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Gogo Inc. (GOGO)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered solid top-line growth and profit metrics: revenue $226.0M (+121% YoY; -2% QoQ), diluted EPS $0.09, adjusted EBITDA $61.7M with 27.3% margin; results modestly exceeded Street on revenue/EPS, with EBITDA mixed depending on definition . Compared to Q1 2025, service revenue dipped 2% and equipment revenue rose 1% .
  • Mix shift continued: AVANCE AOL grew to 4,791 (+14% YoY), now 71% of ATG fleet, while total ATG AOL declined 4% YoY; GEO AOL rose to 1,321 (+15% YoY) underscoring the OEM line-fit strategy .
  • Guidance raised to the high end for FY2025 revenue ($870–$910M), adjusted EBITDA ($200–$220M), and FCF ($60–$90M), with higher expected FCC reimbursements and increased gross capex to accelerate LTE build/strategic programs .
  • Strategic catalysts: reiterated 5G Q4 2025 launch (first end-to-end 5G call completed), Galileo HDX/FDX product progress, and synergy run-rate target increased to $30–$35M; management flagged potential refinancing over coming quarters as deleveraging progresses .
  • Stock-relevant narrative: raised guidance, execution on 5G/Galileo, and improving synergy run-rate should support estimate revisions and sentiment; ATG AOL decline remains a watch item, with management pointing to LTE cutover/C1 incentives and 5G commercialization as stabilization drivers .

What Went Well and What Went Wrong

What Went Well

  • Record AVANCE equipment performance: AVANCE units sold 276 (+19% YoY, +15% QoQ), highest in two years; AVANCE share of ATG fleet rose to 71% . CEO: “We see significant demand for broadband performance improvements… well positioned… as we bring Gogo 5G and Galileo to market this year.”
  • GEO momentum and OEM line-fit: GEO AOL reached 1,321 (+15% YoY; +41 QoQ), with stable ARPU and fixed-term contracts supporting revenue durability .
  • Guidance and synergy upgrades: FY2025 guidance lifted to high end; synergy run-rate raised to $30–$35M within two years; CFO: “We now expect to achieve run rate synergies in the $30–$35M range…” .

What Went Wrong

  • ATG AOL decline: total ATG AOL fell to 6,730 (-4% YoY; -2% QoQ), with suspensions and maintenance on classic installs; management expects stabilization as C1 LTE upgrades and 5G/LTE rollouts ramp .
  • Cost pressures and tariff backdrop: elevated costs including integration-related items ($3.6M in Q2) and earnout liability change ($3.9M); tariff exposure modest but fluid, embedded within guidance .
  • Near-term EBITDA trajectory: management noted second-half EBITDA likely slightly lower vs H1 due to timing of investments even after guidance raise .

Financial Results

MetricQ4 2024Q1 2025Q2 2025 ActualQ2 2025 Consensus*
Total Revenue ($USD Millions)$137.8 $230.3 $226.0 $220.1*
Service Revenue ($USD Millions)$118.8 $198.6 $194.0 —
Equipment Revenue ($USD Millions)$19.0 $31.7 $32.1 —
Net Income ($USD Millions)$(28.2) $12.0 $12.8 —
Diluted EPS ($USD)$(0.22) $0.09 $0.09 $0.115*
Adjusted EBITDA ($USD Millions)$34.0 $62.1 $61.7 —
  • Estimates context: Q2 revenue beat by ~$5.9M and EPS beat by ~$0.02 vs S&P Global consensus; EBITDA (Street, non-adjusted) modestly above consensus; adjusted EBITDA presented by company is higher than Street’s EBITDA definition . Values retrieved from S&P Global.
Adjusted EBITDA Margin (%)Q1 2025Q2 2025
Margin %27.0% 27.3%

Segment and Market Breakdown

Service Revenue by Type ($USD Thousands)Q1 2025Q2 2025
Satellite Broadband$77,679 $76,706
ATG Broadband$75,970 $74,214
Narrowband & Other$44,963 $43,045
Total$198,612 $193,965
Service Revenue by Market ($USD Thousands)Q1 2025Q2 2025
Business Aviation$169,281 $165,366
Military/Government$29,331 $28,599
Total$198,612 $193,965
Equipment Revenue by Type ($USD Thousands)Q1 2025Q2 2025
Satellite Broadband$6,375 $4,563
ATG Broadband$18,672 $21,786
Narrowband & Other$6,648 $5,724
Total$31,695 $32,073

KPIs

KPIQ4 2024Q1 2025Q2 2025
ATG AVANCE AOL (units)4,608 4,716 4,791
Gogo Biz AOL (units)2,451 2,186 1,939
Total ATG AOL (units)7,059 6,902 6,730
GEO Aircraft Online (units)1,249 1,280 1,321
ATG ARPU ($/mo)$3,500 $3,451 $3,445
ATG Units Sold (units)208 317 405
AVANCE Units Sold (units)—241 276

Guidance Changes

MetricPeriodPrevious Guidance (Q1)Current Guidance (Q2)Change
Total RevenueFY 2025$870–$910M High end of $870–$910M Raised to high end
Adjusted EBITDAFY 2025$200–$220M (incl. ~$25M strategic OpEx) High end of $200–$220M (incl. ~$20M strategic OpEx) Raised + lower OpEx
Free Cash FlowFY 2025$60–$90M (incl. ~$70M strategic investments net of FCC) High end of $60–$90M (incl. ~$60M strategic investments net of FCC) Raised + lower investments
Net CapexFY 2025~$60M; assumes $20M FCC reimbursement $40M net; assumes $50M FCC reimbursement Lower net; higher FCC
Gross CapexFY 2025~$60M total; ~$45M strategic (5G, Galileo, LTE) ~$90M total; ~$75M strategic (5G, Galileo, LTE) Increased gross/strategic
FCC Reimbursement AssumptionFY 2025$20M $50M Raised
Strategic OpEx (included in EBITDA)FY 2025~$25M ~$20M Lower

