Gogo Announces First Quarter 2014 Results

                  Gogo Announces First Quarter 2014 Results

Record quarterly revenue up 35 percent to $95.7 million

PR Newswire

ITASCA, Ill., May 12, 2014

ITASCA, Ill., May 12, 2014 /PRNewswire/ -- Gogo Inc. (Nasdaq: GOGO), a leading
aircraft communications service provider to the global aviation industry,
today announced its financial results for the quarter ended March 31, 2014.

GogoLOGO

Gogo reported record first quarter revenue of $95.7 million, up 35%
year-over-year. Adjusted EBITDA for Q1 2014 was $5.3 million, up 87% from
$2.9 million in Q1 2013, driven by strong performance by our CA-NA and BA
segments that was partially offset by an increased segment loss in our CA-ROW
segment as we continued to invest in our international expansion. Net loss
attributable to common stock for Q1 2014 was $16.9 million, or $0.20 per
share, compared to net loss attributable to common stock of $32.5 million, or
$4.77 per share, in Q1 2013.

"We had an excellent first quarter, during which we produced strong financial
results, achieved several important technical and business milestones, and
launched connectivity service on Delta's international fleet," said Gogo's
President and CEO, Michael Small. "Furthermore, we unveiled 2Ku - our new and
exclusive communications technology for the global aviation industry. We also
announced our partnership with Air Canada for its entire North American fleet.
Our technology leadership, operational expertise, and suite of communications
solutions continue to set us apart both in North America and internationally,"
added Mr. Small.

First Quarter 2014 Consolidated Financial Results

  oRevenue increased to $95.7 million, up 35% from $70.8 million in Q1 2013.
    Service revenue increased 32% to $72.3 million and equipment revenue
    increased 48% to $23.4 million year-over-year.
  oOperating expenses increased to $105.0 million, up 30% from $81.1 million
    in Q1 2013. We incurred higher operating expenses primarily due to higher
    cost of service expenses at CA-NA and BA as a result of increased service
    revenue, and increased cost of equipment expenses at BA as a result of
    increased equipment revenue. In CA-ROW, we incurred increased operating
    expenses primarily due to higher satellite transponder and teleport fees,
    and expenses related to the development and certification of our satellite
    connectivity systems.
  oAdjusted EBITDA increased to $5.3 million from $2.9 million in Q1 2013,
    driven by strong growth in CA-NA and BA segment profit, offset in part by
    increased segment loss in CA-ROW due to increased investment in our
    international expansion.
  oCash CAPEX, defined as capital expenditures net of airborne equipment
    proceeds received from the airlines, increased to $28.6 million, up 6%
    from $27.1 million in Q1 2013, driven primarily by investments in our ATG
    network.
  oAs of March 31, 2014, Gogo had cash and cash equivalents of $219.6 million
    compared to $266.3 million as of December 31, 2013.

First Quarter 2014 Business Segment Financial Results

  oCommercial Aviation - North America (CA-NA)

       oWe ended the quarter with 2,056 aircraft online, up 9% from 1,878 at
         March 31, 2013.
       oAverage monthly service revenue per aircraft online, or ARPA,
         increased to $9,199, up 20% from $7,696 in Q1 2013, driven primarily
         by an 11% increase in take rate, to 6.9% in Q1 2014 from 6.2% in Q1
         2013.
       oTotal revenue increased to $57.1 million, up 32% from $43.4 million
         in Q1 2013.
       oSegment profit increased to $5.8 million, up $6.2 million from a
         segment loss of $0.4 million in Q1 2013, due to strong revenue growth
         and the timing of airborne equipment certification and development
         expenses.

