Issued by Gogo Business Aviation.
March 11, 2021
Gogo, the world's largest provider of broadband connectivity services for the business aviation market, today announced its financial results for the quarter and fiscal year ended December 31, 2020.
On December 1, 2020, Gogo completed the sale of its Commercial Aviation (CA) division to a subsidiary of Intelsat S.A. for $400 million in cash subject to certain adjustments. The financial results of the CA division are presented as discontinued operations for the fourth quarter of 2020 and all prior periods.
Fourth Quarter 2020 Financial Results from Continuing Operations:
- Total revenue of $77.6 million decreased approximately 10% from Q4 2019, driven by decreases in both service and equipment revenue caused by the negative impact of COVID-19 on demand for air travel. On a sequential basis, total revenue grew nearly 17%, driven by a 57% increase in equipment revenue and a 7% increase in service revenue.
- Service revenue of $56.9 million decreased approximately 3% from Q4 2019, resulting primarily from a 4% decrease in average monthly connectivity service revenue per ATG aircraft online (ARPU) that was partially offset by a 2% increase in ATG aircraft online (AOL). Service revenue increased 7% sequentially as AOL and ARPU increased 4% and 2%, respectively.
- Equipment revenue of $20.7 million decreased 24% from Q4 2019, due primarily to lower narrowband satellite unit shipments. Equipment revenue increased 57% sequentially, due primarily to an increase in ATG shipments, particularly L5 and L3 products on the Avance platform.
- Combined engineering, design and development, sales and marketing and general and administrative expenses increased to $30.4 million from $25.7 million in Q4 2019, due primarily to increases in general and administrative spending and employee bonuses.
- Adjusted EBITDA of $19.3 million decreased from $36.2 million in Q4 2019 and $30.2 million in Q3 2020, due primarily to a $10.1 million full year accrual of employee cash bonus expense.
“Our 2020 performance demonstrates the resiliency of our business in this attractive market as Gogo exited the year with a record number of ATG units online,” said Oakleigh Thorne, president and CEO of Gogo. “We plan to invest in improving the performance of our proprietary ATG network and driving market penetration of our Avance platform, positioning us well to introduce valuable add-on services such as Gogo 5G, and other new technologies as they evolve.”
“With the sale of the Commercial Aviation division, we have significantly improved Gogo's financial profile and net debt level,” said Barry Rowan, Gogo's executive vice president and CFO. “We are now well-positioned to execute a comprehensive refinancing to de-lever and reduce our interest expense, drive future growth and increase shareholder value.”
Full Year 2020 Financial Results from Continuing Operations:
- Total revenue decreased to $269.7 million, down 13% from the prior year, driven by COVID-19 related declines in both equipment and service revenue.
- Service revenue decreased to $212.0 million, down 4% from 2019.
- Equipment revenue decreased to $57.7 million, down 34% from 2019.
- Net loss decreased to $48.6 million versus a net loss of $88.5 million in 2019.
- Adjusted EBITDA decreased to $98.3 million from $121.8 million in 2019, primarily due to the effects of COVID-19.
2021 Financial Guidance:
- Total revenue in the range of $300 million to $320 million
- Adjusted EBITDA in the range of $105 million to $120 million, including approximately $12 million of 5G-related expenses and excluding approximately $4 million of non-recurring separation and migration costs related to the sale of the CA division
- Capital expenditures in the range of $25 million to $30 million, with the majority tied to Gogo 5G
- Gogo anticipates executing a comprehensive refinancing to significantly reduce interest expense. The company expects to provide full year interest expense and cash flow guidance on the Q1 2021 earnings call.
Long-Term Financial Targets:
Gogo also announced the following long-term financial targets:
- Revenue growth at a compounded annual growth rate of at least 10% from 2020 to 2025
- Adjusted EBITDA margin of 35% - 40% throughout the planning period
- Significant free cash flow growth beginning in 2023, following the deployment of the Gogo 5G network in 2022.