美國
證券交易委員會
華盛頓特區20549
表格
對於過渡期從 至
根據1934年證券交易法第13或15(d)條款的季度報告。 |
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截至季度結束日期的財務報告 |
或者
根據1934年證券交易所法第13或15(d)節提交的過渡報告。 |
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過渡期從__________到_____________ |
委託文件編號：001-39866
(根據其章程規定的註冊人準確名稱)
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（國家或其他管轄區的 組建國的駐地 |
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（IRS僱主 唯一識別號碼） |
，（主要行政辦公地址）
電話號碼（
(註冊人電話號碼，包括區號)
在法案第12(b)條的規定下注冊的證券：
類別名稱 |
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交易代碼 |
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名稱爲每個註冊的交易所: |
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請通過複選標記表示註冊人（1）在過去的12個月內已按照1934年證券交易法第13或15(d)條的規定提交所有要求提交的報告，並且（2）在過去90天中一直受到這些提交要求的約束。
請用勾號表示，即使在前述12個月內(或者註冊人要求提交此類文件的較短期間內)，註冊人是否根據S-t法規規定第405條規定的每個互動數據文件遞交了電子文件。
請在以下選項前打勾表示公司屬於大型快速記錄者、快速記錄者、非快速記錄者、小額報告公司還是新興增長公司。可參考《交易所法規》規則12億.2中對「大型快速記錄者」、「快速記錄者」、「小額報告公司」和「新興增長公司」的定義。
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加速過濾器 |
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非加速過濾器 |
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規模較小的申報公司 |
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新興成長型公司 |
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如果是新興成長型公司，請用複選標記表明註冊人是否選擇不使用延長的過渡期來遵守根據《交易法》第13（a）條規定的任何新的或修訂後的財務會計準則。☐
請用複選標記指示註冊者是否爲殼公司（定義見交易所法規120億.2條）。 是☐不
截至2024年10月31日,
Gogo 股份有限公司
指數
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第一部分 |
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項目1。 |
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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事項二 |
25 |
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第3項。 |
38 |
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事項4。 |
38 |
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第二部分 |
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項目1。 |
39 |
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項目1A。 |
39 |
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事項二 |
41 |
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第3項。 |
41 |
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事項4。 |
41 |
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項目5。 |
41 |
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項目6。 |
42 |
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43 |
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1
第一部分. 財務206,601
第1項. 財務報表財務報表
gogo inc及其附屬公司
未經審計的簡明合併資產負債表未經審計的簡明合併資產負債表
（以千爲單位，除股份數和每股數據外）
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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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資產 |
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流動資產： |
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現金及現金等價物 |
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$ |
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$ |
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應收賬款，扣除$（2024年）和$（2023年）的撥備 |
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存貨 |
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預付費用和其他流動資產 |
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總流動資產 |
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非流動資產： |
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資產和設備，淨值 |
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無形資產, 淨額 |
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經營租賃權使用資產 |
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投資於可轉換票據 |
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其他非流動資產，減去準備金$ |
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延遲所得稅 |
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總非流動資產 |
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資產總額 |
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$ |
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$ |
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負債和股東權益 |
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流動負債: |
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應付賬款 |
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$ |
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$ |
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應計負債 |
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遞延收入 |
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開多次數 |
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流動負債合計 |
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非流動負債: |
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長期債務 |
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非流動經營租賃負債 |
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其他非流動負債 |
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所有非流動負債 |
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負債合計 |
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股東權益 |
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普通股，每股面值 $，授權股數：百萬股；發行股數：分別爲2024年6月30日和2023年12月31日：百萬股；流通股數：分別爲2024年6月30日和2023年12月31日：百萬股 |
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額外實收資本 |
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累計其他綜合收益 |
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Treasury stock, at cost |
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累積赤字 |
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( |
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股東權益總額 |
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負債和股東權益總額 |
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$ |
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$ |
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查看未經審計的簡明綜合財務報表附註
2
gogo inc及其附屬公司
未經審計的簡明合併財務報表未經審計的簡明合併損益表
（以千爲單位，每股金額除外）
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三個月期間 |
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九個月期間 |
