Gogo (GOGO) 6 Aug 212021 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Second Quarter 2021 Gogo Incorporated Earnings 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. [Operator Instructions] I would now like to hand the conference over to your speaker today, Will Davis, Vice President of Investor Relations. go please and you ahead. Thank

and Thank Gogo's everyone. to morning quarter you XXXX Myra, second earnings Welcome good conference call.

Joining results are and talk about Chairman to Vice CEO; CFO. Executive Barry me and Rowan, and Oakleigh today Thorne, President our

would get consider of performance this course in opportunity to the we with risk events materially are financial annual from to and we call, press the XX-K Form caution the those may filed conference statements and you report Before company. to in results statements our filed like are release forward-looking during and regarding future remind future more that take that factors fully These documents on factors could described earnings of We our in we XX-Q I started, call. actual the the this to have factors and make SEC. forward-looking you the risk cause detailed morning the other under this on risk differ the

In make update note XXXX. result that no date. to is undertake statements call as Any statements or on forward-looking of August we date addition, We this of that are as of more X, based obligation assumptions this events. please a information future these today conference the

Oakleigh. earnings now pleasure also in community During with included on non-GAAP and a available press our measures the website non-GAAP a second only. comments, Q&A financial to of and the adjustments the session been is call to internet the call, We've earnings other we'll on It comparable broadcast quarter call considerations we'll of website available has to measures management Gogo ir.gogoair.com. present financial Relations reconciliation is GAAP over the of measures. great the our both The release. host at GAAP turn on my most and Investor website. and This explanation the the After release

and of for Gogo. you this for your and joining morning in us thanks Thanks all Will, interest

Our strategy. results strong as demonstrate is we aviation our momentum, for connectivity execute in-flight Demand quarter connectivity on business second BA pure play accelerating.

to expectations for focus acceleration integrated is Our performance sustainable that bottom positioned positive My line converting business advanced very at on a remarks share demand of financial the investors potential fourth, perfectly initiatives; to the think advantage discuss flow our guidance guidance platform XXXX, Gogo. raise our and third, progress we and into of metrics five-year and we've second, business numbers our how will Barry will our then of into model dive update discuss highlights relative we vertically first, should exceed including merits give a take and an is our I'll on demand quarter look share strategic our XXXX against thoughts equity. revenue that free connectivity on our that of and preview some results, second the provided. aviation guidance, Gogo's cash little for previously will discussion market; competitors;

up let both in strong by revenue and up brief XX% from pre-COVID ATG unit aircraft sequentially from driven from significant quarterly We of QX revenue me with record overview our online XXXX, start XXXX, $XX.X service revenue of XX% million, delivered ARPU. QX average results. So AOL increases up XX% QX achieved and a XXXX. We per

$X conferencing. platform, sharing high. our driven all-time ARPU and connected doing AVANCE great though is job for metric, X,XXX passenger just And the the the which LX by short file AOL our around happening of now right What's first of with us what's meeting barrier popularity today's equipment aircraft demand video is the a sales cracked of $X,XXX metric we the exciting to most hit the On time. we on streaming,

demand that equipment revenue high This sticky orders And for QX to worse drive streams will of minute. into out for because strong is is takeaway long-term and many XXXX, changing business equipment come. industry for be revenue on benefits these even were looking will time than just for and I'll which the the they connectivity XXXX is very like margin for here and important units all a in years are the aircraft quarter behind orders AVANCE service AVANCE this Gogo. QX go have While even stronger. shipments will are But sticky a even consuming. revenue expensive stronger drivers

have churn per we rate XX-year result, X.X% life equipment a aircraft. equates about a a As low to month which an very equipment on

tradition stickiness. believe AVANCE relegated minimize easy continue to that enhancements hardware it designed most the We will upgrades upgrades. in and to of over-the-air have to We reason software that a future

we'd to pure instance, all. aircraft have the of capability, an be have the to of touch LEO top on the need software. intent but to at add That would would satellite interior not upgrade aircraft For

base that For in in service revenue proportion from XX% reason, QX, QX and AVANCE of continuing XXXX XX% our we're of subscriber accounting a XX% for XXXX. to in that is grow encouraged our QX up as

with market. call. contract our into that for a for smaller Another general and AVANCE LX service the the exciting our first small is XXXX-foot upgrade of in AVANCE solid and aircraft just positive I'll our us floor around more it point software really appealing entry is their with This a Vision our proof new partnership aircraft. aircraft data a further lowered and is Jet little aviation Cirrus XXXXXX discuss which was announced to just Cirrus was personal owners form jet. achieved it's factor

XXXX. XXXX from an increase and the delivered XX% $XX.X X% pre-COVID from line, Gogo On QX bottom of XX% adjusted QX XXXX EBITDA QX from increase of million, of

industry want quarter our come. strength what track model, I'm things leading Gogo the position portends performance on positive reflects the accomplished our team right second overall and trends. quarter and business market proud we the good the to Our from of them very of second thank quarter our in to very and

flight recovery moved into business The above the mode. The has shifted high-growth aircraft ran to the demand count slight turn QX for mode aviation industry out has market aviation me business let on Gogo-equipped at and Now a drivers. of XX% it XXXX, hit in QX in XXXX day ran below highs QX for and first one when flight count opposed for XXXX. the flights the days in all-time several as the quarter for count count time. for broke We flight QX X% clearly

and the the gap quarter for first month between flight even continued month sequentially improved of More our XXXX every every monthly the quarter, above activity And importantly, XXXX segment flight activity segment ran Interestingly, recorded of of for above the and end flight the XXXX levels this segment corporate. the through except corporate pre-pandemic in the business counts by QX. of of every size levels. even

year XX% counts in growth within our in entire in the were from all up fractional from fleet, been XXXX. charter as January were count up were April the in January Flight in XX% with in July January. over June XXXX. May, up XXXX. across in of over up XX% Flights flights For July Flights was X% count flights up flights XX% XXXX segments flights April our were from flight flights of The and XX% has well. XX% flight substantial of up and flights in corporate up