  oBusiness Aviation (BA)

       oWe ended the quarter with 2,250 ATG systems online, up 45% from 1,555
         at March 31, 2013, and 5,252 satellite systems online, up 4% from
         5,062 at March 31, 2013.
       oService revenue increased to $15.8 million, up 44% from $10.9 million
         in Q1 2013, driven by the increase in ATG systems online and higher
         average monthly service revenue per aircraft online for both ATG and
         satellite service.
       oEquipment revenue increased to $22.8 million, up 49% from $15.2
         million in Q1 2013, driven by a 41% increase in ATG units shipped to
         241 for Q1 2014, up from 171 in Q1 2013, higher average revenue per
         ATG unit shipped, and strong sales of the recently introduced Gogo
         Text & Talk product.
       oTotal revenue increased to $38.6 million, up 47% from $26.2 million
         in Q1 2013.
       oSegment profit increased to $16.5 million, up 74% from $9.5 million
         in Q1 2013, and segment profit as a percentage of segment revenue
         increased to 43% in Q1 2014, up from 36% in Q1 2013.

  oCommercial Aviation - Rest of World (CA-ROW)

       oWe launched our Ku-band satellite connectivity service on Delta's
         international fleet in March of 2014 and ended the quarter with five
         aircraft online. We expect to end 2014 with 50 to 100 CA-ROW aircraft
         online.
       oSegment loss increased to $16.9 million from a segment loss of $6.2
         million in Q1 2013, due primarily to increased satellite transponder
         and teleport fees, and expenses associated with the development and
         certification of our aircraft satellite connectivity systems.

Recent Announcements

  oWe received a Supplemental Type Certificate (STC) from the FAA and
    certification from the Japanese Civil Aviation Bureau (JCAB) to install
    our Ku-band satellite technology on Boeing 777-300 aircraft. This is our
    fourth STC for international aircraft – we previously received STCs for
    Boeing 747-400, 777-200, and Airbus 330 aircraft.
  oWe announced our revolutionary 2Ku satellite connectivity technology,
    which is initially expected to bring 70 mbps to the aircraft, and to be
    commercially available in mid-2015.
  oAir Canada selected Gogo as the in-flight connectivity provider for its
    entire North American fleet of 130 aircraft, and expects to test Gogo's
    2Ku and Global Xpress satellite connectivity systems on international
    flights in 2015.
  oAlaska Airlines announced that it will offer Gogo Vision on its full fleet
    by the end of 2014.
  oBA announced the launch of our next generation Iridium satellite
    communications solution.
  oWe announced that Gogo and Boeing signed a technical services agreement
    that will enable us to pursue line-fit installation of our ATG-4 and
    satellite solutions on Boeing aircraft.

Business Outlook

For the full year ending December 31, 2014, our guidance remains unchanged:

  oTotal revenue of $400 million to $422 million

       oCA-NA revenue of $240 million to $250 million
       oBA revenue of $157 million to $167 million
       oCA-ROW revenue of $3 million to $5 million

  oAdjusted EBITDA of $8 million to $18 million
  oCash CAPEX of $105 million to $125 million

"We expect continued strong growth in revenue fueled by strong secular trends
and passenger adoption of new services. We continue to add capacity by
upgrading aircraft to ATG-4 technology and had 534 aircraft equipped with
ATG-4 systems at the end of March. We expect to see significant capacity
increases with the introduction of our GTO and 2Ku airborne antennas, both of
which are capable of delivering industry leading speeds of 70 mbps to the
aircraft initially, and up to 100 mbps when spot beam Ku satellites are
launched," commented Mr. Small.

Conference Call

Thefirstquarter conference call will be held on May 12th, 2014 at 8:30 a.m.
ET. A live webcast of the conference call, as well as a replay, will be
available online on the Investor Relations section of the company's website at
http://ir.gogoair.com. Participants can also access the call by dialing (855)
500-1988 (within the United States and Canada) or (832) 412-1830
(international dialers) and entering conference ID number 33329976. A replay
of the call will be available beginning approximately two hours after the call
has ended and will remain available until June 12th, 2014. To access the
replay, dial (855) 859-2056 (within the United States and Canada) or (404)
537-3406 (international dialers) and enter the conference ID number 33329976.

