Gogo(GOGO)2023-05-02 16:00Revenue Performance - Total revenue for the three-month period ended March 31, 2023, was $98.6 million, a 6.3% increase from $92.8 million in the prior-year period[102]. - Service revenue increased to $78.5 million for the three-month period ended March 31, 2023, up 11.1% from $70.7 million in the prior-year period, driven by an increase in ATG aircraft online[104]. - Equipment revenue decreased to $20.1 million for the three-month period ended March 31, 2023, down 9.0% from $22.1 million in the prior-year period, primarily due to a decrease in the number of ATG units sold[104]. - The number of ATG aircraft online increased to 7,046 as of March 31, 2023, compared to 6,526 in the prior-year period[96]. - Average monthly connectivity service revenue per ATG aircraft online rose to $3,389 for the three-month period ended March 31, 2023, compared to $3,321 in the prior-year period[96]. Future Outlook - Gogo expects service revenue to increase in the future with the launch of Gogo 5G and additional ATG aircraft coming online[106]. - Gogo plans to commercially launch its fourth ATG network, Gogo 5G, in the fourth quarter of 2023[91]. - Gogo announced plans to launch Global Broadband, targeting commercial launch in the second half of 2024, to expand its broadband offerings beyond ATG[91]. Income and Expenses - Operating income for the three-month period ended March 31, 2023, was $31.9 million, compared to $34.9 million in the prior-year period[102]. - Net income for the three-month period ended March 31, 2023, was $20.4 million, down from $22.2 million in the prior-year period[102]. - Cost of service revenue increased to $16.8 million for the three-month period ended March 31, 2023, up 14.8% from $14.6 million in the prior-year period[108]. - Cost of equipment revenue rose to $18.1 million for the three-month period ended March 31, 2023, representing a 26.9% increase from $14.3 million in the prior-year period[108]. - Engineering, design and development expenses increased to $7.9 million for the three-month period ended March 31, 2023, compared to $5.4 million in the prior-year period[108]. - Sales and marketing expenses increased to $6.9 million for the three-month period ended March 31, 2023, up from $6.2 million in the prior-year period[110]. - General and administrative expenses increased to $14.2 million for the three-month period ended March 31, 2023, compared to $13.5 million in the prior-year period[110]. - Total other expense decreased to $7.1 million for the three-month period ended March 31, 2023, down from $10.8 million in the prior-year period[111]. - The effective income tax rate for the three-month period ended March 31, 2023 was 17.7%, compared to 8.0% for the prior-year period[112]. - Adjusted EBITDA for the three-month period ended March 31, 2023 was $39.7 million, down from $42.8 million in the prior-year period[116]. Cash Flow and Capital Expenditures - Free cash flow for the three-month period ended March 31, 2023 was $20.0 million, compared to $8.8 million in the prior-year period[116]. - Cash, cash equivalents, and restricted cash at the end of the period increased to $163.6 million, up from $153.2 million in the prior-year period[119]. - For the three-month period ended March 31, 2023, net cash provided by operating activities was $18.5 million, compared to $17.9 million in the prior-year period, reflecting a $0.4 million improvement in net income and non-cash charges[125]. - Capital expenditures for the three-month periods ended March 31, 2023 and 2022 were $4.6 million and $9.1 million, respectively, indicating a decrease primarily due to the completion of the Gogo 5G program[128]. - The company expects capital expenditures to decrease over time as the Gogo 5G program is completed[128]. Debt and Financing - As of March 31, 2023, the company had interest rate cap agreements with a notional amount of $650.0 million to hedge against interest rate movements[132]. - A hypothetical one percentage point change in the applicable interest rate would impact the company's annual interest expense by approximately $1.5 million for the next twelve-month period, considering the impact of interest rate caps[132]. - The Term Loan Facility has an aggregate principal amount of $725.0 million, with a floating interest rate based on an adjusted term SOFR rate plus a margin of 3.75%[120]. - Cash used in financing activities for the three-month period ended March 31, 2023 was $7.4 million, primarily due to stock-based compensation activities and principal payments on the Term Loan Facility[127]. - The Revolving Facility was undrawn as of March 31, 2023, indicating available liquidity for working capital and general corporate purposes[121]. - The financial covenant for the Revolving Facility is set at a maximum senior secured first lien net leverage ratio of 7.50:1.00[121]. - The company has agreements with various vendors under which it has remaining commitments to purchase hardware components and development services[130].