Gogo Inc. Q1 FY2026 earnings call

• Deliberate transition of legacy-based services into next-generation technology portfolio, focusing on GoGo Galileo, 5G rollout, and geobusiness.
• Steady progress on shipments, installations, and early activations across 5G and Gogo Galileo.
• Significant fleet wins for GOGO Galileo offering with VistaJet, Wheels up, NetJets.
• Strong momentum with 5G rollout, record C1 conversions, and extension from FCC regarding classic product migration.
• Geostationary earth orbit business showing resilience with plain simple KU band platform gains.
• Military and government service revenue growing, with secured contracts and expansion into UAV market.

GoGo Galileo:

• Shipments: 92 units in Q1, including 82 HDX and 10 FDX. Total LEO terminals shipped since launch: 410 units across 35 STCs. 14 additional STCs underway for another 1,500 aircraft.
• Fleet wins: VistaJet rolling out across ~100 aircraft (plan to equip over 270 globally), Wheels up rolling out across 80+ aircraft, NetJets Europe to be fully rolled out in first half of 2026, and started installations with NetJets North America.

Air-to-Ground (ATG) Network:

• 5G rollout: Sold an all-time record of 511 air-to-ground units this quarter (52 were 5G), pipeline over 500 units, units online ramping in late Q3 and Q4.
• Legacy products: Record C1 conversions of 254 in Q1, cumulative C1 units sold: 1,063. FCC extension for classic product migration to Nov 8, 2026. Allocated $334 million under FCC reimbursement program.
• Geo business: Geo units online declined by 15 in Q1, moderate reduction. GA fleet attrition expected due to market evolution. Plain simple KU band platform gained traction, AirX selected to upgrade Challenger 850 fleet, US Air Force Mobility Command approval for plain simple KU-band tail mount on C-130 platform.

Military and Government End Market:

• Revenue: Increased by 7% sequentially compared to Q4 2025. Secured contracts with NOAA ($8M over 5 years), us civil government customer ($3M for Galileo and 5G on small to mid-sized airframes), and wins in global UAV market for border protection and surveillance.

• Project total revenue in the range of $905 to $945 million.
• Expect adjusted EBITDA in the range of $198 to $218 million, including $3 million in strategic investments and $8 million of ongoing litigation expense.
• Anticipate free cash flow in the range of $90 to $110 million, implying 12% year-over-year growth at midpoint.
• Guidance includes $30 million slated for strategic investments, net of any FCC reimbursements, and net capital expenditures of $20 million, assuming $45 million in FCC reimbursement.

Q: Hey, good morning. Thanks for taking the questions. Nice to see you guys reiterating the outlook for 2026. Chris, maybe start from a high level. It seems like there are a lot of shipments going out the door as it relates to Galileo and 5G, yet AOL has been slow to come online. I'm wondering if you could talk us through the comfort that you have in terms of that ramping up into the second half of this year in terms of dealer channel support, you know, STCs, which seem like they're very much on track, and just maybe help us understand the competitive landscape out there, particularly as it relates to Starlink.

A: It's going to take time. We've got the building blocks in place. We have the real estate. Our equipment revenue is up 22% year on year. We've got record ATG unit sales. Galileo AOL grew 50% sequentially, and adjusted EBITDA grew 41%. And then if you look at the current shipments on Galileo, then most of that's with MROs at the moment. And really, as we've stated in previous calls, the OEMs come online really in Q3, Q4, and then you see that ramp going from there. So actually, we're really excited about what we're seeing with Galileo and is going to plan at the moment. Regarding competition, we're not really seeing any changes. I think the good news is this is probably the fastest product we've ever launched and the customer confidence is kind of showing with our results. And Chris, I'm sorry, my phone blocked out for the 5G commentary. I'm wondering if you could just reiterate that quickly.

A: Yeah, I mean, if you look on equipment revenue is up 22%, and then we've got year-on-year record ATG unit sales as well, which we sell on the call. So if you look at 5G from a standing start, the pipeline is over 500, and it's a really solid start. We're seeing... Already partners like Textron already completing all their STCs. We've got good product shipments, good reliability. So we're very, very confident about 5G. It's actually a really good start to the product. Then quick two follow-ups, maybe just in terms of the classic conversion, what you're ultimately hoping that looks like by the end of this year. I know你've got an extension there, but but what do you think the attrition is versus retention and conversion over? And then lastly, just as it relates to the traditional SATCOM business, I'm wondering, you know, given the growth that you're seeing in the military opportunities, you know, what's the long-term growth opportunity when you look at the traditional SATCOM business, and how much do you expect military to comprise of that as we start to look out two to three years?

A: Yeah, that's a lot. All right. So let me start with kind of air to ground. If you look at records, 254 C1 conversions this quarter and 1,058 overall, and our advanced base grew 3% year over year. So I think the tendency is just to focus on the quarter average on suspensions, deactivations on the classic customers. They're not all deactivations. Some of those are suspensions, so we expect some to come back. We, in the previous call, said that we expect to lose like 1,000 customers over the year. I think that's kind of holding. I think the big thing there, though, is the transition that we're showing with the new products is all of our customers have somewhere to go with a broadband experience, which they didn't have previously, which is pretty exciting. And, you know, we continue to believe the ATG portfolio kind of will be a very, very important part of our business moving forward. Going on to the MilGov business, I think, you know, just what we're seeing with the wins that we discussed today is kind of a very robust business unit that's growing, which is really exciting. And the value of the commercial-based products that we're putting into that Lower cost, support, global capability, robust cybersecurity, and then the drone market. We see that as a really exciting area for the business to grow into. And service revenue up 14% year on year, 7% from the last quarter. So we're really excited about that revenue segment for us.

Q: Hi, this is Gabby Noffelman on for Justin Lang. Thanks for taking the question. You had mentioned that NetJets Europe will fully roll out Galileo in the first half of the year. I'm curious if you could give us a sense of expectations for the overall Galileo domestic international split through the end of the year.

A: Yeah, that's a good question. So let me just clarify a little bit on NetJets. I think there's a lot of misunderstanding around our NetJets relationship. And I want to clarify this is, you know, really going very well. If you look at the confidence in the broader fleet relationships along with NetJets, we're completing rolling out NetJets Europe. We're starting to roll out NetJets North America. And we're also starting to see you know, real big traction with VistaJet aiming for 270 plus aircraft, wheels up in their transformation with new aircraft, Lux Aviation, Avcon Jet, AirX. So the confidence in the fleet operators, I think, speaks volumes for the business. And that 60-40 split is, you know, 60% North America, 40% overseas is really exciting for the business because previous to the Satcom Direct acquisition, GoGo was predominantly just a U.S. supply. So我们're seeing that kind of international expansion, confidence in the fleet operators, and NetJets is still in the fold with GoGo, and we're excited about rolling out with them.

Q: I'm just curious if you could comment on how geo AOL figures this quarter compared against your expectations. and whether or not you're thinking any differently at all about some of the pressures you had flagged around GEO coming into the year.

A: Yeah, so effectively, GEO has held up exactly as we thought it would. The 15 units is sort of what we thought. I think the other kind of positive sign is as we telegraphed in Q4, the minor drop was largely related to aircraft sales. I can tell you that's the same trend in Q1. our sales guys are beating down the door to try to find the new owners and win those back. So I think GEO continues to be robust. The ARPA is down a little bit, but again, that's what we thought. So我think we've got a pretty good handle on GEO as of now.