Non-GAAP Financial Measures

We report certain non-GAAP financial measurements, including Adjusted EBITDA,
Adjusted Net Loss, Adjusted Net Loss Per Share and Cash CAPEX in the
supplemental tables below. Management uses Adjusted EBITDA and Cash CAPEX for
business planning purposes, including managing our business against internally
projected results of operations and measuring our performance and liquidity.
Management prepares Adjusted Net Loss and Adjusted Net Loss Per Share for
investors, securities analysts and other users of our financial statements for
use in evaluating our performance under our current capital structure. 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 measurements may vary from and may not be comparable to similarly
titled measures by other companies. Adjusted EBITDA, Adjusted Net Loss,
Adjusted Net Loss Per Share and Cash CAPEX are not recognized measurements
under accounting principles generally accepted in the United States, or GAAP,
and when analyzing our performance or liquidity, as applicable, investors
should (i) evaluate each adjustment in our reconciliation of net loss
attributable to common stock, and the explanatory footnotes regarding those
adjustments, (ii) use Adjusted EBITDA, Adjusted Net Loss and Adjusted Net Loss
Per Share in addition to, and not as an alternative to, net loss attributable
to common stock as a measure of operating results, and (iii) use Cash CAPEX in
addition to, and not as an alternative to, consolidated capital expenditures
when evaluating our liquidity.

Cautionary Note Regarding Forward-Looking Statements

Certain disclosures in this press release and related comments by our
management include 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 business
outlook, industry, business strategy, plans, goals and expectations concerning
our market position, international expansion, 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," "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 press release.

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: the loss of, or failure to realize benefits from,
agreements with our airline partners; any inability to timely and efficiently
roll out our technology roadmap for any reason, including regulatory delays,
or the failure by our airline partners to roll out equipment upgrades or new
services or adopt new technologies in order to support increased network
capacity demands; the loss of relationships with original equipment
manufacturers or dealers; our ability to develop network capacity sufficient
to accommodate demand; unfavorable economic conditions in the airline industry
and economy as a whole; our ability to expand our domestic or international
operations, including our ability to grow our business with current and
potential future airline partners; an inability to compete effectively with
other current or future providers of in-flight connectivity services and other
products and services that we offer, including on the basis of price, service
performance and line-fit availability; our reliance on third-party satellite
service providers and equipment and other suppliers, including single source
providers and suppliers; our ability to successfully develop and monetize new
products and services, including those that were recently released, are
currently being offered on a limited, or trial basis or are in various stages
of development; our ability to deliver products and services, including newly
developed products and services, on schedules consistent with our contractual
commitments to customers; the effects, if any, on our business of the recent
merger of American Airlines and U.S. Airways; a revocation of, or reduction
in, our right to use licensed spectrum or grant of a license to use
air-to-ground spectrum to a competitor; our use of open source software and
licenses; the effects of service interruptions or delays, technology failures,
material defects or errors in our software or damage to our equipment; the
limited operating history of our CA-NA and CA-ROW segments; increases in our
projected capital expenditures due to, among other things, unexpected costs
incurred in connection with the roll-out of our technology roadmap or our
international expansion; compliance with U.S. and foreign government
regulations and standards, including those related to the installation and
operation of satellite equipment and our ability to obtain and maintain all
necessary regulatory approvals to install and operate our equipment in the
U.S. and foreign jurisdictions; our, or our technology suppliers', inability
to effectively innovate; costs associated with defending pending or future
intellectual property infringement and other litigation or claims; our ability
to protect our intellectual property; any negative outcome or effects of
pending or future litigation; limitations and restrictions in the agreements
governing our indebtedness and our ability to service our indebtedness; our
ability to obtain additional financing on acceptable terms or at all;
fluctuation in our operating results; our ability to attract and retain
customers and to capitalize on revenue from our platform; the demand for and
market acceptance of our products and services; changes or developments in the
regulations that apply to us, our business and our industry; the attraction
and retention of qualified employees and key personnel; the effectiveness of
our marketing and advertising and our ability to maintain and enhance our
brands; our ability to manage our growth in a cost-effective manner and
integrate and manage acquisitions; compliance with corruption laws and
regulations in the jurisdictions in which we operate, including the Foreign
Corrupt Practices Act and the (U.K.) Bribery Act 2010; restrictions on the
ability of U.S. companies to do business in foreign countries, including,
among others, restrictions imposed by the OFAC; and difficulties in collecting
accounts receivable.