XX% global levels on departments everybody mind corporate XXXX international fly big the than this will. to industry's that corporate July survey market aircraft Recent it to that the the fully and similar private of XX% even flight reopens. often pandemic. the expect question post than and segment more travel expect online is before are still by private traffic frequently still data more we levels private comparisons, economy The larger card aircraft fly expect is the of Given below to suggest private flyers they in COVID aircraft grow passengers well once only before X% expect are so of some continue. than BA difficult to COVID. fly XXX publication will did the jet their significantly less that at more heavy

is demand hit for because new increasingly preowned increased us, purchase drives lows continues demand And given that aircraft all-time to to for it which Gogo. For demand this aircraft. fleet of of that positive opportunity turning spells for sale flights the is aircraft for

these Textron of the close just to spend that planning Gulfstream, Some up their QX. pulling And their X.X QX, two in aircraft in to very end that X.XX jet include retirements was book-to-bill QX aircraft announced XXX that billion and hit aircraft XXXX. announcing ratio they forward than announcing and and net delaying [ph] $X.X additional of its X.X from considerably acquisition for by announcing higher X.X wherever average. the arrive possible, XX-year evidence trends book-to-bill in their to

to aircraft orders business ISC. all very with And well jets Gogo aviation share are of get that a New because fair are new are nine are now positioned most orders. line-fit given those delivered of our we we good OEMs, for

customers data-intensive streaming great meet a far, month including doubled limitless nearly we and in they of that conferencing. our plan. rapid AVANCE than incremental our the is per did consumed by hours aircraft streaming per by now for we right platform XX% day. Data per amount We example add applications Gogo, driving streaming, XX% for those products data as drive and sharing can in customers sold driver Across QX the plans file streaming in launched an QX ARPU fleet, hour more XXXX XXXX. revenue of more increase AVANCE second more than of such passengers four across in enhanced video and actually fractional how on megabytes $XXX consumed and consumed and data To big This is demand other as new over XXXX, of flight increase in flights in easily online. so flight increase XX% top The driven of our services quarter, per increase revenue. AVANCE the and large XX entire they charter use plans

I think demand is Gogo data. meet it's increased for positioned also how out to this well worth pointing

inside our products. aircraft First off, network. data software that and which cell speed phone improves significantly AVANCE, network. improving at hardware cell and we hardware to our accessing Peak your classic us is delivered of software the old accesses AVANCE for have compared the platform as the that our

XXXX, were our mainline to momentum we demand customer of data That the roughly that continue than growth. product our consuming amount as mainline XG tremendous on these freed ATG Second with in and with up driving our network. has of each, capacity The we creates day is the XXXX, one-third per XG we're to the network. aircraft more tremendous on are XXXX of experience. the improves significantly and passengers trends itself. XXX Today, we profitable strong which right improved supportive convergence as accessing left number meet only XXX Today, a network performance. of dramatically In had terabytes ability focus there commercial aircraft

us ask to ATG potential about the take competitive to leading network and on to launch moment low-earth comment a The been satellite launching XXXX. I threats to a Gogo's the start-up strategy companies that's landscape maintain satellite competitive want orbit since investors a are position. namely; most networks SmartSky, Now entrants, promising competitive our and

with start Let me LEOs.

LEOs are in said easily those BA the invest to focused fit thereby give current we the market ESAs path the To made we before, have we AVANCE our and of the the our add steerable multi-barrier OEMs all fleet They at take view revenue. STCs. I Also fit all are today. of the vast constellations. opportunity as As in business top on ISE on path aircraft need installed line can AVANCE amount required aftermarket, every And already the inside to world. have install the accessing a modest they model And is of electronically to finding to leverage line for Combutus of workings attentive we close will aircraft to the including to threat. far by would capital lowering AVANCE largest the to aircraft, a case a base entire on the aircraft. the an pre-congestion the which to STCs platform, To with time the by for time them aero-ready a AVANCE of in revenue. aircraft we ESA fastest which partners And which dramatically fastest the LEO installed far virtually LEO not ESA AVANCE the an necessary are where [ph] add access launch antennas line at partner the finally system. base constellations. What investment amendments in capability making in we vast all are is

all that be one positive. connectivity the opportunity. around from and our idea it customers. We have develop continue the some plans solution tested their to reaction in knowledgeable part integrated Their and provider of They love QX most satellite on to was And of would buy with aircraft. ATG overwhelmingly one

an market that heavy not product us give for the the the us to the jet aircraft access rest and For today. XX,XXX attractive would we in in the USA of do market give us, capability world would address

other a their competitive is modeling lot aging an ATG financials. that The our raise people build and spent trying competitive Based time of guy, spent startup to economics, on we smart $XXX of knowledge than more has ATG threat raised a million network.

believe Gogo a I at business think BA we their their try network In SmartSky we especially speeds had it's that support. the operating have North to case has of revenue. up a complete profitable capabilities, our after fund network, been fundraising, out build funded case, recent aviation the light around a our hard data of needed ramped for we and they commercial business as network and and Gogo's shots they justify our losses taking very lot misrepresented then and revenue. and in that investment operating pot to ramp customer losses to American

So believe significant first we rely unlicensed superior on faces ground-based on which like we from today et we they interference network, vastly usage and superior when because Wi-Fi, have Bluetooth, an network will XG, will network launch a a spectrum cetera. have

licensed signal. to plan very ground always use we that To is spectrum megahertz with While networks should both four where XG also we spectrum be network, aggregate have our no perform of well, spectrum unlicensed clean our interference. a will we there clear, that for will

better ours we interference. However, perform there where is will believe

should enhancements from to more end, our whereas transmit also to with XG efficiently their network have not to The will XG of lowering, LTE only network XG be pipe as With on seats. end network pipe, a did they fast a XXX% more go their offer, also website we XG The XG". at starts as we constantly will elements. coverage enhancing as made data be be bottleneck. believe than LTE network our will Our narrowest "elements able its map X,XXX We're feet. such and XX,XXX coverage floor XG with

also will aircraft. both We to mainline XX-inch product attached antenna they've for bottom a a their roughly XX-inch developing miscalculations roughly the some in require The and made be Whereas believe, and in think and equipment. the require challenges LX business there. XG, inches. real aviation so the our Aircraft face we XX very they inches XX antennas versus significant XXX-inch is market important estate we some of

