美国
证券交易委员会
华盛顿特区20549
表格
对于过渡期从 至
根据1934年证券交易法第13或15(d)条款的季度报告。 |
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截至季度结束日期的财务报告 |
或者
根据1934年证券交易所法第13或15(d)节提交的过渡报告。 |
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过渡期从__________到_____________ |
委托文件编号：001-39866
(根据其章程规定的注册人准确名称)
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（国家或其他管辖区的 组建国的驻地 |
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（IRS雇主 唯一识别号码） |
，（主要行政办公地址）
电话号码（
(注册人电话号码，包括区号)
在法案第12(b)条的规定下注册的证券：
类别名称 |
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交易代码 |
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名称为每个注册的交易所: |
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请通过复选标记表示注册人（1）在过去的12个月内已按照1934年证券交易法第13或15(d)条的规定提交所有要求提交的报告，并且（2）在过去90天中一直受到这些提交要求的约束。
请用勾号表示，即使在前述12个月内(或者注册人要求提交此类文件的较短期间内)，注册人是否根据S-t法规规定第405条规定的每个互动数据文件递交了电子文件。
请在以下选项前打勾表示公司属于大型快速记录者、快速记录者、非快速记录者、小额报告公司还是新兴增长公司。可参考《交易所法规》规则12亿.2中对“大型快速记录者”、“快速记录者”、“小额报告公司”和“新兴增长公司”的定义。
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加速文件提交人 |
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非加速文件提交人 |
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较小的报告公司 |
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新兴成长公司 |
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如果是新兴增长企业，请勾选是否选择不使用扩展过渡期，在符合交易所法第13(a)条规定的任何新的或修订的财务会计准则的合规方面遵循。☐
请用复选标记指示注册者是否为壳公司（定义见交易所法规120亿.2条）。 是☐不
截至2024年10月31日,
Gogo 股份有限公司
指数
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页面 |
第一部分 |
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第 1 项。 |
2 |
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2 |
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3 |
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4 |
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5 |
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6 |
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8 |
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第 2 项。 |
25 |
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第 3 项。 |
38 |
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第 4 项。 |
38 |
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第二部分。 |
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第 1 项。 |
39 |
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第 1A 项。 |
39 |
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第 2 项。 |
41 |
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第 3 项。 |
41 |
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第 4 项。 |
41 |
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第 5 项。 |
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第 6 项。 |
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1
第一部分. 财务206,601
第1项. 财务报表财务报表
gogo inc及其附属公司
未经审计的简明合并资产负债表未经审计的简明合并资产负债表
（以千为单位，除股份数和每股数据外）
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September 30, |
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12月31日 |
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2024 |
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2023 |
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资产 |
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流动资产： |
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现金及现金等价物 |
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$ |
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$ |
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应收账款，扣除$（2024年）和$（2023年）的拨备 |
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存货 |
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预付费用和其他流动资产 |
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总流动资产 |
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非流动资产： |
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资产和设备，净值 |
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无形资产, 净额 |
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经营租赁权使用资产 |
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投资于可转换票据 |
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其他非流动资产，减去准备金$ |
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延迟所得税 |
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总非流动资产 |
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资产总额 |
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$ |
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$ |
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负债和股东权益 |
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流动负债: |
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应付账款 |
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$ |
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$ |
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应计负债 |
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递延收入 |
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开多次数 |
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流动负债合计 |
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非流动负债: |
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长期债务 |
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非流动经营租赁负债 |
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其他非流动负债 |
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所有非流动负债 |
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负债合计 |
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股东权益 |
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普通股，每股面值 $，授权股数：百万股；发行股数：分别为2024年6月30日和2023年12月31日：百万股；流通股数：分别为2024年6月30日和2023年12月31日：百万股 |
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额外实收资本 |
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累计其他综合收益 |
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Treasury stock, at cost |
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累积赤字 |
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股东权益总额 |
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负债和股东权益总额 |
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$ |
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$ |
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查看未经审计的简明综合财务报表附注
2
gogo inc及其附属公司
未经审计的简明合并财务报表未经审计的简明合并损益表
（以千为单位，每股金额除外）
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三个月期间 |
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九个月期间 |
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2024 |
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2023 |
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2024 |
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2023 |
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营业收入： |
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服务收入 |
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$ |
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$ |
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$ |
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设备营收 |
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总收入 |
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营业费用： |
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服务收入成本（不包括下列金额） |
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设备收入成本（不包括下列金额） |
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工程、设计和开发 |
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销售及营销费用 |
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ZSCALER, INC. |
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折旧和摊销 |
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营业费用总计 |
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营业利润 |
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其他费用（收入）: |
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利息收入 |
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利息支出 |
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债务清偿损失 |
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% and |
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其他费用总计 |
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税前收入 |
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所得税负担（利益） |
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净收入 |
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$ |
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$ |
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$ |
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$ |
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每股普通股应分的净利润: |
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基本 |
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$ |
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$ |
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$ |
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$ |
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稀释 |
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$ |
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$ |
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$ |
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$ |
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加权平均股数： |
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基本 |
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稀释 |
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请参阅未经审计的简明合并财务报表附注
3
gogo inc.及其子公司
未经审计的简明汇总 综合收益（损失）表
（以千为单位）
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三个月期间 |
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九个月期间 |
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2024 |
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2023 |
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2024 |
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2023 |
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净收入 |
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$ |
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$ |
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$ |
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其他综合收益（亏损），净额 |
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货币转换差异 |
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( |
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$ |
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$ |
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现金流量套期损益： |
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在其他综合收益中确认的金额 |
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减少：已实现的收入并重新分类为收益 |
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现金流量套期保值工具公允价值变动 |
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其他综合收益（亏损），净额 |
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综合收益（损失） |
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$ |
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$ |
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$ |
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$ |
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查看未经审计的简明综合财务报表附注
4
gogo inc及其附属公司
未经审计的简明合并财务报表现金流量表
（以千为单位）
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九个月期间 |
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2024 |
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2023 |
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经营活动： |
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净收入 |
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$ |
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$ |
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调整净收益以使其与经营活动提供的现金流量相一致： |
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折旧和摊销 |
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资产处置、放弃和减值造成的损失 |
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预期信贷损失准备金 |
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延迟所得税 |
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股票补偿费用 |
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摊销递延融资成本和利率上限 |
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债务折扣溢价 |
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债务清偿损失 |
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可转换票据和股权投资公允价值变动 |
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经营性资产和负债变动: |
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应收账款 |
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存货 |
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( |
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预付费用和其他流动资产 |
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( |
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( |
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合同资产 |
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( |
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应付账款 |
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应计负债 |
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递延收入 |
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应计利息 |
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其他非流动性资产和负债 |
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经营活动产生的现金流量净额 |
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投资活动： |
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购买固定资产 |
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取得无形资产—资本化软件 |
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来自物业、设备和无形资产联邦通信委员会报销计划的收入 |
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来自利率上限的收益 |
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短期投资的赎回 |
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购买期权 |
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购买可转换票据和股权投资 |
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投资活动产生的净现金流出 |
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筹资活动： |
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偿还长期贷款 |
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购回普通股 |
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融资租赁款支付 |
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股票补偿活动 |
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筹集资金净额 |
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汇率变动对现金的影响 |
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现金、现金等价物和受限制的现金的增加（减少） |
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期初现金、现金等价物及受限制的现金余额 |
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期末现金、现金等价物及受限制的现金余额 |
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$ |
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$ |
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期末现金、现金等价物及受限制的现金余额 |
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$ |
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$ |
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减：非流动受限现金 |
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期末现金及现金等价物 |
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$ |
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$ |
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补充现金流量信息： |
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支付的利息现金 |
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$ |
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$ |
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缴纳的税款 |
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非现金投资活动： |
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购置的财产和设备计入流动负债 |
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$ |
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$ |
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查看未经审计的简明综合财务报表附注
5
gogo inc及其附属公司
未经审计的简明综合财务报表股东权益变动表
(以千为单位，除股票数据外)
|
