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Gogo Inc. (GOGO)·Q1 2025 Earnings Summary

Executive Summary

  • Strong quarter with broad beats: revenue $230.3M and adjusted EBITDA $62.1M exceeded plan, driven by stronger-than-anticipated service revenue, earlier-than-expected synergy realization, and deferred spend on new products .
  • GAAP diluted EPS was $0.09; results reflect $9.4M amortization of intangibles and $6.5M acquisition/integration costs tied to Satcom Direct; adjusted EBITDA margin of ~27% underscored recurring service strengths .
  • Guidance reiterated for FY2025 despite tariff headlines: total revenue $870–$910M, adjusted EBITDA $200–$220M, FCF $60–$90M, capex ~$60M; management quantified tariff headwind at ~$5M within guidance .
  • Product milestones are catalysts: FAA PMA approvals for Galileo HDX (March) and FDX (May), growing GEO aircraft online to 1,280, and 5G chipset fabrication progress for Q4 launch; these set up service revenue acceleration starting Q1 2026 .

What Went Well and What Went Wrong

What Went Well

  • Service revenue strength and mix: service revenue rose to $198.6M (+143% YoY; +67% QoQ), with GEO broadband momentum and fixed-term contracts supporting stability .
  • Execution milestones: PMA approvals for HDX and FDX ahead of schedule, 38 HDX STCs under contract, and shipments of 59 HDX antennas YTD; “We believe that these two new products, along with an expected 5G launch in Q4, will begin to accelerate service revenue in the first quarter of 2026.” – CEO Chris Moore .
  • Integration synergies: ~85% of targeted savings realized and trajectory to high end of $25–$30M run-rate synergies within two years; cost to achieve expected at low end of $15–$20M, funded by asset sale .

What Went Wrong

  • ATG fleet pressure: total ATG aircraft online fell ~3% YoY and ~2% QoQ to 6,902, with management attributing declines largely to maintenance suspensions on older classic installs .
  • ARPU softness: ATG ARPU was $3,451, flat YoY and down 1% QoQ from the Q4 record $3,500, reflecting mixed fleet dynamics and timing of upgrades .
  • Reported EPS compressed by non-operational items: GAAP diluted EPS $0.09 includes $9.4M amortization and $6.5M integration costs; Q1 2024 benefited from a $13.1M unrealized gain, distorting YoY comparability .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$100.5 $137.8 $230.3
GAAP Diluted EPS ($USD)$0.08 $(0.22) $0.09
Adjusted EBITDA ($USD Millions)$34.8 $34.0 $62.1
GAAP EBITDA ($USD Millions)$23.4 $(18.7) $49.1
Cash from Operations ($USD Millions)$25.1 $(38.3) $32.5
Free Cash Flow ($USD Millions)$24.6 $(39.6) $30.0

Q1 margin metrics (current period):

MetricQ1 2025
Adjusted EBITDA Margin %~27%
Service Margin % (incl. Satcom Direct)~53%
Equipment Margin %~7%

Segment and revenue type breakdown (Q1 2025):

CategoryQ1 2024Q1 2025
Service – Satellite broadband ($USD Thousands)$776 $77,679
Service – ATG broadband ($USD Thousands)$77,912 $75,970
Service – Narrowband & other ($USD Thousands)$2,985 $44,963
Service – Business Aviation ($USD Thousands)$81,673 $169,281
Service – Military/Government ($USD Thousands)$0 $29,331
Equipment – Satellite broadband ($USD Thousands)$30 $6,375
Equipment – ATG broadband ($USD Thousands)$19,347 $18,672
Equipment – Narrowband & other ($USD Thousands)$3,272 $6,648
Total Revenue ($USD Thousands)$104,322 $230,307

Key operating metrics:

KPIQ3 2024Q4 2024Q1 2025
ATG AVANCE AOL (units)4,379 4,608 4,716
Gogo Biz AOL (units)2,637 2,451 2,186
Total ATG AOL (units)7,016 7,059 6,902
GEO Aircraft Online (units)1,249 1,249 1,280
ATG ARPU ($USD)$3,497 $3,500 $3,451
ATG Units Sold (units)214 208 317

Guidance Changes

MetricPeriodPrevious Guidance (Mar 14, 2025)Current Guidance (May 9, 2025)Change
Total Revenue ($USD Millions)FY 2025$870–$910 $870–$910 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$200–$220 (incl. ~$25M strategic OpEx) $200–$220 (incl. ~$25M strategic OpEx) Maintained
Free Cash Flow ($USD Millions)FY 2025$60–$90 (incl. ~$70M strategic investments net of FCC) $60–$90 (incl. ~$70M strategic investments net of FCC) Maintained
Capital Expenditures ($USD Millions)FY 2025~$60 (incl. ~$45M strategic; excludes ~$20M FCC capex reimbursement) ~$60 (incl. ~$45M strategic; excludes ~$20M FCC capex reimbursement) Maintained