as patent that with raises competitive Gogo. feelings a the numbers Finally, statement of Gogo product Gogo. service cabin agreed Promoter and world-class has customer of our the customers' flight those customers the survey business In transactional also rates customer respondents Scores. which two over second us. eight electronics mid-XXs number category with portfolio to other one are critical years. and last the NPS, was between ranked surprises they've service. SmartSky of and year, been in Gogo it's runs been That last out do And XX our years, about their support AIM the Net the XX.X% consistently and our and easy deck mid-XXs avionics the advantage for

their off, patent most SmartSky even larger mentioned more importantly, patents worth do of advise that all But their and have and XXX patent noting United our attorneys they valid than States to First of patents any detail. have engineers we we owns. in technologies portfolio older a And do. infringe not none us attorneys It's XG. our reviewed apply

cases SmartSky not serve in has did for be would used patents years to Gogo. Encompass if invalid if fact, likely decades. because systems the In its Many against try Gogo many

we years complacent come. BA to leader IFC can think we conclude confident in the remain for I but to So business not that the are on competition,

generates solid for and flow now cash have continue that to that We enables and free innovating to us create a value business customers shareholders.

our Now, our last have on the we briefly on a Remember, progress let's initiatives, strategy. three-pronged strategic about talk call. I discussed

of The prong and First, the on-ground in our to to platform. deploy XXXX. second our expectations to customers' now of in key AVANCE initiative this half keep drive right improving of network invest penetration with is under performance XG network pace ATG the our

new addressable and to on market. of competitive layer to The second products our services is add and performance, moat, top revenue, AVANCE to prong add deepen improve total incremental in our

has prices to or of XG. drive adhere and down manage quality can is roughly XX% volume This products drives components this product. and up. cost note Gogo. it use last in hardware for supply demand the across different especially increase illustration as all which I for lower value means us same, value The purchasing are relationships today guidance components supplier more to The here that of to XX% to get in AVANCE each is strategy this customers drive and sound components the but than including a common to our global primary of prong efficiently significantly respond revenue may shortage. initiative we third we It's meaningful the those quality more has having our three been boring, year useful tremendous and higher would if unit of platform a despite products enabled our in strategy, use LX of LX, raise

Now flight testing components in There against on product antenna, starting progress four with each. and three testing the with Starting QX. the Gogo made the in significant to and we've XG. our that headed me progress let major are is has XG completed for prongs aircraft report qualification

installation station test our hung will now the for our Next of tower antennas. tested and we and array the quarter, into head base XG seven QX In first bed.

then And finally, airborne Next center AVANCE backhaul the left is or the aircard. box integration the on except do the go. or Nothing XG that next houses complete and to small the that and to ready on to plane sits and testing. LOU the is which data for core, there XG

tested LRU have have of We started testing. and the completed prototype have prequel and this

customer. we for to two track of launch was Gogo, deliver The yield passed in itself on go. All technology of as and in functionality our delayed delay of the had on However, on supports second calls XG commercial and completed another goes that this inside discussed That XXXX that us the we chip to Gogo to for be half testing promised. new XG have has has ready last accommodate box. is addition should as delivery now of functionality new design that chip semiconductor chip a that testing

our Now advanced let of on of me right Prom strategy. examples touch now. couple on, top play of of services that' are X good platform our how new flexible and layering products we're There that a in

The first to hardware is XG easy portion The itself. XG designed the be of upgrade L inexpensive. and is

two antennas. just the that two add to Other the upgrade And AVANCE next same small LX fit the points that is LX entire a replace antennas antennas like the box inside as a will We XG software box the the exact with in attachment than will aircraft. Tesla.

of is example, layering AVANCE second platform, contract. the from The customer Cerus additional benefits

this platform. the of to the example a afforded Jet both common software able AVANCE to general an feet Cerus will Vision to we which our fly XX,XXX entirely personal is upgrade, of goals appealed lower aircraft componentry, the the offer Using flexibility our on The to One great for were new is by total developed form X,XXX their to Vision have market small we over aviation the is fit to us. AVANCE from Jet. addressable with GX Jet market of And line and factor. us a grow growth AVANCE for LX Cerus leverage market. Vision jet. feet LX our XXX,XXX service of

We on spot trend added simple the plan. we gain on limitless in and layering of rolling of able by market were out to streaming AVANCE new a that software plans three example market is capitalized we top a a upgrade quickly third that The other four with introduced rapid service -- April. plans streaming traction. And

shareholders. changes the relationships gives To and already As our to of to impact strong it for on react value distribution technology AVANCE drive with customers and I made quickly our combined Advanced to I have big and flexibility ability up noted earlier, a market Gogo, sum installed deep base the ARPU.

XXXX, flow me financial first on guidance full-year half EBITDA going strength are let momentum our free a raising we revenue, with and Now words Based our few guidance. on strong long-term targets. cash into finish of our the and performance adjusted our XXXX and

XXXX. extremely hence growth We believe also by the AOL revenue we driven at growth. XX% future of our upper event for will And service well end XX% grow in the that strong bodes revenue believe to current our sales range

We also at underappreciated current think stock is valuations. Gogo

unpenetrated a have large growth. We for poised market

We competitive and deep wide moats. have

customer We have base. a and diversified high-quality

high switching low and have churn. costs We

rates. high have retention We equipment

industry tailwinds. have We positive

a strong to conversion. EBITDA have We cash

resilient opportunity demonstrated which investors. rather We and Gogo adjusted acquisition money on We than pocket to see trading our EBITDA come are customer represents to new similar add characteristics that double to as COVID for conviction in we multiple of a out cyclically and make having adds companies new our that good have current customers.

