=Gogo (GOGO) reported earnings on Mon 27 Feb 17 (b/o)

Gogo beats by $0.12, beats on revs; guides FY17 revs above consensus; sees FCF positive in 2019 :

• Reports Q4 (Dec) loss of $0.34 per share, $0.12 better than the Capital IQ Consensus of ($0.46); revenues rose 16.1% year/year to $160 mln vs the $151.73 mln Capital IQ Consensus. Service revenue increased to $138.9 million, up 20% from Q4 2015, driven by a 14% increase in commercial aircraft online to 2,943, a 20% increase in ATG business aircraft online to 4,172, and increased customer usage across all segments.
• Adjusted EBITDA increased to a record $23.1 million, up 187% from Q4 2015.
• Co issues upside guidance for FY17, sees FY17 revs of $670-695 mln vs. $661.84 mln Capital IQ Consensus Estimate. CA-NA revenue of $405 million to $425 million BA revenue of $220 million to $230 million CA-ROW revenue of $40 million to $50 million. Adjusted EBITDA of $60 million to $75 million, including $50 million of expenses for the launch of new international airlines and the development of our next generation ATG technology. 2Ku installations of 450 to 550 aircraft, including ~150 aircraft in CA-ROW. Capital expenditures of $290 million to $330 million and Cash CapEx of $230 million to $260 million. The increase in capital expenditures and Cash CapEx versus prior 2017 guidance is due to additional equipment purchases for accelerated 2Ku installations and next generation ATG network expenditures.
• For the full year ending Dec 31, 2018, Gogo is providing the following guidance: 2Ku installations of 650 to 750 aircraft, including ~300 aircraft in CA-ROW. A significant decline in cash needs compared to 2017 due to a substantial decline in Gogo's average investment per 2Ku installation and a significant increase in consolidated adjusted EBITDA. Capital expenditures of $110 million to $170 million and Cash CapEx of $70 million to $120 million. The decrease in capital expenditures and Cash CapEx versus prior 2018 guidance reflects an estimate that 70% to 80% of 2018 2Ku equipment transactions will be under our airline directed business model, which will be accounted for as equipment revenue and cost of goods sold, rather than as capital expenditures and deferred airborne leasing proceeds. Excluding the impact of the expected shift to the airline directed business model, Cash CapEx guidance for 2018 would be $20 million to $30 million lower than previous guidance, driven by reductions in the cost of 2Ku equipment.
• Gogo is providing guidance that it expects to be Free Cash Flow positive in 2019.