Gogo Q2 2025 Earnings Report

Gogo EPS Results

• Actual EPS: $0.13
• Consensus EPS: $0.12
• Beat/Miss: Beat by +$0.01
• One Year Ago EPS: $0.01

Gogo Revenue Results

• Actual Revenue: $226.04 million
• Expected Revenue: $220.12 million
• Beat/Miss: Beat by +$5.91 million
• YoY Revenue Growth: +121.40%

Gogo Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 8:30AM ET

Gogo (NASDAQ:GOGO), together with its subsidiaries, provides broadband connectivity services to the aviation industry in the United States and internationally. The company's product platform includes networks, antennas, and airborne equipment and software. It offers in-flight systems; in-flight services; aviation partner support; and engineering, design, and development services, as well as production operations functions. The company offers voice and data, in-flight entertainment, and other services. In addition, it engages in the development, deployment, and operation of networks, towers, and data center infrastructure to support in-flight connectivity services, as well as in the provision of telecommunications connections to the internet. The company sells its products primarily to aircraft operators and original equipment manufacturers of business aviation aircraft through a distribution network of independent dealers. Gogo Inc. was founded in 1991 and is headquartered in Broomfield, Colorado. As of May 2024, Gogo Inc. claims that "Gogo is the only company in North America with a complete, certified airborne 5G network, meaning that all components within the network (including onboard equipment) are 5G native."

Gogo Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: ATG 5G Milestone: Completed the first end-to-end call using the GoGo 5G chip with the first 5G-capable aircraft in hand, targeting a Q4 launch and offering a $35k FCC incentive for C1 LTE upgrades by year-end.
• Positive Sentiment: Record Q2 Financials: Delivered $62 M in free cash flow, achieved revenue 3% above consensus on record equipment sales and higher ARPA, and generated $61.7 M of adjusted EBITDA.
• Positive Sentiment: Galileo OEM Wins: Embraer will offer HDX for the Phenom 300 and Textron for Citation types, with eight HDX STCs approved (10 aircraft types) and 30 more in development.
• Positive Sentiment: Enhanced Synergies: Raised expected run-rate merger cost synergies to $30–35 M, having completed most headcount reductions and progressing 36 integration projects.
• Negative Sentiment: ATG aircraft online declined 4% year-over-year and 2.5% sequentially as Classic units wind down ahead of the May 2026 LTE network cutover.

Presentation

[Operator]

Good day, and thank you for standing by. Welcome to the q two two thousand twenty five GoGo earnings conference call. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you would need to press 11 on your telephone.

[Operator]

You would then hear an automated message advising your hand is raised. To withdraw your question, please press 11 again. Please be advised that this conference is being recorded. I would now like to turn the conference over to your first speaker today, Will Davis, vice president of investor relations. Please go ahead.

[Will Davis, VP - IR at Gogo]

Thank you, and good morning, everyone. Welcome to Gogo's second quarter twenty twenty five earnings conference call. Joining me today to talk about our results are Chris Moore, CEO and Zach Cotton, our CFO. Before we get started, I would like to take this opportunity to remind you that during the course of this call, we may make forward looking statements regarding future events and the future performance of the company. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward looking statements on this call.

[Will Davis, VP - IR at Gogo]

Those risk factors are described in our earnings release filed this morning and in a more fully detailed note under Risk Factors filed in our annual report on 10 ks and 10 Q and other documents that we have filed with the SEC. In addition, please note that the date of this conference call is 08/07/2025. Any forward looking statements that we make today are based on assumptions as of this date, and we undertake no obligation to update these statements as a result of more information or future events. During this call, we'll present both GAAP and non GAAP financial measures. We have included a reconciliation and explanation of adjustments and other considerations of our non GAAP measures to the most comparable GAAP measures in our second quarter earnings release.

[Will Davis, VP - IR at Gogo]

This call is being broadcast or webcasted and available at ir.gogoair.com. The earnings release is also available on the website. After management comments, we'll host a Q and A session with the financial community only. It is now my great pleasure to turn the call over to Chris.

[Christopher Moore, Director & CEO at Gogo]

Thanks, Will, and good morning, everyone. We believe our Q2 performance reflects the fundamental strengths and capabilities of our business to revolutionize inflight connectivity by leveraging our strong market position as the only independent global multi orbit, multiband connectivity company in aviation. With LEO GEO and ATG Broadband, we are strongly positioned to support durable demand trends. In Q2, the business continued to show growth as demand for our GEO solutions remained strong across the global business aviation and military government mobility markets, as we see increased advanced shipments and continued rollout of GoGoGalileo's STCs. Zac will provide more details on our financial performance shortly, but I first want to highlight some key areas of growth and success.

[Christopher Moore, Director & CEO at Gogo]

Starting with ATG, we reached several significant milestones in the quarter. It gives our team great pride that we announced an important industry first as we completed the initial end to end call using the GoGo five gs chip. We now have the first five gs aircraft in hand and are progressing with the remaining development, integration, and testing that will prepare us for our expected Q4 launch this year on the already deployed and operational five gs terrestrial infrastructure. We also have positive news regarding our FCC rip and replace program, which now provides a $35,000 incentive for C1 installations, completed before 12/31/2025. The C1 incentive enables upgrades for over 40 aircraft models to our LTE network.

[Christopher Moore, Director & CEO at Gogo]

This funding and certification allow Classic customers to seamlessly upgrade in advance of the 05/08/2026 Classic network cutover. We also had significant announcements for Gogo Galileo with the two OEM wins. Embraer announced it will offer Gogo Galileo HD X as an aftermarket option for the popular Phenom 300 light jet, which has over 800 aircraft in operation. Textron also announced that the HD X will be available for aftermarket installations on Cessna citation types once the FAA has confirmed the SDC this is expected in late twenty twenty five. We are expected to continue delivering on the 38 HDX SDCs under contract through our dealer and OEM networks.

