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Gogo's (GOGO) Q2 Earnings and Revenues Surpass Estimates
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Gogo Inc. (GOGO - Free Report) reported second-quarter 2018 loss of 47 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 73 cents and the year-ago quarter’s loss of 56 cents.
Revenues increased 31.2% from the prior-year quarter to $227 million and also surpassed the Zacks Consensus Estimate of $209 million.
Gogo installed 2Ku service in 139 aircrafts in the second quarter 2018, which took the total count to 785.
During the quarter, Service revenues increased 3.2% from the year-ago quarter to $159.1 million and Equipment revenues surged 265.3% year over year to $68.4 million driven by solid growth from Business Aviation equipment revenues.
Segment-wise, Commercial Aviation - North America (CA-NA) revenues increased 18.5% year on year to $119.7 million, primarily on the back of higher aircraft online and take rates, which was offset by decline in American Airlines revenues.
Average revenue per aircraft (ARPA) was $113,000, which declined 0.9% from the year-ago quarter. Take rates, excluding American Airlines, increased 13%, driven by the launch of free in-flight messaging as well as partnership with T-Mobile.
Commercial Aviation - Rest of World (CA-ROW) revenues surged 139.1% year over year to $33.6 million, primarily driven by growth in equipment revenue, which reflects the impact of Accounting Standards Codification (ASC) 606. Moreover, service revenues increased on the back of increased aircraft online. ARPA declined 27.6% to $147,000 on the back of new aircraft fleet installations.
Business Aviation (BA) service revenues grew 14% year over year to $48.1 million on the back of service and equipment revenue growth. Total revenues increased 28.4% to $74.2 million, primarily driven by strong demand for AVANCE platform products.
The in-flight Internet provider incurred net loss of $37.2 million in the quarter, narrower than net loss of $44.2 million in the year-ago quarter. Adjusted EBITDA increased 90% from the year-ago quarter to $18.9 million, primarily due to increased BA revenues and lower CA operating expenses.
Gogo reported an operating loss of $7.4 million in second-quarter 2018 compared with an operating loss of $17.3 million in the previous-year quarter.
Capital expenditure decreased 29.1% year over year to $52.5 million.
Balance Sheet and Cash Flow
Gogo exited the quarter with cash, cash equivalents and short-term investments of $263.6 million compared with $299.7 million in the last reported quarter.
The company’s long-term debt remained consistent at $1 billion in the reported quarter as well as quarter ending Mar 31, 2018.
Guidance
For 2018, management expects total revenues in the range of $865 million to $935 million. Consolidated CapEx and cash CapEx are expected in the range of $150-$170 million and $110-$130 million, respectively.
Adjusted EBITDA is expected in the range of $35-$45 million. Further, the company anticipates 2Ku aircraft online at the low-end of the range of $550-$650 million.
Zacks Rank & Stocks to Consider
Gogo currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the computer technology sector are Vishay Intertechnology (VSH - Free Report) , Science Applications International (SAIC - Free Report) and Seagate Technology (STX - Free Report) . While Vishay Intertechnology sports a Zacks Rank #1 (Strong Buy), Science Applications and Seagate carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Vishay, Science Applications and Seagate is projected to be 8%, 5% and 13.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Gogo's (GOGO) Q2 Earnings and Revenues Surpass Estimates
Gogo Inc. (GOGO - Free Report) reported second-quarter 2018 loss of 47 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 73 cents and the year-ago quarter’s loss of 56 cents.
Revenues increased 31.2% from the prior-year quarter to $227 million and also surpassed the Zacks Consensus Estimate of $209 million.
Gogo installed 2Ku service in 139 aircrafts in the second quarter 2018, which took the total count to 785.
Gogo Inc. Price, Consensus and EPS Surprise
Gogo Inc. Price, Consensus and EPS Surprise | Gogo Inc. Quote
Quarterly Details
During the quarter, Service revenues increased 3.2% from the year-ago quarter to $159.1 million and Equipment revenues surged 265.3% year over year to $68.4 million driven by solid growth from Business Aviation equipment revenues.
Segment-wise, Commercial Aviation - North America (CA-NA) revenues increased 18.5% year on year to $119.7 million, primarily on the back of higher aircraft online and take rates, which was offset by decline in American Airlines revenues.
Average revenue per aircraft (ARPA) was $113,000, which declined 0.9% from the year-ago quarter. Take rates, excluding American Airlines, increased 13%, driven by the launch of free in-flight messaging as well as partnership with T-Mobile.
Commercial Aviation - Rest of World (CA-ROW) revenues surged 139.1% year over year to $33.6 million, primarily driven by growth in equipment revenue, which reflects the impact of Accounting Standards Codification (ASC) 606. Moreover, service revenues increased on the back of increased aircraft online. ARPA declined 27.6% to $147,000 on the back of new aircraft fleet installations.
Business Aviation (BA) service revenues grew 14% year over year to $48.1 million on the back of service and equipment revenue growth. Total revenues increased 28.4% to $74.2 million, primarily driven by strong demand for AVANCE platform products.
The in-flight Internet provider incurred net loss of $37.2 million in the quarter, narrower than net loss of $44.2 million in the year-ago quarter. Adjusted EBITDA increased 90% from the year-ago quarter to $18.9 million, primarily due to increased BA revenues and lower CA operating expenses.
Gogo reported an operating loss of $7.4 million in second-quarter 2018 compared with an operating loss of $17.3 million in the previous-year quarter.
Capital expenditure decreased 29.1% year over year to $52.5 million.
Balance Sheet and Cash Flow
Gogo exited the quarter with cash, cash equivalents and short-term investments of $263.6 million compared with $299.7 million in the last reported quarter.
The company’s long-term debt remained consistent at $1 billion in the reported quarter as well as quarter ending Mar 31, 2018.
Guidance
For 2018, management expects total revenues in the range of $865 million to $935 million. Consolidated CapEx and cash CapEx are expected in the range of $150-$170 million and $110-$130 million, respectively.
Adjusted EBITDA is expected in the range of $35-$45 million. Further, the company anticipates 2Ku aircraft online at the low-end of the range of $550-$650 million.
Zacks Rank & Stocks to Consider
Gogo currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the computer technology sector are Vishay Intertechnology (VSH - Free Report) , Science Applications International (SAIC - Free Report) and Seagate Technology (STX - Free Report) . While Vishay Intertechnology sports a Zacks Rank #1 (Strong Buy), Science Applications and Seagate carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth for Vishay, Science Applications and Seagate is projected to be 8%, 5% and 13.3%, respectively.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>