Additional information concerning these and other factors can be found under
the caption "Risk Factors" in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission on March 14, 2014.

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 press
release 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 we
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or
otherwise.

About Gogo

Gogo is a leading aircraft communications service provider to the global
aviation industry. Using Gogo's exclusive products and services, passengers
with Wi-Fi enabled devices can get online on more than 2,000 Gogo equipped
commercial aircraft. In-flight connectivity partners include AeroMexico,
American Airlines, Air Canada, AirTran Airways, Alaska Airlines, Delta Air
Lines, Japan Airlines, United Airlines, US Airways and Virgin America.
In-flight entertainment partners include AeroMexico, American Airlines, Delta
Air Lines, Japan Airlines, Scoot and US Airways. In addition to its commercial
airline business, Gogo provides its communications services to passengers on
more than 6,200 business aircraft. Back on the ground, Gogo's 700+ employees
in Itasca, IL, Broomfield, CO and various locations overseas are working to
continually redefine flying as a productive, socially connected, and
all-around more satisfying experience. Connect with Gogo at www.gogoair.com,
on Facebook at www.facebook.com/gogo and on Twitter at www.twitter.com/gogo.

Investor Relations Contact:  Media Relations Contact:
Varvara Alva                 Steve Nolan
630-647-7460                 630-647-1074
ir@gogoair.com               pr@gogoair.com





Gogo Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Operations
(in thousands, except per share amounts)
                                                        For the Three Months
                                                        Ended March 31,
                                                        2014        2013
Revenue:
Service revenue                                         $ 72,291    $ 54,935
Equipment revenue                                         23,403      15,819
Total revenue                                             95,694      70,754
Operating expenses:
Cost of service revenue (exclusive of items shown         39,628      25,970
below)
Cost of equipment revenue (exclusive of items shown       9,986       7,729
below)
Engineering, design and development                       14,099      12,285
Sales and marketing                                       8,042       6,630
General and administrative                                17,572      14,595
Depreciation and amortization                             15,687      13,845
Total operating expenses                                  105,014     81,054
Operating loss                                            (9,320)     (10,300)
Other (income) expense:
Interest income                                           (15)        (19)
Interest expense                                          7,248       3,920
Other expense                                             40          1
Total other expense                                       7,273       3,902
Loss before incomes taxes                                 (16,593)    (14,202)
Income tax provision                                      273         275
Net loss                                                  (16,866)    (14,477)
Class A and Class B senior convertible preferred stock    -           (15,283)
return
Accretion of preferred stock                              -           (2,690)
Net loss attributable to common stock                   $ (16,866)  $ (32,450)
Net loss attributable to common stock per share—basic   $ (0.20)    $ (4.77)
and diluted
Weighted average number of shares—basic and diluted       84,995      6,802