[Christopher Moore, Director & CEO at Gogo]

We now have eight HDX SDCs approved, covering 10 aircraft types, with a further 30 in development. STCs for the SDX variant are in progress, with 10 SDC contracts in the works with dealers. As previously announced, we have also signed an agreement with an undisclosed OEM confirming FDX will be live for option for all its production aircraft. On the back of this good news, I'm looking forward to reviewing our strong Q2 performance. I'll cover our quarterly operating results, provide updates on our GEO broadband services, and highlight realized acquisition related cost synergies.

[Christopher Moore, Director & CEO at Gogo]

We will also review our demand potential and outline our strategic approach to capitalize on these opportunities to enhance shareholder value. I'll finish by sharing progress on key strategic initiatives. Our free cash flow exceeded our internal forecast and consensus expectations. This was driven by high gross profit due to record equipment revenue, lower operating expenses, continued synergy realization, and higher than expected adjusted EBITDA at approximately 62,000,000 On the revenue front, the higher than expected Advanced Equipment sales and higher ARPA on GEO services contributed to driving revenue 3% above consensus. Though we are still seeing a gradual decline in ATG units online, we expect to see this slow and perhaps even turn around as Classic customers start taking advantage of our C1 rebate program and others decide to upgrade from Classic to Advance in anticipation of our Classic network cutover to LTE in May 2026.

[Christopher Moore, Director & CEO at Gogo]

Towards that end, we set a record for APG shipments in the quarter with four zero five, including two seventy six Advanced and 129 C1 units. Shipments are a strong indicator of future online activations. We also set a record 144 Classic to Advanced upgrades for the quarter as shipments turned into activations. We had strong performance in our HDX LEO terminals, as we recognized $1,700,000 of equipment revenue. Year to date, we have shipped a total of 77 units.

[Christopher Moore, Director & CEO at Gogo]

As I stated earlier, we now have eight HD X SDCs approved, covering 10 aircraft types, with a further 30 SDCs in development. We have also shipped our first three GoGoGalileo SDX units to support STC generation for mid to large business jet customers. Our GA products and aircraft online continued to grow, up 41 units from Q1, with thirteen twenty one aircraft connected to Gogo. This is up 177 units from Q2 twenty twenty four, up 15%. This demonstrates the power of the OEM line fit, as many of these systems are installed at the factory.

[Christopher Moore, Director & CEO at Gogo]

We also believe it shows a predisposition of many heavy jet customers to take both LEO and GEO offerings to get the capacity, redundancy, and global coverage that neither LEO nor GEO can provide alone. For instance, no LEO provider today can provide service in China than GEO can. In Q2, we completed synchronizing our Advance and SDR routers to schedule. The routers located in the aircraft are the core of inflight connectivity systems and data management. The SDR, SDRG, and Advanced routers are now compatible for GogoGalileo installation, allowing for easy upgrade opportunities for customers.

[Christopher Moore, Director & CEO at Gogo]

This adds the approximate 2,400 aircraft equipped with SD routers to the almost 4,800 advanced installed Gogo fleet. These aircraft can now be installed with GoGo Galileo without extensive rewiring inside the aircraft. It's also worth noting that the Satcom Direct routers align fit on three aircraft models, which add several 100 aircraft a year to that easy install fleet. Additional software and hardware harmonization for our router family are scheduled for the next two years, which will continue to improve performance for customers and lower costs for Gogo. Gogo remains the only company that can satisfy the needs of customers seeking multiple connectivity solutions from a single source.

[Christopher Moore, Director & CEO at Gogo]

The military needs to fulfill PACE, primary, alternate, contingent, and emergency requirements, and global customers want assured redundancy. This gives us a significant competitive advantage in some very attractive segments of the market. We are progressing towards our synergy goals. We have completed most of the key actions to reach our now anticipated 30,000,000 to $35,000,000 synergy cost savings. We have completed staff synergies associated with the merger, along with other actions such as the Chicago data center transition to the Melbourne, Florida site, the transition of the SD Avionics manufacturing to Colorado, which is targeted to be completed by year end.

[Christopher Moore, Director & CEO at Gogo]

The SD Melbourne building sale is expected to be finalized by the August. This will offset the 15,000,000 to $20,000,000 investment required to achieve the projected recurring synergy savings. In total, we have another 36 integration projects still underway, focused on moving to common systems and process, and we expect further cost synergies from many of these. Business aviation is currently characterized by strong OEM results, expanding fractional fleets, and robust flight counts. In Q2, the five major OEMs increased aircraft deliveries 11% year on year and reported a very strong aggregate book to bill of 1.3 times the trend.

[Christopher Moore, Director & CEO at Gogo]

It's set to continue, and with the One Big Beautiful Bill Act signed in July allowing businesses to deduct the full acquisition costs of eligible aircraft, we believe this positive momentum will continue into 2026. We believe this presents a significant opportunity for the increased broadband connectivity and installations, and a major opportunity for Gogo. This sector remains buoyant, with recent announcements confirming strong market growth. Fractional ownership operator Flexjet announced an investment of $800,000,000 The company has indicated that much of it will be spent on improving passenger experience, much of which relies on connectivity. In addition, Bombardier recently announced a new fleet order for 50 aircraft, with an option for a further 70, presenting a considerable opportunity for GoGo.

[Christopher Moore, Director & CEO at Gogo]

This trend indicates more business aircraft will be entering the global fleet than leaving, and more hours being flown. As a result, demand for connectivity should continue to increase. International governments are seeking alternative satellite suppliers, which provides an opportunity for Gogo and our multi network approach. The French government has already strengthened OneWeb's competitive position by becoming EUTELSAT's largest shareholder following a $1,550,000,000 capital commitment. This will support continued OneWeb network investments.