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2024 |
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2023 |
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2024 |
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2023 |
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營業收入： |
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服務收入 |
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$ |
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$ |
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$ |
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$ |
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設備營收 |
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總收入 |
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營業費用： |
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服務收入成本（不包括下列金額） |
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設備收入成本（不包括下列金額） |
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工程、設計和開發 |
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銷售及營銷費用 |
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ZSCALER, INC. |
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折舊和攤銷 |
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營業費用總計 |
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營業利潤 |
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其他費用（收入）: |
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利息收入 |
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( |
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( |
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( |
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( |
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利息支出 |
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債務清償損失 |
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% and |
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( |
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( |
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( |
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其他費用總計 |
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稅前收入 |
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所得稅負擔（利益） |
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( |
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淨收入 |
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$ |
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$ |
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$ |
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$ |
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每股普通股應分的淨利潤: |
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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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稀釋 |
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$ |
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$ |
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$ |
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$ |
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加權平均股數： |
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基本 |
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稀釋 |
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請參閱未經審計的簡明合併財務報表附註
3
gogo inc.及其子公司
未經審計的簡明彙總 綜合收益（損失）表
（以千爲單位）
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三個月期間 |
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九個月期間 |
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2024 |
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2023 |
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2024 |
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2023 |
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淨收入 |
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$ |
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$ |
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$ |
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$ |
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其他綜合收益（虧損），淨額 |
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貨幣轉換差異 |
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( |
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$ |
( |
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$ |
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現金流量套期損益： |
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在其他綜合收益中確認的金額 |
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( |
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減少：已實現的收入並重新分類爲收益 |
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現金流量套期保值工具公允價值變動 |
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( |
) |
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( |
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( |
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( |
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其他綜合收益（虧損），淨額 |
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( |
) |
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( |
) |
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( |
) |
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( |
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綜合收益（損失） |
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$ |
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$ |
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$ |
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$ |
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查看未經審計的簡明綜合財務報表附註
4
gogo inc及其附屬公司
未經審計的簡明合併財務報表現金流量表
（以千爲單位）
|
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九個月期間 |
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2024 |
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2023 |
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經營活動： |
