Gogo (GOGO) 7 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Q3 2023 Gogo Inc. earnings conference call. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Will Davis, VP of Investor Relations. Please go ahead.

good and Bella, you, morning, everyone. Thank Gogo's to Third Quarter Call. Conference Earnings XXXX Welcome

We factors to of results the statements the and President Factors to and morning about Those Chairman me this remind make like our consider talk Joining our today in forward-looking opportunity and this the forward-looking our cause differ the in this materially that get on filed Risk I that and future caution documents other call. risk could to statements and the call, Betjemann, to filed Annual may take Report actual we that you and Jessi are from we events risk conference XX-Q the described have are of Executive release to regarding results factors CFO.Before more are those Vice XX-K during company. future and SEC. you with fully started, performance would course in earnings CEO; under Thorne, Oakleigh on we the detailed

at on Oakleigh. is After the earnings community also obligation this of is we'll internet We available available note on comments, call session a Relations broadcast based please call my this over comparable measures on turn conference today website pleasure is explanation to and earnings press events.During the of considerations update GAAP information forward-looking to included only.It adjustments non-GAAP great and X, in our with to to as host call as other management will of present we XXXX. date Any assumptions GAAP the measures of of addition, that reconciliation release.This the is or statements the no Q&A are the undertake that In result on ir.gogoair.com. November make and date. website. the third more quarter these our statements a financial future non-GAAP both we We've now call, financial a most the and The Investor being measures. release

our line earnings to a welcome the industry reaccelerate which Galileo, second half the and as bottom headwinds QX of XG Will, third achieved our solid orders Gogo growth call.Gogo of of of and in await XXXX customers slowing Thanks, will starting in both launch quarter despite and aviation XXXX. results the

reduced suspensions On quarter fact, several supply side, mostly and in and labor chain impact the the in aftermarket levels, for Gogo. headwinds positive which management. Delaying started side, shortages which the a partly have XXXX discussed and XG to new highest revenue and growth the are to in like Despite quarter, cycles, and maintained ever slowed I issues flip OEM deliveries achieved turn the our last to partners. nature, strong new deactivations, of cost normalize, service of have equipment continue third of due partly to to activations.On investment maintenance we've for temporary shift and aircraft we dollars profitability revenue extending that and our due

explosive not prior EBITDA of changing do and change guidance we're for cash our not to that result, we're disappointing, raising end poised free guidance And high a our for adjusted headwinds view As but near-term ranges.Though and is lowering very flow XXXX, these in targets. our revenue our Gogo the guidance is XXXX beyond. for changing growth long-term

business highly solution without broadband of the world's unpenetrated today. flying with a aircraft serve we a market First, XX%

demanding connectivity. surge with and those to unprecedented Second, aviation of private we see fly demand travelers travelers choosing post-COVID a

the decline all walk demand dive global And BA in those every the order our rationale products by shareholders very Galileo BA high Gogo us close by I'll our dramatically through magnitude the counts meet QX. having enables returns the our for progress observers platform through morning, key attractive in of we to to typically in of replacement business now on Gogo's in and have TAM initiatives. me numbers recurring data technologies improvements we technologies.The a FCC service use the demand. the from to position. And in strong drives that for XG, start a service to the an make market we're let in behind Gogo were investment heavy minutes.This the touching reaching model Industry by X% to start flight incorporating new our private needs we which as to and develop price will count a aviation the few based revenue in cash down increase I Fourth, which going counts the from that market. X% Jessi deliver then we build investments with is and deliver to industry competitive QX, Third, flow. an Rip the a we're project, our necessary substantial flight that enhance on experienced demand. segment of only and improvement execute deep and have new for go guidance of is proxy I'm strategic and against driving cycle I'll update.So sheet see balance from then that strong quarter, finally, XXXX, the explosive growth highlighting Gogo will into

connectivity In offerings only offered connectivity broadband the at to importantly, seen per XX%, its the Those XX% from by flight pre-COVID That and remained the OEM Gogo, research years.Meanwhile, stay. numbers the stark today. business all in are for QX all conducted usage over XXXX to to current fleet, IFC and currently and XX% of that which order is XX%. past participants plus significantly global to global demand the increased QX and flight at to here XX% hour opt announced XXXX in those competitors, surge in ownerships by aviation increased few Gogo we in when More would fractional market industry elevated add supported many QX XXXX. sale industry of counts from books data have stands stronger over signaling contrast aircraft in from stands that