growth With our support were drive our creation. model leverage partners the strong and of excited our lenders strong strategy on team continued executing balance to value sheet continue and vertically to and and integrated

on focus momentum delivering and the market over our opportunities is Barry. capitalizing on that Our aviation it business I our and shareholders. with future to will as And for bright. remains turn Gogo's accelerates customers continuing

with underlying to this results in in everyone. least accelerating demand business quarter. a enabled future us at aviation these foundation market for dramatic fundamentals Thanks Oak The solid deliver morning coupled ways. The and provide recovery performance results for driving connectivity for the good record three

revenue come of this translates that profit service the First, comprises and our approximately high as aircraft customer more value. of into lifetime gross source recurring represents our exceptionally online XX%

strong normalized demand the the meaningful. quarter rates skewed The more future we further revenue both Secondly, for ARPU quarter But is driving And as second growth service pandemic backlog the year-over-year very the of the thirdly, comparison experienced which on XXXX. depths projections. our today's we are basis, record In resulted growth demands passengers a continued has the this fully records in levels growth of of AVANCE of certainly quarter and are in capabilities EBITDA. customers tremendous derisks adjusted increasing leverage even new proof platform. by set the the our connected to second the

sequentially. my driven through compared we up to out COVID. financial as XXXX. as revenue quarter remarks, for the COVID up the driven the of revenue quarter the revenue quarter more aircraft first from and was pre-COVID ramp service even for year second quarter to value is just Total sequential X% context driver provide unpack XXXX our over continuing XX% robustness Gogo from was of COVID X% morning Total subscription-based comparisons. XX% second as XXXX. up XXXX at important second the every investment grow XX% pre-COVID of was demand of levels was some $XX.X for quarter in drivers revenue from continues total we And subscription-based year to press $XX.X quarter the service testimony normalized as well XXXX, record of XXXX by the Recurring XG sequentially to coming XXXX walk XXXX compared described above Service quarter up ongoing of least as except revenue grown the in Gogo the in of revenue XXXX service year-over-year quarter's our has Gogo of end well Oak flight in Gogo. our online an long-term and AOL achieved the XX% year reactivations revenue, from activity record I'll did second existing exceed a and of second XXXX; service which down new this online XX% will the more model. and the This of second I detail. I'll note online revenue comparisons detail by full This At As revenue service million and ATG revenue. quarter as to equipment our XX% ARPU. of performance aircraft increase and growth XXXX; of release which for to ATG per from To X% of since by our in growth during additional or average with year our increases also service our an first outlook on expectations. update both an to quarter was of refer nearly revenue for an to monthly to continues ATG aircraft and second long-term both in service activations guidance. the result continues growth revenue connectivity million as the increase growth customer further XX% year-over-year by was provide generated second customers

also achieved year-over-year We approximately growth. sequential ARPU of record growth XX% $XXXX representing X% and

Our future quarters. the $X.X deferred in ARPU a reflects related recognizing don't second quarter million which we customer revenue expect in benefit to contract of

deferred rooms offices. Demand data increased However to very as even excluding an high close all-time revenue living to the passengers increasingly impact of and as ARPU ARPU grow, continues this and sequentially view X% their $XXXX their it explained. our was to Oak for as aircraft, of extension

the network the during $X.X revenue sharing second Intelsat quarter. recognized in agreement service with from also million We

from overtime, described, Intelsat the As Gogo XG service particularly previously ramps we've after deployed. agreement is revenue

even than this of expected X% represents less this revenue the ramp, relationship derived with revenue. However, from annual Gogo's

continued year. growth expect of throughout sequential we ahead, -- Looking the the second half growth revenue

expectations our full revenue service full the over revenue the that XXXX Our will grow year XXXX. reflects upwardly XX%, approximately guidance for revised year

million, mentioned, units expanding as of quarter Turning a demand that our strategy. been AVANCE of Oak ATG more XXth second XXXX, equipment the units. base saying aircraft June total platform our increased up equipment of long-term of customers XX% is and to Gogo with quarter grew continue penetration AVANCE of sequentially or of for were In due centerpiece XXXX, new units now and to second into new equipment installed comprised the XXXX. that AVANCE delivered revenue, of LX XXth We've the LX Gogo's XX% of an online year-over-year than LX to LX for online year-over-year expand sometime and both from XXXX. the sales advance systems. we for as outstanding AVANCE revenue all strategy to Total and real $XX.X estate, XX% as AVANCE XX% as of increase June XX% AVANCE

LX are AVANCE at total XG. provides lower product XX% LX upgrade has And of enabling system seamless AVANCE LX year. Gogo to attractive our this product shipments shipments advantage cost of path approximately an Our running point. the a additional entry AVANCE

expect seasonality XXXX, continue the this continued to the and several third therefore with QX. half in to the of over fourth expect We quarters We experienced growth in past years year the sequential strongest the of we've equipment revenue, and through in year. revenue second equipment backloaded

and addition, have even and Oak backlog In a of our equipment shipments momentum this more provides year guidance into balance the than for mentioned, significantly revised this XXXX. upwardly year as derisks orders, stretching of projected our for we great robust This into going totaling XXXX.

as into comes equipment recurring revenue translates the course Of service long-term online, drives our model. it that this

Our guidance to as well our of XX% market revenue measures is as higher-than-expected the compared dynamics business. the to to This operational based We're underlying year meet the the a full increased implementing seasonal reflects of series year strength full a XX% on revenue equipment XXXX. of in increase this as XXXX, demand. for the

to updated to Importantly, in forecast supply we have XXXX our the managed on reflected position deliver us equivalent higher guidance. our chain

our to to prove the deploying constraints product by new our cases Strategically, several we our We're across also described. ease of larger pandemic. past we committing to of significant manufacturing cash meet supply with additional offerings of And in get purchases lead our capacity. the quoted in worked demand sheet expand I've reduce times. during brought This materials. the amount our designed on various componentry quarters, for balance common we to have selected includes, platform as simplify, And approximately chain challenges, and our ensure have to million support inventory XXXX, which $XX earmarking Over quantities suppliers, strengthened by to ahead orders. supply paying chain

continue will to cycle bring demand, suppliers online our the start on work capitalize the capacity more more creative model our We and value-driving to to recurring enhance pursue strong our revenue equipment and quickly. sooner with ways of

points in Let's basis also of included record by a Gogo deferred of driven The revenue, profitability discussion to which second the margins in XXX was quarters. that the service quarter, revenue for of don't as quarter. sequentially. XX% increase future now mentioned, an we I expect service the turn increase delivered

to some somewhat to and operations margins mainly related decrease throughout which of XG. service As costs, due network I increased XXXX said previously, to we are data anticipate center