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截至2024年9月30日三个月 |
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累积的 |
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额外的 |
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其他 |
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普通股 |
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实缴 |
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综合 |
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累积的 |
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库存股 |
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股份 |
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票面价值 |
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资本 |
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收益 |
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$ |
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股份 |
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数量 |
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总费用 |
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2024年6月30日余额 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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净收入 |
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— |
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— |
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— |
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— |
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— |
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324.7 |
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— |
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— |
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现金流量套期工具公允价值调整，税后净额 |
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股票补偿费用 |
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行使期权的普通股发行 |
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根据限制性股票单位的归属而发行的普通股 |
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与限制性股票单位归属相关的税收代扣 |
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回购普通股 |
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2024年9月30日的余额 |
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$ |
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( |
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( |
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截至2023年9月30日三个月的时间 |
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累积的 |
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额外的 |
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其他 |
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普通股 |
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实缴 |
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综合 |
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累积的 |
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库存股 |
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股份 |
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票面价值 |
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资本 |
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收益 |
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$ |
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股份 |
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数量 |
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总费用 |
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2023年6月30日的余额 |
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净收入 |
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324.7 |
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现金流套期货的公允价值调整，税后净额 |
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股票补偿费用 |
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行使期权的普通股发行 |
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根据限制性股票单位的归属而发行的普通股 |
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与限制性股票单位归属相关的税收代扣 |
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2023年9月30日结余 |
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$ |
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( |
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( |
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在截至2024年9月30日的九个月中 |
|
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累积 |
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额外 |
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其他 |
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普通股 |
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付费 |
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全面 |
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累积 |
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国库股 |
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|
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股票 |
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面值 |
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资本 |
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收入 |
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赤字 |
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股票 |
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金额 |
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总计 |
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||||||||
2024 年 1 月 1 日的余额 |
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净收入 |
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扣除税款的货币折算调整 |
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— |
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— |
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扣除税款的现金流套期保值的公允价值调整 |
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股票薪酬支出 |
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行使股票期权时发行普通股 |
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授予限制性股票单位后发行普通股 |
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|
与限制性股票单位归属有关的预扣税款 |
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— |
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( |
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回购普通股 |
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( |
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截至 2024 年 9 月 30 日的余额 |
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$ |
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( |
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6
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截至2023年9月30日的九个月 |
|
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累积的 |
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额外的 |
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其他 |
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|
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||||||||
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|
普通股 |
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实缴 |
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综合 |
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累积的 |
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|
||||||||||||||
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|
股份 |
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|
票面价值 |
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资本 |
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|
收益 |
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$ |
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股份 |
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数量 |
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|
总费用 |
|
||||||||
2023年1月1日余额 |
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|
|
|
$ |
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$ |
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$ |
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$ |
( |
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( |
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( |
) |
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净收入 |
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324.7 |
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— |
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— |
|
|
|
— |
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||
现金流套期货的公允价值调整，税后净额 |
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— |
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— |
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— |
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( |
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|
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— |
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|
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( |
) |
股票补偿费用 |
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— |
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行使期权的普通股发行 |
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— |
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— |
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— |
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|
|
— |
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|
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根据限制性股票单位的归属而发行的普通股 |
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— |
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— |
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— |
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— |
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|
|
— |
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|
|
— |
|
|
与限制性股票单位归属相关的税收代扣 |
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— |
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— |
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( |
) |
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— |
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— |
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|
|
— |
|
|
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( |
) |
员工股票购买计划中的普通股票发行 |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
|
|
|
|
|||
2023年9月30日结余 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
查看未经审计的简明综合财务报表附注
7
gogo inc及其附属公司
简明联合财务报表附注(未经审计)
业务- Gogo Inc.（“Gogo”，“公司”，“我们”，“我们”，或“我们的”）是业务航空市场领先的宽带连接服务提供商，我们已为该市场服务超过25年。我们的使命是通过世界一流的业务航空机上连通和客户支持，丰富乘客的生活和运营商的效率。无论技术如何，我们始终致力于为业务航空市场提供最佳连通性，并且我们有着成功的历史。直到最近，我们主要专注于北美的业务航空飞机，这占全球业务航空机队的约63％，我们是该市场上连通性领先的提供商。Gogo于1990年代末开始使用模拟空对地（ATG）技术，随后随着模拟蜂窝回程的消失，于2000年代初迁移到窄带卫星连接，然后从2010年开始，又回到了使用数字宽带3G和4G网络的ATG。我们目前正在开发第四代ATG网络 - Gogo 5G，预计将于2025年第二季度末进行商业化推出。与Gogo 5G的开发同时进行，我们正在积极与AVANCE的部分客户以及利用我们地面3G和4G网络的传统Gogo Biz ATG飞机系统的客户合作，升级至与新LTE网络兼容的AVANCE系统。我们预计这部分客户将因此网络过渡而看到性能提升，预计将在2026年初完成此过渡。从参与联邦通信委员会（“FCC”）安全和可信通信网络补偿计划（“FCC补偿计划”）中部分获得新LTE网络的过渡费用。
我们还继续通过与卫星提供商签订的分销协议向北美和国际客户提供窄带卫星服务。2022年5月，为了进一步服务现有客户并扩大我们的目标市场，我们宣布计划通过推出专为所有商务飞机机型设计的全球第一宽带服务，扩大我们的宽带服务范围。该服务将使用电子定向天线（“ESA”），专门设计用于覆盖各种业务航空飞机，运行在低地球轨道（“LEO”）卫星网络上。半双工（“HDX”）天线设计用于任何大小的商务飞机，预计将于2024年第四季度商业化推出。全双工（“FDX”）天线设计用于较大的飞机，预计将于2025年第二季度商业化推出。我们相信，Gogo Galileo与我们的ATG系统结合使用或作为替代方案，将使我们能够增加对北美市场的渗透，并为现有ATG客户群提供升级路径。此外，我们相信Gogo Galileo将使我们能够进入北美以外的业务航空市场，该市场目前仅有 大约
报告范围 根据美国公认会计原则（“GAAP”）和证券法修正案（“证券法”）下颁布的第10条规则的规定，附带的未经审计的简明合并财务报表及附注已按照美国公认会计原则编制，并符合美国1933年证券法修正案（“证券法”）规定的第10条规则。因此，它们不包括所有完整财务报表所需的信息和附注，须结合我们年度已审计的合并财务报表及相关附注阅读，这些内容包括我们2023年12月31日结束的年度10-k报告中提交给美国证券交易委员会（“SEC”）的附注（“2023 10-K”）。这些未经审计的简明合并财务报表在管理层的意见中反映出所有对财务状况、营业额和现金流量的实质性调整（包括常规循环调整）, 以便在各方面公正地说明我们的财务状况。
截至2024年9月30日的三个月和九个月期间的运营和现金流量结果并不一定能反映出截至2024年12月31日的财年所期望的结果。
截至2024年3月31日和2023年12月31日，我们记录了
收购Satcom Direct – 于2024年9月29日， Gogo Direct Holdings LLC，一个特拉华有限责任公司（“Gogo Direct”）及公司的间接全资子公司， 签订了购买协议（“购买协议”及购买协议规定的交易，“交易”），双方为Satcom Direct Holdings, Inc.，一家特拉华州公司（“SD卖方”），SDHC Holdings, Inc.，一家特拉华州公司（“SDHC卖方”），Satcom Direct Government Holdings, Inc.，一家特拉华州公司（“Satcom政府卖方”），ndtHost Holdings, Inc.，一家特拉华州公司（“ndtHost卖方”以及SD卖方，SDHC卖方和Satcom政府卖方一起，各自是一个“卖方” ，其中包括“卖方”），Satcom Direct, Inc.，一家佛罗里达公司（“Satcom Direct”），Satcom Direct Holding Company, LLC，一家佛罗里达有限责任公司（“SDHC”），Satcom Direct Government, Inc.，一家佛罗里达公司（“Satcom Government”），ndtHost, LLC，一家佛罗里达有限责任公司（“ndtHost”以及Satcom Direct，SDHC和Satcom Government一起，各自是一个“母公司”及共同，“母公司”），仅用于购买协议第8.8条和第8.9条的目的，James W. Jensen，以其个人身份，仅用于第2.5条和第13.20条的目的，公司。根据购买协议，在其中规定的条款和条件下，Gogo Direct将在其他事项中，从卖方那里购买母公司的所有已发行和未发行的股权兴趣（统称为“购买股权”），换取其中规定的考虑事项。
8
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
母公司成立于1997年，主要作为卫星服务的经销商提供商业、军事和政府机上连接服务。母公司在全球开展业务，国际销售和服务团队分布在九个国家。母公司通过其国际销售队伍在全球范围内向原始设备制造商、政府、军事和私人舰队公司等销售服务和设备。母公司在佛罗里达州墨尔本管理网络运营中心并维护自己的数据中心，授权数据站点战略性地分布在世界各地。此次收购将创建唯一一家能够满足全球公务航空和军事/政府出行市场各个细分市场的性能和成本需求的机上连接提供商。
受《条款和条件》中规定的条款和条件约束
购买协议包含惯常陈述、担保和承诺，以及受特定限制的赔偿条款。除其他外，卖方和母公司已同意，除某些例外情况外，从购买协议签订之日起直至成交，按照过去的惯例，卖方和母公司同意在交易结束之前不采取某些行动，未经Gogo Direct事先书面同意，不得在交易完成之前采取某些行动。卖方和母公司已经订立了某些额外的惯例承诺，除其他外，包括不征求与收购提案有关的提案，不参与有关收购提案的讨论或提供与收购提案有关的信息，但有某些例外情况。
此外，根据购买协议的条款，Gogo Direct、卖方和母公司必须尽最大努力获得所有必要的监管批准，包括联邦贸易委员会、美国司法部反垄断司、联邦通信委员会和某些国际政府机构的某些监管批准。
该交易预计将于2024年第四季度完成，并受惯例成交条件的约束，其中包括：（i）经修订的1976年《哈特-斯科特-罗迪诺反垄断改进法》（“HSR法”）规定的等待期到期或终止，（ii）缺乏阻止交易完成的法律限制，（iii）获得通信授权（定义为收购）协议），（iv）购买协议中包含的陈述和担保的准确性（前提是某些资格），（v）双方在所有重要方面履行其在购买协议下的各自义务，以及（vi）关于Gogo Direct完成交易的义务，不产生重大不利影响（定义见购买协议）。Gogo Direct完成交易的义务不受与融资可用性有关的任何条件的约束。 关于购买协议的签订，公司和Gogo Intermediate Holdings LLC（“中级”）已签订了一份债务承诺书，其中规定了美元
购买协议包含Gogo Direct和卖家的某些惯常终止权，包括如果交易在2025年3月28日之前尚未完成，则终止购买协议的权利。除了具体履约的补救措施外，购买协议还规定，在某些特定情况下终止购买协议后，卖方和母公司可以通过通知公司来选择（i）公司应支付的终止费为美元
估算值的使用 — 根据公认会计原则编制财务报表要求管理层做出估算和假设，这些估算和假设会影响报告的资产和负债金额、截至财务报表之日的或有资产和负债的披露以及报告期内报告的收入和支出金额。管理层持续评估重大估计数，并根据历史经验和在当时情况下认为合理的各种其他假设进行此类估计。但是，实际结果可能与这些估计有重大差异。
最近发布的会计公告
公司考虑了财务会计准则委员会（“FASB”）发布的所有会计准则更新（“ASU”）的适用性和影响。未在下面列出的华硕经评估后确定其不适用或预计对我们的合并财务报表和相关附注的影响微乎其微。
尚未采用的会计准则：
2023 年 11 月，财务会计准则委员会发布了 ASU 第 2023-07 号 细分市场报告（主题 280）：对可报告的细分市场披露的改进 改善应申报分部的披露要求，主要是通过加强对重大分部支出的披露。本指南对2023年12月15日之后开始的财政年度及其后的过渡期具有追溯效力
9
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
2024年12月15日。允许早期采用。由于此指南仅影响披露，我们预计采用对我们的合并基本报表没有实质影响。
2023年12月，FASB发布了ASU No. 2023-09， 所得税（主题740）：改进所得税披露 为了增强所得税披露的透明度和决策有用性，尤其是在税率调解和已交所得税方面。该指南适用于2024年12月15日之后开始的年度期间。允许早期采用，并且修订应以前瞻性方式应用，允许有追溯性应用。 由于此指南仅影响披露，我们预计采用对我们的合并基本报表没有实质影响。
基本每股收益和摊薄每股收益是通过使用权重平均股本数来计算的。摊薄每股收益是用基于股票补偿的库藏股方法计算的。
在计算稀释每股收益时，排除了股票期权、递延股票单位和受限股票单位的影响，当计算是逆向稀释时。对于截至2024年9月30日的三个月和九个月期间排除在计算中的平均排除股本数为
以下表格列出了截至2024年和2023年9月30日的每股基本和摊薄收益的计算 截至2024年和2023年9月30日的三个月和九个月期间以千为单位，每股金额除外):
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三个月期间 |
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九个月期间 |
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Basic |
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2024 |
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2023 |
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2024 |
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2023 |
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||||
净收入 |
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$ |
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$ |
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$ |
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$ |
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加权平均股数 |
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基本每股收益 |
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$ |
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$ |
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$ |
