Gogo’s Shares Rise on Q3 Financial Results

Gogo (NASDAQ:GOGO) announced on Tuesday (November 6) its Q3 2018 financial results, highlighting a 65 percent profit increase to US$35.2 million in its business aviation segment.

The company, which is engaged in providing broadband connectivity products and services for the aviation industry, also noted its consolidated revenue was US$217.3 million, which is 26 percent up from its Q3 2017 results.

Crucially, Gogo’s net loss improved by 17 percent compared to Q3 2017 to US$37.7 million while its adjusted EBITDA have increased to US$21.1 million, up 63 percent from the same period in the prior year.

Further, the company has raised its 2018 adjusted EBITDA guidance to a range between US$45 million and US$60 million from its previous range of US$35 million and US$45 million.

While Gogo is set for a strong EBITDA growth in 2019, Oakleigh Thorne, the company’s president, said that its Q3 2018 results establishes its strong performance.

Further, Throne said in the company’s earnings call on Wednesday that Gogo has been “hard” at work on improving its Gogo 2020 plan ,which is the company’s long-term business outlook.

“The enhanced plan called Gogo 2020 plus significantly improves the performance of our CA business and maintains the positive cash balance throughout the planning period, thereby significantly improving our ability to fund the business going forward,” Thorne said.

Total revenues in the company’s business aviation segment increased to US$73.6 million, up 22 percent from the same period last year while its service revenues in the segment increased 14 percent to US$49.3 million.

The company’s commercial aviation in North America faced the wrath of increased satellite costs as  profit decreased to US$8.7 million compared to US$16 million from the same period in 2017.

Throne said that the impact on this segment was due to higher operating expenses as well as the need to support capacity requirements for the company’s 2Ku fleet.

“We are really pleased with the resiliency of our CA-NA service revenue,” he said. “We expect [service revenue] to slow next quarter because of an unusually strong comp in Q4 2017, but to pick up again Q1 next year.”

Meanwhile, the company’s commercial aviation, rest of world segment fared comparatively well as the total revenue increased to US$35.2 million, up from US$16.6 million in Q3 2017. The segment’s service revenue increased 12 percent to US$17.6 million.

“In Q3 2013, we started with zero percent market share of installed aircraft and at the end of Q3 this year we have grown that to 17.1 percent,” Thorne said. “We expect strong revenue growth and we expect that growth to outpace growth in service costs as we scale to meet the demand of new airlines.”

Following its Q3 financial results, shares of Gogo were up 26.25 percent to close the trading session on Tuesday at US$7.31. The stock opened at US$6.05 and had a high of US$7.82 with a trading volume of 12.55 million shares. Gogo has a “Strong Buy” ranking on TradingView with 17 verticals in favor, seven in neutral and two against.

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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.