[Christopher Moore, Director & CEO at Gogo]

As OneWeb's only connectivity service partner for business aviation, we believe this strengthens our position to respond to growing demand and maximize our global office expansion. In summary, we see demand for quality in flight connectivity in both Business Aviation and Military Government Mobility verticals, surging while overall penetration remains extremely low, only 9,700 or 24% of roughly 41,000 global business aircraft, which have broadband connectivity today. Gogo's strategy for value creation is to grow our share of a highly unpenetrated market by strengthening existing and creating new long term, high margin, recurring revenue customer relationships. We plan to do this by first delivering the many new products I've just described that significantly improved performance over traditional in flight connectivity products. Second, engineering equipment that is purpose built for our market and easier to install, maintain, and upgrade than competitive products.

[Christopher Moore, Director & CEO at Gogo]

Third, expanding our addressable market by utilizing the broad product offering and global footprint facilitated by this SD Gogo merger to satisfy the needs of all segments of our vertical markets. Fourth, leveraging our significant presence in those markets to attract the best technology, distribution, and network partners on the best terms to serve our customers, and finally, provide the world class customer support that our customers demand. This strategy underpins our approach to multi network, open architecture platforms, and enables broad mission coverage across both business aviation and military government markets. That flexibility is core to our future proofed hardware design strategy that can support multiple bearers with network agnostic modular terminals, such as our plain simple GEO and GOGO LEO antenna portfolio. With the upcoming launch of multiple Ka band LEO networks, GoGo can leverage our terminal network architecture, so we remain agnostic about our customers enabling the latest developments from satellite providers on any aircraft type.

[Christopher Moore, Director & CEO at Gogo]

Our expanding global support network is a key part of the distribution partners, part of this strategy. We now have 148 dealers across two thirty three locations. These dealers are invested in STC generation, ongoing customer support, and as our representatives across the globe act as a force multiplier to our sales efforts. Now I'd like to share a few updates on the progress we are making towards some of the efforts that support this strategy. Since the start of operations in April, our LEO EUTELSAT OneWeb customers have used over twelve hundred hours.

[Christopher Moore, Director & CEO at Gogo]

HD X is ideal for the 12,000 mid sized and smaller aircraft that fly outside of North America and have no broadband solution today, an aircraft among the 11,000 mid sized and smaller North American registered aircraft that often fly regionally outside CONUS or want faster mean speeds than five gs alone can provide. The FDX terminal is designed for the 9,700 larger business aircraft operators, many of which fly into continental missions, as well as our VVIP and government clients. We are off to a strong start for Galileo. Our early customers are positive about the HD X performance, and we have more than 500 plus immediate opportunities for HD X in our sales pipeline. 40% of these are overseas, and we are seeing strong interest from international operators.

[Christopher Moore, Director & CEO at Gogo]

We've already signed our first multi aircraft deal with a Middle East charter operator. As I mentioned at the start, we have made a crucial step forward in terms of our five gs product, which is targeted at large segments of the North American mid sized and smaller market that want a good connectivity experience, but a lower cost than satellite products. Our chipset supply successfully completed the first end to end call using the GoGo five gs chip in June. The chip is now in the final phase of testing at our Broomfield and Chicago facilities. Following the integration into the Advance LX-five, flight testing is anticipated to commence in September, and to go live by year end.

[Christopher Moore, Director & CEO at Gogo]

It is worth noting that we have already made a bulk chip purchase to ensure supply for our customers when ready. More than 300 aircraft are now pre provisioned for launch. The five gs tower network is complete, with 170 installed across The US and Southern Canada. Gogo has already received FAA approval to produce and manufacture the advanced LX5 LIU, and 25 FTCs for the new antenna covering 8,500 aircraft. The new five gs core is installed in our data center.

[Christopher Moore, Director & CEO at Gogo]

Our next generation LTE network deployment is also underway. The first LTE tower antenna has been installed, and we are beginning network build out in anticipation for the cut over. Supporting the transition, we announced a multi aircraft type STC for the GoGo C1 unit. This covers 42 aircraft, representing 70% of the installed GoGo Classic fleet. We have already shipped two thirty four units for customers.

[Christopher Moore, Director & CEO at Gogo]

As mentioned previously, the FCC rip and replace program now provides incentives for C1 installations, assisting customers with the replacement of the old GoGo classic installs. The C1 LTE box has the same form factor as the old classic product, allowing for a very fast unit swap, but it has dual EVDO and LTE air cards. This enables a seamless network cutover For customers lacking the time or budget for an advanced upgrade before the May 2026 transition, this solution enables a cost effective option and keeps our customers connected and preserves GoGo's service revenue from this market segment. We are urging customers to commit before year end to take advantage of the FCC rebate and be ready for the cutover. In the MilGov vertical, we see an opportunity for GoGo's solutions to be integrated with SD's GEO offerings.

[Christopher Moore, Director & CEO at Gogo]

Our current revenue mix in this segment includes a significant portion of legacy narrowband services, which are expected to decline gradually over the next several years. However, we anticipate broadband growth in the milgov sector will materially outpace the decline in narrowband as the segment transitions to broadband solutions. Today, almost all milgov mobility aircraft still rely heavily on voice over radio and narrowband for communications, which is limited in bandwidth, there is a significant effort underway to upgrade to new broadband satellite technologies. The US Air Force 25 by '25 program aims to equip 25% of its 1,100 mobility aircraft with satellite communications by the 2025. This still leaves 75% of the fleet without satellite connectivity, which the Air Force believes must be addressed, presenting a substantial opportunity for growth.