Earnings Call Themes & Trends

TopicQ3 2024Q4 2024Q1 2025Trend
LEO Galileo (HDX/FDX) progressAnnounced HDX wins with Textron/Wheels Up; demand building HDX PMA received; set gates for STCs; integration synergy plan PMA for HDX and FDX ahead of schedule; 38 HDX STCs; 59 HDX shipped YTD; performance per spec Accelerating product readiness and customer pipeline
5G programOngoing delays; strong demand; pre-provisioning rising Preparing for 2025 guidance including 5G Chip fabrication completed; Q4 launch targeted; 301 aircraft pre-provisioned (up 29%) Execution milestones achieved, launch near
ATG fleet dynamicsTotal ATG AOL down 2% YoY; AVANCE penetration rising ATG AOL up QoQ but down YoY; AVANCE reached 65% ATG AOL down ~3% YoY; AVANCE penetration 68%; declines tied to maintenance suspensions Mixed near term; platform upgrades continue
GEO broadbandStable/expanding with OEM line-fit strength GEO AOL increased YoY/QoQ GEO AOL 1,280 (+179 YoY; +31 QoQ); ARPU holding better than expected Continued growth; potential LEO supplement/upgrade path
TariffsNot highlightedNot highlightedTariff impact manageable (~$5M across EBITDA/working capital), embedded in guidance Risk quantified and absorbed
FCC reimbursement programNot a focusFunding enacted in Dec-2024; supports LTE transition $5.9M received in Q1; ~$50M anticipated reimbursement; supports LTE and AVANCE upgrades Strengthening cash offset to program spend
SynergiesPending Satcom deal$18M run-rate at close; +$9M expected in Q1 >85% realized; targeting high end $25–$30M run-rate within two years Ahead of plan

Management Commentary

  • “We believe that these two new products, along with an expected 5G launch in Q4, will begin to accelerate service revenue in the first quarter of 2026.” – CEO Chris Moore .
  • “We achieved $18 million of run rate synergies at close and add another $9 million during the first quarter…positioning us for higher-than-projected cost savings this year and full realization in 2026.” – CEO Chris Moore .
  • “Our adjusted EBITDA margin was 27%…Gogo delivered service margins of approximately 53% inclusive of Satcom Direct…equipment margins were 7%.” – CFO Zach Cotner .
  • “Based on the current tariff environment…we believe we have modest exposure to tariffs. Under the current tariff proposal, we can absorb tariff impacts within our current guidance.” – CEO Chris Moore .
  • “We expect 2025 will be our trough year of free cash flow…as new products ramp and program investments roll off.” – CFO Zach Cotner .

Q&A Highlights

  • Tariff impact sizing: ~$5M impact, split between EBITDA and working capital, primarily through inventory purchases; service revenue largely exempt .
  • Glide path vs guidance: management flagged monitoring of ATG AOL trajectory and GEO units/ARPU; upside possible if GEO holds better than assumed .
  • ATG declines attribution: detailed telemetry supports maintenance-driven suspensions rather than structural share losses; continued 5G pre-provisioning corroborates demand .
  • GEO competitive stance and LEO supplement: GEO holding “exceptionally well”; mid-to-large jets expected to add LEO as a supplement; PACE requirements support multi-orbit .
  • 5G chip milestone clarity: fabrication completed; packaging/bring-up underway; cautious tone based on prior experience; Q4 launch targeted .

Estimates Context

How results compared to S&P Global consensus:

MetricQ1 2025 ConsensusQ1 2025 ActualDifference
Revenue ($USD Millions)214.445*230.307 +15.862*
Primary EPS ($USD)0.0932*0.1240*+0.0308*
EBITDA ($USD Millions)48.317*53.730*+5.413*
  • Company-reported GAAP diluted EPS was $0.09; Primary EPS actual from S&P differs due to methodology. Company-reported GAAP EBITDA was $49.1M and adjusted EBITDA $62.1M .
    Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • Revenue trajectory and adjusted EBITDA likely to be revised higher near term on stronger service mix and earlier synergy capture; watch GEO ARPU durability and ATG AOL recovery pace as key estimate swing factors .

Key Takeaways for Investors

  • Recurring-service engine intact: 98% of gross profit tied to service revenue, with GEO contracts underpinning stability and AVANCE penetration rising to 68% .
  • Execution catalysts: PMA approvals for HDX/FDX, growing GEO AOL, and Q4 5G launch preparations should convert to equipment revenue near term and service ramps starting Q1 2026 .
  • Synergy and deleveraging: >85% of synergy savings realized; net leverage ~3.4x with cash/FCF enabling debt paydown and potential future capital returns as FCF grows post-2025 trough .
  • Tariff risk manageable: quantified ~$5M impact embedded in guidance; majority of revenue insulated; manufacturing largely U.S.-based .
  • FCC support reduces cash drag: ~$50M anticipated reimbursement supports LTE transition and AVANCE incentives; $5.9M received in Q1 .
  • Monitor ATG fleet and GEO ARPU: near-term stock narrative hinges on stabilization of ATG AOL and resilience of GEO ARPU; upside if trends outperform cautious planning assumptions .
  • Medium-term thesis: multi-orbit leadership, OEM line-fit, and broad dealer network position Gogo to capture underpenetrated BA/Mil/Gov TAM; management reiterates mid‑20s adjusted EBITDA margin model for the combined company .