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淨收入 |
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$ |
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$ |
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調整淨收益以使其與經營活動提供的現金流量相一致： |
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折舊和攤銷 |
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資產處置、放棄和減值造成的損失 |
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預期信貸損失準備金 |
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延遲所得稅 |
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( |
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股票補償費用 |
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攤銷遞延融資成本和利率上限 |
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債務折扣溢價 |
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債務清償損失 |
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可轉換票據和股權投資公允價值變動 |
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( |
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經營性資產和負債變動: |
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應收賬款 |
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存貨 |
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( |
) |
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( |
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預付費用和其他流動資產 |
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( |
) |
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( |
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合同資產 |
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( |
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應付賬款 |
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應計負債 |
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( |
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遞延收入 |
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( |
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應計利息 |
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( |
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( |
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其他非流動性資產和負債 |
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( |
) |
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( |
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經營活動產生的現金流量淨額 |
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投資活動： |
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購買固定資產 |
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( |
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( |
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取得無形資產—資本化軟件 |
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( |
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( |
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來自物業、設備和無形資產聯邦通信委員會報銷計劃的收入 |
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來自利率上限的收益 |
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短期投資的贖回 |
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購買期權 |
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( |
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購買可轉換票據和股權投資 |
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( |
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( |
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投資活動產生的淨現金流出 |
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( |
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( |
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籌資活動： |
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償還長期貸款 |
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( |
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( |
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購回普通股 |
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( |
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融資租賃款支付 |
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( |
) |
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( |
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股票補償活動 |
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( |
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( |
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籌集資金淨額 |
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( |
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( |
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匯率變動對現金的影響 |
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現金、現金等價物和受限制的現金的增加（減少） |
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( |
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期初現金、現金等價物及受限制的現金餘額 |
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期末現金、現金等價物及受限制的現金餘額 |
|
$ |
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$ |
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期末現金、現金等價物及受限制的現金餘額 |
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$ |
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$ |
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減：非流動受限現金 |
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期末現金及現金等價物 |
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$ |
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$ |
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補充現金流量信息： |
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支付的利息現金 |
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$ |
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$ |
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繳納的稅款 |
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非現金投資活動： |
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購置的財產和設備計入流動負債 |
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$ |
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$ |
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查看未經審計的簡明綜合財務報表附註
5
gogo inc及其附屬公司
未經審計的簡明綜合財務報表股東權益變動表