that by finally, a Some and X turn push service at for out our Y, maintenance demand from for aircraft as revenue the of to last also flying. and generational by and slowed to growth revenue maintenance forced equipment dampened demand has out next by and shortages which improve that of revenue see their let which has to and timeframe product technologies silent to highest gets flyers, maintenance labor which ever XXXX spending and all growth. performance are extra new the SmartSky down prior the with a online because which drivers extended And to to before and losing for in delivered up from Inventory the was this up We're short the generation last to XXX, X% opt for ever only QX XXX extension replacement Among as to a total, Z, which on shipments schedules in about year. in was economically forced inventory. others, up wait aftermarket in up our suspension to driven equipment are substantially splash.Despite I and with turn times year. avoid point, the a service customers have aircraft up the goes due just XX upgrades upgrades Strategically, third we has competitor. Gogo, high a by aircraft QX not out. have aircraft would to down normalization same to in new at this migration to fair from events high-margin rates to as reactivation and they highest and And from XX demographic equipment had The important.In very XX%. critical Gen XX, aircraft our that the prior run. LEO reactivation XX% is that What in let time amount performance us, those needed we are satellites, for online marketing of business those XX% is upgrade and grow for XX%. of has rate, elongated dealers Though goes of connectivity phenomenon for of XX% and OEMs biggest our to prioritize shortages, from this deliveries, X quarter growth stronger XX parts time this We customers revenue last to slowed bode who volume in ago.New committed offerings particular in those part extension, grew older quickly interviews AVANCE and new rolls customers, baby expectations, to our in in up technology up X%. the Among Gen allows turn like discretionary prior AVANCE has Gogo install fly shortages, me busy of are not moment caused to continuing units revenue.On dealers activations the with a was short at to for of Part what systems. big critical connectivity. shortages IFC, potential note based planes boomers, encouraging. and frantically at well field This only were that dealers. AVANCE we shift believe from roughly online revenue.Part Overall, dealers offset like XX% service FCC when important units XX% end driven penetration recurring for Gogo to was not that labor labor first service partially shortage.Now AVANCE. units from year, And years.Now of quarterly revenue over our moving wait satellite were years fleet, new our of did down headwinds, than We at quarter is year, AVANCE performance will IFC QX spending earth XXX, weaker low poised in grew launched guessed and QX a XX%, percentage XX of inventory AOL technology dampened it, strong XG maintenance losing extensive from results. field by to QX but much me but jumps XX% and is in making AOL decreased particularly now very equipment over XXX, combined XG was aircraft. accounts QX, orders Classic quarter saw that to you XXX the trends have and dampened Gogo And dramatically impetus them in discretionary push parts, that activations and with from of and activations continuing for broadband XX program mentioned with more maintenance in continued OEMs rip the to shipments combined heavy only and to caused and channel, hold And believe to competitors. hurt sales by orbit has year, we that We a year. shortages, delayed that which fell which XX% XXXX

a shipment a the had turn XXX the blockbuster much of growth to were in discussed have expect perspective, in AVANCE and orders year.Now shipments in seen with in signs quarter our little October we stronger had how we To earlier highest ago, intend moment me the we to strategic QX XXXX, to put accelerate a still For we three-pronged this versus in strategy. quarter encouraging have decrease ever XXX second the quarter. however, last an reasons when year year to more on update new in I AVANCE a our we let and than initiatives significant

each offerings our BA meet addressable the want First, segment platform broadening the global needs by we market of hardware to to network market. of expand the and AVANCE

AVANCE support HDX to our as networks improving customer networks path strategic achieve LEO secure segment focused new We're to upgrade platform network and initiatives in we start goals, leveraging total Galileo with our our networks and from the on and strides the loyalty offering those secured And third, our easy FCC making XG we're global SEC market technologies the administration. ownership. program cost of including Biden to program, FDX.I'll and the our broadband technologies an drive want of announcement lowest and emerge. customer continually to each to encouraging offerings, Second, the new great at best the provide by product

with communication Gogo it SEC's there telecom grants XX% the secure good for removal $XXX trusted for to You'll grant originally networks funding grants news to of year, Because technology recall for the program qualified XG that the included more a supplemental under Gogo's expenses back and that associated our from the last was original funding program awarded were back network. Chinese reimburse million of the than full was cut accelerating planned, award, case request in $XXX its all White was cut million.The Congress. House last in to funding week which to were