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$ |
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三个月期间 |
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九个月期间 |
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Diluted |
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2024 |
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2023 |
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2024 |
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2023 |
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||||
净收入 |
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$ |
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$ |
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$ |
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$ |
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||||
平均股份 |
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加权平均股数 |
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摊薄证券的影响 - 以股票为基础的补偿 |
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总加权平均摊薄股份 |
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每股收益（摊薄） |
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$ |
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$ |
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$ |
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$ |
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10
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
2023年9月30日
截至2024年9月30日，分配给未满足业绩义务（“RPO”）的交易价格的总额约为 $
营收分解
以下表格展示了我们按类别细分的营业收入 （以千为单位）:
|
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三个月期间 |
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九个月期间 |
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2024 |
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2023 |
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2024 |
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2023 |
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||||
服务收入 |
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||||
连接性 |
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$ |
|
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$ |
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$ |
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$ |
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||||
娱乐和其他 |
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||||
总服务收入 |
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$ |
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$ |
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$ |
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$ |
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||||
设备营收 |
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||||
ATG |
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$ |
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$ |
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$ |
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$ |
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||||
窄带卫星 |
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其他 |
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||||
设备总收入 |
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$ |
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$ |
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$ |
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$ |
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||||
客户类型 |
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||||
飞机所有者/运营商/服务提供商 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
OEm和售后市场经销商 |
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||||
总收入 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
合同余额
我们当前和非流动合同资产余额总计$
我们当前和非流动递延收入余额总计$
FCC报销计划
2022年7月15日，公司收到通知，获得了参加FCC报销计划的批准，该计划旨在为提供先进通信服务的提供商报销因删除、更换和处理被视为对国家安全构成风险的覆盖通信设备或服务而发生的合理成本。根据FCC报销计划，FCC批准向公司提供约$
11
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
参与者将向FCC申请一个或多个为期六个月的项目完成期限延期。该公司在聘请顾问协助管理项目的情况下，于2023年7月提交并获得了其第一笔报销请求。公司最初为完成该项目设定的一年期限为2024年7月21日。于2024年3月29日，公司获得了其首次由FCC批准的为期六个月的延期，将项目完成期限延长至2025年1月21日。根据与支持该项目的供应商讨论关于网络设备的交付时间，我们计划向FCC申请多次延期，正如我们在FCC报销计划申请中所详述。
截至2024年9月30日和2023年12月31日，我们分别记录了从FCC收到的一笔营业收入，该金额已包含在我们未经审计的简明合并资产负债表的预付费用和其他流动资产中。 $
以下是我们2024年9月30日和2023年12月31日未经审计的简明合并资产负债表中资产余额减值的扣除项 以下是我们2024年9月30日和2023年12月31日未经审计的简明合并资产负债表中资产余额减值的扣除项 （以千为单位）：
|
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|
|
截至2022年9月30日， |
|
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截至12月31日， |
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||||
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2024 |
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2023 |
|
||
资产： |
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|
||
存货 |
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$ |
( |
) |
|
$ |
( |
) |
预付费用和其他流动资产 |
|
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( |
) |
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( |
) |
资产和设备，净值 |
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( |
) |
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( |
) |
无形资产, 净额 |
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( |
) |
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( |
) |
其他非流动资产 |
|
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|
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|
|
( |
) |
|
|
( |
) |
以下是截至2024年9月30日的三个月和九个月非经审计的简明合并利润表中净利润增加的部分 以下是截至2024年9月30日的三个月和九个月非经审计的简明合并利润表中净利润增加的部分 （以千为单位）:
|
|
三个月期间 |
|
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九个月期间 |
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||||||||||
|
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2024 |
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2023 |
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2024 |
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2023 |
|
||||
营业收入： |
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|
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|
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|
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|
||||
服务收入 |
|
$ |
|
|
$ |
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|
$ |
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|
$ |
|
||||
营业费用： |
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|
||||
服务成本 |
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设备成本 |
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ZSCALER, INC. |
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存货主要包括电信系统和零部件，按照平均成本或净实现价值的较低者计入。我们通过定期审查净实现库存价值来评估与过时、滞销和无销售价值库存相关的减值需求。
截至2024年9月30日的存货状况 和2023年12月31日如下（（以千为单位）):
|
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9月30日， |
|
|
12月31日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
在制品部件 |
|
$ |
|
|
$ |
|
||
成品 |
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|
|
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|
||
19,782(1) |
|
$ |
|
|
$ |
|
||
(1)
12
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
截至2024年6月30日的预付费和其他流动资产为： 2024年9月30日和2023年12月31日如下（（以千为单位）):
|
|
9月30日， |
|
|
12月31日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
利率上限和应收款项 |
|
$ |
|
|
$ |
|
||
FCC退款应收款(1) |
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合同资产(1) |
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预付存货 |
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其他 |
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|
||
预付款和其他流动资产总计 |
|
$ |
|
|
$ |
|
||
(1)
截至2024年6月30日，固定资产和设备如下： 2024年9月30日和2023年12月31日如下（（以千为单位）):
|
|
9月30日， |
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12月31日 |
|
||
|
|
2024 |
|
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2023 |
|
||
办公设备、家具、装置以及其他 |
|
$ |
|
|
$ |
|
||
租赁改良 |
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网络设备(1) |
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累计折旧 |
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( |
) |
|
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( |
) |
净房地产和设备总资产 |
|
$ |
|
|
$ |
|
||
(1)
截至2024年9月30日和2023年12月31日的其他非流动资产如下： 截至2024年9月30日和2023年12月31日的其他非流动资产如下：（以千为单位）):
|
|
9月30日， |
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12月31日 |
|
||
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|
2024 |
|
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2023 |
|
||
利率上限 |
|
$ |
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|
$ |
|
||
合同资产净额，减免额为$ |
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循环信贷设施延迟融资成本 |
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其他 |
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其他非流动资产合计 |
|
$ |
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|
$ |
|
||
(1)
截至2024年9月30日和2023年12月31日如下：（以千为单位）):
|
|
9月30日， |
|
|
12月31日 |
|
||
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|
2024 |
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2023 |
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||
|
$ |
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$ |
|
|||
员工薪酬福利 |
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客户信用准备金 |
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网络设备 |
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递延租赁 |
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Gogo Galileo开发成本 |
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税收 |
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应计利息 |
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其他 |
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|
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总应计负债 |
|
$ |
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|
$ |
|
||
研发支出按发生予以费用计入，并在截至2024年9月30日的三个月和九个月期间分别合计 $
13
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
我们的无形资产包括无限生命周期和有限生命周期的无形资产。具有无限生命周期的无形资产不摊销，而是至少每年审查一次，或者在事件或情况表明资产的账面价值可能无法收回时进行审查。我们在每个财政年度的第四季度对我们的无限生命周期无形资产进行年度减值测试，2023年第四季度进行的测试结果显示没有减值。我们还重新评估无限生命周期无形资产的有用生命期，以确定事件和情况是否继续支持无限有用生命期。
截至2024年9月30日和2023年12月31日，我们的商誉余额为 $
我们的无形资产，除商誉外，在 和2023年12月31日如下（千，除加权平均剩余有用生命外):
|
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|
|
截至2024年9月30日 |
|
截至2023年12月31日 |
||||||||
|
|
已授予和预期于2021年1月2日授予股份 |
|
毛利 |
|
累积的 |
|
净利 |
|
毛利 |
|
累计 |
|
净利 |
已摊销的无形资产(1): |
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|
|
|
|
|
|
|
|
|
软件 |
|
|
$ |
|
$( |
|
$ |
|
$ |
|
$( |
|
$ |
|
其他无形资产 |
|
|
|
— |
|
|
|
— |
|
|||||
服务客户关系 |
|
|
|
|
( |
|
— |
|
|
( |
|
— |
||
OEM和经销商关系 |
|
|
|
|
( |
|
— |
|
|
( |
|
— |
||
已摊销的无形资产总额 |
|
|
|
|
( |
|
|
|
( |
|
||||
未摊销的无形资产： |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCC许可证 |
|
|
|
|
— |
|
|
|
— |
|
||||
无形资产总额 |
|
|
|
$ |
|
$( |
|
$ |
|
$ |
|
$( |
|
$ |
(1)
摊销费用为 $
未摊销费用剩余为 2024年以及接下来的四年以及之后，估计如下（（以千为单位）):
|
|
摊销 |
年终数据为12月31日 |
|
费用 |
2024年（10月1日至12月31日） |
|
$ |
2025 |
|
$ |
2026 |
|
$ |
2027 |
|
$ |
2028 |
|
$ |
此后 |
|
$ |
实际未来摊销费用可能与预估金额不同，这可能是由于未来投资和其他因素导致的。
14
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
截至 2024年9月30日和2023年12月31日如下（（以千为单位）):
|
|
9月30日， |
|
|
12月31日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
贷款设施期限 |
|
$ |
|
|
$ |
|
||
减少：递延融资成本 |
|
|
( |
) |
|
|
( |
) |
减：长期债务的流动部分 |
|
|
( |
) |
|
|
( |
) |
所有长期债务 |
|
$ |
|
|
$ |
|
||
2021年授信协议
2021年4月30日，Gogo与Gogo Intermediate Holdings LLC （“GIH”）（Gogo的全资子公司）签订了一项信贷协议（“原2021年信贷协议”，并可能不时修订、补充或以其他方式修改的协议，即“2021年信贷协议”），该协议包括Gogo、GIH、出资银行以及签署方Morgan Stanley Senior Funding，Inc.（作为行政代理），该协议规定了以下内容：（i）总额为$金额的一笔贷款信贷额度（“贷款设施”），由折扣发行，（ii）高达$金额的循环信贷设施（“循环设施”以及贷款设施一起构成“设施”），其中包括信用状况分设施。，2021年信贷协议”）之间的, Gogo、GIH、贷款人以及在此之中的发行银行和Morgan Stanley Senior Funding, Inc.（作为行政代理）。该协议提供了（i）总额为$金额的一笔贷款信贷额度（“贷款设施”），由折扣发行，（ii）高达$金额的循环信贷设施（“循环设施”以及贷款设施一起构成“设施”），其中包括信用状况分设施。
按年度支付，以每年初始本金总额的1%为标准，直到贷款到期日为止，剩余余额应在贷款设施最终到期日支付
年度利率采用浮动利率，根据GIH的选择，可以选择以下任一作为基准进行测量：（i）根据纽约联邦储备银行管理的调整期限担保隔夜融资利率（“SOFR”）（仅受到
循环授信额度下的贷款按照GIH选择的浮动利率支付年利息，可以选择以下任一方式计算，即(i)
在GIH的选择下，设施可以随时提前偿还，不收取溢价或罚款（除了惯例的违约费用），但需满足最低本金支付要求。 2023年5月3日，公司提前偿还了贷款设施的未偿本金金额$
除了特定例外情况和最低临界值外，贷款设施需进行强制预付款，金额等于：
2021年信贷协议包含惯例陈述和担保以及惯例积极和消极契约。消极契约包括对以下事项的限制：负债的承担或发行不合格的股权利益；负债或留存的留置权益；合并或兼并；Gogo及FCC发行许可证的任何子公司的活动；投资、贷款、垫款、担保或收购；资产出售；股权的分红或其他分配；购买、赎回或兑现股本；支付或赎回特定的次级负债；签订其他协议
15
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
限制可以担保贷款设施的能力；并修改组织文件；在每种情况下都需符合惯例的例外。
循环授信设施包括将最高优先担保头寸净杠杆比率设定为
2021年信贷协议包含惯例的违约事件，如果任何违约事件发生，将允许或要求设施下所有当时未偿还义务的本金、溢价（如有）和利息立即到期支付，并终止循环授信设施下的承诺。
截至2024年9月30日和2023年12月31日，循环授信设施可用于GIH及其子公司的营运资金和一般企业用途，且未用额度。
截至2024年9月30日和2023年12月31日，定期贷款设施的未偿还本金金额为 $
我们支付了大约$
2021年4月30日，Gogo、GIH及GIH的每个直接和间接完全拥有的美国受限子公司（Gogo和这些子公司合称“担保方”）与摩根士丹利资方公司（作为抵押品代理）签署了担保协议（“担保协议”），GIH和担保方在其担保协议中为设施和担保协议中规定的某些其他担保债务担保，并签署了抵押协议（“抵押协议”），GIH和担保方向抵押品代理授予几乎所有可看和无形资产的抵押权利（包括GIH或任何担保方直接拥有的每个美国直接材料完全拥有的子公司的股权利益和GIH或任何担保方直接持有的任何非美子公司65%的股权利益），受到一定例外的限制，以担保设施和担保协议中规定的某些其他担保债务。
我们的浮动利率借款面临利率风险。我们目前使用利率上限来管理利率变动的风险，并已将这些利率上限指定为现金流套期保值以用于会计目的。因此，指定为现金流套期保值的衍生品的收益影响是在确认与套期保值债务相关的可变利息支付时记录的。
2021年5月，我们购买了利率上限，名义总额为美元
上限协议的名义金额、罢工率和结束日期如下 （以千为单位的名义金额）:
开始日期 |
|
结束日期 |
|
名义上的 |
|
|
罢工率 |
|
||
|
|
$ |
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
我们将现金流套期保值公允价值变动的有效部分记录为扣除税款的其他综合收益（亏损），然后将这些金额重新归类为对冲交易确认期间的收益。根据ASC 815，如果套期保值不再被视为有效，则累计其他综合收益（亏损）中包含的金额将重新归类为利息支出， 衍生品和套期保值.
16
gogo inc及其附属公司
未经审计的简明综合财务报表注解 - (续)
从UBS AG转移到UBS瑞士银行股份有限公司被视为无效，并从2024年9月30日结束的三个和九个月期间的其他全面收入（损失）重新分类为收入。 对于截至2023年9月30日的三个月期间，我们的现金流量套期交易产生的约$百万净未实现损失被视为无效，并从其他全面收入（损失）重新分类为收入。未实现损失与上一季度的未实现收益相抵，形成净影响。
截至2024年9月30日的三个月期间，我们记录了利率上限的公允价值下降$
当衍生工具被使用时，若对手方违约将面临信用损失风险；然而，并不预期会违约。 ASC 815, 衍生工具及对冲, 要求公司在资产负债表中将所有衍生工具以公允价值确认为资产或负债。利率衍生工具的公允价值基于商业银行提供的类似工具的报价市场价格（基于重要可观察输入 - 2级输入）。
下表显示了我们的利率衍生工具的公允价值，已包含在呈现期间的未经审计的简明合并资产负债表中（以千为单位）：
|
|
|
|
9月30日， |
|
|
12月31日 |
|
||
被指定为套期保值工具的衍生工具 |
|
资产负债表位置 |
|
2024 |
|
|
2023 |
|
||
利率上限的流动部分 |
|
|
$ |
|
|
$ |
|
|||
利率上限的非流动部分 |
|
|
$ |
|
|
$ |
|
|||
公允价值计量
我们的衍生资产和负债主要包括利率上限，这些资产按照基于重要可观察输入（二级输入）的公允价值进行计量。我们进入的衍生工具通常是场外交易的，其价值是使用折现现金流与主要使用市场可观察输入的公允价值模型计算的。这些模型考虑了各种因素，包括（如果适用的话）到期日、利率收益曲线和交易对手信用风险。
We capitalize a portion of our interest on funds borrowed during the active construction period of major capital projects. Capitalized interest is added to the cost of the underlying assets and amortized over the useful lives of the assets.
The following is a summary of our interest costs for the three- and nine-month periods ended September 30, 2024 and 2023 (in thousands):
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Interest costs charged to expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Amortization of deferred financing costs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of the purchase price of interest rate caps |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate cap benefit |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Accretion of debt discount |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest costs capitalized to property and equipment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest costs capitalized to software |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest costs |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
17
Gogo Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
A three-tier fair value hierarchy has been established which prioritizes the inputs used in measuring fair value. These tiers include:
Refer to Note 9, “Derivative Instruments and Hedging Activities,” for fair value information relating to our interest rate caps.