[Christopher Moore, Director & CEO at Gogo]

We believe Gogo's LEO product will be an excellent complement to our GEO product in this market due to the DoD's PACE protocol, which requires military programs to have primary alternate contingent and emergency systems. With the support of the government funding, Gogo is also leveraging our SP Pro operating system, which enables monitoring and utilization of PACE. We also see the opportunity for five gs air to ground as a possible new alternative for redundancy. While there have been some delays in awards, the general trend towards better communication systems for aircraft aligns with the US administration's broader goal for modernizing the military. We've also added a key resource to the GoGo board of directors with the recent appointment of retired General Mike Minahan.

[Christopher Moore, Director & CEO at Gogo]

Finally, I'll touch briefly on tariffs. We have made provision, and while our decisions remain fluid, we believe that as trade deals currently stand, there is minimal impact on aviation and our exposure is much reduced. In conclusion, we are pleased that our strategic investments are now being delivered. We are uniquely positioned to capitalize on the increased demand of in flight connectivity, as our multi orbit, multi band approach gives the business a competitive edge. We feel very positive about the merger process.

[Christopher Moore, Director & CEO at Gogo]

So far, we are achieving the cost, product, and commercial synergies we wanted to accomplish with the SD GoGo combination. We expect to produce compelling financial results in 2026, driven by growth in service revenue from our new products, a significant reduction in product program spend, the full year impact of synergies made in 2025, and full funding of our FCC rip and replace program. And now, I will hand over to Zach to talk about the numbers.

[Zachary Cotner, CFO & Treasurer at Gogo]

Thanks, Chris, and good morning, everyone. Like last quarter, I'm pleased to report that second quarter results were ahead of expectations for revenue, adjusted EBITDA, and free cash flow. Our integration is progressing well, cost controls are taking root, and the demand for our new products continues to ramp. As our product investments roll off, we continue to expect solid free cash flow growth in 'twenty six combined with further deleveraging. Strong first half results led to improvements across the board in our 'twenty five financial guidance, which I'll discuss later in my remarks.

[Zachary Cotner, CFO & Treasurer at Gogo]

Our 2025 guidance continues to reflect limited new product revenue given most HGX shipments are STC focused, and our five gs network is anticipated to launch in Q4. 2025 remains an investment year, priming the pump for new product service revenue in 2026 and beyond. I'll now provide an overview of Gogo's second quarter financial performance, then I will turn to our capital allocation priorities and our positive outlook regarding a potential refinancing over the coming quarters. And finally, I'll conclude with additional context on our raised 2025 financial guidance. On a combined pro form a basis, Gogo's total revenue in the second quarter was $226,000,000 up 1% year over year and down about 2% sequentially.

[Zachary Cotner, CFO & Treasurer at Gogo]

On a standalone basis, SATCOM Direct's Q2 revenue grew approximately 1% from the prior year. Total service revenue of $194,000,000 increased 137% over the prior year and declined 2% compared to the prior quarter. At the end of Q2, total ATG aircraft online was $6,730 or a decline of approximately 4% versus the prior year period and down 2.5% sequentially. Despite the pressure on total ATG AOL, Advanced AOL grew nearly 14% from the prior year period and now comprises more than 71% of the total ATG fleet, up from 60% in Q2 twenty twenty four. In the last two years, our total advanced AOL has grown nearly by nearly 1,200.

[Zachary Cotner, CFO & Treasurer at Gogo]

Our 2025 guidance continues to assume advanced AOL growth, but the total overall ATG AOL will be lower at year end 'twenty five versus year end 'twenty four. We believe that the rollout of five gs and LTE will help improve the trajectory of our ATG subscriber trends. Total ATG ARPU of 3,445 was relatively flat versus both the prior year and the prior quarter. Total broadband GEO AOL, excluding networks that are end of life, reached thirteen twenty one, up 15% from the prior year and 3% sequentially. This strength underscores our strong line fit positions with OEMs.

[Zachary Cotner, CFO & Treasurer at Gogo]

In addition, most GEO broadband aircraft are under fixed term contracts, which helps to create revenue stability, and our GEO ARPU is holding up better than expected. Now turning to equipment revenue. Total equipment revenue in the second quarter was $32,100,000 up 59% year over year and 1% sequentially. Total Advanced Equipment shipments of two seventy six increased 19% versus the prior year period and 15% sequentially. This was our highest Advanced Equipment shipment quarter in the last two years, and we believe this strength bodes well for the future conversion of Classic customers to advance ahead of our LTE network cutover.

[Zachary Cotner, CFO & Treasurer at Gogo]

Regarding our profitability, Gogo delivered combined service margins inclusive of SATCOM Direct of 52.9%, up slightly sequentially. Standalone Gogo service margin was approximately 77% and in line with our previously stated targets. Service gross profit accounted for 96% of our total gross profit in Q2, and we focus on driving this recurring high margin service revenue. Equipment margins were nearly 14% in the second quarter. As a reminder, we expect Galileo equipment pricing to be close to cost.

[Zachary Cotner, CFO & Treasurer at Gogo]

Now turning to our operating expenses. Total Q2 operating expenses excluding depreciation and amortization were $55,900,000 down roughly $2,000,000 sequentially. I will now provide additional commentary on our major strategic initiatives, five gs, Galileo, and the FCC reimbursement program. In the second quarter, dollars 1,500,000.0 of five gs spending was all tied to CapEx. We expect total five gs spend to decline significantly in 2026 as we roll out five gs in Q4.

