Gogo Reports Strong Q4 Earnings and Shares Positive Outlook for 2024 and Beyond

Gogo Inc., a leading provider of in-flight broadband connectivity solutions for the aviation industry, recently released its earnings report for the fourth quarter of 2023. The company beat by a penny on the bottom line and outpaced revenue expectations. It provided in line guidance and updated its long-term projections. 

The company reported GAAP earnings of $0.11 per share, beating analysts' expectations by $0.01. However, Revenues declined by 9.6% year-over-year to $97.81 million, slightly lower than the FactSet Consensus estimate of $96.56 million.

Service revenue reaching a record high of $80.9 million, a 5% increase compared to Q4 2022 and a 2% increase compared to Q3 2023. The company's total revenue decreased by 10% compared to Q4 2022, mainly due to a 45% decline in equipment revenue. 

Despite the decrease in equipment revenue, Gogo's total aircraft online (AOL ) reached 7,205, an increase of 4% compared to Q4 2022 and 1% compared to Q3 2023. The company's average monthly revenue per ATG aircraft online (ARPU) was $3,387, compared to $3,370 in Q4 2022 and $3,373 in Q3 2023. 

Gogo's net income decreased by 48% from $27.7 million in Q4 2022 to $14.5 million in Q4 2023. Diluted earnings per share was $0.11, compared to $0.21 in Q4 2022. Adjusted EBITDA decreased by 24% compared to Q4 2022 and 19% compared to Q3 2023, Mainly due to approximately $1.9 million of operating expenses related to Gogo Galileo. 

Gogo's cash provided by operating activities decreased from $31.5 million in the prior-year period to $26.2 million in Q4 2023. However, the company reported record Free Cash Flow of $28.4 million, an increase from $25.0 million in the prior-year period. As of December 31, 2023, Gogo had $139.0 million in cash, cash equivalents, and short-term investments, compared to $110.8 million as of September 30, 2023. Gogo has signed a new 10-year connectivity agreement with NetJets and has repurchased approximately 1.05 million shares for a total cost of approximately $10.0 million in Q4 2023 and January 2024. 

The company has provided guidance for 2024, which includes the impact of the Federal Communications Commission's Secure and Trusted Communications Networks Reimbursement Program. Gogo expects total revenue in the range of $410 million to $425 million, with Adjusted EBITDA in the range of $110 million to $125 million, reflecting operating expenses of approximately $44 million for strategic and operational initiatives. The company expects Free Cash Flow in the range of $20 million to $40 million, including $45 million in reimbursements tied to the FCC Reimbursement Program. 

Gogo has also provided long-term financial targets, including revenue growth at a compound annual growth rate of approximately 15%-17% from 2023 through 2028, annual Adjusted EBITDA Margin reaching 40% in 2028, and Free Cash Flow in the range of $150 million to $200 million in 2025, without the effect of the FCC Reimbursement program.