Gogo Inc., the world’s largest provider of broadband connectivity services for the business aviation market, today announced its financial results for the quarter ended March 31, 2023.
Q1 2023 Highlights
- Total revenue of $98.6 million increased 6% compared to Q1 2022, fueled by strong growth in service revenue.
- Record service revenue of $78.5 million increased 11% compared to Q1 2022 and 1% compared to Q4 2022.
- Equipment revenue of $20.1 million decreased 9% compared to Q1 2022 and 35% compared to record equipment revenue in Q4 2022.
- AVANCE equipment units shipped totaled 223, a decrease of 9% compared to Q1 2022 and 43% compared to Q4 2022.
- Total ATG aircraft online (“AOL”) reached 7,046 an increase of 8% compared to Q1 2022 and 2% compared to Q4 2022.
- Total AVANCE AOL grew to 3,447, an increase of 28% compared to Q1 2022 and 5% compared to Q4 2022. AVANCE units comprised approximately 49% of total AOL as of March 31, 2023, up from 41% as of March 31, 2022.
- Average Monthly Revenue per ATG aircraft online (“ARPU”) of $3,389 increased 2% compared to Q1 2022 and increased slightly compared to Q4 2022.
- Net income decreased to $20.4 million in Q1 2023 from $22.2 million in Q1 2022. Q1 2023 net income is net of a $4.4 million income tax provision compared to a provision of $1.9 million in Q1 2022.
- Diluted earnings per share was $0.15 compared to $0.18 in Q1 2022, driven primarily by lower net income in Q1 2023.
- Adjusted EBITDA(1) of $39.7 million, which includes approximately $1.5 million of operating expenses related to Global Broadband, decreased 7% compared to Q1 2022 and 14% compared to Q4 2022.
- Cash provided by operating activities of $18.5 million in Q1 2023 increased from $17.9 million in the prior year period.
- Free Cash Flow(1) was $20.0 million in Q1 2023 compared to $8.8 million in the prior-year period and decreased from $25.0 million in Q4 2022.
- Cash, cash equivalents and short-term investments totaled $188.0 million as of March 31, 2023, compared to $175.3 million as of December 31, 2022.
- On May 3, the Company will pay down $100 million principal amount of its outstanding Term Loan. The transaction will reduce the Company’s cash interest by approximately $4.5 million in 2023 based on forward SOFR rates and $8.5 million on an annualized basis based on current SOFR rates.
“Channel momentum is building for our on-track launches of 5G in Q4 this year and our LEO-based Global Broadband product in the second half of 2024,” said Oakleigh Thorne, Chairman and CEO.
“Business aviation demand for inflight connectivity remains robust and we expect our channel partners to make continued progress in installing our record 2022 equipment shipments.”
“Gogo reiterates its 2023 guidance and anticipates approximately 50% year-over-year growth in Free Cash Flow while incurring $30 million in 5G and GBB investments and other operational initiatives,” said Jessi Betjemann, Executive Vice President and CFO.
“Our $100 million debt paydown will reduce cash interest by approximately $8.5 million on an annualized basis and we reiterate our target for over $200 million in Free Cash Flow in 2025.”
2023 Financial Guidance and Long-Term Financial Targets
The Company reiterates the following guidance for 2023:
- Total revenue in the range of $440 million to $455 million.
- Adjusted EBITDA(1) of $150 million to $160 million, reflecting operating expenses of approximately $30 million for strategic and operational initiatives including Gogo 5G and Global Broadband.
- Free Cash Flow(1) of $80 million to $90 million. Free Cash Flow includes capital expenditures of approximately $30 million to $40 million, of which $20 million is tied to Gogo 5G.
The Company reiterates the following long-term financial targets:
- Revenue growth at a compound annual growth rate of approximately 17% from 2022 through 2027, with Global Broadband contributing to revenue beginning in 2025.
- Annual Adjusted EBITDA Margin(1) in the mid-40% range by 2027.
- Free Cash Flow(1) of more than $200 million beginning in 2025 and growing thereafter.