Gogo posts £217.2m revenue and $59.7m net loss for 2018

Gogo logoGogo has announced its fourth quarter and full-year 2018 financial results, showing consolidated revenue of $217.2 million, up 16% year-over-year, with a net loss of $59.7 million.

“We had 1,000 2Ku aircraft flying at very close to 98% availability in Q4 2018,” said Oakleigh Thorne, Gogo’s President and CEO. “2Ku gives us the ability to adopt new technologies, whether they are MEO, LEO or other technologies on the drawing board.

“Our top strategic priority is to become cash-flow positive,” Thorne said, with Gogo saying it expects to reach a positive cash flow in 2019.

He said it was involved in a number of pitches that could result in new airline customers.

Gogo's "2Ku" dual Ku-band antenna.
Gogo’s “2Ku” dual Ku-band antenna.

“Last winter we had a ‘de-icing demon’. We had great support from our airline partners and after a painstaking study we had four solutions to the issue. We have now flown over 15,000 flights that have been de-iced with no incidents of 2Ku system degradation,” he said.

Business Aviation

  • Business Aviation had a strong Q4 with total revenue increasing to $73.6 million, up 11% from Q4 2017.
  • Service revenue increased to $51.3 million, up 13% from Q4 2017, driven by a 12% increase in ATG units online and a 3% increase in average monthly service revenue per ATG unit online.
  • Equipment revenue increased to $22.3 million, up 8% from Q4 2017, driven by continuing strong demand for AVANCE L5 and L3 systems.
  • Segment profit increased to $35.6 million, up 33% compared to the prior year period, with segment profit margin of 48%, up from 41% in the prior year period.

Commercial Aviation – North America (CA-NA)

  • Take rates increased to 12.9% in Q4 2018 up from 9.9% in the prior year period.
  • Primarily as a result of the de-installations:
  • Total revenue decreased to $97.3 million from $105.1 million, down 7% from Q4 2017.
  • Service revenue decreased to $89.4 million, down 13% from Q4 2017.
  • Aircraft online decreased 10% to 2,551 on December 31, 2018 from 2,840 on December 31, 2017.
  • Net annualised ARPA decreased to $113,000, down 5% from $119,000 in Q4 2017.
  • Equipment revenue increased to $7.9 million, up from $1.9 million in Q4 2017, due to the post-adoption impact of ASC 606.

Commercial Aviation – Rest of World (CA-ROW)

  • Aircraft online increased to 589, up from 391 on December 31, 2017.
  • Total revenue increased to $46.4 million, up from $16.9 million in Q4 2017.
  • Service revenue increased to $19.3 million, up 26% from Q4 2017, due to an increase in aircraft online.
  • Equipment revenue increased to $27.1 million, up from $1.6 million in the prior year period, due to the post-adoption impact of ASC 606.
  • Net annualised ARPA of $144,000 in Q4 2018 declined from $183,000 in the prior year period, due primarily to the significant growth in new aircraft fleets online, which typically initially generate lower net annualised ARPA.
  • Segment loss of $24.7 million declined slightly versus Q4 2017 as higher equipment losses were offset by an increase in 2Ku aircraft online.
  • Segment profit decreased to $8.8 million from $23.5 million in Q4 2017, due to the effect of the de-installations and higher satcom expense.

Thorne said: “Gogo’s focus on execution resulted in major operational improvements over the course of 2018, including excellent 2Ku performance and aggressive cost controls within our CA business.

“As we build on this momentum and put the negative effects of the de-installations behind us over the next several quarters, we expect to see a return to higher revenue and profit growth in 2020.”

Barry Rowan, Gogo’s Executive Vice President and CFO, added: “Strong execution led to fourth quarter financial performance coming in well ahead of our internal projections, particularly for Adjusted EBITDA and our year-end cash balance.

“We expect to improve free cash flow by approximately $100 million in 2019 as we continue to grow Adjusted EBITDA and improve working capital.”

Recent Developments

  • Gogo surpassed 1,000 2Ku aircraft online and ended 2018 with nearly 1,300 commercial aircraft installed with satellite IFC systems and approximately 1,000 2Ku aircraft in backlog as of December 31, 2018.
  • As of February 20, 2019, Gogo had experienced no incidents of 2Ku system degradation on aircraft fitted with Gogo’s recent de-icing modifications. Gogo estimates that aircraft with Gogo de-icing modifications have now flown 15,000 flights that had been de-iced, based on Federal Aviation Administration (FAA) data listing airports under de-icing conditions.
  • The Airbus A220 has now entered revenue service with Delta offering both 2Ku and Gogo Vision Touch.
  • Gogo completed its first satellite IFC installation on a Boeing 787-800 aircraft using a service bulletin.
  • As of February 6, 2019, BA had shipped more than 770 AVANCE systems (L3 and L5) with more than 500 L5 systems installed and in operation.

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