(以千爲單位，除股票數據外)
|
|
截至2024年9月30日三個月 |
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累積的 |
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額外的 |
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其他 |
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普通股 |
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實繳 |
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綜合 |
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累積的 |
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庫存股 |
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股份 |
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票面價值 |
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資本 |
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收益 |
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$ |
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|
股份 |
|
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數量 |
|
|
總費用 |
|
||||||||
2024年6月30日餘額 |
|
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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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||||||
淨收入 |
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— |
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— |
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324.7 |
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現金流量套期工具公允價值調整，稅後淨額 |
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股票補償費用 |
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行使期權的普通股發行 |
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根據限制性股票單位的歸屬而發行的普通股 |
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與限制性股票單位歸屬相關的稅收代扣 |
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回購普通股 |
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2024年9月30日的餘額 |
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$ |
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$ |
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( |
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截至2023年9月30日三個月的時間 |
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累積的 |
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額外的 |
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其他 |
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普通股 |
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實繳 |
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綜合 |
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累積的 |
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庫存股 |
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票面價值 |
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資本 |
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收益 |
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$ |
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股份 |
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數量 |
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2023年6月30日的餘額 |
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( |
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淨收入 |
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324.7 |
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現金流套期貨的公允價值調整，稅後淨額 |
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股票補償費用 |
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行使期權的普通股發行 |
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根據限制性股票單位的歸屬而發行的普通股 |
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與限制性股票單位歸屬相關的稅收代扣 |
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2023年9月30日結餘 |
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( |
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在截至2024年9月30日的九個月中 |
|
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|
累積 |
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額外 |
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|
|
普通股 |
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付費 |
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全面 |
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累積 |
|
|
國庫股 |
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||||||||||||||
|
|
股票 |
|
|
面值 |
|
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資本 |
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收入 |
|
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赤字 |
|
|
股票 |
|
|
金額 |
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|
總計 |
|
||||||||
2024 年 1 月 1 日的餘額 |
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|
$ |
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$ |
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|
$ |
( |
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( |
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淨收入 |
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扣除稅款的貨幣折算調整 |
|
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— |
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— |
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— |
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( |
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— |
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( |
) |
扣除稅款的現金流套期保值的公允價值調整 |
|
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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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|
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( |
) |
股票薪酬支出 |
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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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||
行使股票期權時發行普通股 |
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|
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|
— |
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— |
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— |
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— |