[Zachary Cotner, CFO & Treasurer at Gogo]

Turning to Galileo, we recorded $1,300,000 in OpEx in the second quarter. We continue to expect total external development costs for both the HD X and FD X solutions to be less than $50,000,000 of which $31,000,000 was incurred from 2022 through the 2025, and approximately $9,000,000 is expected for the rest of the year. We anticipate approximately 80% of Galileo's external development costs will be in OpEx. And finally, our FCC reimbursement program. Following the passage of the National Defense Authorization Act last year, we continue to anticipate increased reimbursement of about 50,000,000 for our FCC program.

[Zachary Cotner, CFO & Treasurer at Gogo]

This funding will support the upgrade of our ATE network to LTE and provide incentives to upgrade our classic fleet to Advance. In the second quarter, we received 5,900,000.0 in FCC grant funding, bringing our program to date total to $53,400,000 As of 06/30/2025, we recorded a $9,800,000 receivable from the FCC and incurred $5,400,000 in reimbursable spend during the quarter. The receivable is included in prepaid expenses and other current assets on our balance sheet, with corresponding reductions to property and equipment, inventory, and contract assets with a pickup in the income statement. Moving to our bottom line, Gogo generated $61,700,000 in adjusted EBITDA in the second quarter. Our adjusted EBITDA margin was 27.3% as compared to our initial long term view in the mid-20s when the SATCOM acquisition was announced last year.

[Zachary Cotner, CFO & Treasurer at Gogo]

Gogo reported second quarter net income of $12,800,000 and $09 of diluted EPS. I will now provide some color on our synergy progress. I'm pleased to announce that within two years, we now expect to achieve run rate synergies in the 30,000,000 to $35,000,000 range, up from our prior view of 25,000,000 to 30,000,000 While we achieved the vast majority of headcount reductions, we expect further cost improvements from non headcount areas like real estate and back office software solutions. We achieved $18,000,000 of run rate synergies at the close of the acquisition, another $9,000,000 during the first quarter, and a further $2,000,000 in the second quarter. We continue to believe the cost to achieve these synergies will be within our previously expected range of 15,000,000 to $20,000,000 Moving to free cash flow, Gogo generated $34,000,000 of free cash flow in the quarter, above expectations and totaling $64,000,000 in the first half.

[Zachary Cotner, CFO & Treasurer at Gogo]

While we expect free cash flow in the '25 to be lower than the first half, we believe our recent cash flow trends once investments roll off, new product service revenue begins, and we continue to delever. Now I'll turn to a discussion of our balance sheet. Gogo ended the quarter with $102,100,000 in cash and short term investments and $850,000,000 in outstanding principal on our two term loans, with our $122,000,000 revolver remaining undrawn. Our cash balance as of last Monday was 116,000,000 For Q2, this equates to a net leverage ratio of 3.2 times, and we expect this ratio to remain relatively flat through year end with a slight downward bias. Our cash interest paid for the second quarter net of hedge cash flow was 16,000,000 As previously discussed, our hedge agreement stepped down at the July to $250,000,000 with the strike rate increasing from 125 basis points to two twenty five basis points, resulting in approximately 30% of the loans being hedged.

[Zachary Cotner, CFO & Treasurer at Gogo]

As a reminder, the cash interest paid for 2024 net of hedged cash flow was $33,000,000 and we continue to expect that to be approximately $70,000,000 this year. Given our improved financial performance and relative strength of the credit markets, we and our banking partners believe there is sufficient market appetite to pursue a comprehensive refinancing over the coming quarters. We believe this will be a positive outcome for Gogo and its stakeholders. Our capital allocation priorities remain consistent with prior quarters and focused on executing across the following four priorities in order. First, maintaining adequate liquidity.

[Zachary Cotner, CFO & Treasurer at Gogo]

Second, continuing to invest in our strategic opportunities primarily through Galileo and five gs. Third, maintaining an appropriate level of leverage for the economic environment with a target net leverage ratio of 2.5 to 3.5 times. And finally, returning capital to shareholders. As a reminder, Gogo has $12,100,000 remaining on its $50,000,000 repurchase authorization that our Board approved in September 2023. Until we complete our refinancing, we expect to continue to prioritize deleveraging over equity buybacks.

[Zachary Cotner, CFO & Treasurer at Gogo]

Bottom line, we believe our expected free cash flow growth over the next few years will provide ample excess cash to pay down debt, reduce our interest expense, and ultimately return capital to shareholders. In our earnings release this morning, we increased key elements of our 2025 financial guidance. For the year, we expect total revenue at the high end of the previously guided range of $870,000,000 to $910,000,000 which reflects our HD X launch in Q1 and five gs generating modest equipment revenue in Q4. Adjusted EBITDA at the high end of our previously guided range of 200,000,000 to $220,000,000 reflecting operating expense of approximately $20,000,000 for strategic investments, including five gs and Galileo, versus our prior expectations of $25,000,000 Given our guidance, we expect the second half EBITDA will decline slightly versus the first half, largely due to timing investments. Free cash flow at the high end of our previously guided range of 60,000,000 to $90,000,000 and we expect 2025 to be the trough of our free cash flow, as we have approximately $60,000,000 slated for strategic investments, net of any FCC reimbursement versus prior expectations of $70,000,000 Our net CapEx is still expected to be $40,000,000 after $50,000,000 of CapEx reimbursement from the FCC reimbursement program.

[Zachary Cotner, CFO & Treasurer at Gogo]

After two full quarters following the close of the SD deal, we are seeing the clear benefits of the combination, including global expansion, product expertise, synergies, and the addition of a Milgov business. We have more work to do, but believe we are well positioned to delever the balance sheet, drive free cash flow, and create long term shareholder value. Before we open up the floor for questions, I want to express my gratitude to the entire Gogo team for their hard work, commitment to our business, and dedication to providing exceptional service to our customers. Operator, this now concludes our prepared remarks, and we're ready to take questions.