first increased equipment equipment quarter XX% in decrease XXXX. is the of the versus declined mix in the quarter. to The shipments but primarily the XXX margin XX% due On basis of year-over-year LX LX points in the to margins from side, in quarter sequential second

continue for the levels. We to full to expect equipment margins above of XXXX year be the XXXX

less the the mix. product, in model. second percentage due equipment be year overall two the are service this similar product half offerings, on the expensive important of the for in to are LX our while largely margins important business first across to most expect that lower of note we than quite course margins It's half to lower However, is which

also is as airframes objective recent our delivering product smaller on strategic by its demonstrated LX penetrating serious announcement. for Our of market the

factors. terms expenses quarter of increased In driven operating expenses, G&A increase year-over-year. and $XX.X combined and second engineering marketing million by sales design of two Gogo's development, and was XX% This

expenses this reduced the marketing an increase COVID sales in during year and a quarter, were First, which was period ago. significantly

was a of pay we in were quarter our hold. accrual certain took as that the when not bonus year Second, would the ago we the occurred bonus reversal pandemic

plan cost You'll we our COVID. was one reduction recall during that activated levers this XX the of to bonus forgo

Looking to ahead, reduction stock-based decrease our G&A level on expectation targeted versus remain to deliver approximately to excluding million track from the now XXXX expect XXXX. year-over-year. in We the XXXX remaining G&A compensation XXXX we by end relative of non-cash our $XX previous in G&A of flat

some schedule of ahead running related currently transaction. to are costs we Intelsat fact, transition the In despite

Now, of to program. overview an XG Gogo shifting our

ramp during We year the and deployment development in second the costs quarter, which OpEx. million XXXX launch. XG anticipation balance spent our to of was in of majority expect $X.X of the in in We total this spending

adjusted $XX spend and in EBITDA, This of shifted XX/XX $X We results reduction CapEx the expect to free cash spend in OpEx approximately We CapEx. shift flow $X for the our about million in million between XG OpEx in a this million CapEx and XXXX, million is which reduction second half and updated in of $X a year. reflected this split for year. year in guidance

of the has timing deployment our the remains modestly shifted XG schedule unchanged. While Gogo investment program expected

of we the significant based for have deployment track half XXXX in Oak program on our are the on outlined. which We second XG milestones achieved, Gogo

end business flow, overall in through With by million Gogo the a generated XXXX CapEx in internally cash Gogo strong entire continue expect over be this fund about flow. anticipate of XG XG $XXX investment from to out We XXXX. XX% completed now to of our of spend the with generating XXXX we position to of amount cash the

free second increase recent annually the program. beyond. adjusted conversion total expenditures in $XX.X the refinancing from million top is discipline spending and bottom expect growth of Gogo of in This QX million million to an XXXX we and capital in savings EBITDA financial an the CapEx from line our rate a year second one performance million the and to represents an ongoing increase range flow for EBITDA of annual continuing accelerating XG stronger quarter After This a $XX anticipated adjusted exceeds increase even X% the cash line XG just $XX translated $XX in interest new launched, of fact supporting sequentially. the delivered very XX% XX% year-over-year record. into Gogo strong combination in quarter. XXXX, In

XXXX. expect was income resurgence the have it financing point corner. line Free to quarter increase to old of we the achieve outflow terms. the look growth quarter to sustainable of guidance and we flow line was in EBITDA net bottom for positive as in exciting inflection million. the spite around legacy our as reflects significant top year. an interest EBITDA, adjusted net of is an This ahead, translate income market is as growth adjusted ability in as cash increased for Gogo demonstrated of positive And we third in Gogo's Given payment a at our our under expected the this the $XX last beginning just

XXXX, six generate our prior six in positive was June positive now compared balance the cash $X.X refreshed six-month With cash the the a place, the of period. a remainder sheet negative in flow For million for $X.X free flow -- month year months prior to to free year. ending million XX, we expect

expectations generate and change enabled how to year. by highly see also in It's to shareholder business our refinancing strength model XXXX, this Gogo's of cash EBITDA we has raised successful the free for gratifying Given guidance our value. in adjusted for recent flow revenue step created ability our a our

provide cash have position Before drawn revolver. more a about in $XXX strong I'll I and balance hand on sheet our say quick a guidance, million on $XXX.X we update. as XX, with of Gogo not liquidity in June is very million

$XXX quarter, As convertible debt, including Loan recently and we notes. the we of approximately in place approximately Term second outstanding of end in in million $XXX the had the and B million $XXX put outstanding million

convertible debt we've equity, ratio about reduce will would we of XXXX previously, to leverage our our As with conversions our and plan sell additional May capital which and in mature streamline structure. spoken further any

well our Based financial valuation at or investment our allowance once drive our reduced enhanced we XX could refinancing an the tax including tax recent profile need value position which material Gogo on revenue months. in of deploy positioned XG particularly recent assets, of $XXX rates. our reduction transaction interest on strengthened tax continue and build we of million It's attractive whether value expense, the occur refinancing strength next from possible current significant nearly the attractive, EBITDA actionable adjusted is a recurring CapEx, strong are the quite all we on significantly have an projected to after-tax the and part resulting trends, today's allowance these a assets. within valuation interest to deferred ongoing to that assess maintain reversal of on service our deferred XXXX, model, factors, free profile margins, We thesis. low multiple and and expense from by to supported long-term Gogo's shareholder flow market based cash business

of moment our profile. considerations spend allocation light capital Let sheet me a financial in and strengthened balance our improved now highlighting

too of on provide of of our of the considering I'll in call. $XXX shareholders to on We to context $XX to will primary XXXX We to which continuing to market market business strengthen to such ways to first, overall enhancing total million longer-term due adjusted million. expenditures $XX Oak investing million. Free capitalize global to quarter $XX in the range over Gogo We allocation further million on at million in We a are the as four adjusted CapEx. expect our our morning. of full financial we year to of increased This deployment some to to year EBITDA additional the in million our through further strategy previous guidance strong guidance EBITDA the Gogo capital $XX to second, described; opportunities continue to aviation compared broadband guidance This tied and our deliver to business in $XXX compares million $XXX the position strategically our first and reducing $XXX the or million $XXX previous of opportunity capital million. and network competitive appropriate. to XG. full $XX the EBITDA areas: of million conditions we're financial flow updated majority revenue our guidance returning balanced pursue to focused range our leverage; With reduced now performance. seeing based in on $XX the range XG; healthy $XXX third, this $XXX previous $XXX as XXXX that, Adjusted million fourth, guidance in the guidance cash with ended we million million million March million $XX million. $XX to this to least compared provided $XXX compares our on guidance million Capital increased increased