in extending functionality all full earlier, the it Gogo year. that has chance a ETE we work Congress, performance of in this Including Full go XX% can and refresh. acceleration Given of equipment ATG customers that moving funding I customers simultaneously expect very the significant replacement support as to a the and Gogo lifetimes already on Classic aircraft compatible are will of XG equipment Gogo help ground LX Gogo in installed of described improvement XXXX. and has project and network upgrading will the passage almost equipment of ATG funding that replacement brought feel of Gogo benefits strategic our networks.We've of ground-based AVANCE, customers side has which, manage bipartisan started cost replacing profitable from number XG lifetime benefit the defray early in ground the network Classic the for at good and this AVANCE of get to the significant than customer network better to doubling equipment. this Because live a network connectivity the equipment some today, airborne be will with our

majority years. with our of convert side and already the And with transition, in SEC how overwhelming which is all LRUs to and me details our a will than the customer leading Air-to-Ground goal fit minutes over cars AVANCE a our into are the all the next on an LTE of to touch our to spoken the to have the new guidance.Now XG today provide network program majority flying Jessi that reimbursements, them. than been air XX% program. costs of the coming selecting are preference, of actually We've product X On in expected, Gogo turn more towards upgrade few those Classic X,XXX those of LXs. customers more with have this in with quicker the let and those of tails

to We've the North this coverage. All to that tower global aspect medium with megabits American the but reminder, we'll And performance XX those far price.Last of a nationwide America, As affordable North current completed provides product a at market up our by will beginning to have the speeds coverage more they Cisco chip. wanted next equipment build-out of second, quality And Xx by one, completed North America. XX of and affordable per network. year, with peaks all the at of XX ATG XXX core world, LEO that announced aircraft XXx also segments Canadian mean durability in an with stream.This and to XG revenue in driven the limited products. deliver fact In Gogo's complete network lighter XG the megabits or airborne its satellite second. XG every offerings all ending business per around competitive flights except are our the high-margin mean of than GEO in segments package which pick, satellite ahead offerings, is Gogo though #X Gogo's largest than year, professionals, operators global for more certainties many partly the connectivity, and want market of is XX% current currently price the of of well ATG aviation bodes and a competitive

note block, significant As complete at of our the bring-up important foundry. in quarter chipset we've because superior has the delays house. that which I'm the perimeter of chip been to sub-block.Since team with issue implementing that the guidance. on in to confident much after date to full cause and was has chip earlier chipset conducted sure hit root not the the currently we're Sadly, in of identified supplier the this analysis suppliers the you're our a That modeling outside remedy we'll aware, It problem. It's we third XG that fabrication project. because, the X XG bringing establishes chipset the the and in our time our ship involves first, peripheral a our chip XG have had program is brought remedy and house up thorough our design completing capabilities of simulation but July, re-spin, fully to issues the a new was has that at network said, supplier has issue frame more a feels old design and remedy.Second, into a working this

full of to year and chip having fabrication, test of a is and missions.The as up transcontinental will fly to broadband of satellite significantly ever software to the comes flight Gogo Galileo, FDX system The OEMs is the include will XX X Gogo's allow bandwidth Eutelsat and to the I'll can kits, integration Galileo all antenna those house of FDX international chip and on an panel, Third, the fits heavy and larger that success smaller and we're the saving broadband business the no market pre-provision offerings. a XG with technology, XX and Galileo inside planes down be in terminal. share orders the move receiving really HDX begin that installed utilizing has And success jets the our steerable today; already smaller larger next antenna box. North have Gogo higher our have that Once for add LXX A, and terminal what's North with be targets all orbit a initiative, is receipt and more with terminal and are fly it low a immediately million cancellations platform that sets. even have and constellation chip.Finally, X domicile chip that; ago, XXX will America vendors global than mentioned when survey, risk. in a already. that aircraft expects natural America often the we midsized and solid technology many I Galileo jets the sets is built testing every flat targets begin almost OEMs itself. XG Gogo outside larger turn a array considerable terminal global kits, The flight in a super no our earth chip. what's they HDX programmable midsized fuselage B, XG the and those deliver AVANCE XG adds OneWeb ready, that XG network flavors, megahertz of And aftermarket ready have to to Gogo bring have LXX emissions. for domicile of antenna small the as approaching the launches solution in only design a it alone. installed that LX we'll have also QX moment install provisions which before Gogo those occur right our have milestones test electronically mounted after due testing and getting GEO LEO-based currently XG better our bundles commercial aspects fourth, operate offerings it in And Eutelsat margin. and record chip in just Other satellite fine-tune Galileo QX, upgrade and OneWeb have the plane XG technology simple HDX to Las network on speeds from higher-speed current second. the these the while We're the Gogo been service speeds We've chip OneWeb XXX start-up with considerable satellite It's XX X install risk customers will is any to years.A $X.X for AVANCE against burn that in to both few fuselage the announced us markets when And Geneva having already to this per Eutelsat product using which a they FPGAs, constellation advantage chip these XG expense. and bundles time. the can year aircraft. Galileo field waiting noting in on data before megabits needs to all design network FDX we LEO it AVANCE increase And place first had huge Not new and us its be demonstrated including is run QX. from or MBAAE-based And the and tested and also competitive a ATG We've dramatically conferences as when Gen into chip we from delay, which cooler quickly and shipped cabling and enable the LX of the installed very by of downtime installing Vegas worth achieved only which then cool to so known add our gate an at aircraft and on AVANCE allow FDX either antennas. they and is power HDX Hughes is late those XG that show will MDXX offerings. X antenna testing outperforming risk, XG in our the to FPGA network mean antennas competitive all consistently backlog ready.Now