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— |
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|
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授予限制性股票單位後發行普通股 |
|
|
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— |
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— |
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— |
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— |
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— |
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|
與限制性股票單位歸屬有關的預扣稅款 |
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( |
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) |
回購普通股 |
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( |
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( |
) |
|
截至 2024 年 9 月 30 日的餘額 |
|
|
|
|
$ |
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|
$ |
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|
$ |
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|
$ |
( |
) |
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$ |
( |
) |
|
$ |
|
||||||
6
|
|
截至2023年9月30日的九個月 |
|
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
累積的 |
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||||||||
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|
|
|
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|
額外的 |
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其他 |
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|
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||||||||
|
|
普通股 |
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|
實繳 |
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綜合 |
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|
累積的 |
|
|
庫存股 |
|
|
|
|
||||||||||||||
|
|
股份 |
|
|
票面價值 |
|
|
資本 |
|
|
收益 |
|
|
$ |
|
|
股份 |
|
|
數量 |
|
|
總費用 |
|
||||||||
2023年1月1日餘額 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
|
( |
) |
|||||
淨收入 |
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— |
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— |
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— |
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— |
|
|
|
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|
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— |
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|
|
— |
|
|
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|
||
324.7 |
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— |
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— |
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— |
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— |
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|
|
— |
|
|
|
— |
|
|
|
|
||
現金流套期貨的公允價值調整，稅後淨額 |
|
|
— |
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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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— |
|
|
|
( |
) |
股票補償費用 |
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|
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|
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|
|
— |
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|
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— |
|
|
|
— |
|
|
|
|
||
行使期權的普通股發行 |
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|
|
|
|
— |
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|
— |
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|
|
— |
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|
|
— |
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|
|
— |
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|
|
|
|||
根據限制性股票單位的歸屬而發行的普通股 |
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— |
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— |
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— |
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|
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— |
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— |
|
|
|
— |
|
|
|
— |
|
|
與限制性股票單位歸屬相關的稅收代扣 |
|
|
— |
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|
|
— |
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|
|
( |
) |
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|
— |
|
|
|
— |
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|
|
— |
|
|
|
— |
|
|
|
( |
) |
員工股票購買計劃中的普通股票發行 |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
2023年9月30日結餘 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
|
|
|
$ |
( |
) |
|
$ |
|
||||||
查看未經審計的簡明綜合財務報表附註
7
gogo inc及其附屬公司
簡明聯合財務報表附註(未經審計)
業務- Gogo Inc.（「Gogo」，「公司」，「我們」，「我們」，或「我們的」）是業務航空市場領先的寬帶連接服務提供商，我們已爲該市場服務超過25年。我們的使命是通過世界一流的業務航空機上連通和客戶支持，豐富乘客的生活和運營商的效率。無論技術如何，我們始終致力於爲業務航空市場提供最佳連通性，並且我們有着成功的歷史。直到最近，我們主要專注於北美的業務航空飛機，這佔全球業務航空機隊的約63％，我們是該市場上連通性領先的提供商。Gogo於1990年代末開始使用模擬空對地（ATG）技術，隨後隨着模擬蜂窩回程的消失，於2000年代初遷移到窄帶衛星連接，然後從2010年開始，又回到了使用數字寬帶3G和4G網絡的ATG。我們目前正在開發第四代ATG網絡 - Gogo 5G，預計將於2025年第二季度末進行商業化推出。與Gogo 5G的開發同時進行，我們正在積極與AVANCE的部分客戶以及利用我們地面3G和4G網絡的傳統Gogo Biz ATG飛機系統的客戶合作，升級至與新LTE網絡兼容的AVANCE系統。我們預計這部分客戶將因此網絡過渡而看到性能提升，預計將在2026年初完成此過渡。從參與聯邦通信委員會（「FCC」）安全和可信通信網絡補償計劃（「FCC補償計劃」）中部分獲得新LTE網絡的過渡費用。
我們還繼續通過與衛星提供商簽訂的分銷協議向北美和國際客戶提供窄帶衛星服務。2022年5月，爲了進一步服務現有客戶並擴大我們的目標市場，我們宣佈計劃通過推出專爲所有商務飛機機型設計的全球第一寬帶服務，擴大我們的寬帶服務範圍。該服務將使用電子定向天線（「ESA」），專門設計用於覆蓋各種業務航空飛機，運行在低地球軌道（「LEO」）衛星網絡上。半雙工（「HDX」）天線設計用於任何大小的商務飛機，預計將於2024年第四季度商業化推出。全雙工（「FDX」）天線設計用於較大的飛機，預計將於2025年第二季度商業化推出。我們相信，Gogo Galileo與我們的ATG系統結合使用或作爲替代方案，將使我們能夠增加對北美市場的滲透，併爲現有ATG客戶群提供升級路徑。此外，我們相信Gogo Galileo將使我們能夠進入北美以外的業務航空市場，該市場目前僅有 大約
報告範圍 根據美國公認會計原則（「GAAP」）和證券法修正案（「證券法」）下頒佈的第10條規則的規定，附帶的未經審計的簡明合併財務報表及附註已按照美國公認會計原則編制，並符合美國1933年證券法修正案（「證券法」）規定的第10條規則。因此，它們不包括所有完整財務報表所需的信息和附註，須結合我們年度已審計的合併財務報表及相關附註閱讀，這些內容包括我們2023年12月31日結束的年度10-k報告中提交給美國證券交易委員會（「SEC」）的附註（「2023 10-K」）。這些未經審計的簡明合併財務報表在管理層的意見中反映出所有對財務狀況、營業額和現金流量的實質性調整（包括常規循環調整）, 以便在各方面公正地說明我們的財務狀況。
