Gogo Q3 Earnings Call Highlights

Key Points

• Revenue and profitability declined as Gogo’s planned shift away from legacy air-to-ground services continued: Q3 revenue fell 5% year over year to $213.2 million, adjusted EBITDA fell 27% to $41 million, and the net loss widened to $3.2 million.
• Galileo satellite adoption accelerated, with shipments reaching a quarterly record of 172 units and 297 aircraft online. Gogo also secured new fleet commitments, while average monthly service revenue per Galileo aircraft rose 6% sequentially.
• Gogo reiterated its 2026 outlook of $870 million to $895 million in revenue and $175 million to $185 million in adjusted EBITDA. After the quarter, it extended most original Term Loan B debt maturities to October 2030 and committed to scheduled principal payments.

Gogo NASDAQ: GOGO reported lower third-quarter revenue and adjusted earnings as customers left its legacy air-to-ground connectivity services, although shipments of its Galileo satellite products reached a quarterly record.

Revenue fell 5% from a year earlier to $213.2 million, while adjusted EBITDA declined 27% to $41 million. The company reiterated its full-year guidance and said it had extended the maturity of most of its original Term Loan B debt after the quarter ended.

CEO Chris Moore said on the Nov. 6 earnings call that the results reflected a planned transition from air-to-ground, or ATG, services toward newer satellite and 5G offerings. Some customers have moved to competing platforms, while others are upgrading to Gogo products.

Galileo shipments rise as legacy services decline

Gogo shipped 172 Galileo units in the third quarter, up 59% from the second quarter and 95% from a year earlier. The number of aircraft online with Galileo rose 61% sequentially to 297. Moore said cumulative shipments had surpassed 760 as of the call, which he estimated represented 35% to 40% of the low-Earth-orbit business aviation connectivity market.

Moore said average monthly service revenue per Galileo aircraft increased 6% from the previous quarter as some initial customer discounts began to expire. He expects that trend to continue through the first half of 2027, alongside revenue growth from additional aircraft coming online.

New commitments included a decision by PlaneSense to equip its fleet of 71 Pilatus aircraft, as well as future deliveries, with Galileo HDX. Installations are expected to be complete by the end of 2027. Textron Aviation also plans to offer no-charge installation of Galileo HDX on factory-new Latitude and Longitude aircraft delivered starting in 2028.

Gogo ended the quarter with 5,399 ATG aircraft online, down 17% year over year and 6% sequentially. Moore said the decline reflected deactivations, including customers moving to competing systems and to Gogo’s newer products. CFO Zach Cotner said 71 aircraft in the deactivation figures were upgrades to Galileo or 5G that had not yet been activated, with the vast majority moving to Galileo.

Moore said it was too early to predict when the ATG business would bottom. Cotner said the company still anticipated a net decline of about 1,200 ATG aircraft, including the contribution from 5G.

Military and government revenue provides support

Business aviation service revenue fell 10% year over year to $145.6 million, driven by the decline in ATG service revenue. Military and government service revenue rose 36% to $37.2 million, although it slipped 7% from the record second quarter as elevated usage moderated.

Moore said the company renewed a sovereign communications lease worth more than $15 million annually to provide geostationary satellite connectivity to an overseas government customer. Gogo also completed testing with Boeing subsidiary Insitu of a satellite connectivity solution for uncrewed aircraft.

The company’s third-quarter net loss widened to $3.2 million from $1.9 million a year earlier. Gross margin before depreciation and amortization was approximately 40%, down from 42% in the prior quarter. Cotner attributed the decline to lower revenue from ATG services, which carry the company’s highest margins. Galileo equipment also carries lower margins than the ATG hardware it replaces, he said.

Debt extension and spectrum review

After quarter-end, Gogo extended the maturity of consenting lenders’ loans under its original Term Loan B by approximately two and a half years to October 2030. Cotner said lenders holding substantially all of the facility participated.

The company committed to $75 million in principal payments by the end of 2027, including $25 million paid at closing, $30 million due by the end of 2026 and another $20 million by the end of 2027. Including the new amortization schedule, total debt repayment over that period is expected to be $92 million.

Gogo ended the quarter with $90.7 million in cash and equivalents. Free cash flow was $28.1 million, up from $21.6 million in the second quarter but below the $30.6 million reported a year earlier.

Moore also said Gogo had engaged banking and other advisers to evaluate uses for its tower assets and exclusive 800 MHz ATG spectrum, following a 10-year FCC license renewal. Potential applications include uncrewed aircraft and terrestrial mobile services, he said, while cautioning that the review was at an early stage.

Full-year outlook unchanged

Gogo reiterated its 2026 revenue forecast of $870 million to $895 million and adjusted EBITDA guidance of $175 million to $185 million. The EBITDA outlook now includes approximately $18 million in litigation expenses, down from a previous estimate of $22 million after a court vacated a $22.7 million jury award in the SmartSky litigation. Final judgment has not been entered, and the litigation remains ongoing.

The company continues to expect approximately $20 million in net capital expenditures for the year. That forecast assumes $35 million in FCC reimbursements, down from $45 million previously, as some reimbursement and related spending shift into 2027. Gogo said it received a six-month FCC extension and expects to complete migration of its remaining Classic customers in the first quarter of 2027.

About Gogo (NASDAQ:GOGO)

Gogo Inc is an aviation connectivity and broadband services company that provides internet access, entertainment, and communications solutions for business and commercial aircraft. Its offerings are designed to help passengers and flight crews stay connected while in the air through a combination of air-to-ground and satellite-based technologies.

Gogo's business aviation portfolio includes the AVANCE connectivity platform, which supports in-flight Wi-Fi and related services, as well as equipment, software, and network management solutions for private and business aircraft.

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