of plan dealers their agreement signed several make a will with easier line-fit an OEMs already AVANCE perspective and already We and to Galileo start at and FDX its is certification line-fit partner, terminals underway half STCs and great its and satellite the has option our ready continue a partner, flying the to antenna offer towards OneWeb network discussions OEM have satellite one in constellation and to make as it Gen-X year. QX OEM launch model in others. our progress and the be in ground every OneWeb terminals XXXX launch XXX for every completed our second aero of engineering Eutelsat We've half half dates. Hughes, first HDX for in use XXXX and before of customers. has with those to driving the the XXXX.In shipping Eutelsat aftermarket, on option should aircraft second that complete currently of in of the from Given this

opportunity our the XX,XXX front global in Gogo believe and has turn to the With it because future that and right do I front we're thanking to the to We expect early shipments are the the antenna the receive preproduction numbers. that, a to of will Jessi few value most of market. product total segment in you equivalent the with from the and and team both the business complete the highly support the the have those of the want support by the this Hughes in that Gogo production on IFC of continue offer right to over test quarter right business months capitalize at position. products every in we're first portfolio customer [indiscernible] HDX great the with with first units cost creation.I line. testing Gogo addition units of for Overall, performance, strategy that will aviation QX for place It's market unpenetrated Galileo, significant and to for long-term after.With excited aircraft in the end coverage, aviation on industry deliver flight targeting line right

including financial and our competitive walking Gogo's to today, position financial our allocation I'll in performance we my continue turn delivered sheet bottom capital Thanks, Gogo future.In XG I invest Galileo then initiatives, for good quarter morning, Oak, everyone. by Gogo will priorities. solid performance, Gogo operational line third strategic enhance balance the and remarks through to start to as and and our

third quarter, financial million, the additional for and revenue targets.Total Next, up year and our revised long-term the $XX.X down I overview And and of We growth in around our by revenue ATG as was sequentially. of X% aircraft outlook sequentially. of the delivered XXXX down an program. year-over-year context prior million quarter, units reached the growth X% I a online X% will of wrap X% from the provide third will prior FCC finally, increase impact $XX.X reiterating quarter of end record service a and the X% representing versus X% sequentially.Our provide year increase X,XXX the third the

an in quarter, the incremental XX which show took these improvement suspensions muted maintenance ATG third elongated online to in aircraft quarter driven off-line. the from in second cycles, XX to While by remain due aircraft Gogo temporary

Gogo market of XX% critical Increasing record as addition, we our aircraft aircraft penetration products total Galileo. North muted In XG last replaces And comprise AVANCE for aircraft had also fleet, online XX% we it strategy, online strategically globally the as the up third of contributed from important, the while to American with prepare in quarter. now our X,XXX aircraft and and year. remains it growth to Gogo's to both upgrades grew and existing the online.AVANCE online in

suspension As to data normal return to year on year, several drive smaller and incremental Galileo rate market.Now partially growth last that accelerate and priced offset by quarter, lower sequentially anticipated installation to into XX% online of sales slightly to third time, Gogo turning year-over-year a dealers Gogo shipped revenue units plans $X,XXX growth LX further XXX decrease versus as AVANCE quarters issues shift supply to expand decreased slower XX% over ATG to generated and equipment quarter, in rates.Total next XG sequentially our are aircraft $XX.X mix. driven continued down chain continue and we addressing aircraft opportunity slightly expect and contributing growth time ARPA reducing decreased in The will revenue. quarter. ARPA third events product work to levels, we as million in maintenance equipment the launch increased by next the start mentioned of decrease to prior the AVANCE equipment the in over revenue the a a