[Operator]

Thank you. At this time, we will conduct a question and answer session. As a reminder, to ask a question, you need to press 11 on your telephone and wait for your name to be announced. To withdraw your question, please press 11 again. Please stand by while I compile the Q and A roster.

[Operator]

Our first question comes from Scott Searle from ROTH Capital Partners. Please go ahead.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Hey. Good morning. Thanks for taking my questions, and thanks for the comprehensive overview. Chris, maybe to just jump in on the

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

ATG front, down 170 this quarter. I know there are a lot of moving parts in terms of five gs transitions, reimbursement programs that are ongoing and there have been longer maintenance events. I'm wondering, can you take us through a timeline of when you expect to see a return to growth in ATG and what the ultimate opportunity and penetration opportunity is for ATG when you look at aircraft within North America. I think there's a lot of different issues out there in terms of how much is ATG versus the Galileo potential and love to kind of understand of stabilization timelines, which seem like it should be coinciding now with five gs commercialization, but how that growth should ramp up into '26 and beyond with five gs and with C1.

[Christopher Moore, Director & CEO at Gogo]

Okay. That's good. There's a lot there. So let me I'll I'll start with kind of, like, market opportunity and where we kinda see that, and I'll let Zach chip in with the numbers and kind of how we see that that playing out. But I think if you look at suspensions and deactivations over that period of time in the quarter, obviously, it's a little bit more than previous.

[Christopher Moore, Director & CEO at Gogo]

But I think if you look at the advanced shipments, the real reason for that is upgrade. So you can already see there's strong pull in that and the advanced numbers are obviously extremely strong. So we're not concerned with the suspensions, although obviously they're a little bit higher than previous. I think also now with building the strong backlog in Galileo product portfolio, we're feeling pretty confident that those customers are looking at the product portfolio as well, and then with the announcement of five gs. So, we're not concerned or any concerns at this point that we can't migrate customers and then also with the FCC funding with the C1, that now those customers have really got a good path.

[Christopher Moore, Director & CEO at Gogo]

And we've only just got that done at zero cost of upgrading themselves to the new LTE network as well. So we think we're gonna kind of keep customers. Also, they're not just leaving the network. There are a number of suspensions in there. We see that with kind of seasonal behavior, maintenance.

[Christopher Moore, Director & CEO at Gogo]

We love that pretty well. So, you know, at this point, we think we've got strong growth path. We've got multiple products in the portfolio for customers to go to, and we're seeing strong performance with the advanced shipment. So I think I think we're in a good spot. I don't know if Zach, you want to add anything to that on the number side.

[Zachary Cotner, CFO & Treasurer at Gogo]

Yeah, I mean, I think the, like we've said in the guidance, it's we still assume that the net ATG numbers are going to be down this year, but, you know, we're hopeful that next year with the C1 and the five gs launch, like you said, that will start to pick back up. The other thing that's interesting is when we look at the activation reasoning, the highest drivers are consistent with what we've seen in other quarters, which are like to Chris's point, sold aircraft or management changes. Right? So, you know, I think we also mentioned in the last call, we're kind of ramping up our inside sales team to really focus on these customers. It's early days, like we said, because it kind of started in Q2, but they a little bit of progress, but we to get more focused on it.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Great. Very helpful. And just to clarify, Chris, on that front, these are not competitive losses to StarLink. This is suspensions and this is the normal transition that we see in the ATG business now ahead of two major product cycles.

[Christopher Moore, Director & CEO at Gogo]

Yeah, we're not seeing a mass level of loss to competition, no. Like Zach said, it's the same reasons. We have really comprehensive deactivation process. So we're not seeing kind of like mass losses to competition in the deactivation.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

And lastly, if I could, and then I'll get back in the queue. On the GEO front, you guys, I think, continue to outperform the early expectations, both in terms of aircraft and I think pricing. I'm wondering if you could just give us some longer term thoughts in that market because I think at the time of the acquisition, there was some concern around the ARPAs related to the GEO market opportunity. It doesn't really seem like that's materializing, at least not as fast. So I'm wondering if you could just give some updated thoughts on that opportunity and how you see GEO progressing over the next couple of years. Thanks.

[Christopher Moore, Director & CEO at Gogo]

I'll cover the business side, but you want cover the ARPA piece?

[Zachary Cotner, CFO & Treasurer at Gogo]

Yeah, I think, as we said before, we anticipated even last year before the deal that we were going to see more ARPA contraction. But I think the nice thing that's happened is, like we said, a lot of times this stuff is very expensive to swap out, right? And if it's good enough for a lot of folks, they're not going to spend $506,100,000 dollars if it's satisfying their needs. I think our view is longer term, it's gonna have to come down slightly. It's just the rate at which it does is, it's kind of anybody's guess.

[Zachary Cotner, CFO & Treasurer at Gogo]

But you know, like I said, we're working on our long term model and it will assume, you know, modest degradation over the over the next few years.

[Christopher Moore, Director & CEO at Gogo]

Yeah. I'll just add to, I think customers have been waiting for Galileo. So I think that's good testament to customers believing in Gogo, which is great. We've just got to get obsolete the products out to them, which we're now executing on, which is which is fantastic.

[Christopher Moore, Director & CEO at Gogo]

The other piece would be geo business. We are we also launched our own products within that within the last few years, which actually really enhance the performance of those networks with the plain simple range. And then I think also it's like what I said in the script, you know, it's just kind of like earlier on, it's a testament to having line fit positions, which we're very lucky to have, really, and we've worked hard to get. And you can see that kind of working through the OEMs as well as the MROs, but those products are predominantly really strong OEM products. So I think with that mix, like Zach said, that business is holding up really, really well.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Hey. Great. Thanks so much. I'll get back in the queue. Really exciting to see what's going on with with five g and the traction that you're seeing with Galileo. Thanks.

