service provider
1 2 3 4 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
ATG / ATG-4
1 st generation of technology North America coverage 2Ku 2 nd generation of technology Global coverage Intellectual Property 100+ patents globally WE SPECIALIZE IN AIRCRAFT AND HAVE A TRACK RECORD OF INNOVATION EXPERTISE IN INTERNET, AVIATION AND TELECOM EXPERTISE IN INTERNET, AVIATION AND TELECOM GOGOAIR.COM | 14 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
GOGO’S TECHNOLOGY AGAIN
DISRUPTS THE
GLOBAL AVIATION INDUSTRY
ATG-4: North America coverage
2Ku: Global coverage
ATG-4 Antenna 2Ku Antenna Expected launch 2015 70 Mbps at launch, 100 Mbps expected when spot beam Ku- band satellites are launched Low cost – estimated half the bandwidth cost compared to other satellite solutions Most complete global coverage Half the height of traditional antenna – lower drag, fuel savings Leverages Gogo’s existing Ku-band network and future high
throughput Ku satellites
ATG launched 2008
ATG-4 launched 2012
ATG / ATG-4 peak speed –
3 Mbps /
10Mbps
Proprietary solution enabling overnight
installs
Years of experience delivering
broadband service
Gogo is the only ATG solution provider
GOGOAIR.COM | 15
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 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
GLOBAL AND REGIONAL NETWORKS DRIVE
SUPERIOR RELIABILITY AND RAPID INNOVATION
Scalable and modular architecture
Operational leverage
Rapid innovation and evolution
Reliable and mature hardware
and software platform
Superior reliability
98%+ ATG
system availability
75+ million of passenger sessions
7,800+ flight per day
GOGOAIR.COM | 16
Figures as of 3/31/2015. |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
THE MOST COMPLETE END-TO-END
AVIATION SERVICE PROVIDER
Real-time credit card processing
Real-time weather information
Other applications to enhance
airlines operational efficiency
Account support Network monitoring and management Passenger support services, portal design, developing and hosting Airborne equipment for ATG and satellite Certification, installation, maintenance, etc. Passenger connectivity Passenger entertainment Portal content ATG / ATG-4 for North America 2Ku / Ku for global satellite service Passenger Services Equipment and Equipment Related Services Airline / Owner / Operator Services Operations-Oriented Communications Services Global Network Solutions GOGOAIR.COM | 17 |
 FINANCIALS |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
GROWING REVENUE DRIVES PROFITABILITY
Note: Minor differences exist due to rounding
(1) Please see reconciliation of Adjusted EBITDA in appendix
Adjusted EBITDA
(1) ($MM) $37 $160 $328 $408 $428 2009 2011 2013 2014 Q1 2015 LTM ($89) ($1) $8 $11 $14 $41 $78 $80 2009 2011 2013 2014 Q1 2015 LTM $49 CA-ROW Segment Loss Revenue
($MM) 62% CAGR $89 Adjusted EBITDA $93 GOGOAIR.COM | 19 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
CA - NA: REVENUE AND SEGMENT PROFIT GROWTH Note: Minor differences exist due to rounding (1) We define ARPA as the aggregate service revenue for the annual period divided by the number of aircraft online during that period
$11 $251 $266 2009 2014 Q1 2015 LTM Revenue ($MM) $24 $121 $127 2009 2014 Q1 2015 LTM Annualized ARPA (1) ($000s) $(91) $26 $30 2009 2014 Q1 2015 LTM Segment Profit ($MM) 11% Margin 692 2,098 2,200 2009 2014 Q1 2015 Aircraft Online (End of Period) 102 Q/Q Increase GOGOAIR.COM | 20 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
$6 $72 $78 $20 $84 $81 2009 2014 Q1 2015 LTM BA: HIGH-MARGIN SERVICE REVENUE DRIVES PROFITABILITY AND CASH FLOW $26 $156 $159 Equipment Revenue Service Revenue Revenue ($MM) $3 $63 $63 11% 40% 40% 2009 2014 Q1 2015 LTM Segment Profit ($MM) Segment Profit Margin Segment Profit 49 2,797 2,983 2009 2014 Q1 2015 ATG Aircraft Online (End of Period) 186 Q/Q Increase 139 943 936 2009 2014 Q1 2015 LTM ATG Units Shipped Note: Minor differences exist due to rounding. 43% CAGR GOGOAIR.COM | 21 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
1 85 116 180 257 293 500+ 2012 2013 2014 Aircraft Online (end of period) Cumulative Aircraft Awards June 2015 116 aircraft online as of 3/31/2015 Near global Ku-band satellite network 2Ku technology selected by 7 airlines for trial or adoption (1) Includes Gogo awarded aircraft as of 6/22/2015 $14 $41 $78 $80 2012 2013 2014 Q1 2015 LTM International Aircraft Awards and Aircraft Online Executing Our International Expansion CA-ROW Segment Loss ($MM) International Partners CA - ROW: FOCUS ON INTERNATIONAL EXPANSION (1) GOGOAIR.COM | 22 Q1 ‘15 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
CAPEX PROFILE
(1) Please see reconciliation of Cash CapEx in the Appendix
Gross CapEx
Capitalized
software
Airborne
equipment
Network
equipment
Over the past two
years, Gogo’s Cash
CapEx has been
stable at ~$100
million
Over the past two
years, Gogo’s Cash
CapEx has been
stable at ~$100
million
Equipment proceeds received from airlines
and landlord incentives
Cash CapEx
(1) GOGOAIR.COM | 23 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
Why Does Gogo Win?