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024 & Q1 2025)Current Period (Q2 2025)Trend
5G rollout (chip, towers, launch)Network/towers built; chip fabrication underway; Q4 launch expected First end-to-end 5G call; flight testing anticipated Sept; reiterates Q4 launch; >300 pre-provisioned aircraft Improving execution
Galileo HDX/FDX progressPMA approvals; HDX/FDX STCs queued; early shipments and revenue 77 HDX shipped YTD; 8 HDX STCs approved; SDX STCs in progress; positive customer feedback Ramping
ATG AOL trajectoryQ1: declines tied to maintenance; expect stabilization post-LTE/5G Q2: total ATG AOL down 4% YoY; management cites upgrades/suspensions and C1 incentives to stabilize Near-term pressure; medium-term stabilizing
GEO ARPU & OEM line-fitGEO AOL up; ARPU holding better than expected; line-fit advantage GEO AOL +15% YoY; fixed-term contracts; ARPU stable; strong OEM positions Stable to improving
Mil/Gov (PACE/PLEO, awards)DoD spending on LEO rising; opportunities with PACE, European demand Some award delays; broader international demand growth; Board addition (Gen. Minihan) Mixed near-term; positive medium-term
Tariffs/macroModest exposure; absorbed within guidance Guidance includes tariff impacts; exposure “much reduced” Manageable

Management Commentary

  • CEO: “Our first half results demonstrate the strategic value and well-executed integration of the Satcom Direct-Gogo merger… we’re well positioned to meet [broadband] demand as we bring Gogo 5G and Galileo to market this year.”
  • CFO: “We increased key elements of our 2025 financial guidance… and believe there is sufficient market appetite to pursue a comprehensive refinancing over the coming quarters.”
  • CEO on 5G/Galileo: “We completed the initial end-to-end call using the Gogo 5G chip… flight testing is anticipated to commence in September, and to go live by year end.”
  • CFO on synergies: “Within two years, we now expect to achieve run rate synergies in the $30–$35M range… we achieved $18M at close, another $9M in Q1, and $2M in Q2.”

Q&A Highlights

  • ATG declines vs competition: Management characterized ATG suspensions as maintenance/seasonality and transitions ahead of product cycles, not mass competitive losses; inside sales effort ramping to re-activate accounts .
  • GEO ARPU trajectory: ARPU contraction expected over time but pace uncertain; swap-out costs and “good enough” performance temper near-term contraction; OEM line-fit driving AOL growth .
  • 5G readiness: >300 aircraft pre-provisioned; towers and core installed; flight tests slated for September; Q4 launch reiterated .
  • Mil/Gov timing: Awards moving slower than hoped, but international demand strengthening; DoD tech refresh supports long-term opportunity .
  • Cost roll-off: ~$60–$70M of 2025 program/synergy costs expected to go away into 2026, supporting FCF expansion .

Estimates Context

  • Q2 2025 vs consensus: revenue $226.0M vs $220.1M (beat), diluted EPS $0.09 vs $0.115 estimate reported on normalized basis; company’s adjusted EBITDA $61.7M exceeded Street’s EBITDA definition estimate (~$51.7M) though definitions differ . Values retrieved from S&P Global.
  • Forward look: Q3 2025 Street sees revenue ~$223.6M*, EPS ~$0.12*; Q4 2025 revenue ~$222.7M*, EPS ~$0.03*. With raised FY guidance, Street may lift FY revenue/EBITDA and refine H2 timing given management’s comment that H2 EBITDA is slightly lower than H1 due to investment timing .
  • Target price/Recommendation: Consensus target ~$14*; limited coverage count (EPS estimates N≈4 in Q2/Q3)*.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Guidance raised to the high end across revenue/EBITDA/FCF with improved FCC reimbursements and lower strategic OpEx, supporting positive estimate revisions and multiple expansion potential .
  • Execution on 5G and Galileo is advancing (first 5G call, flight tests Sept; HDX/FDX PMA/STCs and shipments), positioning for new service revenue ramp in early 2026; monitor Q4 2025 equipment revenue timing .
  • AVANCE momentum and GEO line-fit underpin recurring service margins; watch ATG AOL declines in 2025 but expect stabilization with C1 LTE incentives and 5G commercialization .
  • Synergy run-rate raised to $30–$35M with costs to achieve funded by asset actions; deleveraging plus potential refinancing could reduce interest expense and enable future capital returns .
  • H2 2025 EBITDA likely slightly below H1 due to investment timing; FCF remains trough in 2025, expanding in 2026 as investments roll off and new products monetize .
  • Competitive landscape: management not seeing mass competitive churn; product suite (multi-orbit/multi-band) and OEM/dealer network are key moats; watch GEO ARPU trend and international Mil/Gov awards cadence .
  • Near-term trading setup: positive catalyst path (refi chatter, 5G flight test, STC progress, HDX deliveries, estimate revisions) vs. ATG AOL headwinds; risk skew improves if Street embraces higher FCC reimbursement and lower strategic OpEx .