Investment in Convertible Note:
On February 26, 2024, Gogo invested $
The fair value of the Investment in Convertible Note is measured using Level 3 (unobservable) inputs. The Company, with the assistance of a third-party valuation specialist, determined the fair value using a binomial lattice model. The significant assumptions used in the model include the yield, equity volatility, outstanding principal, remaining term, stated interest rate, risk-free interest rate and the current publicly available stock price. The yield is estimated using similar security yields for companies with similar credit ratings. Equity volatility is estimated based on observed equity volatility for similar companies. The outstanding principal, remaining term and stated interest rate are all determined based on contractually defined terms and the risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of measurement for time periods approximately equal to the remaining time to maturity.
The reconciliation of beginning and ending balances of the Investment in Convertible Note as of September 30, 2024 were as follows (in thousands):
|
|
For the Three Months |
|
|
For the Nine Months |
|
||
|
|
2024 |
|
|
2024 |
|
||
Balance at beginning of period |
|
$ |
|
|
$ |
|
||
Investment |
|
|
|
|
|
|
||
Change in fair value |
|
|
|
|
|
( |
) |
|
Balance at end of period |
|
$ |
|
|
$ |
|
||
Long-Term Debt:
As of September 30, 2024 and December 31, 2023, our only financial asset and liability disclosed but not measured at fair value is the Term Loan Facility, which is reflected on the Unaudited Condensed Consolidated Balance Sheets at cost. The fair value measurement is classified as Level 2 within the fair value hierarchy since it is based on quoted market prices of our instrument in markets that are not active. We estimated the fair value of the Term Loan Facility by calculating the upfront cash payment a market participant would require to assume this obligation. The upfront cash payment used in the calculation of fair value on our September 30, 2024 Unaudited Condensed Consolidated Balance Sheets, excluding any issuance costs, is the amount that a market participant would be willing to lend at such date to an entity with a credit rating similar to ours and that would allow such an entity to achieve sufficient cash inflows to cover the scheduled cash outflows under the Term Loan Facility.
18
Gogo Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
The fair value and carrying value of long-term debt as of September 30, 2024 and December 31, 2023 were as follows (in thousands):
|
|
September 30, 2024 |
|
|
December 31, 2023 |
|
||||||||
|
|
Fair Value (1) |
|
Carrying |
|
|
Fair Value (1) |
|
Carrying |
|
||||
Term Loan Facility |
|
$ |
|
$ |
(2) |
|
$ |
|
$ |
(2) |
||||
Equity Investment:
During the three-month period ended September 30, 2023, we purchased an equity investment in a publicly traded company for $
Stock-Based Compensation — As of September 30, 2024, we maintained the 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), which replaced the Second Amended and Restated 2016 Omnibus Incentive Plan (the “2016 Plan”). The 2024 Plan provides for the grant of both equity and cash awards, including non-qualified stock options, incentive stock options, stock appreciation rights, performance awards (shares and units), restricted stock, restricted stock units (“RSUs”), deferred share units and other stock-based awards and dividend equivalents to eligible employees, directors and consultants, as determined by the Compensation Committee of our Board of Directors. Concurrent with the effectiveness of the 2024 Plan on June 4, 2024, no further grants are being made under the 2016 Plan. The 2016 Plan remains in effect for all awards outstanding thereunder on or after June 4, 2024. See Note 12, “Stock-Based Compensation and 401(k) Plan,” in our 2023 10-K for further information regarding the 2016 Plan. The majority of our equity grants are awarded on an annual basis.
For the nine-month period ended September 30, 2024,
For the nine-month period ended September 30, 2024,
For the nine-month period ended September 30, 2024,
The following is a summary of our stock-based compensation expense by operating expense line in the Unaudited Condensed Consolidated Statements of Operations (in thousands):
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Cost of service revenue |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Cost of equipment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Engineering, design and development |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
|
|
|
|
|
|
|
|
|
|
|
||||
General and administrative |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
19
Gogo Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
401(k) Plan — Under our 401(k) plan, all employees who are eligible to participate are entitled to make tax-deferred contributions, subject to Internal Revenue Service limitations. We match
The effective income tax rates for the three- and nine-month periods ended September 30, 2024 were
We regularly assess the need for a valuation allowance related to our deferred income tax assets to determine, based on the weight of all available positive and negative evidence, whether it is more likely than not that some or all of such deferred assets will not be realized. In our assessments, the Company considers recent financial operating results, the scheduled expiration of our net operating losses, future taxable income, the reversal of existing taxable differences, and tax planning strategies. The remaining valuation allowance is still required for deferred tax assets related to certain state credits, foreign net operating losses and capital loss carryforwards as it is more likely than not as of September 30, 2024 that these deferred tax assets will not be realized.
We are subject to taxation and file income tax returns in the United States federal jurisdiction and many states, Brazil, Canada, Mexico and the United Kingdom. With few exceptions, as of September 30, 2024 we are no longer subject to U.S. federal, state, local or foreign examinations by tax authorities for years before 2020.
We record penalties and interest relating to uncertain tax positions in the income tax provision line item in the Unaudited Condensed Consolidated Statements of Operations.
Operating and Financing Leases — We determine whether a contract contains a lease at contract inception. Lease liabilities are calculated using a discount rate based on our incremental borrowing rate at lease commencement. We have operating lease agreements primarily related to cell sites and office space. Certain cell site and office space leases have renewal option terms that have been deemed reasonably certain to be exercised. These renewal options extend a lease by up to
The following is a summary of our lease expense included in the Unaudited Condensed Consolidated Statements of Operations (in thousands):
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Operating lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Financing lease cost: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Amortization of leased assets |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest on lease liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total lease cost |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
20
Gogo Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
Other information regarding our leases is as follows (in thousands, except lease terms and discount rates):
|
|
For the Nine Months |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Supplemental cash flow information |
|
|
|
|
|
|
||
Cash paid for amounts included in measurement of lease liabilities: |
|
|
|
|
|
|
||
Operating cash flows used in operating leases |
|
$ |
|
|
$ |
|
||
Operating cash flows used in financing leases |
|
$ |
|
|
$ |
|
||
Financing cash flows used in financing leases |
|
$ |
|
|
$ |
|
||
Non-cash items: |
|
|
|
|
|
|
||
Operating leases obtained |
|
$ |
|
|
$ |
|
||
Financing leases obtained |
|
$ |
|
|
$ |
|
||
Weighted average remaining lease term |
|
|
|
|
|
|
||
Operating leases |
|
|
|
|
||||
Financing leases |
|
|
|
|
||||
Weighted average discount rate |
|
|
|
|
|
|
||
Operating leases |
|
|
% |
|
|
% |
||
Financing leases |
|
|
% |
|
|
% |
||
Annual future minimum lease payments as of September 30, 2024 (in thousands):
Years ending December 31, |
|
Operating |
|
|
Financing |
|
||
2024 (period from October 1 to December 31) |
|
$ |
|
|
$ |
|
||
2025 |
|
|
|
|
|
|
||
2026 |
|
|
|
|
|
|
||
2027 |
|
|
|
|
|
|
||
2028 |
|
|
|
|
|
|
||
Thereafter |
|
|
|
|
|
|
||
Total future minimum lease payments |
|
|
|
|
|
|
||
Less: Amount representing interest |
|
|
( |
) |
|
|
( |
) |
Present value of net minimum lease payments |
|
$ |
|
|
$ |
|
||
Reported as of September 30, 2024 |
|
|
|
|
|
|
||
Accrued liabilities |
|
$ |
|
|
$ |
|
||
Non-current operating lease liabilities |
|
|
|
|
|
|
||
Other non-current liabilities |
|
|
|
|
|
|
||
Total lease liabilities |
|
$ |
|
|
$ |
|
||
Contractual Commitments – We have agreements with various vendors under which we have remaining commitments to purchase hardware components and development services. Such commitments will become payable as we receive the hardware components, or as development services are provided.
On September 18, 2024, we entered into an amendment (the “Amendment”) to that certain OneWeb Distribution Partner Agreement by and between Gogo Business Aviation LLC and Network Access Associates Limited (“Eutelsat OneWeb”), dated as of May 19, 2022 and as previously amended on October 5, 2022 (the “Original Agreement”). Pursuant to the Original Agreement, Gogo partners with Eutelsat OneWeb to utilize its global low earth orbit satellite network. Pursuant to the Amendment, Gogo has made a total guaranteed minimum commitment of $
On May 17, 2024, Airspan Networks Holdings Inc. (“Airspan”) filed a plan supplement to its Joint Prepackaged Chapter 11 Plan of Reorganization, Case No. 24-10621 (the “Plan”), whereby the Company and Fortress Credit Corp. (“Fortress”) agreed in principle to each provide fifty percent (50%) of a new first lien revolving facility in an aggregate committed principal amount of $
21
Gogo Inc. and Subsidiaries
Notes to Unaudited Condensed Consolidated Financial Statements – (Continued)
Facility. The Plan, including the Company’s participation in the New Revolving Credit Facility, was approved by the Bankruptcy Court for the District of Delaware on June 28, 2024. On June 27, 2024, Airspan and the Company amended the Master Service Agreement, dated November 25, 2019. Further, on October 11, 2024, in connection with Airspan becoming a private company, the Company, Airspan and Fortress executed the necessary documents for the New Revolving Credit Facility to become active.
SmartSky Litigation – On
On March 5, 2024, Gogo Inc. and its subsidiary Gogo Business Aviation LLC filed counterclaims in the same suit, alleging that SmartSky’s ATG network, Flagship equipment, and LITE ATG equipment infringe three patents owned by Gogo. Gogo’s counterclaim suit seeks an unspecified amount of compensatory damages as well as reimbursement of Gogo's costs and attorneys' fees. On April 10, 2024, the Court held that Gogo's counterclaims would proceed under a separate schedule and would be tried separately from SmartSky's claims. At this time, no schedule has been adopted for Gogo's counterclaims.
The following is a summary of changes in accumulated other comprehensive income (loss) by component (in thousands):
|
|
|
|
|
Change in |
|
|
|
|
|||
|
|
Currency |
|
|
Fair Value of |
|
|
|
|
|||
|
|
Translation |
|
|
Cash Flow |
|
|
|
|
|||
|
|
Adjustment |
|
|
Hedges |
|
|
Total |
|
|||
Balance at January 1, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
|
|
|
|
||
Less: income realized and reclassified to earnings |
|
|
|
|
|
|
|
|
|
|||
Net current period comprehensive income (loss) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at September 30, 2024 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
Change in |
|
|
|
|
|||
|
|
Currency |
|
|
Fair Value of |
|
|
|
|
|||
|
|
Translation |
|
|
Cash Flow |
|
|
|
|
|||
|
|
Adjustment |
|
|
Hedges |
|
|
Total |
|
|||
Balance at January 1, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
Other comprehensive income (loss) before reclassifications |
|
|
|
|
|
|
|
|
|
|||
Less: income realized and reclassified to earnings |
|
|
|
|
|
|
|
|
|
|||
Net current period comprehensive income (loss) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Balance at September 30, 2023 |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
||
22
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Quarterly Report on Form 10-Q may constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding our industry, business strategy, plans, goals and expectations concerning our market position, international expansion, future technologies, future operations, margins, profitability, future efficiencies, capital expenditures, liquidity and capital resources and other financial and operating information. When used in this discussion, the words “anticipate,” “assume,” “believe,” “budget,” “continue,” “could,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “future” and the negative of these or similar terms and phrases are intended to identify forward-looking statements in this Quarterly Report on Form 10-Q.
Forward-looking statements reflect our current expectations regarding future events, results or outcomes. These expectations may or may not be realized. Although we believe the expectations reflected in the forward-looking statements are reasonable, we can give you no assurance these expectations will prove to have been correct. Some of these expectations may be based upon assumptions, data or judgments that prove to be incorrect. Actual events, results and outcomes may differ materially from our expectations due to a variety of known and unknown risks, uncertainties and other factors. Although it is not possible to identify all of these risks and factors, they include, among others, the following:
23
Any one of these factors or a combination of these factors could materially affect our financial condition or future results of operations and could influence whether any forward-looking statements contained in this Quarterly Report on Form 10-Q ultimately prove to be accurate. Our forward-looking statements are not guarantees of future performance, and you should not place undue reliance on them. All forward-looking statements speak only as of the date made and unless required by law we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
In addition, while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them any material non-public information or other confidential information. Accordingly, stockholders should not assume that we agree with any statement or report issued by any analyst irrespective of the content of the statement or report. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts, or opinions, such reports are not our responsibility.