Why Does Gogo Win?
Specialize in aviation and telecom
Specialize in aviation and telecom
End-to-end service provider
End-to-end service provider
Superior technology and cost
Superior technology and cost
Deliver excellent reliability
Deliver excellent reliability
Focused Strategy
Focused Strategy
Gain global share
Gain global share
Grow ARPA
Grow ARPA
Increase bandwidth to aircraft
Increase bandwidth to aircraft
Deliver consistent execution
Deliver consistent execution
GOGO -
A COMPELLING INVESTMENT OPPORTUNITY
Gogo is a leading aero
communications service provider for the global aviation industry GOGOAIR.COM | 24 |
 Q&A |
 APPENDIX |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
1991 GOGO - LEADER WITH ESTABLISHED TRACK RECORD 2012 2013 2014 June 2013 Gogo IPO October 2013 Gogo launches Gogo Text & Talk, ATG 2000, Gogo Vision, and UCS 5000 for Business Aviation Gogo awarded domestic fleet of Japan Airlines August 2008 Connectivity service is launched on American Airlines Delta Air Lines selects Gogo for IFC June 2009 Gogo begins offering ATG service to Business Aviation customers Q1 2012 Gogo initiates international expansion efforts April 2014 Gogo announces its new global 2Ku in-flight connectivity technology Fall 2012 Gogo begins rollout of ATG-4 technology December 2014 Gogo awarded 250 American Airlines regional jets June 2012 Gogo wins Delta’s international fleet October 2014 United Airlines announces it selects Gogo for regional jets July 2014 Gogo launches satellite service on Delta Air Lines and Japan Airlines 2006 Gogo wins bid for 3MHz ATG spectrum 2008 Gogo completes initial build-out of ATG network in record time 2009 2015 February 2015 Delta Air Lines selects 2Ku for more than 250 aircraft March 2015 Gogo issues $362M Senior Unsecured Convertible Notes June 2015 Brazilian airline GOL selects 2Ku to service entire fleet of aircraft 2006 1991 Founder Jimmy Ray envisions a telephone system for aircraft GOGOAIR.COM | 27 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
ADJUSTED EBITDA RECONCILIATION ($MM)
2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Net Income (142) (140) (18) (96) (146) (17) (19) (25) (24) (20) Interest Income (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) Interest Expense 30 – 1 9 29 7 7 9 9 10 Income Tax Provision – 3 1 1 1 – – – – – Depreciation & Amortization 22 31 33 37 56 16 15 17 17 19 EBITDA (91) (106) 16 (49) (60) 6 4 2 2 9 Fair Value Derivative Adjustments – 33 (59) (10) 36 – – – – – Class A and Class B Senior Convertible Preferred Stock Return – 18 31 52 29 – – – – – Accretion of Preferred Stock – 9 10 10 5 – – – – – Stock-based Compensation Expense 1 2 2 4 6 2 2 3 3 3 Loss on Extinguishment of Debt 2 – – – – – – – – – Write Off of Deferred Equity Financing Costs – – – 5 – – – – – – Amortization of Deferred Airborne Lease Incentives – (1) (1) (4) (8) (3) (3) (4) (4) (4) Adjusted EBITDA (89) (45) (1) 9 8 5 3 1 1 8 Note: Minor differences exist due to rounding GOGOAIR.COM | 28 |
 ©2015 Gogo Inc. and Affiliates. Proprietary & Confidential.
CASH CAPEX RECONCILIATION ($MM)
2009 2010 2011 2012 2013 2014 Q1 2014 Q2 2014 Q3 2014 Q4 2015 Q1 Purchases of Property and Equipment (69) (33) (33) (67) (105) (32) (28) (35) (37) (53) Acquisition of Intangible Assets (Capitalized Software) (8) (7) (10) (12) (16) (4) (5) (5) (3) (4) Consolidated Capital Expenditures (77) (40) (43) (79) (121) (36) (33) (41) (40) (57) Change in Deferred Airborne Lease Incentives – 9 11 18 9 5 3 5 17 9 Amortization of Deferred Airborne Lease Incentives – 1 1 4 8 3 3 3 4 4 Landlord Incentives – – – – – – – 2 7 12 Cash CapEx (77) (30) (31) (58) (104) (29) (27) (30) (12) (32) Note: Minor differences exist due to rounding GOGOAIR.COM | 29 |