million revenue Adjusted total cash now weighted in an fourth the optimistic expect our end annual to the XX% year this grown our longer second growth full And a second function growth and least to all XX% expectations following upper revenue to XXXX XXXX other versus growth, be the year rate particularly XXXX. and growth increasing will significant range is in half EBITDA increased Gogo is of is strength that that network rate compounded impact flow for the cash targets. the grow revenue As the these We've of on with of service revenue, XG XXXX the of a Based flow XX% a at guidance expectation half free of on toward free taper reminder, expected expenses. the at full the expect the in we stated our than quarter. the for flow now XXXX. previously our year the more of the equipment we topline and acceleration for a in full sales about free between cash as also in thereafter. XXXX from more Based We XG and timing $XXX spend XXXX. to growth and expected term resulting for year, see of we Gogo deployment

target EBITDA of XX% to period. planning margin We to throughout the continue XX% adjusted

model long-term our the planning process updating be in course refresh months five-year our targets will we the our as We of ahead. in

want the Before customers to prepared our we That the Q&A, ensure moat, we're congratulate competitive during and capitalize tailwinds their ready focus continue first the and question. to our for remarks. concludes our fantastic and in our The deepen our we Operator, of create open the resolve up second market, on shareholders. for value the now Gogo on entire I work to call quarter. will superb team team

At you have from time, our ROTH to Searle any like today. us [Operator the would of Capital. Scott take we questions first Instructions] for We line comes you. this question have might from Thank

please Your ahead. line go is open,

Maybe the guys Congratulations guidance questions. EBITDA in quarter. in the guys on Difficult my but are are from for taking for Thanks what excelling this morning. world, terms operating you posting. of of a good on environment year rest quickly an dive Hey the great you to perspective.

taking of second second to touched view it of cost. just the But the seems XG as one-time this of sales there as million Is this where ramping world half into you something related like revenue items conservative of contributions the year? kind for else $XXX this there the conservative. there, You've or that that second couple year the like half seems guys -- really were into a on a the of of even account, into going implying half it's taking are well on some deferred

we least million. said, as $XXX Scott Yes at it's

the really the of certainly half is And tapering above that we One of to majority expect majority number. to the first second due of are that drivers the half. this is three versus the be kind So, the primary in consider. to XG is factors

the in Secondly up is environment. and expenses we're market current planning some increases that there marketing like are light sales other that on

offset see more increase increases to the these to than gross So, that margin due expect the higher revenues. in we

may I -- be least think it tried primary So, bit issues. we at we again to conservative, but million. highlight a being And the again $XXX and is

there Is the capacity installation there a that things your And overall besides a at well could. factor looking you it Are availability one into a Helpful. is that could within I see of you I'd hear early we maybe LEO think out if if to factor? you marketplace. I'm wondering as seems little something broader if limiting the into timing of to going the could talk that general follow-up high. it and you. you little on as the XXXX. timing some Thanks. the maybe Oak the And really like you out would that bit it's gating aviation Because touch do demand there like Got be to a could macro pricing thoughts bit love seems and that picture some can partnerships? on start as kind related about that of, XXXX exceedingly what you front? get and market, component be going to

Yes.

figure that trying down can we are that? relatively diving to what the our Scott. of In capacity great of of ample time to we our think a actually obviously. But inhibitors And out and break those our question, that a there's unpenetrated. we hit right is are sort Why okay market capacity We and -- and is lot terms inhibitors spending on projections accelerate penetration. AVANCE -- how now, it's deep

say a sort XX% we actually that work terms AVANCE would quickly that's are growing at in we're this rate. So in very of, us growing and analysis. of, for deep I progress

installations grow the a than faster. we other other old so our fairly more already business platform to but number. we'd -- are than aviation in There's world quickly AVANCE like that's any what's IFC so So growing large ones. But

So that's your first question.

your know part part LEO. second question last the of was The I

Aviation… General

Yes. Yes.

plan what yes, deal And for it's connectivity their from So paying don't at a then ordered This by us. kind service The the equipment a and their there on opportunity market. And our we bunch question now connectivity. is very they that. well. putting a financial have and perspective. for regular things is as then learning with is experience is, firm us? of good -- call, it includes general sell sort And they're the have new what for We will revenue customers it's whole they of, Cerus to and as I'd macro on selling the a were we of us us customers a a view aviation, that include large price jets have for they're

that So -- we're market deal. are are they're clearly probably very us. there The not is, there aircraft of of XXX,XXX GA there for happy work out an be. a question are the other and that with parts there that might the addressable are we think may lot But market

on And the over giving more guidance it I it will products later us about are we last then any for news in get give where guidance timing part the world. is work. up we'll think our terms we'll in our want -- good of skis ESA active and clearly of has learn to But as in this. pockets conversations don't LEO opened more and So And there we anything. are the

is the be the And AVANCE rapidly understand that revenue them for to the build we're to think market business these you you cases able got takeaway to important to it's important revenue. the getting guys way and feed fastest our at They've revenue. is show look if most I platform, thing. question the that that when no BA

So a with continue going play good hand us. our to leads and LEO I where we'll it the have to see conversations and providers think that we're

quarter. Great you. Thank

Thanks, Scott.

Scott. Thanks.

from Our Lance comes next Cowen. Vitanza question of from the line

Please go open. is line Your ahead.

with three guys. have months Hi, out how of that many And compares questions. you unit. Thanks the how ago? on you growth today? Can Nice for taking AVANCE installed break the the LXs

have you numbers think, I handier do. those I than Barry,

Yes.