[Christopher Moore, Director & CEO at Gogo]

Yeah. Thank you.

[Zachary Cotner, CFO & Treasurer at Gogo]

Thanks, Scott.

[Operator]

Thank you. As a reminder, to ask a question, you would need to press star one 1 on your telephone and wait for your name to be announced. I am showing no further questions at this time. I will now turn it over to Will Davis for close oh, one moment, please.

[Will Davis, VP - IR at Gogo]

I think somebody just came in on Antoine.

[Operator]

Yep. Alright. We have Scott Searle from Roth Capital Partners. Please go ahead.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Hey. I apologize if if no one else is gonna hop on. I'll pepper you with a few more. You know, Chris, it it sounds like there's some interesting opportunities, percolating, with with five g private network opportunities. I think you referenced some military applications potentially in North America. I'm wondering if there's any additional color on that front. And also, I'm not sure if there were some five gs metrics that you provided in terms of the number of five gs ready aircraft at this point in time, you know, as we start to get to that four gs launch time period?

[Christopher Moore, Director & CEO at Gogo]

Yeah. I mean, I'll cover the government piece, and then I'll I'll let Zach to stick to the numbers so they're they're nice and accurate. They but with that military business, I I mean, it's really new to GoGo, but not from the SD point of view, from the business that we've been in the government business pretty much for over twenty years. So looking at the five gs piece and the opportunity of those increased speeds and then looking at the US DoD, we really do think there's some opportunity there, giving kind of broadband resilience with PACE planning. The other thing we're looking at is potential with UAVs, which I mentioned on a previous call as well, we've started looking at that with HD X as well on the fact that we see that market growing massively from the military markets, not only from a domestic point of view, but from a global point of view for Galileo, then actually, five g could be a really interesting alternative for CONUS, and we're pursuing those opportunities at the moment.

[Christopher Moore, Director & CEO at Gogo]

It's very early days, but the fact that, you know, we're starting to talk to the customers about that, we're actually getting some level of interest on exploring that. Now we've got the product. So, you our government team is really in tune with the DoD and the different aspects of government within The US. Actually, we kind of we see that as being a potential new market. So, we're just exploring it early days, but pretty excited.

[Christopher Moore, Director & CEO at Gogo]

And then on the backlog, it's It's little over 300.

[Zachary Cotner, CFO & Treasurer at Gogo]

It's pretty pre provisioned.

[Christopher Moore, Director & CEO at Gogo]

Yeah.

[Christopher Moore, Director & CEO at Gogo]

They're all pre provisioned. So the network there, I mean, it's all rolled out. The towers are done. As I said before, it's just kind of getting these five gs cards in those boxes and converting those customers really quick. And those customers have been fantastic, really patient.

[Christopher Moore, Director & CEO at Gogo]

So we're really motivated on getting those guys over really, really quickly.

[Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC]

Great. Thanks so much. I'll get back in the queue.

[Christopher Moore, Director & CEO at Gogo]

No problem. Thank you.

[Operator]

Thank you. Our next question comes from Justin Lane from Morgan Stanley. Please go ahead.

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

Yes. Hi, good morning. Thanks for taking the questions. A few quick ones for me. Maybe can you just provide a little more color on the CapEx guidance change?

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

I understand the net number doesn't change, but just maybe the underlying drivers of the difference in the guide.

[Zachary Cotner, CFO & Treasurer at Gogo]

Yeah, it's all related to the reimbursement for the rip and replace program. Basically, we've accelerated some stuff that would have hit next year. You know, it's really to make sure in advance of the cutover date that we're totally buttoned up. So it's just pulling in from next year. And then like I said, it's all reimbursed. So basically, everything else is pretty similar.

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

Okay, great. And then maybe just on the HD X shipments in the quarter, it looks like they might have stepped down sequentially. Is there anything to call out? I mean, that a dynamic that was sort of anticipated or anything to call out there? Thanks.

[Christopher Moore, Director & CEO at Gogo]

Yeah, that was anticipated. At the moment, we're rolling out those STCs. And really, I mean, at the moment, this is all just preparation work for 2026. So, from an STC point of view, we've pretty much, you know, the HDX got them all shipped out to our MRO partners. So, we've got great traction there.

[Christopher Moore, Director & CEO at Gogo]

We do have customers now starting to deploy, which is great, but, you know, that's the aviation cycles, unfortunately. I mean, it's good and it's a bad thing. It's a difficult market to get into from a competitor's point of view, which kind of gives us good motes around the business. But equally, you've got to get the products ready, you've got them to go through the FAA, you've got all of those aspects to it. So, as we've said previously on calls, 2025 for us is really a build year on making sure that we've got those STCs.

[Christopher Moore, Director & CEO at Gogo]

So, this is all kind of anticipated. We don't see any slowdown in ramp on the product.

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

Okay, great. And maybe just last one on the Milgov business. Christy, I think you mentioned in your prepared remarks some delays in awards. Just curious if you could elaborate there. I mean, is that trend holding steady?

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

Or does that look like it might reverse? And then just because we got the President's budget and the one big beautiful bill act just from a Milgop perspective, is there anything above or below expectations on either of those? Thanks.

[Christopher Moore, Director & CEO at Gogo]

Yeah, just kind of things are moving a little bit slower than expected. And then, you know, it's just the nature of the government business really, you know, awards come, you try and influence as much as you can. The budget cycles, they operate a little bit differently as well. So we're hoping kind of we start seeing a little bit more movement in Q4, where you typically, from a trend point of view, we've seen that. And From the year end? Yeah. The year starts, I think it's October, right?

[Zachary Cotner, CFO & Treasurer at Gogo]

Yeah.