24
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is intended to help the reader understand our business, financial condition, results of operations, liquidity and capital resources. You should read this discussion in conjunction with our unaudited condensed consolidated interim financial statements and the related notes contained elsewhere in this Quarterly Report on Form 10-Q. Unless the context otherwise indicates or requires, the terms “we,” “our,” “us,” “Gogo,” and the “Company,” as used in this Quarterly Report on Form 10-Q, refer to Gogo Inc. and its directly and indirectly owned subsidiaries as a combined entity, except where otherwise stated or where it is clear that the terms refer only to Gogo Inc. exclusive of its subsidiaries.
The statements in this discussion regarding industry outlook, our expectations regarding our future performance, liquidity and capital resources and other non-historical statements in this discussion are forward-looking statements. These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited to, the risks and uncertainties described under “Risk Factors” in the 2023 10-K, in Item 1A of the 2024 Q1 10-Q, in Item 1A of the 2024 Q2 10-Q and in Item 1A and “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Our actual results may differ materially from those contained in or implied by any forward-looking statements.
Our fiscal year ends December 31 and, unless otherwise noted, references to “years” or “fiscal” are for fiscal years ended December 31. See “— Results of Operations.”
Company Overview
Gogo is a leading provider of broadband connectivity services for the business aviation market. We have served this market for more than 25 years. Our mission is to enrich the lives of passengers and the efficiency of operators with the world’s best business aviation in-flight connectivity and customer support. We have always sought to provide the best connectivity for the business aviation market regardless of technology, and we have a successful history of doing so. Until recently, we focused primarily on business aviation aircraft in North America, which comprise approximately 63% of the worldwide business aviation fleet, and we are the leading provider of in-flight connectivity in that market. Gogo started in analogue air-to-ground (“ATG”) technology in the late 1990s, then, as analogue cellular backhaul disappeared, migrated to narrowband satellite connectivity in the early 2000s, then back to ATG with our digital broadband 3G and 4G networks beginning in 2010. We are currently developing our fourth ATG network – Gogo 5G – that we expect to commercially launch late in the second quarter of 2025. Simultaneous with the development of Gogo 5G, we are actively working with a subset of AVANCE customers and customers utilizing our legacy Gogo Biz ATG airborne system operating on our ground 3G and 4G networks to upgrade to an AVANCE system compatible with a new LTE network. We anticipate this subset of customers will see improved performance because of this network transition, which is expected to occur in early 2026. The cost for the transition to the new LTE network is partially being reimbursed through our participation in the Federal Communications Commission (“FCC”) Secure and Trusted Communications Networks Reimbursement Program (the “FCC Reimbursement Program”).
We also continue to provide narrowband satellite services to customers in North America and internationally through distribution agreements with satellite providers. In May 2022, in order to further serve our existing customers and expand our target market, we announced plans to expand our broadband offerings beyond ATG by launching the first global broadband service designed for all models of business aircraft (“Gogo Galileo”). The service will use electronically steered antennas (“ESAs”), specifically designed to address a broad range of business aviation aircraft, operating on a low earth orbit (“LEO”) satellite network. The half duplex (“HDX”) antenna is designed to fit on any size business aircraft and is targeted for commercial launch in the fourth quarter of 2024. The full duplex (“FDX”) antenna is designed for larger aircraft and is targeted for commercial launch in the second quarter of 2025. We believe that Gogo Galileo, in combination with, or as an alternative to, our ATG systems will allow us to increase our penetration of the North American market and provide an upgrade path for our existing ATG customer base. In addition, we believe that Gogo Galileo will allow us to penetrate the business aviation market outside of North America, where only approximately 6% of business aviation aircraft are installed with in-flight connectivity systems.
Our chief operating decision maker evaluates performance and business results for our operations, and makes resource and operating decisions, on a consolidated basis. As we do not have multiple segments, we do not present segment information in this Quarterly Report on Form 10-Q.
Factors and Trends Affecting Our Results of Operations
We believe that our operating and business performance is driven by various factors that affect the business aviation industry, including trends affecting the travel industry and trends affecting the customer bases that we target, as well as factors that affect wireless Internet service providers and general macroeconomic factors. Key factors that may affect our future performance include:
25
Key Business Metrics
Our management regularly reviews financial and operating metrics, including the following key operating metrics, to evaluate the performance of our business and our success in executing our business plan, make decisions regarding resource allocation and corporate strategies, and evaluate forward-looking projections.
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Aircraft online (at period end) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ATG AVANCE |
|
|
4,379 |
|
|
|
3,784 |
|
|
|
4,379 |
|
|
|
3,784 |
|
Gogo Biz |
|
|
2,637 |
|
|
|
3,366 |
|
|
|
2,637 |
|
|
|
3,366 |
|
Total ATG |
|
|
7,016 |
|
|
|
7,150 |
|
|
|
7,016 |
|
|
|
7,150 |
|
Narrowband satellite |
|
|
4,180 |
|
|
|
4,395 |
|
|
|
4,180 |
|
|
|
4,395 |
|
Average monthly connectivity service revenue per aircraft online |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ATG |
|
$ |
3,497 |
|
|
$ |
3,373 |
|
|
$ |
3,474 |
|
|
$ |
3,378 |
|
Narrowband satellite |
|
|
332 |
|
|
|
294 |
|
|
|
319 |
|
|
|
297 |
|
Units sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ATG |
|
|
214 |
|
|
|
192 |
|
|
|
703 |
|
|
|
692 |
|
Narrowband satellite |
|
|
39 |
|
|
|
40 |
|
|
|
132 |
|
|
|
132 |
|
Average equipment revenue per unit sold (in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ATG |
|
$ |
75 |
|
|
$ |
77 |
|
|
$ |
75 |
|
|
$ |
73 |
|
Narrowband satellite |
|
|
46 |
|
|
|
39 |
|
|
|
43 |
|
|
|
48 |
|
26
Key Components of Consolidated Statements of Operations
There have been no material changes to our key components of Unaudited Condensed Consolidated Statements of Operations as described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”) in our 2023 10-K.
Critical Accounting Estimates
Our discussion and analysis of our financial condition and results of operations are based on our Unaudited Condensed Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Unaudited Condensed Consolidated Financial Statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related exposures. We base our estimates and assumptions on historical experience and other factors that we believe to be reasonable under the circumstances. In some instances, we could reasonably use different accounting estimates, and in some instances, actual results could differ significantly from our estimates. We evaluate our estimates and assumptions on an ongoing basis. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
We believe that the assumptions and estimates associated with the valuation allowance related to our deferred income tax assets have the greatest potential impact on and are the most critical to fully understanding and evaluating our reported financial results, and that they require our most difficult, subjective or complex judgments.
There have been no material changes to our critical accounting estimates described in the MD&A in our 2023 10-K.
Recent Accounting Pronouncements
See Note 1, “Basis of Presentation,” to our Unaudited Condensed Consolidated Financials Statements for additional information.
27
Results of Operations
The following table sets forth, for the periods presented, certain data from our Unaudited Condensed Consolidated Statements of Operations. The information contained in the table below should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and related notes.
Gogo Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands)
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Service revenue |
|
$ |
81,857 |
|
|
$ |
79,546 |
|
|
$ |
245,459 |
|
|
$ |
237,107 |
|
Equipment revenue |
|
|
18,672 |
|
|
|
18,403 |
|
|
|
61,451 |
|
|
|
62,660 |
|
Total revenue |
|
|
100,529 |
|
|
|
97,949 |
|
|
|
306,910 |
|
|
|
299,767 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of service revenue (exclusive of amounts shown below) |
|
|
19,051 |
|
|
|
18,116 |
|
|
|
55,793 |
|
|
|
51,732 |
|
Cost of equipment revenue (exclusive of amounts shown below) |
|
|
15,165 |
|
|
|
12,320 |
|
|
|
47,383 |
|
|
|
47,983 |
|
Engineering, design and development |
|
|
9,759 |
|
|
|
9,154 |
|
|
|
29,279 |
|
|
|
26,259 |
|
Sales and marketing |
|
|
8,551 |
|
|
|
7,015 |
|
|
|
25,870 |
|
|
|
21,748 |
|
General and administrative |
|
|
24,917 |
|
|
|
13,336 |
|
|
|
61,416 |
|
|
|
40,734 |
|
Depreciation and amortization |
|
|
4,015 |
|
|
|
4,692 |
|
|
|
11,743 |
|
|
|
12,022 |
|
Total operating expenses |
|
|
81,458 |
|
|
|
64,633 |
|
|
|
231,484 |
|
|
|
200,478 |
|
Operating income |
|
|
19,071 |
|
|
|
33,316 |
|
|
|
75,426 |
|
|
|
99,289 |
|
Other expense (income): |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest income |
|
|
(2,419 |
) |
|
|
(1,622 |
) |
|
|
(6,587 |
) |
|
|
(5,509 |
) |
Interest expense |
|
|
9,670 |
|
|
|
8,025 |
|
|
|
26,193 |
|
|
|
24,807 |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,224 |
|
Other expense (income), net |
|
|
(332 |
) |
|
|
(728 |
) |
|
|
1,286 |
|
|
|
(733 |
) |
Total other expense |
|
|
6,919 |
|
|
|
5,675 |
|
|
|
20,892 |
|
|
|
20,789 |
|
Income before income taxes |
|
|
12,152 |
|
|
|
27,641 |
|
|
|
54,534 |
|
|
|
78,500 |
|
Income tax provision (benefit) |
|
|
1,522 |
|
|
|
6,728 |
|
|
|
12,575 |
|
|
|
(52,711 |
) |
Net income |
|
$ |
10,630 |
|
|
$ |
20,913 |
|
|
$ |
41,959 |
|
|
$ |
131,211 |
|
28
Three and Nine Months Ended September 30, 2024 and 2023
Revenue:
Revenue and percent change for the three- and nine-month periods ended September 30, 2024 and 2023 were as follows (in thousands, except for percent change):
|
|
For the Three Months |
|
|
% Change |
|
|
For the Nine Months |
|
|
% Change |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
||||||
Service revenue |
|
$ |
81,857 |
|
|
$ |
79,546 |
|
|
|
2.9 |
% |
|
$ |
245,459 |
|
|
$ |
237,107 |
|
|
|
3.5 |
% |
Equipment revenue |
|
|
18,672 |
|
|
|
18,403 |
|
|
|
1.5 |
% |
|
|
61,451 |
|
|
|
62,660 |
|
|
|
(1.9 |
)% |
Total revenue |
|
$ |
100,529 |
|
|
$ |
97,949 |
|
|
|
2.6 |
% |
|
$ |
306,910 |
|
|
$ |
299,767 |
|
|
|
2.4 |
% |
Total revenue increased to $100.5 million for the three-month period ended September 30, 2024 as compared with $97.9 million for the prior-year period, due to an increase in service revenue. Total revenue increased to $306.9 million for the nine-month period ended September 30, 2024 as compared with $299.8 million for the prior-year period due to an increase in service revenue, partially offset by a decrease in equipment revenue.
Service revenue increased to $81.9 million and $245.5 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $79.5 million and $237.1 million, respectively, for the prior-year periods, due to increases in ARPU.
Equipment revenue increased to $18.7 million for the three-month period ended September 30, 2024 as compared with $18.4 million for the prior-year period, due to an increase in the number of ATG units sold, with 214 units sold during the three-month period ended September 30, 2024 as compared with 192 units sold during the prior-year period. Equipment revenue decreased to $61.5 million for the nine-month period ended September 30, 2024 as compared with $62.7 million for the prior-year period due to a decrease in equipment repair revenue.
We expect service revenue to decline in the near term as a result of expected decline in ATG services sold to Intelsat for commercial aviation and increase in the future as additional aircraft come online after the launch of Gogo 5G and Gogo Galileo. We expect equipment revenue to increase in the future driven by growth in sales of ATG units including Gogo 5G, and Gogo Galileo units.
Cost of Revenue:
Cost of revenue and percent change for the three- and nine-month periods ended September 30, 2024 and 2023 were as follows (in thousands, except for percent change):
|
|
For the Three Months |
|
|
% Change |
|
|
For the Nine Months |
|
|
% Change |
|
||||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
||||||
Cost of service revenue |
|
$ |
19,051 |
|
|
$ |
18,116 |
|
|
|
5.2 |
% |
|
$ |
55,793 |
|
|
$ |
51,732 |
|
|
|
7.9 |
% |
Cost of equipment revenue |
|
$ |
15,165 |
|
|
$ |
12,320 |
|
|
|
23.1 |
% |
|
$ |
47,383 |
|
|
$ |
47,983 |
|
|
|
(1.3 |
)% |
Cost of service revenue increased 5% and 8% to $19.1 million and $55.8 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $18.1 million and $51.7 million, respectively, for the prior-year periods due to an increase in ATG network costs.