So sighted we those. of – some

this are total we are XXXX have the LXs and that of the about XXXs. high installed LXs So quarter

year So those build we growth some and XXXX continues that's talked last lower XX% to over had the we And of cited. about get the over that that at the number quarter-to-quarter. growth

time last LX number the think was I I we X,XXX. And think the spoke

So the little is another how help which that misheard time. that, -- continues it's a question Gogo no has international then, said it and the for sure seems well. long for could that if I I But how it's but is could how that or to perhaps about Gogo, could talk tailwind followed given you that because bit underground, be return I'm given think you. depressed not back could I actually you, return you I domestic, that improve to remained back in Oak we be that And guess, international like think remarks nicely to industry a travel made your of a how about going the as you prepared still comment travel

me lot actually heard of you satellite them on service. they they and A to those the our outside till No, flip and Yes. they range right. aircraft use ATG get international, ATG coverage then have to

have departments, almost you So all ATG corporate site to satellite. the talk and of big them

at question, my last I great. well Okay, obviously positioned. then as guess, OEs, mentioned nine line-fit And you all you're

you base have get installed think about that I put like? it how share mean, presumably, is? that what lot less the way would say the but look do fair should your ultimately you fair of What was, installs. you XX% the it's something I a your you today, of think share new to share than fair

fair are fairly U.S. totally large missions, that And that's produce. of that year, obviously aircraft but outside part of Well, be portion to what our the missions OEMs manufactured by for that varies are year not the going are international a share.

or missions, and you light that to that the American probably have So have option. the sort medium either on only jets primarily today were those of sized totally focus North honestly in

system most is then will jets, U.S.-based ATG add system. that's an high. heavy so the but -- in And very most all, our satellite heavy their to jets, And not share fair

get we those well. number of as fair a So

Thanks, Appreciate questions. the guys. Great.

of next from the Our line Raymond question Prentiss comes James. from Ric

Your go open. line ahead. is Please,

Good Thanks. guys. morning,

Ric. Good morning,

Ric. Hey,

Yeah. A couple questions. of

chain early, has Obviously, ordering Any from couple well. side? which of term? you there A problems supply issues any there inventory the on the out Going You on innovative maybe obviously. the some been medium be pressure guys issue mentioned funding the questions. should in chain pretty management, said margin or supply but cost them, short

haven't... We

Yeah.

Oak. ahead, Go

Go ahead, Barry. you No, go.

seen pricing We real haven't pressure.

that We XXXX are kind are continuing the changes look to demand. be that now to increasing really drive necessary to going at meet of to

we're doing of some So other kind creative things.

our on time. our manufacturers contract they allows can't We're to providing we're that XX-month market. example, with equipment build shortages ahead components demand to address secure XX our chain. to critical open on also identify It For the supply and us of putting well

to we're So that the the managing and internal higher and trying demand system get supply chain really of it that we're out seeing. to the accommodate ahead whole ERP levels

suppliers in doing that. I arrangements that protocol as some for those have benefit done the So from people prepayments, where selective case, areas. on that are get that very with as In we well. negotiated quick we can are mentioned, individually Those the something

vendor-by-vendor. kind or So it's very been process, very, a of, component-by-component active

getting we'd love so for certainly happening happen be quickly able to have and trying have the but for far we're really they as that shorten we're well. customers more good to this to quotes to like year, because installations pressure year, next from time so would And the that lead

Makes sense. stuff innovative Doing some there.

asked the far could factors you on seeing? as you you're Second, a work what couple out that is gating be of side, also, also of on status the to lines need Update the STCs. continue STCs? think the Scott to us when some LEO there the along ESAs as And

Well, the it's I'd say status -- years. two about

is there ESA a viable business for the market. So jet

suppliers. couple and that's different -- across So a of

far are technologies. fairly these in that think developing along I

terms get FTC. and a the In and ready to PMA of from go until have you can't the you FTC, FAA antenna have the go you design

be that So ways would out. a

Right.

and the as having it? the time LEOs then But revenue opportunities, far we as as lining ESAs So is discussions STCs the good. far revenue with of need as of opportunities, thinking kind

Yes. Yes. lines more short being and able mean more five we'll as I revenue, to at talking look four, Ric. form opportunity you're concrete have don't in time time is I of partnerships think out. drive give we three, this years on terms We something lines. that And as guidance term

And think are should any But can. of out how consumption sites with data you for coming stuff significant streaming talked how me congestion obviously off. extra about they is final as we XG one the People about services mainline there. network much with consuming day your capacity got as

the the As you should how design network, think you within how congestion network? XG we manage about

and cetera. of Yes. engineers. a key how design you aim our them, antennas, network about And where It's all you focus it's put et and

science and So to complex around a that. give any we plan whole but least qualified it's build it the around at consideration you we person probably Gogo it. it, detail yes, there's And hard around very a I'm for significant and

this, kind about in And assuming? of what into consumption as you growth you think are what kind capacity of annual build building you're

network our XX% have And but a out, grows excess we figure projections on about growth our we use a that's going what of we now capacity. consumption Yes, year and for look, right lot as for network the we as now that years could that out many should I several aircraft, as jets on three we have say, today's handle have we times growth. on including

speeds So significantly of improve able number the them constrained we terms those the to to we'll aircraft of of our in not we handle. of we are XG, in with course, network, be to aircraft. can terms deliver And

guys. it well. Appreciate Stay

right. Thanks, Ric. All

Thanks, Ric.

Ric. Thanks,

next the comes Phil question Cusick from JPMorgan. from Our of line

open. is Your ahead. go line Please

for for you This the is time. Cusick. Thank me Phil [indiscernible]

half SmartSky from you why that was First the partners? XXXX XG into And there to installed the obstacles with to off, of And $X could its shifted second CapEx build be Thank channels might you. go what XXXX? XXXX? sales and second of million is hearing from about Gogo