[Christopher Moore, Director & CEO at Gogo]

I think, hopefully we start seeing things through. But I would say, there's definitely an acknowledgment with the administration on the need for the technology refresh.

[Christopher Moore, Director & CEO at Gogo]

We've had a lot of interest on demonstrations, technology, the SIPA rewards that, you know, the research grant awards really strong. We're looking at kind of next year rolling out our software within the Air Force, which is a really kind of good point for us. I mean, they've been a great partner with us as well, the US Air Force, on developing that software platform with them. So, I think things will start picking up, but it's a really difficult thing to predict. So, but and then the the one piece of it, what we've seen, right, it's small business, but it's exceptional growth this year has actually been the international market.

[Christopher Moore, Director & CEO at Gogo]

And I think that kind of, you know, step up of NATO, people looking at the budgets, we're starting to see a lot of interest being generated from overseas clients, and that team's been growing quite a lot. And that the way they contract is quite different to the DOD as well, and the fiscal cycle is a little bit different. So we're very optimistic. Team's working really hard, doing a really good job. So, yeah, we'll kind of wait and see, but the technology is there, which is the exciting piece.

[Christopher Moore, Director & CEO at Gogo]

It's not like we're now waiting for the technology to come. I think with the expansive product portfolio and delivering on the product portfolio, I think we've now got something really interesting for the military.

[Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley]

Perfect. Thanks for the color.

[Zachary Cotner, CFO & Treasurer at Gogo]

Thank you, Justin.

[Christopher Moore, Director & CEO at Gogo]

Yeah. Thank you.

[Operator]

Thank you. Our last question comes from Louis De Palma from William Blair. Please go ahead.

[Louie Dipalma, Research Analyst - Industrials at William Blair]

Chris, Zach, and Will, good morning.

[Christopher Moore, Director & CEO at Gogo]

Hey, Louie. How's going?

[Louie Dipalma, Research Analyst - Industrials at William Blair]

Do you remain confident in, I think, approximately the the $65,000,000 in cost for 2025 coming out in 2026 as it relates to the different synergies and and milestone payments for for five g, HDX, and FDX? And how should we think of like the costs in 2025 versus 2026?

[Zachary Cotner, CFO & Treasurer at Gogo]

Yeah, I think we still feel like the vast majority of that will go away. Like you said, we get the full year of synergies. And then, obviously, we're kind of working on our r and d roadmap. We I don't know that we're ready to release what all the projects are we working on to some of that will get backfilled, the vast majority will be pulled out.

[Louie Dipalma, Research Analyst - Industrials at William Blair]

Great. And one final one from from a high level as you and and customers have done more testing of HD X and FD X. Just in general, how does it compare with Starlink in the market? Even though there are many less OneWeb satellites than Starlink, it appears that the the OneWeb constellation is far less utilized. So how has the performance and testing bent for the different solutions?

[Louie Dipalma, Research Analyst - Industrials at William Blair]

And and also, I I missed the first part of the call, but, what is the timing for flight tests of of five g?

[Christopher Moore, Director & CEO at Gogo]

So, yeah, we're I'll I'll handle the five g thing first, Louis. So, yeah, we've we've got the customers ready to go. Really got FTCs and things flying. So, you know, from a network point of view, I think rollout in q four is planned and migrating those customers over. There's no hold up there.

[Christopher Moore, Director & CEO at Gogo]

So the five g thing is pretty straightforward. Now we've got the chip. On the performance on Galileo, we're seeing great performance metrics. I think the nice thing is we're not seeing people do futile speed tests in the cabin because they can do what they wanna do, that low latency, snappy product feel is what they've got. We've got aircraft now flying around, capturing a lot of data.

[Christopher Moore, Director & CEO at Gogo]

We're seeing very consistent service, happy customers. I think the fact that we've truly designed an aviation grade product, and more importantly, we've got the support because, you know, things do happen from networks point of view that we make that seamless for customers. We can get an engineer. We advertise under twenty four hours on an aircraft anywhere in the world. The reality is we don't really go beyond twelve hours and having that human touch if we need it, but the team's been great.

[Christopher Moore, Director & CEO at Gogo]

Customers have been fantastic. Some big anchor clients who have we've announced before in the past, and they're moving ahead and very, very happy with the service. So we're we're we're very enthusiastic, and we're seeing great performance on the FDX as well, and we're just wrapping up the FTCs on that. So, yeah, it's I think it's I think this is a bit where everybody kind of looks at satellite networks and speed tests, whereas having consistent performance in flight, and you can fly anywhere in the world with our services, whether you're using dual purpose service or you're not, say, using multi networks or a single network. I mean, our aim is to have consistent service anywhere a client flies anywhere in the world.

[Christopher Moore, Director & CEO at Gogo]

And I think we can I think we can safely say that we can do that?

[Louie Dipalma, Research Analyst - Industrials at William Blair]

Great. Thanks.

[Christopher Moore, Director & CEO at Gogo]

Thank you.

[Zachary Cotner, CFO & Treasurer at Gogo]

Thanks.

[Operator]

You. The question and answer session is now closed. I will now turn it over to Will Davis for closing remarks.

[Will Davis, VP - IR at Gogo]

Thank you all for your participation on our second quarter earnings call. You may disconnect.

[Operator]

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

[Zachary Cotner, CFO & Treasurer at Gogo]

Goodbye.

Participants

Executives

• Will Davis, VP - IR
• Christopher Moore, Director & CEO
• Zachary Cotner, CFO & Treasurer

Analysts

• Scott Searle, MD & Senior Research Analyst at Roth Capital Partners, LLC
• Justin Lang, VP - Aerospace & Defense Equity Research at Morgan Stanley
• Louie Dipalma, Research Analyst - Industrials at William Blair