截至2024年9月30日的三個月和九個月期間的運營和現金流量結果並不一定能反映出截至2024年12月31日的財年所期望的結果。
截至2024年3月31日和2023年12月31日，我們記錄了
收購Satcom Direct – 於2024年9月29日， Gogo Direct Holdings LLC，一個特拉華有限責任公司（「Gogo Direct」）及公司的間接全資子公司， 簽訂了購買協議（「購買協議」及購買協議規定的交易，「交易」），雙方爲Satcom Direct Holdings, Inc.，一家特拉華州公司（「SD賣方」），SDHC Holdings, Inc.，一家特拉華州公司（「SDHC賣方」），Satcom Direct Government Holdings, Inc.，一家特拉華州公司（「Satcom政府賣方」），ndtHost Holdings, Inc.，一家特拉華州公司（「ndtHost賣方」以及SD賣方，SDHC賣方和Satcom政府賣方一起，各自是一個「賣方」 ，其中包括「賣方」），Satcom Direct, Inc.，一家佛羅里達公司（「Satcom Direct」），Satcom Direct Holding Company, LLC，一家佛羅里達有限責任公司（「SDHC」），Satcom Direct Government, Inc.，一家佛羅里達公司（「Satcom Government」），ndtHost, LLC，一家佛羅里達有限責任公司（「ndtHost」以及Satcom Direct，SDHC和Satcom Government一起，各自是一個「母公司」及共同，「母公司」），僅用於購買協議第8.8條和第8.9條的目的，James W. Jensen，以其個人身份，僅用於第2.5條和第13.20條的目的，公司。根據購買協議，在其中規定的條款和條件下，Gogo Direct將在其他事項中，從賣方那裏購買母公司的所有已發行和未發行的股權興趣（統稱爲「購買股權」），換取其中規定的考慮事項。
8
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
母公司成立於1997年，主要作爲衛星服務的經銷商提供商業、軍事和政府機上連接服務。母公司在全球開展業務，國際銷售和服務團隊分佈在九個國家。母公司通過其國際銷售隊伍在全球範圍內向原始設備製造商、政府、軍事和私人艦隊公司等銷售服務和設備。母公司在佛羅里達州墨爾本管理網絡運營中心並維護自己的數據中心，授權數據站點戰略性地分佈在世界各地。此次收購將創建唯一一家能夠滿足全球公務航空和軍事/政府出行市場各個細分市場的性能和成本需求的機上連接提供商。
受《條款和條件》中規定的條款和條件約束
購買協議包含慣常陳述、擔保和承諾，以及受特定限制的賠償條款。除其他外，賣方和母公司已同意，除某些例外情況外，從購買協議簽訂之日起直至成交，按照過去的慣例，賣方和母公司同意在交易結束之前不採取某些行動，未經Gogo Direct事先書面同意，不得在交易完成之前採取某些行動。賣方和母公司已經訂立了某些額外的慣例承諾，除其他外，包括不徵求與收購提案有關的提案，不參與有關收購提案的討論或提供與收購提案有關的信息，但有某些例外情況。
此外，根據購買協議的條款，Gogo Direct、賣方和母公司必須盡最大努力獲得所有必要的監管批准，包括聯邦貿易委員會、美國司法部反壟斷司、聯邦通信委員會和某些國際政府機構的某些監管批准。
該交易預計將於2024年第四季度完成，並受慣例成交條件的約束，其中包括：（i）經修訂的1976年《哈特-斯科特-羅迪諾反壟斷改進法》（「HSR法」）規定的等待期到期或終止，（ii）缺乏阻止交易完成的法律限制，（iii）獲得通信授權（定義爲收購）協議），（iv）購買協議中包含的陳述和擔保的準確性（前提是某些資格），（v）雙方在所有重要方面履行其在購買協議下的各自義務，以及（vi）關於Gogo Direct完成交易的義務，不產生重大不利影響（定義見購買協議）。Gogo Direct完成交易的義務不受與融資可用性有關的任何條件的約束。 關於購買協議的簽訂，公司和Gogo Intermediate Holdings LLC（「中級」）已簽訂了一份債務承諾書，其中規定了美元
購買協議包含Gogo Direct和賣家的某些慣常終止權，包括如果交易在2025年3月28日之前尚未完成，則終止購買協議的權利。除了具體履約的補救措施外，購買協議還規定，在某些特定情況下終止購買協議後，賣方和母公司可以通過通知公司來選擇（i）公司應支付的終止費爲美元
估算值的使用 — 根據公認會計原則編制財務報表要求管理層做出估算和假設，這些估算和假設會影響報告的資產和負債金額、截至財務報表之日的或有資產和負債的披露以及報告期內報告的收入和支出金額。管理層持續評估重大估計數，並根據歷史經驗和在當時情況下認爲合理的各種其他假設進行此類估計。但是，實際結果可能與這些估計有重大差異。
最近發佈的會計公告
公司考慮了財務會計準則委員會（「FASB」）發佈的所有會計準則更新（「ASU」）的適用性和影響。未在下面列出的華碩經評估後確定其不適用或預計對我們的合併財務報表和相關附註的影響微乎其微。
尚未採用的會計準則：
2023 年 11 月，財務會計準則委員會發布了 ASU 第 2023-07 號 細分市場報告（主題 280）：對可報告的細分市場披露的改進 改善應申報分部的披露要求，主要是通過加強對重大分部支出的披露。本指南對2023年12月15日之後開始的財政年度及其後的過渡期具有追溯效力
9
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
2024年12月15日。允許早期採用。由於此指南僅影響披露，我們預計採用對我們的合併基本報表沒有實質影響。
2023年12月，FASB發佈了ASU No. 2023-09， 所得稅（主題740）：改進所得稅披露 爲了增強所得稅披露的透明度和決策有用性，尤其是在稅率調解和已交所得稅方面。該指南適用於2024年12月15日之後開始的年度期間。允許早期採用，並且修訂應以前瞻性方式應用，允許有追溯性應用。 由於此指南僅影響披露，我們預計採用對我們的合併基本報表沒有實質影響。
基本每股收益和攤薄每股收益是通過使用權重平均股本數來計算的。攤薄每股收益是用基於股票補償的庫藏股方法計算的。
在計算稀釋每股收益時，排除了股票期權、遞延股票單位和受限股票單位的影響，當計算是逆向稀釋時。對於截至2024年9月30日的三個月和九個月期間排除在計算中的平均排除股本數爲
以下表格列出了截至2024年和2023年9月30日的每股基本和攤薄收益的計算 截至2024年和2023年9月30日的三個月和九個月期間以千爲單位，每股金額除外):
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三個月期間 |
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九個月期間 |
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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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||||
淨收入 |
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$ |
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|
$ |
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$ |
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$ |
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||||
加權平均股數 |
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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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三個月期間 |
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九個月期間 |
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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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||||
淨收入 |
|
$ |
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$ |
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$ |
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$ |
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||||
平均股份 |
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加權平均股數 |
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攤薄證券的影響 - 以股票爲基礎的補償 |
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總加權平均攤薄股份 |
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每股收益（攤薄） |
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$ |
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$ |
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$ |
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$ |
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||||
10
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
2023年9月30日
截至2024年9月30日，分配給未滿足業績義務（「RPO」）的交易價格的總額約爲 $
營收分解
以下表格展示了我們按類別細分的營業收入 （以千爲單位）:
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三個月期間 |
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九個月期間 |
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2024 |
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2023 |
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2024 |
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2023 |
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||||
服務收入 |
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|
|
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|
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||||
連接性 |
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$ |
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$ |
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$ |
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$ |
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||||
娛樂和其他 |
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||||