We expect cost of service revenue to increase over time, due to service revenue growth and increasing network costs, including those for Gogo 5G, Gogo Galileo, and our data center.
Cost of equipment revenue increased 23% to $15.2 million for the three-month period ended September 30, 2024 as compared with $12.3 million for the prior-year period, due to a $1.6 million increase related to the FCC Reimbursement Program for certain expense reductions in the prior year and $1.2 million due to an increase in ATG units sold. Cost of equipment revenue decreased 1% to $47.4 million for the nine-month period ended September 30, 2024 as compared with $48.0 million for the prior-year period due to lower inventory reserves.
We expect that our cost of equipment revenue will increase with growth in units sold, including Gogo 5G and Gogo Galileo units, following the launch of those products.
29
Engineering, Design and Development Expenses:
Engineering, design and development expenses increased 7% and 12% to $9.8 million and $29.3 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $9.2 million and $26.3 million, respectively, for the prior-year periods due to personnel costs.
We expect engineering, design and development expenses as a percentage of service revenue to increase in 2024, driven by Gogo Galileo development costs and Gogo 5G program spend, and decrease thereafter as these developmental projects are completed and the level of investment decreases and revenue from these product roll-outs increases.
Sales and Marketing Expenses:
Sales and marketing expenses increased 22% and 19% to $8.6 million and $25.9 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $7.0 million and $21.7 million, respectively, for the prior-year periods due to personnel costs.
We expect sales and marketing expenses as a percentage of service revenue to remain relatively flat in the future.
General and Administrative Expenses:
General and administrative expenses increased 87% and 51% to $24.9 million and $61.4 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $13.3 million and $40.7 million, respectively, for the prior-year periods due to increased legal and acquisition-related expenses.
We expect general and administrative expenses as a percentage of service revenue to decrease over time.
Depreciation and Amortization:
Depreciation and amortization expense decreased 14% and 2% to $4.0 million and $11.7 million, respectively, for the three- and nine-month periods ended September 30, 2024, as compared with $4.7 million and $12.0 million, respectively, for the prior-year periods.
We expect that our depreciation and amortization expense will increase in the future as we launch our Gogo 5G network.
Other (Income) Expense:
Other expense (income) and percent change for the three- and nine-month periods ended September 30, 2024 and 2023 were as follows (in thousands, except for percent change):
|
|
For the Three Months |
|
|
% Change |
|
||||||
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
|||
Interest income |
|
$ |
(2,419 |
) |
|
$ |
(1,622 |
) |
|
|
49.1 |
% |
Interest expense |
|
|
9,670 |
|
|
|
8,025 |
|
|
|
20.5 |
% |
Other expense (income), net |
|
|
(332 |
) |
|
|
(728 |
) |
|
nm |
|
|
Total |
|
$ |
6,919 |
|
|
$ |
5,675 |
|
|
|
21.9 |
% |
|
|
|
|
|
|
|
|
|
|
|||
|
|
For the Nine Months |
|
|
% Change |
|
||||||
|
|
2024 |
|
|
2023 |
|
|
2024 over 2023 |
|
|||
Interest income |
|
$ |
(6,587 |
) |
|
$ |
(5,509 |
) |
|
|
19.6 |
% |
Interest expense |
|
|
26,193 |
|
|
|
24,807 |
|
|
|
5.6 |
% |
Loss on extinguishment of debt |
|
|
— |
|
|
|
2,224 |
|
|
nm |
|
|
Other expense (income), net |
|
|
1,286 |
|
|
|
(733 |
) |
|
nm |
|
|
Total |
|
$ |
20,892 |
|
|
$ |
20,789 |
|
|
|
0.5 |
% |
Percentage changes that are considered not meaningful are denoted with nm. |
|
|
|
|
|
|
|
|
|
|||
Total other expense increased to $6.9 million for the three-month period ended September 30, 2024 as compared with $5.7 million for the prior-year period, due to interest expense, partially offset by an increase in interest income. Total other expense increased to $20.9 million for the nine-month period ended September 30, 2024 as compared with $20.8 million for the prior-year period, due to the unrealized holding loss on the Investment in Convertible Note in the current-year period as compared with an unrealized holding gain on investment in an equity investment in the prior-year period and increased interest expense, partially offset by the loss on extinguishment of debt in the prior year and an increase in interest income.
We expect our interest expense to fluctuate in the future based on changes in the variable rates associated with the Facilities, partially offset by the impact of the interest rate caps. We expect these fluctuations to be impacted by the decrease in the hedge benefit as our hedge notional amount decreases and the strike rate increases. See Note 8, “Long-Term Debt and Other Liabilities,” to our Unaudited Condensed Consolidated Financial Statements for additional information.
30
Income Taxes:
The effective income tax rates for the three- and nine-month periods ended September 30, 2024 were 12.5% and 23.1%, respectively, as compared to 24.3% and (67.1)%, respectively, for the prior-year periods. For the three- and nine-month periods ended September 30, 2024, our income tax provision was $1.5 million and $12.6 million, respectively, due to pre-tax income. For the three-month period ended September 30, 2023, our income tax provision was $6.7 million due to pre-tax income and for the nine-month period ended September 30, 2023, our income tax benefit of $52.7 million was primarily due to a partial release of the valuation allowance on our deferred income tax assets, partially offset by pre-tax income. See Note 13, “Income Tax,” to our Unaudited Condensed Consolidated Financial Statements for additional information.
We expect our income tax provision to increase in the long term as we continue to generate positive pre-tax income. We expect cash tax payments to be immaterial for an extended period of time, subject to the availability of our net operating loss carryforward amounts.
Non-GAAP Measures
In our discussion below, we discuss EBITDA, Adjusted EBITDA and Free Cash Flow, as defined below, which are non-GAAP financial measures. Management uses EBITDA, Adjusted EBITDA and Free Cash Flow for business planning purposes, including managing our business against internally projected results of operations and measuring our performance and liquidity. These supplemental performance measures also provide another basis for comparing period-to-period results by excluding potential differences caused by non-operational and unusual or non-recurring items. These supplemental performance measures may vary from and may not be comparable to similarly titled measures used by other companies. EBITDA, Adjusted EBITDA and Free Cash Flow are not recognized measurements under GAAP; when analyzing our performance with EBITDA or Adjusted EBITDA or liquidity with Free Cash Flow, as applicable, investors should (i) evaluate each adjustment in our reconciliation to the corresponding GAAP measure, and the explanatory footnotes regarding those adjustments, (ii) use EBITDA or Adjusted EBITDA in addition to, and not as an alternative to, net income attributable to common stock as a measure of operating results and (iii) use Free Cash Flow in addition to, and not as an alternative to, consolidated net cash provided by operating activities when evaluating our liquidity.
Definition and Reconciliation of Non-GAAP Measures
EBITDA represents net income attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization expense.
Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense, (ii) acquisition-related costs, (iii) change in fair value of Investment in Convertible Note and equity investment and (iv) loss on extinguishment of debt. Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent. It also provides an assessment of controllable expenses, which are indicators management uses to determine whether current spending decisions need to be adjusted in order to meet financial goals and achieve optimal financial performance.
We believe that the exclusion of stock-based compensation expense from Adjusted EBITDA provides a clearer view of the operating performance of our business and is appropriate given that grants made at a certain price and point in time do not necessarily reflect how our business is performing at any particular time. While we believe that investors should have information about any dilutive effect of outstanding options and the cost of that compensation, we also believe that stockholders should have the ability to consider our performance using a non-GAAP financial measure that excludes these costs and that management uses to evaluate our business.
Acquisition-related costs include direct transaction costs, such as due diligence and advisory fees. We believe it is useful for an understanding of our operating performance to exclude acquisition-related costs from Adjusted EBITDA because they are infrequent and do not reflect our operating performance.
We believe it is useful for an understanding of our operating performance to exclude from Adjusted EBITDA the changes in fair value of Investment in Convertible Note and an equity investment because this activity is not related to our operating performance.
We believe it is useful for an understanding of our operating performance to exclude the loss on extinguishment of debt from Adjusted EBITDA because of the infrequently occurring nature of this activity.
31
We also present Adjusted EBITDA as a supplemental performance measure because we believe that this measure provides investors, securities analysts and other users of our consolidated financial statements with important supplemental information with which to evaluate our performance and to enable them to assess our performance on the same basis as management.
Free Cash Flow represents net cash provided by operating activities, plus the proceeds received from the FCC Reimbursement Program and the interest rate caps, less purchases of property and equipment and the acquisition of intangible assets. We believe that Free Cash Flow provides meaningful information regarding our liquidity. Management believes that Free Cash Flow is useful for investors because it provides them with an important perspective on the cash available for strategic measures, after making necessary capital investments in property and equipment to support the Company’s ongoing business operations and provides them with the same measures that management uses as the basis of making capital allocation decisions.
32
Gogo Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, unaudited)
|
|
For the Three Months |
|
|
For the Nine Months |
|
||||||||||
|
|
2024 |
|
|
2023 |
|
|
2024 |
|
|
2023 |
|
||||
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to common stock (GAAP) |
|
$ |
10,630 |
|
|
$ |
20,913 |
|
|
$ |
41,959 |
|
|
$ |
131,211 |
|
Interest expense |
|
|
9,670 |
|
|
|
8,025 |
|
|
|
26,193 |
|
|
|
24,807 |
|
Interest income |
|
|
(2,419 |
) |
|
|
(1,622 |
) |
|
|
(6,587 |
) |
|
|
(5,509 |
) |
Income tax provision (benefit) |
|
|
1,522 |
|
|
|
6,728 |
|
|
|
12,575 |
|
|
|
(52,711 |
) |
Depreciation and amortization |
|
|
4,015 |
|
|
|
4,692 |
|
|
|
11,743 |
|
|
|
12,022 |
|
EBITDA |
|
|
23,418 |
|
|
|
38,736 |
|
|
|
85,883 |
|
|
|
109,820 |
|
Stock-based compensation expense |
|
|
5,030 |
|
|
|
5,235 |
|
|
|
14,755 |
|
|
|
15,729 |
|
Acquisition-related costs |
|
|
6,654 |
|
|
|
— |
|
|
|
6,654 |
|
|
|
— |
|
Loss on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,224 |
|
Change in fair value of convertible note and equity investments |
|
|
(323 |
) |
|
|
(773 |
) |
|
|
1,239 |
|
|
|
(773 |
) |
Adjusted EBITDA |
|
$ |
34,779 |
|
|
$ |
43,198 |
|
|
$ |
108,531 |
|
|
$ |
127,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Free Cash Flow: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net cash provided by operating activities (GAAP) |
|
$ |
25,134 |
|
|
$ |
18,677 |
|
|
$ |
79,740 |
|
|
$ |
52,818 |
|
Consolidated capital expenditures |
|
|
(8,196 |
) |
|
|
(5,355 |
) |
|
|
(18,894 |
) |
|
|
(18,717 |
) |
Proceeds from FCC Reimbursement Program for property, equipment and intangibles |
|
|
1,120 |
|
|
|
3 |
|
|
|
1,215 |
|
|
|
3 |
|
Proceeds from interest rate caps |
|
|
6,536 |
|
|
|
7,676 |
|
|
|
19,454 |
|
|
|
20,165 |
|
Free cash flow |
|
$ |
24,594 |
|
|
$ |
21,001 |
|
|
$ |
81,515 |
|
|
$ |
54,269 |
|
Material limitations of Non-GAAP measures
Although EBITDA, Adjusted EBITDA and Free Cash Flow are measurements frequently used by investors and securities analysts in their evaluations of companies, EBITDA, Adjusted EBITDA and Free Cash Flow each have limitations as an analytical tool, and you should not consider them in isolation or as a substitute for, or more meaningful than, amounts determined in accordance with GAAP.