Gogo Inc. and Subsidiaries
Unaudited Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
                                                     March 31,    December 31,
                                                     2014         2013
Assets
Current assets:
Cash and cash equivalents                            $ 219,572    $  266,342
Accounts receivable, net of allowances of $97 and      29,669        25,690
$162, respectively
Inventories                                            11,693        13,646
Prepaid expenses and other current assets              18,272        16,287
Total current assets                                   279,206       321,965
Non-current assets:
Property and equipment, net                            283,494       265,634
Intangible assets, net                                 74,369        72,848
Goodwill                                               620           620
Long-term restricted cash                              7,899         5,418
Debt issuance costs                                    12,133        12,969
Other non-current assets                               11,710        9,546
Total non-current assets                               390,225       367,035
Total assets                                         $ 669,431    $  689,000
Liabilities and Stockholders' equity
Current liabilities:
Accounts payable                                     $ 16,428     $  22,251
Accrued liabilities                                    42,054        49,146
Accrued airline revenue share                          9,969         9,958
Deferred revenue                                       13,094        11,718
Deferred airborne lease incentives                     9,956         9,005
Current portion of long-term debt and capital leases   8,315         7,887
Total current liabilities                              99,816        109,965
Non-current liabilities:
Long-term debt                                         233,951       235,627
Deferred airborne lease incentives                     58,122        53,012
Deferred tax liabilities                               5,977         5,770
Other non-current liabilities                          16,253        14,436
Total non-current liabilities                          314,303       308,845
Total liabilities                                      414,119       418,810
Stockholders' equity
Common stock                                           9             8
Additional paid-in-capital                             873,554       871,325
Accumulated other comprehensive loss                   (667)         (425)
Accumulated deficit                                    (617,584)     (600,718)
Total stockholders' equity                             255,312       270,190
Total liabilities and stockholders' equity           $ 669,431    $  689,000





Gogo Inc. and Subsidiaries
Unaudited Condensed Consolidated Statements of Cash Flows
(in thousands)
                                                        For the Three Months
                                                        Ended March 31,
                                                        2014        2013
Operating activities:
Net loss                                                $ (16,866)  $ (14,477)
Adjustments to reconcile net loss to cash provided by
operating activities:
Depreciation and amortization                             15,687      13,845
Loss on asset disposals/abandonments                      186         50
Deferred income taxes                                     207         201
Stock compensation expense                                1,604       878
Amortization of deferred financing costs                  836         386
Changes in operating assets and liabilities:
Accounts receivable                                       (3,979)     (1,441)
Inventories                                               1,953       (1,252)
Prepaid expenses and other current assets                 (1,980)     (688)
Accounts payable                                          (2,475)     1,406
Accrued liabilities                                       (8,484)     (5,658)
Accrued airline revenue share                             11          1,033
Deferred airborne lease incentives                        5,566       4,786
Deferred revenue                                          1,163       320
Other non-current assets and liabilities                  (238)       327
Net cash used in operating activities                     (6,809)     (284)
Investing activities:
Proceeds from the sale of property and equipment          -           85
Purchases of property and equipment                       (31,907)    (29,390)
Acquisition of intangible assets—capitalized software     (4,188)     (4,108)
(Increase) decrease in investing restricted cash          (2,499)     -
Net cash used in investing activities                     (38,594)    (33,413)
Financing activities:
Payment of debt, including capital leases                 (2,003)     (1,021)
Other                                                     626         112
Net cash used in financing activities                     (1,377)     (909)
Effect of exchange rate changes on cash                   10          (10)
Decrease in cash and cash equivalents                     (46,770)    (34,616)
Cash and cash equivalents at beginning of period          266,342     112,576
Cash and cash equivalents at end of period              $ 219,572   $ 77,960





Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics

Commercial Aviation North America
                                                          For the Three Months
                                                          Ended March 31,
                                                          2014        2013
Aircraft online                                              2,056      1,878
Average monthly service revenue per aircraft online       $  9,199    $ 7,696
(ARPA)
Gross passenger opportunity (GPO) (in thousands)             74,668     65,024
Total average revenue per passenger opportunity (ARPP)    $  0.76     $ 0.66
Total average revenue per session (ARPS)                  $  10.55    $ 10.30
Connectivity take rate                                       6.9%       6.2%