總服務收入 |
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$ |
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$ |
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$ |
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$ |
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||||
設備營收 |
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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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||||
窄帶衛星 |
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其他 |
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||||
設備總收入 |
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$ |
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$ |
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$ |
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$ |
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||||
客戶類型 |
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||||
飛機所有者/運營商/服務提供商 |
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$ |
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$ |
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|
$ |
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$ |
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||||
OEm和售後市場經銷商 |
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總收入 |
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$ |
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$ |
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|
$ |
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|
$ |
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||||
合同餘額
我們當前和非流動合同資產餘額總計$
我們當前和非流動遞延收入餘額總計$
FCC報銷計劃
2022年7月15日，公司收到通知，獲得了參加FCC報銷計劃的批准，該計劃旨在爲提供先進通信服務的提供商報銷因刪除、更換和處理被視爲對國家安全構成風險的覆蓋通信設備或服務而發生的合理成本。根據FCC報銷計劃，FCC批准向公司提供約$
11
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
參與者將向FCC申請一個或多個爲期六個月的項目完成期限延期。該公司在聘請顧問協助管理項目的情況下，於2023年7月提交併獲得了其第一筆報銷請求。公司最初爲完成該項目設定的一年期限爲2024年7月21日。於2024年3月29日，公司獲得了其首次由FCC批准的爲期六個月的延期，將項目完成期限延長至2025年1月21日。根據與支持該項目的供應商討論關於網絡設備的交付時間，我們計劃向FCC申請多次延期，正如我們在FCC報銷計劃申請中所詳述。
截至2024年9月30日和2023年12月31日，我們分別記錄了從FCC收到的一筆營業收入，該金額已包含在我們未經審計的簡明合併資產負債表的預付費用和其他流動資產中。 $
以下是我們2024年9月30日和2023年12月31日未經審計的簡明合併資產負債表中資產餘額減值的扣除項 以下是我們2024年9月30日和2023年12月31日未經審計的簡明合併資產負債表中資產餘額減值的扣除項 （以千爲單位）：
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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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2024 |
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2023 |
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資產： |
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存貨 |
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$ |
( |
) |
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$ |
( |
) |
預付費用和其他流動資產 |
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( |
) |
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( |
) |
資產和設備，淨值 |
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( |
) |
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( |
) |
無形資產, 淨額 |
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( |
) |
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( |
) |
其他非流動資產 |
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( |
) |
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|
( |
) |
以下是截至2024年9月30日的三個月和九個月非經審計的簡明合併利潤表中淨利潤增加的部分 以下是截至2024年9月30日的三個月和九個月非經審計的簡明合併利潤表中淨利潤增加的部分 （以千爲單位）:
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三個月期間 |
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九個月期間 |
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||||||||||
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2024 |
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2023 |
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2024 |
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2023 |
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營業收入： |
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|
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||||
服務收入 |
|
$ |
|
|
$ |
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|
$ |
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$ |
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||||
營業費用： |
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服務成本 |
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設備成本 |
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ZSCALER, INC. |
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存貨主要包括電信系統和零部件，按照平均成本或淨實現價值的較低者計入。我們通過定期審查淨實現庫存價值來評估與過時、滯銷和無銷售價值庫存相關的減值需求。
截至2024年9月30日的存貨狀況 和2023年12月31日如下（（以千爲單位）):
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9月30日， |
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12月31日 |
|
||
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2024 |
|
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2023 |
|
||
在製品部件 |
|
$ |
|
|
$ |
|
||
成品 |
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|
|
|
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|
||
19,782(1) |
|
$ |
|
|
$ |
|
||
(1)
12
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
截至2024年6月30日的預付費和其他流動資產爲： 2024年9月30日和2023年12月31日如下（（以千爲單位）):
|
|
9月30日， |
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12月31日 |
|
||
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2024 |
|
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2023 |
|
||
利率上限和應收款項 |
|
$ |
|
|
$ |
|
||
FCC退款應收款(1) |
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合同資產(1) |
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預付存貨 |
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其他 |
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預付款和其他流動資產總計 |
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$ |
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$ |
|
||
(1)
截至2024年6月30日，固定資產和設備如下： 2024年9月30日和2023年12月31日如下（（以千爲單位）):