XX% well noted, as confident of the and for shipped of market delivered the reflects XG to half largely prior shifts future.Turning connectivity, the in advanced as in-flight equipment QX in in in coupled propel third in and orders the the expected our customer launch in margins in XXXX expected of they channel, lingering of penetrated only Gogo compared inventory will of delays with XXXX the position purchases that strong year remains Galileo is Oak impact to the wait As XX% quarter. decrease Gogo OEM global XXXX.Gogo as remains continue in to flat Gogo a year Gogo with the profitability, our quarter, equipment launch the sales in which second Galileo next service units XG to in that

by the positive impact to a in to range, offset The percentage QX XXXX. margins FCC free long-term percent points service Equipment equipment long-term quarter. to million due prior in activity flow as the positioning expected production aircraft than partially creation. expect quarter, due accrual, replace air compared an was air million continue large to points as modem dual shipments, lever period with for the XX% The $X.X incurred lower in higher generation the sequentially. cash and accrual equipped $X.X to reimbursement reimbursement EVDO was related of related and million percentage revenue for third the last expected was for primary revenue of in margin equipment to FCC prior cards the primarily were accrual $X increase lower quarter's an margins to in increase percentage We number our X of XX-plus X year costs a back the of to $X.X while in cost service million quarter AVANCE cards.Out value of of

expenses. to to for the on catch-up as margin equipment reimbursement.Moving QX expect FCC decline there is no operating We accrual

combined quarter engineering, decreased and general a declined and million slightly of X% and and Third and $XX.X sales administrative design year-over-year expenses on basis. sequential marketing development,

expenses sequentially Gogo lower complete investment ramp Gogo operating for to year Our due decreased spending to program primarily Gogo XXXX marketing-related be a expect significant will and we as costs. XG Galileo. continues our

quarter, and million in these growth benefit Gogo million see inflection investments $X.X of CapEx. sustained and our in flow free $X.X comprised in an operating $X.X to OpEx line XXXX third of XG expect of cash We million in top in XG business.In and terms of through growth point beyond our in core the the was spending strong

Oak our and million push delay of in Gogo Gogo plans XXXX. to expects cash XXXX. initiative. $X take original to Gogo into dampen resolve Galileo expect now and $X.X of our Gogo XG the in of approximately recorded year-to-date. launch million our $XX in XXXX.Now total the revenue, our free Gogo will from our on in In We this third and delay cost Gogo operating CapEx working As EBITDA in million Galileo flow OpEx network XG million quarter, is suppliers estimate to maintain place chip issue, and related $X.X to of the the but XG with $XXX chipset QX program, to we XXXX million mentioned, XG expenses and for commercial

XXXX. of line. in adjusted We $XX basis to quarter, stayed to in and to points had basis expanded development diluted strong relatively third service approximately per cost million XXX costs continue up high-margin EBITDA as growth year-over-year, control. Gogo up external we XX% $XX development than to in in be the million basic EBITDA We in net be share. earnings less XXXX while year-over-year approximately $XX.X of Gogo's which in million delivered bottom costs year-over-year. approximately flat and income third our X% and expect $X.XX quarter last revenue, translating million Gogo Gogo of in of total, be margin up external will XX.X%, maintaining incurred from points OpEx.Moving for XXX quarter $XX.X on anticipate $XX million will Galileo's to Galileo

Section last income the that of allowance deferred related million net to tax the XXX(j) partial million XXX(j) in Gogo on valuation limitation and interest our due reminder, XXXX, the income interest assets million $XX.X benefit of $XXX million carry-forward.As state an in of operating XX, net December we tax $XXX reported in losses losses, to a release included $XXX limitation net quarter, operating carry-forwards. Section Federal had As

$XXX.X paid base up year, $XX The Rights lasted. million are do largely our September. large sheet. period million a our modest as quarter We investments CapEx. designed non-cash of no the preserve our expense reflect of versus line a equity.In horizon.In of resulting slightly in to the outstanding renewed Based loan, over months lower Shareholder to Thus, term short-term was as continue but Shareholder also shareholders to to of X.Xx. monthly target shareholder from as X-year our quarter, have leverage pretax X.XX due in for $XXX in NOL ended to flow, we cadence our principal Rights paid we on second with due on we shares Plan end payments X-year expire quarter.Now our term cash position, not X remaining new Gogo's we to flow have primarily pay to cash may $XX.X NOLs, is over to with statements the million prior million $XXX.X interest reminder, Plan, million in period, interest in XG the Free a income. access common that turn in is lower but I'll a our net of generated positive revolver was with purchasing lower income this cash interest still quarter changes to our position, and switched pay longer cash taxes restricted of X% third discussion meaningful balance amount an we the up range financial planning million the X.Xx, a loan undrawn. our addition, not and by in free $X.X Gogo's in to sequentially, of outstanding on NOL substantial tax our we extended expect As generate