Yes. taking delivering I'll promised start many XG. long terms ago, of so stop worth MRI they turn SmartSky that because I'll time that seriously. taking the missed seriously and with for in them the just the it's SmartSky and not they over The it network to dealers dates Barry a

two, nickname so they it's like canoe, antenna big. because the dealers not one. So the Number do number the that's and

has very Now done business careful we've power antenna, The about one got there's get to problem large is more the benefits in of ground-based antenna. and better is and it be you a balances aviation very which it in is out we've but signal, how size large power. way one

they're the told large minimized to power get what aircraft. antennas we very size the the willing what an arrays market on And So by out the us of the that's our really of put they're about for on and driven aircraft XG and we and not. what antenna

comes So Dunkin' in does of out and talk form the obviously, partnerships, they've I to know but network. substance find we CEO they those same challenges industry lot don't I of former Mark to partnerships think when trying the SmartSky Aviation, so much got mean, of a there. in the real people been he and we boast dealer people

the And then [ph] Amir on your in $X spend. the change program million question about

on. of push. $X shifting And process that the of go is get those that you on and result a only tweaked it's spend. overall based between CapEx of some is as the and the million -- CapEx So standards kind It's OpEx so things accounting through on

matching the really what's happening evolves. is it the with that planning as spend So program we're

So it year. is into next early shifting

pretty affecting side. which said the we delivery And of changes as is next not second said, program as in the we half is really it's the within this still modest on So date, stem year. the

And continue to to kinds continued testing refine flight and kind modify program -- what of of have it in with in and response to we do that. but seeing has the things market. really So timing the development, just it's those of to the that we're

Great. Thank you.

question Operator, one more Hey. take you. Thank please. let's

Sure.

Blair. William Our the DiPalma Louie question next from of comes from line

go Your open. ahead. Please line is

Barry. and morning. Good Oakleigh

Louie. Good morning,

Louie. morning, Good

of topic overarching be recently. competition the seems driver the The to of stock price

milestone doing XXX that were well. with able Inmarsat Gulfstream this doing quarter, appears and the Direct be reached this other of took revenue doing Satcom announced And you the growth win with to in achieve all XX% Flexjet, robust seems ViaSat vendors announced even jet and also well. business it place of During to several well a online. Inmarsat be market. to aircraft WiFi

you the market is XX% or double-digit market to range? to or in business And XX% jet think range maintain vendors? my enough share so grow need that a large do in-flight high And single-digit market do support question to is, WiFi multiple share a for you

me jump that Louie. on Let

have by equipment all, So first actually the our Gulfstreams with of -- using we on XXXX Inmarsat Gulfstream them. announcement been

-- fact as Inmarsat. direct cohabitate So Inmarsat. also that have you'll kind system have that competitor. I to important end satellite are they network rather actually that than the most Redundancy them find over Gogo double about the over The will US-based went a don't At and the market, like in of with product is we of Inmarsat that jets quality US. a that view the ATG the North also cheaper of And using the it's America and system.

product and But compete we that's call gets And ViaSat-X Inmarsat will really say their what don't think sort the is of trying come that I'd mids really kind but to, of market I FlexJet where I they is they us. sort they presumably product and when with don't -- compete product super global they're into They lost I'll head-to-head little launched deal right mean, lot And ViaSat-X have the there. So from ViaSat product. It's cohabitate really mean, of delivering. with easier was. it. the with us what to yet. is it they service install to can a what down have then than I from right a Inmarsat. And the LX now. have will don't they ViaSat. is cheaper to super ViaSat and a do regional it's frankly comparable is bit

we of they're where a other to aircraft it's really compete have real don't only companies or reseller head-to-head. Direct going -- people would is and a certainly on switch to satellite incentive So a products. new not Satcom

again, And we the So for of co-habitate good of satellite them. lot have they're high-end organizations again, with sort But installs. of the and at we respect direct a market. sometimes service would very they're

of will. it's So the for you the again, Inmarsat kind story as if same

that's with the competitor. So SmartSky environment they launches obviously competitive a be will

issues what stuff? other have to amount fair cover Louie, some the or did to script more I some do you wanted you about have face. going cover any in I of you that they're I talked other think Did a think

of Like a online asking come is now, new related almost probably Gogo? future the of But if Lance share percentage is what growth? to a come online, of of continue in XX% new what share of for that new have to aircraft, in high. number aircraft very that terms that from if And aircraft supporting you market XX% enough that was XX% new revenue aircraft right are equipped instead having if market a

that the they So overseas I very them and wouldn't go the go all, out aircraft have percentage almost XX% of don't come OEMs XX% because think of on all nearly a XX%, first we of put overseas. Gogo high

going line-fit So different you're have mean, Gogo. to then works. sometimes they're And not you're are there standard. sometimes I ways an option,

we – large jets, not and an medium-sized standard. offering. not standard on often the heavy typically light will going then large – to the the on On going we're be the we're jets, And be option. be more We're very to

So not on is JX going offering the instance, us. – the large but Gulfstream Inmarsat if be standard for to

we percent systems that's off say So planes I in numbers, would that, know, varies, the coming like get the it installed. don't of share. total – exactly line the fair kind I something maybe our today of but why XX-ish our we have

– room we I'm So shrinking. about to actually We that have there. worried grow not

of The other your sorry. part question,

Let me ask this.

other the obvious come maintain rate question But and we the still of growing because the shared math there's model, answer the of XX% easily there And can in didn't planning need unpenetrated grow The The could planning call, is, period is you projected in which us for XX%-plus much Remember, jets part year-end well, rate. that and that others XX%. world end plan. still growth five-year end grow we the to generally through at XX% continue growth the the to our market no. as share, more we a room so of our than of XX% connectivity. in the market our five-year have at in

of market left a still get. there's lot to So

think didn't think Right. what be but seems answers comment able the several down quarter very XX%, is announced that's by and during And question, underpenetrated. because win in that because basically think is to with And vendors win? that others went it win asking seems when can I'm ViaSat that still and aircraft the you and relevant my I stock you that's that, and said able ViaSat FlexJet impact I other last quarter, are particularly like what like the to Inmarsat market to aircraft, you, win what these your

I Yeah. where plans because to to whole edge they case case an that Europe. mean, those in ViaSat fly reason was an Flexjet the has really market, our were addressable in That advantage. not used they that's

those basically. or to had ViaSat Inmarsat to go So

business on our loss And for. so a competing really a part we wasn't and not were

Barry. Oakleigh. Thanks, Thanks,

Yeah.

Yeah. Louie. Thanks,

end quarter you That Okay. our our question. joining Thank for last second was conference the call. concludes can you This our call. Operator, please.

Thank you, everybody.

all. Thanks Appreciate it.

This concludes participating. you for Thank today's all call. conference

disconnect. You Have day. great may now a