  oAircraft online. We define aircraft online as the total number of
    commercial aircraft on which our ATG network equipment is installed and
    Gogo service has been made commercially available as of the last day of
    each period presented.
  oAverage monthly service revenue per aircraft online ("ARPA"). We define
    ARPA as the aggregate service revenue for the period divided by the number
    of months in the period, divided by the number of aircraft online during
    the period (expressed as an average of the month end figures for each
    month in such period).
  oGross passenger opportunity ("GPO"). We define GPO as the estimated
    aggregate number of passengers who board commercial aircraft on which Gogo
    service has been available during the period presented. We calculate
    passenger estimates by taking the maximum capacity of flights with Gogo
    service, which is calculated by multiplying the number of flights flown by
    Gogo-equipped aircraft, as published by Air Radio Inc. (ARINC), by the
    number of seats on those aircraft, and adjusting the product by a
    passenger load factor for each airline, which represents the percentage of
    seats on aircraft that are occupied by passengers. Load factors are
    provided to us by our airline partners and are based on historical data.
  oTotal average revenue per passenger opportunity ("ARPP"). We define ARPP
    as revenue from Gogo Connectivity, Gogo Vision, Gogo Signature Services
    and other service revenue for the period, divided by GPO for the period.
  oTotal average revenue per session ("ARPS"). We define ARPS as revenue from
    Gogo Connectivity divided by the total number of sessions during the
    period. A session, or a "use" of Gogo Connectivity, is defined as the use
    by a unique passenger of Gogo Connectivity on a flight segment. Multiple
    logins or purchases under the same user name during one flight segment
    count as only one session.
  oConnectivity take rate. We define connectivity take rate as the number of
    sessions during the period expressed as a percentage of GPO. Included in
    our connectivity take-rate calculation are sessions for which we did not
    receive revenue, including those provided pursuant to free promotional
    campaigns and, to a lesser extent, as a result of complimentary passes
    distributed by our customer service representatives or unforeseen
    technical issues. For the periods listed above, the number of sessions for
    which we did not receive revenue was less than 3% of the total number of
    sessions.





Gogo Inc. and Subsidiaries

Supplemental Information – Key Operating Metrics

Business Aviation
                                                          For the Three Months
                                                          Ended March 31,
                                                          2014        2013
Aircraft online
Satellite                                                    5,252       5,062
ATG                                                          2,250       1,555
Average monthly service revenue per aircraft online
Satellite                                                 $  160      $  151
ATG                                                          2,006       1,893
Units Shipped
Satellite                                                    153         147
ATG                                                          241         171
Average equipment revenue per unit shipped (in thousands)
Satellite                                                 $  48       $  40
ATG                                                          64          53



  oSatellite aircraft online. We define satellite aircraft online as the
    total number of business aircraft for which we provide satellite services
    in operation as of the last day of each period presented.
  oATG aircraft online. We define ATG aircraft online as the total number of
    business aircraft for which we provide ATG services in operation as of the
    last day of each period presented.
  oAverage monthly service revenue per satellite aircraft online. We define
    average monthly service revenue per satellite aircraft online as the
    aggregate satellite service revenue for the period divided by the number
    of months in the period, divided by the number of satellite aircraft
    online during the period (expressed as an average of the month end figures
    for each month in such period).
  oAverage monthly service revenue per ATG aircraft online. We define average
    monthly service revenue per ATG aircraft online as the aggregate ATG
    service revenue for the period divided by the number of months in the
    period, divided by the number of ATG aircraft online during the period
    (expressed as an average of the month end figures for each month in such
    period).
  oUnits shipped. We define units shipped as the number of satellite or ATG
    network equipment units, respectively, shipped during the period.
  oAverage equipment revenue per satellite unit shipped. We define average
    equipment revenue per satellite unit shipped as the aggregate equipment
    revenue earned from all satellite shipments during the period, divided by
    the number of satellite units shipped.
  oAverage equipment revenue per ATG unit shipped. We define average
    equipment revenue per ATG unit shipped as the aggregate equipment revenue
    from all ATG shipments during the period, divided by the number of ATG
    units shipped.