level a a third, Gogo's occurs including positioning strong and target and to as ratio cash X.XX%.As first, Gogo drive of remain a strategic to with maintaining have we include, economic to to XG, Galileo; hedged. adequate of reminder, value, to in next in Gogo hedge the As XXXX our mentioned, XX% And X.Xx environment hedge X.Xx. million net the from increase place, in balance, have strike leverage with step shareholders returning appropriate in $XXX we rate future.With the our The leverage we appropriate July and in and an finally, an capital a for currently leverage Galileo down agreement previously well-funded in returning year loans this projects financial X.Xx, at X.XX% net $XXX strategic capital moving the opportunities and goals second, X the liquidity; maintaining to to business. our in investing paydown and comfortable confidence were with including ratio competitive XG allocation are million aligned priorities earlier in unchanged our and strong strategic debt capital and We priority other our shareholders. of

This Board the set share approved no offers that Directors repurchase date so we stock. value $XX opportunistically proposition. to up Our when shares to in an ability of repurchase program of a doing million find grants September repurchase common with gives us expiration shares to authority that of attractive

Secure we balance year Trusted capital the a allocation interest funds repurchases.I down Networks need hedge use debt, of to to FCC and continue Communications to our high rates financial in However, the would impact program. over across and in step next our cash paydown priorities considering an update expected on and the further reimbursement of share and like future provide between of allocating now the especially

which issued House mentioned, to were Oak the supplemental are million. as total we call we the request fund reimbursement includes up the would to increase value recently encouraged funding As $XXX granted significantly program, fully Congress to White that a FCC that our

the our our XX, of request waiting the reminder, need to months we our replace extension grant LTE of and a X areas: blanket and this which for in flight partial the to will start receive claim testing, triggered aircraft rebates we mentioned costs third, cards quarters, July cards costs to to and program and swaps program incur and that design professional XXXX. application, EVDO services. have airborne to air cell multiple will continue stated the incurred extension communicate FCC are we has or complete will we if for customer to to first network datacenters; previous In enable own.Gogo of existing customers' coming the primarily in to second, equipment network; see the extensions in operating expenses and an sites As to will $XXX for program equipment network to First, for million.As to installation clock a funding by complete we X-year the on partial new submitted in the July, air currently expect

partially income and FCC, the recorded is reimbursement the costs for the spent a XX, and expenses statement. reimbursements.As assets previously included property with corresponding a in equipment, offset and mentioned, expect million FCC We I other which in with the of to contract of September inventory will assets the by be $XX.X in we the receivable our from prepaid sheet and pickup balance current reductions

impacted timing free recorded benefit program the sheet.Previously, we reimbursement FCC cash impact for, to the since and the in a to optionality proceeds. balance forward, have reimbursement in partially XXXX negatively statement funded, XXXX of between currently Gogo XXXX where Going the income by be what expected grant would request and we due is and flow money which program could some received be

quicker in expected, than currently reimbursements changing cash free we flow the over coming However, seeing are years. effect potentially the swing on

which and our as outlook. Gogo well total down our in range. million XG with largely now partial This spend, process, prudently more development as in lower receive affected guidance $XX FCC XXXX, in reduced shifts I the spending could operating XXXX and expected the But lag to year. the $X of approximately expect in to delay expects we financial approximately costs was XG and Gogo to initiatives. the include to million delay. were to of this million for of compared due The the dynamics. million Nonetheless, to previously noted updated now orders includes revenue, $XXX to a Galileo, reimbursement by in reflect they guidance financial continue approximately equipment expected approximately adjusted out of expected for and OEM be as be with operational revenue in XG for spend on adjusted orders strategic million be Gogo million our example, by million the guided launch its of we XXXX.Turning current spend customer market expenses manage to earlier.We XXXX approximately approximately total Gogo and reimbursements. $X to which $XX spending, through $XXX wait range additional program program $XX previously EBITDA EBITDA million fiscal of cash $XX million Gogo as $XXX $X in are as end we For in the decrease in reimbursements to Galileo $XXX the short is driven to revenue push high expected increase of reduction guidance despite million. million initiatives, recoup We able to in to funding, XXXX additional the cost operational a expect XXXX

related FCC approximately $X to Our offset expect guidance program million program, includes by of the the million XXXX range of related to now the $X our accruals to million to CapEx $XX the also adjusted including million and $XX FCC costs of be FCC $XX XG million, program. EBITDA for reimbursement.We $X million for expected the Gogo approximately in