|
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9月30日， |
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12月31日 |
|
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2024 |
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2023 |
|
||
辦公設備、傢俱、裝置以及其他 |
|
$ |
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$ |
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||
租賃改良 |
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網絡設備(1) |
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累計折舊 |
|
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( |
) |
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( |
) |
淨房地產和設備總資產 |
|
$ |
|
|
$ |
|
||
(1)
截至2024年9月30日和2023年12月31日的其他非流動資產如下： 截至2024年9月30日和2023年12月31日的其他非流動資產如下：（以千爲單位）):
|
|
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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$ |
|
||
合同資產淨額，減免額爲$ |
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循環信貸設施延遲融資成本 |
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其他 |
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|
|
||
其他非流動資產合計 |
|
$ |
|
|
$ |
|
||
(1)
截至2024年9月30日和2023年12月31日如下：（以千爲單位）):
|
|
9月30日， |
|
|
12月31日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
|
$ |
|
|
$ |
|
|||
員工薪酬福利 |
|
|
|
|
|
|
||
客戶信用準備金 |
|
|
|
|
|
|
||
網絡設備 |
|
|
|
|
|
|
||
遞延租賃 |
|
|
|
|
|
|
||
Gogo Galileo開發成本 |
|
|
|
|
|
|
||
稅收 |
|
|
|
|
|
|
||
應計利息 |
|
|
|
|
|
|
||
其他 |
|
|
|
|
|
|
||
總應計負債 |
|
$ |
|
|
$ |
|
||
研發支出按發生予以費用計入，並在截至2024年9月30日的三個月和九個月期間分別合計 $
13
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
我們的無形資產包括無限生命週期和有限生命週期的無形資產。具有無限生命週期的無形資產不攤銷，而是至少每年審查一次，或者在事件或情況表明資產的賬面價值可能無法收回時進行審查。我們在每個財政年度的第四季度對我們的無限生命週期無形資產進行年度減值測試，2023年第四季度進行的測試結果顯示沒有減值。我們還重新評估無限生命週期無形資產的有用生命期，以確定事件和情況是否繼續支持無限有用生命期。
截至2024年9月30日和2023年12月31日，我們的商譽餘額爲 $
我們的無形資產，除商譽外，在 和2023年12月31日如下（千，除加權平均剩餘有用生命外):
|
|
|
|
截至2024年9月30日 |
|
截至2023年12月31日 |
||||||||
|
|
已授予和預期於2021年1月2日授予股份 |
|
毛利 |
|
累積的 |
|
淨利 |
|
毛利 |
|
累計 |
|
淨利 |
已攤銷的無形資產(1): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
軟件 |
|
|
$ |
|
$( |
|
$ |
|
$ |
|
$( |
|
$ |
|
其他無形資產 |
|
|
|
— |
|
|
|
— |
|
|||||
服務客戶關係 |
|
|
|
|
( |
|
— |
|
|
( |
|
— |
||
OEM和經銷商關係 |
|
|
|
|
( |
|
— |
|
|
( |
|
— |
||
已攤銷的無形資產總額 |
|
|
|
|
( |
|
|
|
( |
|
||||
未攤銷的無形資產： |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FCC許可證 |
|
|
|
|
— |
|
|
|
— |
|
||||
無形資產總額 |
|
|
|
$ |
|
$( |
|
$ |
|
$ |
|
$( |
|
$ |
(1)
攤銷費用爲 $
未攤銷費用剩餘爲 2024年以及接下來的四年以及之後，估計如下（（以千爲單位）):
|
|
攤銷 |
年終數據爲12月31日 |
|
費用 |
2024年（10月1日至12月31日） |
|
$ |
2025 |
|
$ |
2026 |
|
$ |
2027 |
|
$ |
2028 |
|
$ |
此後 |
|
$ |
實際未來攤銷費用可能與預估金額不同，這可能是由於未來投資和其他因素導致的。
14
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
截至 2024年9月30日和2023年12月31日如下（（以千爲單位）):
|
|
9月30日， |
|
|
12月31日 |
|
||
|
|
2024 |
|
|
2023 |
|
||
貸款設施期限 |
|
$ |
|
|
$ |
|
||
減少：遞延融資成本 |
|
|
( |
) |
|
|
( |
) |
減：長期債務的流動部分 |
|
|
( |
) |
|
|
( |
) |
所有長期債務 |
|
$ |
|
|
$ |
|
||
2021年授信協議
2021年4月30日，Gogo與Gogo Intermediate Holdings LLC （「GIH」）（Gogo的全資子公司）簽訂了一項信貸協議（「原2021年信貸協議」，並可能不時修訂、補充或以其他方式修改的協議，即「2021年信貸協議」），該協議包括Gogo、GIH、出資銀行以及簽署方Morgan Stanley Senior Funding，Inc.（作爲行政代理），該協議規定了以下內容：（i）總額爲$金額的一筆貸款信貸額度（「貸款設施」），由折扣發行，（ii）高達$金額的循環信貸設施（「循環設施」以及貸款設施一起構成「設施」），其中包括信用狀況分設施。，2021年信貸協議”）之間的, Gogo、GIH、貸款人以及在此之中的發行銀行和Morgan Stanley Senior Funding, Inc.（作爲行政代理）。該協議提供了（i）總額爲$金額的一筆貸款信貸額度（「貸款設施」），由折扣發行，（ii）高達$金額的循環信貸設施（「循環設施」以及貸款設施一起構成「設施」），其中包括信用狀況分設施。
按年度支付，以每年初始本金總額的1%爲標準，直到貸款到期日爲止，剩餘餘額應在貸款設施最終到期日支付
年度利率採用浮動利率，根據GIH的選擇，可以選擇以下任一作爲基準進行測量：（i）根據紐約聯邦儲備銀行管理的調整期限擔保隔夜融資利率（「SOFR」）（僅受到
循環授信額度下的貸款按照GIH選擇的浮動利率支付年利息，可以選擇以下任一方式計算，即(i)
在GIH的選擇下，設施可以隨時提前償還，不收取溢價或罰款（除了慣例的違約費用），但需滿足最低本金支付要求。 2023年5月3日，公司提前償還了貸款設施的未償本金金額$
除了特定例外情況和最低臨界值外，貸款設施需進行強制預付款，金額等於：
2021年信貸協議包含慣例陳述和擔保以及慣例積極和消極契約。消極契約包括對以下事項的限制：負債的承擔或發行不合格的股權利益；負債或留存的留置權益；合併或兼併；Gogo及FCC發行許可證的任何子公司的活動；投資、貸款、墊款、擔保或收購；資產出售；股權的分紅或其他分配；購買、贖回或兌現股本；支付或贖回特定的次級負債；簽訂其他協議
15
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
限制可以擔保貸款設施的能力；並修改組織文件；在每種情況下都需符合慣例的例外。
循環授信設施包括將最高優先擔保頭寸淨槓桿比率設定爲
2021年信貸協議包含慣例的違約事件，如果任何違約事件發生，將允許或要求設施下所有當時未償還義務的本金、溢價（如有）和利息立即到期支付，並終止循環授信設施下的承諾。
截至2024年9月30日和2023年12月31日，循環授信設施可用於GIH及其子公司的營運資金和一般企業用途，且未用額度。
截至2024年9月30日和2023年12月31日，定期貸款設施的未償還本金金額爲 $
我們支付了大約$
2021年4月30日，Gogo、GIH及GIH的每個直接和間接完全擁有的美國受限子公司（Gogo和這些子公司合稱「擔保方」）與摩根士丹利資方公司（作爲抵押品代理）簽署了擔保協議（「擔保協議」），GIH和擔保方在其擔保協議中爲設施和擔保協議中規定的某些其他擔保債務擔保，並簽署了抵押協議（「抵押協議」），GIH和擔保方向抵押品代理授予幾乎所有可看和無形資產的抵押權利（包括GIH或任何擔保方直接擁有的每個美國直接材料完全擁有的子公司的股權利益和GIH或任何擔保方直接持有的任何非美子公司65%的股權利益），受到一定例外的限制，以擔保設施和擔保協議中規定的某些其他擔保債務。
我們的浮動利率借款面臨利率風險。我們目前使用利率上限來管理利率變動的風險，並已將這些利率上限指定爲現金流套期保值以用於會計目的。因此，指定爲現金流套期保值的衍生品的收益影響是在確認與套期保值債務相關的可變利息支付時記錄的。
2021年5月，我們購買了利率上限，名義總額爲美元
上限協議的名義金額、罷工率和結束日期如下 （以千爲單位的名義金額）:
開始日期 |
|
結束日期 |
|
名義上的 |
|
|
罷工率 |
|
||
|
|
$ |
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
|
|
|
|
|
|
% |
||||
我們將現金流套期保值公允價值變動的有效部分記錄爲扣除稅款的其他綜合收益（虧損），然後將這些金額重新歸類爲對沖交易確認期間的收益。根據ASC 815，如果套期保值不再被視爲有效，則累計其他綜合收益（虧損）中包含的金額將重新歸類爲利息支出， 衍生品和套期保值.
16
gogo inc及其附屬公司
未經審計的簡明綜合財務報表註解 - (續)
從UBS AG轉移到UBS瑞士銀行股份有限公司被視爲無效，並從2024年9月30日結束的三個和九個月期間的其他全面收入（損失）重新分類爲收入。 對於截至2023年9月30日的三個月期間，我們的現金流量套期交易產生的約$百萬淨未實現損失被視爲無效，並從其他全面收入（損失）重新分類爲收入。未實現損失與上一季度的未實現收益相抵，形成淨影響。
截至2024年9月30日的三個月期間，我們記錄了利率上限的公允價值下降$
當衍生工具被使用時，若對手方違約將面臨信用損失風險；然而，並不預期會違約。 ASC 815, 衍生工具及對沖, 要求公司在資產負債表中將所有衍生工具以公允價值確認爲資產或負債。利率衍生工具的公允價值基於商業銀行提供的類似工具的報價市場價格（基於重要可觀察輸入 - 2級輸入）。
下表顯示了我們的利率衍生工具的公允價值，已包含在呈現期間的未經審計的簡明合併資產負債表中（以千爲單位）：
|
|
|
|
9月30日， |
|
|
12月31日 |
|
||
被指定爲套期保值工具的衍生工具 |
|
資產負債表位置 |
|
2024 |
|
|
2023 |
|
||
利率上限的流動部分 |
|
|
$ |
|
|
$ |
|
|||
利率上限的非流動部分 |
|
|
$ |
|
|
$ |
|
|||
公允價值計量
我們的衍生資產和負債主要包括利率上限，這些資產按照基於重要可觀察輸入（二級輸入）的公允價值進行計量。我們進入的衍生工具通常是場外交易的，其價值是使用折現現金流與主要使用市場可觀察輸入的公允價值模型計算的。這些模型考慮了各種因素，包括（如果適用的話）到期日、利率收益曲線和交易對手信用風險。
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.
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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