Some of these limitations include:
33
Liquidity and Capital Resources
The following table presents a summary of our cash flow activity for the periods set forth below (in thousands):
|
|
For the Nine Months |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net cash provided by operating activities |
|
$ |
79,740 |
|
|
$ |
52,818 |
|
Net cash used in investing activities |
|
|
(3,225 |
) |
|
|
(3,408 |
) |
Net cash used in financing activities |
|
|
(38,902 |
) |
|
|
(113,881 |
) |
Effect of foreign exchange rate changes on cash |
|
|
29 |
|
|
|
78 |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
37,642 |
|
|
|
(64,393 |
) |
Cash, cash equivalents and restricted cash at the beginning of period |
|
|
139,366 |
|
|
|
150,880 |
|
Cash, cash equivalents and restricted cash at the end of period |
|
$ |
177,008 |
|
|
$ |
86,487 |
|
Supplemental information: |
|
|
|
|
|
|
||
Cash, cash equivalents and restricted cash at the end of period |
|
$ |
177,008 |
|
|
$ |
86,487 |
|
Less: non-current restricted cash |
|
|
330 |
|
|
|
330 |
|
Cash and cash equivalents at the end of the period |
|
$ |
176,678 |
|
|
$ |
86,157 |
|
We have historically financed our growth and cash needs primarily through the issuance of common stock, debt and cash from operating activities. We continually evaluate our ongoing capital needs in light of increasing demand for our services, capacity requirements, evolving user expectations regarding the in-flight connectivity experience, evolving technologies in our industry and related strategic, operational and technological opportunities. Our capital management activities include the assessment of opportunities to raise additional capital in the public and private markets, utilizing one or more of the types of capital raising transactions through which we have historically financed our growth and cash needs, as well as other means of capital raising not previously used by us.
Liquidity:
Based on our current plans, we expect our cash and cash equivalents, cash flows provided by operating activities and access to the Revolving Facility and capital markets will be sufficient to meet the cash requirements of our business, including the acquisition of Satcom Direct, capital expenditure requirements, debt maturities and share repurchases, if any, for at least the next twelve months and thereafter for the foreseeable future.
On September 5, 2023, we announced a share repurchase program that grants the Company authority to repurchase up to $50 million of shares of the Company’s common stock. Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Securities Exchange Act, as amended, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under the Securities Exchange Act. The repurchase program has no time limit and may be suspended for periods or discontinued at any time and does not obligate us to purchase any shares of our common stock. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations. We do not expect to incur debt to fund the share repurchase program. During the nine-month period ended September 30, 2024, we repurchased an aggregate 3.6 million shares of our common stock for $30.8 million. As of September 30, 2024, the remaining amount available to be repurchased under the program was $14.5 million.
As detailed in Note 8, “Long-Term Debt and Other Liabilities,” on April 30, 2021, GIH entered into the 2021 Credit Agreement with Gogo, the lenders and issuing banks party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, which provides for the Term Loan Facility in an aggregate principal amount of $725.0 million, issued with a discount of 0.5%, and the Revolving Facility, which includes a letter of credit sub-facility.
On February 2, 2023, Gogo and GIH entered into an amendment to the Original 2021 Credit Agreement with Morgan Stanley Senior Funding, Inc., as administrative agent, which replaced all references in the Original 2021 Credit Agreement to LIBOR in respect of the applicable interest rates for the Facilities with an adjusted term SOFR rate, plus a credit spread adjustment recommended by the Alternative Reference Rates Committee.
The Term Loan Facility amortizes in nominal quarterly installments equal to 1% of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity on April 30, 2028. There are no amortization payments under the Revolving Facility, and all borrowings under the Revolving Facility mature on April 30, 2026.
The Term Loan Facility bears annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term SOFR rate (subject to a floor of 0.75%) plus an applicable margin of 3.75% and a credit spread adjustment recommended by the
34
Alternative Reference Rates Committee of 0.11%, 0.26% or 0.43% per annum based on 1-month, 3-month or 6-month term SOFR, respectively or (ii) an alternate base rate plus an applicable margin of 2.75%.
Loans outstanding under the Revolving Facility bear annual interest at a floating rate measured by reference to, at GIH’s option, either (i) an adjusted term SOFR rate (subject to a floor of 0.00%) plus an applicable margin ranging from 3.25% to 3.75% per annum depending on GIH’s senior secured first lien net leverage ratio and a credit spread adjustment recommended by the Alternative Reference Rates Committee of 0.11%, 0.26% or 0.43% per annum based on 1-month, 3-month or 6-month term SOFR, respectively or (ii) an alternate base rate plus an applicable margin ranging from 2.25% to 2.75% per annum depending on GIH’s senior secured first lien net leverage ratio. Additionally, unused commitments under the Revolving Facility are subject to a fee ranging from 0.25% to 0.50% per annum depending on GIH’s senior secured first lien net leverage ratio. As of September 30, 2024, the fee for unused commitments under the Revolving Facility was 0.25% and the applicable margin was 3.25%.
The Facilities may be prepaid at GIH’s option at any time without premium or penalty (other than customary breakage costs), subject to minimum principal payment amount requirements. On May 3, 2023, the Company prepaid $100 million of the outstanding principal amount of the Term Loan Facility.
Subject to certain exceptions and de minimis thresholds, the Term Loan Facility is subject to mandatory prepayments in an amount equal to: (i) 100% of the net cash proceeds of certain asset sales, insurance recovery and condemnation events, subject to reduction to 50% and 0% if specified senior secured first lien net leverage ratio targets are met; (ii) 100% of the net cash proceeds of certain debt offerings; and (iii) 50% of annual excess cash flow (as defined in the 2021 Credit Agreement), subject to reduction to 25% and 0% if specified senior secured first lien net leverage ratio targets are met.
The Revolving Facility includes a financial covenant set at a maximum senior secured first lien net leverage ratio of 7.50:1.00, which will apply if the outstanding amount of loans and unreimbursed letter of credit drawings thereunder at the end of any fiscal quarter exceeds 35% of the aggregate of all commitments thereunder.
The 2021 Credit Agreement contains customary events of default, which, if any of them occurred, would permit or require the principal, premium, if any, and interest on all of the then outstanding obligations under the Facilities to be due and payable immediately and the commitments under the Revolving Facility to be terminated.
The 2021 Credit Agreement contains covenants that limit the ability of GIH and its subsidiaries to incur additional indebtedness. Further, market conditions and/or our financial performance may limit our access to additional sources of equity or debt financing, or our ability to pursue potential strategic alternatives. As a result, we may be unable to finance the growth of our business to the extent that our cash, cash equivalents and short-term investments and cash generated through operating activities prove insufficient or we are unable to raise additional financing through the issuance of equity, permitted incurrences of debt (by us or by GIH and its subsidiaries), or the pursuit of potential strategic alternatives.
The proceeds of the Term Loan Facility were used, together with cash on hand, (i) to redeem in full and pay the outstanding principal amount of the 2024 Senior Secured Notes together with accrued and unpaid interest and redemption premiums and to pay fees associated with the termination of the ABL Credit Agreement (together with the redemption of the 2024 Senior Secured Notes, the “Refinancing”), and (ii) to pay the other fees and expenses incurred in connection with the Refinancing and the Facilities. The Revolving Facility is available for working capital and general corporate purposes of GIH and its subsidiaries and was undrawn as of September 30, 2024 and December 31, 2023.
For additional information on the 2021 Credit Agreement, see Note 8, “Long-Term Debt and Other Liabilities,” to our Unaudited Condensed Consolidated Financial Statements.
In May 2021, we purchased interest rate caps with an aggregate notional amount of $650.0 million for $8.6 million. We receive payments in the amount calculated pursuant to the caps for any period in which the daily compounded SOFR rate plus a credit spread adjustment recommended by the Alternative Reference Rates Committees of 0.26% increases beyond the applicable strike rate. The termination date of the cap agreements is July 31, 2027. The notional amounts of the interest rate caps periodically decrease over the life of the caps with the latest reduction of $175.0 million having occurred on July 31, 2024. The aggregate notional amount of the interest rate caps as of September 30, 2024 is $350.0 million. While the interest rate caps are intended to limit our interest rate exposure under our variable rate indebtedness, which includes the Facilities, if our variable rate indebtedness does not decrease in proportion to the periodic decreases in the notional amount hedged under the interest rate caps, then the portion of such indebtedness that will be effectively hedged against possible increases in interest rates will decrease. In addition, the strike prices periodically increase over the life of the caps. As a result, the extent to which the interest rate caps will limit our interest rate exposure will decrease in the future.
For additional information on the interest rate caps, see Note 9, “Derivative Instruments and Hedging Activities,” to our Unaudited Condensed Consolidated Financial Statements.
35
Cash flows provided by Operating Activities:
The following table presents a summary of our cash flows from operating activities for the periods set forth below (in thousands):
|
|
For the Nine Months |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Net income |
|
$ |
41,959 |
|
|
$ |
131,211 |
|
Non-cash charges and credits |
|
|
43,982 |
|
|
|
(20,252 |
) |
Changes in operating assets and liabilities |
|
|
(6,201 |
) |
|
|
(58,141 |
) |
Net cash provided by operating activities |
|
$ |
79,740 |
|
|
$ |
52,818 |
|
For the nine-month period ended September 30, 2024, net cash provided by operating activities was $79.7 million as compared with $52.8 million in the prior-year period. The principal contributors to the year-over-year change in operating cash flows were:
Cash flows used in Investing Activities:
Cash used in investing activities was $3.2 million for the nine-month period ended September 30, 2024, due to $18.9 million of capital expenditures noted below and a $5.0 million convertible note investment, partially offset by $19.5 million of proceeds from interest rate caps and $1.2 million of proceeds received from the FCC Reimbursement Program associated with the reimbursement of capital expenditures.
Cash used in investing activities was $3.4 million for the nine-month period ended September 30, 2023, due to $18.7 million of capital expenditures noted below and a $5.0 million equity investment, partially offset by $20.2 million of proceeds from interest rate caps.
Cash flows used in Financing Activities:
Cash used in financing activities for the nine-month period ended September 30, 2024 was $38.9 million due to share repurchases, principal payments on the Term Loan Facility and stock-based compensation activities.
Cash used in financing activities for the nine-month period ended September 30, 2023 was $113.9 million, due to principal payments on the Term Loan Facility and stock-based compensation activities.
Capital Expenditures
Our operations require capital expenditures associated with our ATG network, data centers and regulatory licenses. We capitalize software development costs related to network technology solutions. We also capitalize costs related to the build out of our office locations.
Capital expenditures for the nine-month periods ended September 30, 2024 and 2023 were $18.9 million and $18.7 million, respectively.
We expect that our capital expenditures will increase in the near term due to Gogo 5G and the build out of the LTE network related to the FCC Reimbursement Program. This increase may be partially offset by reimbursements from the FCC. We expect that our capital expenditures will decrease starting in 2026 as these programs are completed.
36
Other
Contractual Commitments: We have agreements with various vendors under which we have remaining commitments to purchase hardware components and development services. Such commitments will become payable as we receive the hardware components or as development services are provided. See Note 15, “Commitments and Contingencies,” to our Unaudited Condensed Consolidated Financial Statements for additional information.
Leases and Cell Site Contracts: We have lease agreements relating to certain facilities and equipment, which are considered operating leases. See Note 14, “Leases,” to our Unaudited Condensed Consolidated Financial Statements for additional information.
37
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Our exposure to market risk is currently confined to our cash and cash equivalents, short-term investments and debt. We have not used derivative financial instruments for speculation or trading purposes. The primary objectives of our investment activities are to preserve our capital for the purpose of funding operations while maximizing the income we receive from our investments without significantly increasing risk. To achieve these objectives, our investment policy allows us to maintain a portfolio of cash equivalents and short-term investments through a variety of securities, including U.S. Treasury securities, U.S. government agency securities, and money market funds. Our cash and cash equivalents as of both September 30, 2024 and December 31, 2023 primarily included amounts in bank deposit accounts, U.S. Treasury securities and money market funds with U.S. Government and U.S. Treasury securities. The primary objective of our investment policy is to preserve capital and maintain liquidity while limiting concentration and counterparty risk.
The risk inherent in our market risk sensitive instruments and positions is the potential loss arising from interest rates as discussed below. The sensitivity analyses presented do not consider the effects that such adverse changes may have on the overall economic activity, nor do they consider additional actions we may take to mitigate our exposure to such changes. Actual results may differ.
Interest Rate Risk: We are exposed to interest rate risk on our variable rate indebtedness, which includes borrowings under the Term Loan Facility and Revolving Facility (if any). We assess our market risks based on changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings and cash flows based on a hypothetical one percentage point change in interest rates. As of September 30, 2024, we had interest rate cap agreements to hedge a portion of our exposure to interest rate movements of our variable rate debt and to manage our interest expense. Currently, we receive payments in the amounts calculated pursuant to the caps for any period in which the daily compounded SOFR rate plus a credit spread adjustment recommended by the Alternative Reference Rates Committee of 0.26% increases beyond the applicable strike rate. The termination date of the cap agreements is July 31, 2027. Over the life of the interest rate caps, the notional amounts of the caps periodically decrease, while the applicable strike prices increase.
