Gogo Inc.

Good day, and thank you for standing by. Welcome to Q4 2024 GoGo, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Will Davis, Head of Investor Relations. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to GOGO's fourth quarter of 2024 earnings conference call. Joining me today to talk about our results are Oakley Thorne, Executive Chairman of GoGo, Chris Moore, CEO, and Zach Cotner, CFO. Before we get started, I would like to take this opportunity to remind you that during the course of this call, we may make forward-looking statements regarding future events and the future performance of the company. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements on this call. Those risk factors are described in our earnings release filed this morning and are more fully detailed under risk factors in our annual report on 10-K and 10-Q and other documents that we have filed with the SEC. In addition, please note that the date of this conference call is March 14, 2025. Any forward-looking statements that we make today are based on assumptions as of this date. and we undertake no obligation to update these statements as a result of more information or future events. During this call, we'll present both GAAP and non-GAAP financial measures. We have included a reconciliation and explanation of adjustments and other considerations of our non-GAAP measures to the most comparable GAAP measures in our fourth quarter earnings release. This call is being broadcast on the Internet and available on the Investor Relations website at ir.gogoair.com. The earnings press release is also available on the website. After management comments, we'll host a Q&A session with the financial community only. It is now my great pleasure to turn the call over to Oakley.

Thanks, Will, and good morning, everyone. Let me start by extending a highly enthusiastic welcome to Chris and Zach. As many of you will remember, seven years ago, I came in from the GoGo board to serve as CEO on an emergency basis. And ever since then, we've been looking for the right successor. I believe we found that person in Chris. As our industry becomes more competitive and more centered in the fast-changing world of satellite technology, Chris' deep SATCOM and aviation knowledge and his strong leadership skills are exactly what GOGO needs at this point in its value creation journey. So with that, I'd like to set a little historical context for where we are in that journey. and set the stage for how combining with SATGOM helps drive that journey. Then I'll turn it over to Chris to review our Q4 and 2024 business progress, to give an overview of our business strategy, to provide some insight on our MilGov business, and to update everyone on our progress against our strategic initiatives. Then Zach will do the numbers. And finally, we'll move to our usual Q&A. I always like to start by reminding people that we operate in a market with lots of room to grow. In a world where demand for connectivity is surging due to video conferencing and cloud-based applications, only 36% of the world's business jets boast broadband in-flight connectivity, only 22% if you include turboprops. And if you look outside the United States, There are 5,000 mid and small jets and 7,000 turboprops that literally have no access to an in-flight broadband solution today. Meanwhile, data usage per hour continues to surge. On go-go planes, continued in Q4, it grew 16% over prior year. And on SATCOM planes, it grew 18% over prior year. Demand for flight also continues to grow, with fractional fleets growing their fleets dramatically, and OEMs generally showing book-to-bill ratios over one-to-one. This is supported by WingX data, which shows that the post-COVID surge in flight demand persists, with global flight departures up 33% in February 25 versus February 2019. As for GOGO and SATCOM Direct in 2024, both had solid years. GOGO's standalone met or beat guidance on all financial metrics, SATCOM's GEO AOL grew substantially, and GOGO ATG AOL rebounded in the most recent quarter. I'm also excited to announce, despite a short delay due to a last-minute change in FAA testing, we've received PMA for the Galileo HDX low Earth orbit antenna and are now shipping product to dealers to kick off work on their aircraft-specific STCs. We expect those STCs to start rolling out in Q3 and continue rolling out into next year, which will drive a pickup in equipment revenue starting in late Q3 and service revenue in Q1 2026. Chris and Zach will provide more details on these developments in their comments, but to summarize, this PMA delay plus a small slip in GOGO 5G puts a hole in our 2025 plans. and leads us to provide pretty flat revenue and EBITDA guidance for this year. Despite that bad news, this is a watershed moment for GOGO and the beginning of our climb back to strong, sustainable, free cash flow growth. HDXPMA is the first deliverable from a massive three-year GOGO investment program, extending our advanced platform into new satellite technologies and building a new 5G ATG network in order to one, dramatically improve the quality of our connectivity services and remain competitive in a fast changing telecom ecosystem. Two, grow our addressable market 60% by delivering products that are relevant outside the United States. And three, extend recurring revenue customer lifetimes by aggressively driving penetration of our easily upgradable network agnostic advanced platform. This last point is critically important, and Chris will discuss it in more detail later. But our goal is to win real estate on as many aircraft as possible with our easily upgradable advanced hardware and software platform so that as technology evolves, our customers can upgrade with easy hardware swaps and software upgrades instead of the delays and costs associated with removing our products and replacing them with competitive products. To ensure that we win as much of that real estate as possible, we run a major marketing program dubbed Galileo Catalyst to ensure customers are aware that we're the only viable Leo alternative to Starlink. That program was highly successful, and Chris will talk about how that has driven high demand for our Galileo products. However, it will impact our free cash flow to the tune of about $25 million later this year. We expect several more deliverables from our multi-year investment program that should also accelerate our revenue growth, including the delivery of our Galileo FDX LEO terminal and the completion of our 5G ATG product later this year, and the LTE upgrade of our classic ATG network next year. Our combination with SATCOM Direct not only brings critically important satellite expertise into GOGO, but also accelerates achieving the goals I just enumerated. Their international business aviation and MilGov sales forces are primed to sell GoGo Galileo globally, and their high-end business aviation and their MilGov customer bases are particularly interested in the high capacity, redundancy, and geographic coverage that can be achieved with combined GEO-LEO solutions. Although we'll provide formal long-term guidance later, we believe 2026 is setting up to be a significant free cash flow inflection point for GoGo. In 2026, we should start seeing higher margin service revenue from our Galileo and 5G investments, growth in our MilGov business, and we should see a roughly $60 million reduction in program investments as we, one, complete the major product initiatives I just described, two, reduce marketing and promotional expenses associated with the Galileo Cavaliers program, three, finish the investments required to achieve integration synergies, and four, achieve the full annual run rate benefits of synergies we've already achieved or plan to achieve later this year. On the synergy front, Chris and the team have done an amazing job. And as Zach will describe in more detail, we now expect to achieve run rate synergies at the high end of the 25 to $30 million range which we shared at closing. We also expect to cover much of the one-time costs to achieve those synergies with the sale of SATCOM's headquarters building in Melbourne, Florida. And finally, our 2026 free cash flow will benefit from the FCC receiving full funding for the Rip and Replace program late last year, which Zach will discuss in more detail in a moment. Full funding of that program which helps us accelerate transition from our old EVDO network to LTE technology and remove Chinese telco equipment, will also allow us to create better incentives for our old classic customers to convert to equipment compatible with the new network, further extending customer lifetimes. Besides growth and financial benefits, the go-go SATCOM combination has big strategic benefits. With the launch of Galileo, GOGO is uniquely positioned as the only competitor to Starlink with a LEO solution specifically designed for the BA market, providing us with a significant competitive edge against our traditional competition. And because of our multi-bearer capabilities, which Starlink does not have, we're well positioned to provide multi-orbit, multi-band solutions that provide superior capacity, redundancy, and coverage to what any competitor on their own can provide. Finally, we believe that network technology will continue to evolve rapidly and that partnering with new partners will be critical. By virtue of our scale within the vertical and our easily upgradable real estate on the aircraft, we believe we will be the partner of choice for new network and technology suppliers as they come to market. Now, let me turn it over to Chris, who will go over the quarter discuss our product strategy, provide insight on our new MilGov business, and provide an update on our strategic initiatives.