Gogo Inc. and Subsidiaries
Supplemental Information – Segment Revenue and Segment Profit/(Loss)
(in thousands, Unaudited)
                       For the Three Months Ended
                       March 31, 2014
                       CA-NA        CA-ROW        BA        Total
Service revenue        $  56,435    $  63         $ 15,793  $ 72,291
Equipment revenue         633          -            22,770    23,403
Total revenue          $  57,068    $  63         $ 38,563  $ 95,694
Segment profit (loss)  $  5,804     $  (16,893)   $ 16,463  $ 5,374
                       For the Three Months Ended
                       March 31, 2013
                       CA-NA        CA-ROW        BA        Total
Service revenue        $  42,806    $  1,198      $ 10,931  $ 54,935
Equipment revenue         559          20           15,240    15,819
Total revenue          $  43,365    $  1,218      $ 26,171  $ 70,754
Segment profit (loss)  $  (385)     $  (6,220)    $ 9,456   $ 2,851
Gogo Inc. and Subsidiaries

Supplemental Information – Segment Cost of Service Revenue

(in thousands, Unaudited)^(1)
                                    For the Three Months
                                    Ended March 31,
                                    2014          2013
CA-NA                               $  27,223     $ 21,666
BA                                     4,649        2,854
CA-ROW                                 7,756        1,450
 Total                           $  39,628     $ 25,970
(1) Excludes depreciation and amortization expense.
Gogo Inc. and Subsidiaries

Supplemental Information – Segment Cost of Equipment Revenue

(in thousands, Unaudited)^(1)
                                    For the Three Months
                                    Ended March 31,
                                    2014          2013
CA-NA                               $  987        $ 230
BA                                     8,999        7,499
CA-ROW                                 -            -
 Total                           $  9,986      $ 7,729
(1) Excludes depreciation and amortization expense.





Gogo Inc. and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
(in thousands, except per share amounts)
(unaudited)
                                                    For the Three Months Ended
                                                    March 31,
                                                    2014           2013
Adjusted EBITDA:
Net income (loss) attributable to common stock      $  (16,866)    $  (32,450)
(GAAP)
Interest expense                                       7,248          3,920
Interest income                                        (15)           (19)
Income tax provision                                   273            275
Depreciation and amortization                          15,687         13,845
EBITDA                                                 6,327          (14,429)
Class A and Class B senior convertible preferred       -              15,283
stock return
Accretion of preferred stock                           -              2,690
Stock-based compensation expense                       1,604          878
Amortization of deferred airborne lease incentives     (2,597)        (1,572)
Adjusted EBITDA                                     $  5,334       $  2,850
Adjusted Net Loss and Adjusted Net Loss Per Share:
Net loss attributable to common stock (GAAP)        $  (16,866)    $  (32,450)
Class A and Class B senior convertible preferred       -              15,283
stock return
Accretion of preferred stock                           -              2,690
Adjusted Net Loss                                   $  (16,866)    $  (14,477)
Basic and diluted weighted average shares              84,995         6,802
outstanding (GAAP)
Adjustment of shares to our current capital            -              78,193
structure
Adjusted shares outstanding                            84,995         84,995
Adjusted Net Loss Per Share – basic and diluted     $  (0.20)      $  (0.17)
Cash CAPEX:
Consolidated capital expenditures (GAAP) ^(1)       $  (36,095)    $  (33,498)
Deferred airborne lease incentives ^(2)                4,965          4,786
Amortization of deferred airborne lease incentives     2,490          1,572
^(2)
Cash CAPEX                                          $  (28,640)    $  (27,140)

(1) See unaudited condensed consolidated statements of cash flows.
    Excludes deferred airborne lease incentives and related amortization
(2) associated with Supplemental Type Certificates (STCs) for the three months
    ended March 31, 2014 as STC costs are expensed as incurred as part of
    Engineering, Design and Development.