the cash XXXX and year XXXX spend FCC high in reflect investments, our approximately be targets They and growth initiatives compound of financials, half We launch in are XXXX to we to in of causing second reiterate XXXX. unchanged. XG of Gogo made and investments $XX the Gogo including with will the XXXX. reimbursements. an further stated, previously expected year-over-year Even cash guidance previously it burdened with expect flow $XX lag the XX% our growth free of to due of million, to the an nearly continue in FCC We flow end free also strategic increase be to And investment year anticipated, excluding Galileo expenses FCC-related in expect but nearly the now cash million guided range we the be FCC program, lower push impact, XG would aircraft original the our revenue of in a for launch growth to long-term through at spend. in impact this expectations XXXX the and Gogo's launch our year.However, Gogo XXXX the of online XX% XXXX. lower annual Galileo trough be from with rate were out negatively a of delay XX% QX flow XG coupled free shipments expected our to expectations These and versus XX%.As

call to flow expect effect FCC range on program fourth and $XXX annual the typically the in growing metrics margin of guidance We provide the and the adjusted XXXX XXXX update to to and in to continue mid-XX% to by our EBITDA range for earnings service appropriate we our up $XXX targets the free deliver customers.Before million we of solid their plan to We our cash in quarter bottom for our shareholders without and to line unparalleled we thanking customers.Operator, will we open join to entire conclusion, performance, the and our continue and Oak team financial would do.In are value long-term committed questions, providing continued long-term million like commitment concludes this creating remarks. Gogo in I prepared call XXXX as to thereafter. as

question. ready for first We are now your

the Richard with Instructions] And Raymond from comes Prentiss James. question our of [Operator first line

versus competition on side, been BA as first, but changes. I'm little into And you the the update to the Delta Hughes thinking has I contract. you're with into, will space probe others coming about Jet any Regional on interesting Oak, talked not side, of SmartSky the there BA announcing others. want offers your testing It's if bit lawsuit, if well? an then wondering maybe the a start

Yes.

product the a So point. mean, is I Hughes Delta at GEO large this deal antenna

not antenna. at of ThinKom the ESA use XXXX set, BA is using satellites long. present. And It's not not which they're antenna type a does it and So LEO about aircraft X-feet it's

to important. for it's way I meant a sell Jupiter is which to really Hughes capacity. It's be think KA,

we So entrants. partner, I were at it agreements, with with is this potential and about all.Second, you no issue have think our asking our they're consistent

Yes.

Yes.

I were time branded or those U.S. We higher Gogo. doing global offers the entrants added Are capacity then gave jets grown. on think summer, really products. HDX world. FDX we And potential basis. market has cheap and unbranded spent us product lot The confidence over that product? and really developing and a want around LX did so generally lot And outside against the for ].And research and the top confidence surveys medium-size jets right XG medium-sized [ planes of our the always the a for flyers, of we the a the an that who North then down detailed Transcon U.S. want on and capacity for higher FDX flying that American in the X we're

that right have right lot in. service. good different coverage. We or segments to Starlink pretty fact et of We're that. understanding the all points, be whole vertical. coverage, right able a segments.So Most our the there's right the take this complexities And each The of understand cost, create looking right strategy people that and different at for the have the the we feel to and products, those the those of about different cetera, needs to worry coming price right very is advantage about segments small

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to urgent temporary felt an is granted when heard. assert it would grant injunction was the need if believes that of injunction, And they that asking close have court There's year we when it's And has injunction. then for was SmartSky that last of court half decision So their now a that on litigation. we good to good sign a feel temporary the the as denial appeal to that now. really essence. a since the there one was been in by Because of still question lower time a about because view serve no that.And an the

later, good XXXX was can't we about goes was. April So trial that which to come in which feel that.And month of to remember it general of I August trial, believe XXXX. the or I

lot and and Markman the out, lays all or over will hearings a there so. year still of that that be So next

it a process. expensive and time-consuming discovery. will go that So will into be somewhat And

that $X looks million? to to XG, is for Galileo I'm others. XX is to million the is that Galileo Has Is items? Galileo $XX And for just X and compare impact also for trying The like want to pushed said got be think $XX I the XX like just think the impact XG $XX it's you understand XG, operating in the $X impact million just out? million for I $XX million. what EBITDA to make I XX going initiatives. sure total those Jess, million $X million the OpEx-wise

Yes.

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more $X $XX like So OpEx expecting we're million. to we're expecting for million in that year. then CapEx, next And be

$XX So we originally have total year, pushed year. but The additional planned year. total CapEx $XX XG be a next we little next will in so to a next from had spend $XX this year, million million bit out CapEx of of to year next million

sheet the balance to been cash run as And the the do then reimbursement? we is last all strong, much obviously, How at, different you're the line, want to obviously, on to the sheet balance FCC one for also, me keep is, the looking bottom business you've think working that. you about components

Yes.