The notional amount of outstanding debt associated with interest rate cap agreements as of September 30, 2024 was $350.0 million. Based on our September 30, 2024 outstanding variable rate debt balance, a hypothetical one percentage point change in the applicable interest rate would impact our annual interest expense by approximately $2.7 million for the next twelve-month period, which includes the impact of our interest rate caps at a strike rate of 1.25% and the $100 million reduction in the notional amount and an increase of the strike rate to 2.25% that will occur on July 31, 2025. Excluding the impact of our interest rate caps, a hypothetical one percentage point change in the applicable interest rate would impact our annual interest expense by approximately $6.0 million for the next twelve-month period.
Our earnings are affected by changes in interest rates due to the impact those changes have on interest income generated from our cash, cash equivalents and short-term investments. We believe we have minimal interest rate risk as a 10% decrease in the average interest rate on our portfolio would have reduced interest income for the three- and nine-month periods ended September 30, 2024 and 2023 by immaterial amounts.
Inflation: We do not believe that inflation has had a material effect on our results of operations. However, there can be no assurance that our business will not be affected by inflation in the future.
ITEM 4. Controls and Procedures
Management, with the participation of our Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of September 30, 2024. Based upon this evaluation, our Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of September 30, 2024.
There have been no changes to our internal control over financial reporting in connection with the evaluation required by Rules 13a-15(f) and 15d-15(f) under the Exchange Act during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
We are subject to lawsuits arising out of the conduct of our business. See Note 15, “Commitments and Contingencies,” to our Unaudited Condensed Consolidated Financial Statements for a discussion of litigation matters.
From time to time we may become involved in legal proceedings arising in the ordinary course of our business. We cannot predict with certainty the outcome of any litigation or the potential for future litigation. Regardless of the outcome of any particular litigation and the merits of any particular claim, litigation can have a material adverse impact on our company due to, among other reasons, any injunctive relief granted, which could inhibit our ability to operate our business, amounts paid as damages or in settlement of any such matter, diversion of management resources and defense costs.
ITEM 1A. |
Risk Factors |
“Item 1A. Risk Factors” of our 2023 10-K includes a discussion of our risk factors. The information presented below updates, and should be read in conjunction with, the risk factors and information disclosed in our 2023 10-K. Except as set forth below, there have been no material changes to the risk factors previously disclosed in our 2023 10-K.
Risks Related to Our Business
As we expand geographically and otherwise, we may experience difficulties in maintaining our corporate culture, and our business, results of operations and financial condition could be adversely affected.
We believe that our corporate culture has been a critical component of our success, and have invested substantial time and resources in building this culture. As we further expand our business and grow internationally, we may find it difficult to maintain our corporate culture. For instance, we recently signed an agreement to acquire Satcom Direct’s business and, to the extent it is consummated, we will be required to make certain changes to integrate it into our larger business. For more information, see Note 1, “Basis of Presentation—Acquisition of Satcom Direct,” to our Unaudited Condensed Consolidated Financial Statements for a discussion of the pending acquisition. Any failure to manage organizational changes from our expansion, including in our management or employee base, in a manner that preserves the key aspects of our culture could be detrimental to our future success, including by limiting our ability to recruit and retain personnel and to effectively pursue our corporate objectives. For example, we are dedicated to creating and maintaining a diverse and inclusive culture and to having every employee feel like they have a home at our company, and our expansion may hinder these efforts. This, in turn, could adversely affect our business, results of operations and financial condition.
In addition, expansion could lead to our organizational structure becoming more complex, and could strain our ability to maintain reliable service levels for our customers (both existing customers of the Company and, to the extent the acquisition of Satcom Direct is consummated, new customers acquired as a result of Satcom Direct’s business). If we fail to achieve the necessary level of efficiency in our organization as we grow, then our business, results of operations and financial condition could be adversely affected. See “—When we expand our business outside the United States with Gogo Galileo, we will be exposed to a variety of risks associated with international operations that could adversely affect our business.” in our 2023 10-K.
We may be unsuccessful at evaluating and pursuing strategic opportunities, including acquisitions, as well as integrating them into our business, which could adversely affect our revenue, financial condition and results of operation.
Our Board and management continuously assess whether shareholder value would be increased by engaging in strategic and/or financial relationships, transactions or other opportunities, including those that are suggested to us by third parties. There can be no assurance that we will pursue any strategic or financial relationship, transaction or other opportunity, the outcome of which is inherently uncertain. Further, the process of evaluating and pursuing any such relationship, transaction or other opportunity will involve the dedication of significant resources and the incurrence of significant costs and expenses. If we are unable to mitigate these or other potential risks relating to assessing and undertaking strategic opportunities, it may disrupt our business or adversely impact our revenue, financial condition and results of operation.
In addition, to the extent we consummate acquisitions or other related transactions, these completed acquisitions may entail further risks, including: unanticipated costs and liabilities of the acquired businesses, including environmental liabilities, that could materially adversely affect our results of operations; increased regulatory compliance relating to the acquired business; difficulties in assimilating acquired businesses, their personnel and their financial reporting systems, which would prevent the expected benefits from the transaction from being realized within the anticipated timeframe; negative effects on existing business relationships with suppliers and customers; and loss of key employees of the acquired businesses or our business. In addition, any future acquisitions could result in the incurrence of additional debt and related interest expense, contingent liabilities and amortization expense related to intangible assets, which could have a material adverse effect on our business, financial condition, operating results and cash flows, or the issuance of additional equity, which could dilute our shareholders’ interests.
39
Finally, there can be no assurance that we will be able to negotiate any acquisition successfully, and once negotiated, receive the required approvals for any acquisition or otherwise conclude any acquisition successfully, or that any acquisition will achieve the anticipated synergies or other positive results. For more information, see Note 1, “Basis of Presentation—Acquisition of Satcom Direct,” to our Unaudited Condensed Consolidated Financial Statements for a discussion of our pending acquisition, including the conditions in the Purchase Agreement to consummating the acquisition. We cannot provide any assurance that the pending Satcom Direct acquisition will be completed, and to the extent it is completed, we cannot provide any assurance that we will successfully integrate or achieve the anticipated synergies of Satcom Direct’s technology, personnel, geographical reach, financial condition or business generally. Additionally, we cannot reasonably predict the impact that Satcom Direct’s key operating results or business, or investors’ perception of its future value, would have on the market’s perception of our Company’s overall value. There are also risks associated with the incurrence of an additional $275 million of incremental term loans under Intermediate’s existing credit facility to fund a portion of the cash purchase price of the acquisition. For more information, see “Item 1A “Risk Factors—Risks Related to Our Indebtedness—We and our subsidiaries have substantial debt and may incur substantial additional debt in the future, which could adversely affect our financial health, reduce our profitability, limit our ability to obtain financing in the future and pursue certain business opportunities and reduce the value of your investment.” in our 2023 10-K. Overall, if our acquisition strategy is not successful or if acquisitions are not well integrated into our existing operations, the Company’s profitability, business and financial condition could be negatively affected.
Risks Related to Our Technology and Intellectual Property
We are currently delayed in deploying Gogo 5G, and may be unsuccessful or further delayed in developing and deploying this or other next generation technologies.
We are currently developing a next generation ATG network using 5G technology, unlicensed spectrum, and licensed spectrum. Gogo 5G will be capable of working with different spectrum and supporting different next generation technologies. As previously disclosed, we are delayed in our commercial, nationwide launch of Gogo 5G due to a design error in a non-5G component of our chip, which was designed by a third-party subcontractor of our 5G solution provider. We currently expect the launch of Gogo 5G to occur late in the second quarter of 2025, and are working with our vendors to finalize the schedule.
There can be no assurance that, during the current delay of our 5G launch, our customers will not seek alternative technologies of competitors. The launch of 5G may, depending on the impact of delays, launch closely in time or shortly after the launch of Gogo Galileo service, which could impede our marketing and sales efforts with respect to either offering, due to possible customer confusion among the offerings or lack of sufficient customer focus on either one during launch. Additionally, while we expect to launch Gogo 5G late in the second quarter of 2025, we cannot assure you that the 5G launch or our launch of other next generation technologies will in fact occur in sufficient time to meet growing user expectations regarding the in-flight connectivity experience and to effectively compete in the business aviation market. The ongoing delay and any future delays could also decrease customer confidence, including from current or prospective customers, in our offerings, and negatively impact our financial position.
If Gogo 5G or any other next generation technology fails to perform as expected, our ability to meet users’ expectations regarding our systems' performance and to effectively compete in our market may be impaired and our business, financial condition and results of operations may be materially adversely affected. Factors heightening the risk of future delays in our 5G network or other next generation technologies, or a failure of such technologies to perform once commercialized, include: (i) our failure to design and develop a technology that provides the features and performance we require; (ii) integrating the solution with our existing ATG network; (iii) the availability of adequate spectrum; (iv) the failure of spectrum to perform as expected; (v) the failure of equipment and software to perform as expected; (vi) problems arising in the manufacturing process; (vii) our ability to negotiate contracts with suppliers on acceptable commercial and other terms; (viii) our reliance on single-source suppliers and their ability to continue as a going concern with adequate access to capital for the development and manufacturing of the core elements of the network and on other suppliers to provide certain components and services; and (ix) delays in obtaining or failures to obtain the required regulatory approvals for installation and operation of such equipment and the provision of service to passengers.
40
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Not applicable.
On September 5, 2023, we announced a share repurchase program that grants the Company authority to repurchase up to $50 million of shares of the Company’s common stock. Repurchases may be made at management's discretion from time to time on the open market, through privately negotiated transactions, or by other means, including through the use of trading plans intended to qualify under Rule 10b5-1 under the Exchange Act, in accordance with applicable securities laws and other restrictions, including Rule 10b-18 under the Exchange Act. The repurchase program has no time limit and may be suspended for periods or discontinued at any time and does not obligate us to purchase any shares of our common stock. The timing and total amount of stock repurchases will depend upon business, economic and market conditions, corporate and regulatory requirements, prevailing stock prices, and other considerations.
The following table summarizes our purchases of common stock during the three-month period ended September 30, 2024.
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share (1) |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program |
|
||||
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
||||
July 1-31, 2024 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
22,083 |
|
August 1-31, 2024 |
|
|
306,000 |
|
|
$ |
7.81 |
|
|
|
306,000 |
|
|
$ |
19,699 |
|
September 1-30, 2024 |
|
|
708,598 |
|
|
$ |
7.36 |
|
|
|
708,598 |
|
|
$ |
14,497 |
|
(1)Average price paid per share includes transaction costs associated with the repurchases.
ITEM 3. Defaults Upon Senior Securities
None.
ITEM 4. Mine Safety Disclosures
None.
ITEM 5. Other Information
During the fiscal quarter ended September 30, 2024, none of our directors or officers
41
ITEM 6. Exhibits
Exhibit Number |
|
Description of Exhibits |
|
|
|
|
|
|
2.1* |
|
|
|
|
|
10.1† |
|
|
|
|
|
10.2† |
|
|
|
|
|
31.1 |
|
|
|
|
|
31.2 |
|
|
|
|
|
32.1** |
|
|
|
|
|
32.2** |
|
|
|
|
|
101.INS |
|
Inline XBRL Instance Document – The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document |
|
|
|
101.SCH |
|
Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents |
|
|
|
104 |
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* Certain of the schedules and exhibits to the agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished to the SEC upon request; provided, however, that the parties may request confidential treatment for certain portions of the agreement pursuant to Rule 24b-2 of the Exchange Act, for any document so furnished.
† Portions of this exhibit have been omitted pursuant to Item 601(b)(10) of Regulation S-K. If requested by the SEC or its staff, the Company will promptly provide on a supplemental basis an unredacted copy of the exhibit and its materiality and privacy or confidentiality analyses.
** This certification accompanies the Form 10-Q to which it relates, is not deemed filed with the SEC and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Exchange Act (whether made before or after the date of the Form 10-Q), irrespective of any general incorporation language contained in such filing.
42
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
Gogo Inc. |
Date: November 5, 2024 |
|
|
|
|
/s/ Oakleigh Thorne |
|
|
Oakleigh Thorne |
|
|
Chief Executive Officer and Chair of the Board |
|
|
(Principal Executive Officer) |
|
||
|
|
/s/ Jessica G. Betjemann |
|
|
Jessica G. Betjemann |
|
|
Executive Vice President and Chief Financial Officer |
|
|
(Principal Financial Officer) |
43