Definition of Non-GAAP Measures

EBITDA represents net income (loss) attributable to common stock before income
taxes, interest income, interest expense, depreciation expense and
amortization of other intangible assets.

Adjusted EBITDA represents EBITDA adjusted for (i) fair value derivative
adjustments, (ii) preferred stock dividends, (iii) accretion of preferred
stock, (iv) stock-based compensation expense, (v) amortization of deferred
airborne lease incentives and (vi) write off of deferred equity financing
costs. 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.

More specifically, we believe the exclusion of fair value derivative
adjustments, Class A and Class B senior convertible preferred stock return and
accretion of preferred stock from Adjusted EBITDA is appropriate because we do
not believe such items are indicative of ongoing operating performance due to
their non-recurring nature as a result of the conversion of all shares of
preferred stock into shares of common stock upon consummation of our IPO in
June 2013.

Additionally, we believe the exclusion of stock-based compensation expense
from Adjusted EBITDA is appropriate given the significant variation in expense
that can result from using the Black-Scholes model to determine the fair value
of such compensation. The fair value of our stock options as determined using
the Black-Scholes model varies based on fluctuations in the assumptions used
in this model, including inputs that are not necessarily directly related to
the performance of our business, such as the expected volatility, the
risk-free interest rate, the expected life of the options and future dividends
to be paid by the Company. Therefore, we believe the exclusion of this cost
provides a clearer view of the operating performance of our business. Further,
stock option 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.

We believe the exclusion of the amortization of deferred airborne lease
incentives from Adjusted EBITDA is useful as it allows an investor to view
operating performance across time periods in a manner consistent with how
management measures segment profit and loss, see Note 13 "Business Segments
and Major Customers" of the first quarter 10-Q as filed with the SEC for a
description of segment profit (loss). Management evaluates segment profit and
loss in this manner, excluding the amortization of deferred airborne lease
incentives, because such presentation reflects operating decisions and
activities from the current period, without regard to the prior period
decision or form of connectivity agreements. See "—Key Components of
Consolidated Statements of Operations—Cost of Service Revenue—Commercial
Aviation North America" in our Annual Report on Form 10-K for the year ended
December 31, 2013 for a discussion of the accounting treatment of deferred
airborne lease incentives.

We believe it is useful to an understanding of our operating performance to
exclude write off of deferred equity financing costs from Adjusted EBITDA
because of the non-recurring nature of this charge.

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 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.

Adjusted Net Loss represents net loss attributable to common stock before fair
value derivative adjustments, Class A and Class B senior convertible preferred
stock return and accretion of preferred stock. We present Adjusted Net Loss to
eliminate the impact of such items because we do not consider those indicative
of ongoing operating performance due to their non-recurring nature as a result
of the conversion of all shares of preferred stock into shares of common stock
in connection with our IPO in June 2013.

Adjusted Net Loss Per Share represents net loss attributable to common stock
per share—basic and diluted, adjusted to reflect the number of shares of
common stock outstanding as of March 31, 2014 under our current capital
structure, after giving effect to the initial public offering and the
corresponding conversion of shares of preferred stock outstanding. We present
Adjusted Net Loss Per Share to provide investors, securities analysts and
other users of our financial statements with important supplemental
information with which to evaluate our performance considering our current
capital structure and the shares outstanding following our IPO on a consistent
basis.

Cash CAPEX represents capital expenditures net of airborne equipment proceeds
received from the airlines. We believe Cash CAPEX provides a more
representative indication of our liquidity requirements with respect to
capital expenditures, as under certain agreements with our airline partners we
are reimbursed for all, or a substantial portion of, the cost of our airborne
equipment, thereby reducing our cash capital requirements.

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SOURCE Gogo

Website: http://www.gogoair.com
 
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