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Vitanza Lance the And of Cowen. TD your line from with next comes question

couple launches. new a product around the Just

here what not can happen I mean, specifically there? between get point First, exact more the what us the would to comfortable around timing of that if are launch, on XG, help you milestones the us certainty, that this and needs to

Right.

the in call. I to into would new run of would the foundry starts delivery technology in be actually XX sort flying that that And down replication the of because across try in can I FPGA network burn of QX. clock the of the down can second the all chip, testing an So we able chip, software say of I'd burn integration would through burn megahertz say risk. we be lot those the going We'll in will of chip as it's that the production us. sort some FPGA of exact be all be QX the first integration then. risk, down version to the late we Because software a to capacity risk.

significant. hardware an those down, from The chip So is risk burn a issue are cannot we in very only perspective. that XG the

take dates there's after foundry foundry. You And chip a between it off up test it when would our of then later then off that start because testing. it comes have to we coming to be foundry.And off us. and the comes when the process then delivered being the bring flight delivery And

are those think I milestones. major the

And does flight how testing take, component you expect? long would the

But takes but chip, network, most we start the FPGA X it risk flight that. testing will the of we testing flying and but we the down fine-tuning whole ahead the about once have with months, burn of around

go launch, operators XG time saying, going launch just that? to to related about to launch the a Right. the in of aircraft there, was but to on XG or calibrating think the of here well, risk you off and is now about the going the months, what, pressured I Galileo be for I have heels as Galileo with I being hold worry of just guess, frame maybe but trying worried should quickly than we I'm gee, XG, couple softer launch set that's basically in a wait expected know by much And to then I question, sort the not helpful. so am relatively about do with

I see a we very it Yes. Look, and market. being land the conflict as sort the to it's because you get But of products segments confused North have different we're its the X of coverage. know, design, sort year. XG have ideal not The starting communication, that aimed each of is It's launches to on these originally American think at see straightened think last And we XG connectivity while market to these ocean. that option those top that's whatsoever. positioned the because XG Canada we wasn't out. aimed that to down out other, well really that which see I large Mexico, at delays were et as going on don't jets product want down Hawaii, broadband U.S. or whatsoever. that but is somewhat product.The product course, good medium-size have aimed affordable the Caribbean cetera, a sort on today of no any And a want fly at jets is the it's connectivity the to They of piece over right? U.S. like medium-sized conscious, planes outside option than really of HDX an jets those U.S., cost No will outside be of still down cheaper And or medium-sized on satellite And but product. are in have

that's won that's the of aimed. around fly where that's is big connectivity And jet a lot And for heavy FDX jets So a either transcontinental that then the routes. and product. or fly the U.S.

prudent more which planes.So segments, So transcontinental they're right at the be segment. probably trying market aimed in different and be terms with we're the of it's going very products very to to the be communicating for should products each

line the from Scott comes Searle ROTH question MKM. of next with your And

availability, has quickly been last et significantly. events, just pretty in quarter, engine AOL. maintenance all terms in were part or the And to that dive the down appreciate cetera, maybe units The detail. of I shipments ETG delaying

of implied are in October. are believe I where quarter. in having I quarters below averaged activations over the terms think of like X only weak about a quarter they're unspoken despite sounds last suspensions that unit And you month record you're or well the is and you're to It in guidance fourth it going ATG in the that, units about so. away channel units another XXX starting for.So as XX indicated the pickup see that there

events, into see to way prolongated start the through and a channel back its normalized balance with down of and terms again? shipped reacceleration So aircraft but that's the starting are to maintenance we inventory now being ramp starting of up completely that ATG work is, now both we burned in to and channel question we XXXX, and get as units AOL

Yes.

of definitely XXX think We quarter. those there's awful I look that is been talked that already so, an burn the actually at down place. taking $XXX have When or lot you installed. last inventory about really the

that's it's more much actually, XX dynamic to by was This up that. than offset were the number XXX%. actually XXX, that XXX%. down that And Of increased activated to took quarter, that then back shipments

spoken X may yes, order, XX are the dealers they or inventory. hoping of the if COVID, units better are of inventory, a a be get of you about So feel of during part they that we rest X took will.And dealers inventory really like an XXX just that much haven't and sitting that move about are that said, all those there. But lot couple for,

orders we that that normalizing that and help is So that feel will somewhat.

don't up they next of wanting make I LXX. that LX countervailing think people launch year end to the us that with a be for after we sure lot will inventory

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