Gogo’s Net Losses Increase Fivefold in Wi-Fi Provider’s First Public Quarter
Gogo's in-flight Internet lab. Gogo / Gogo
The losses come at time when Gogo is rapidly expanding, improving technology, and marketing its product. A 37 percent increase in revenue is a good sign that Gogo’s business model could eventually level out.
In its first quarterly earnings report as a public company, in-flight Wi-Fi technology provider Gogo saw its net loss increase fivefold in the second quarter from a year ago.
The Itasca-based company posted a net loss of $72.6 million for the period, compared with a net loss of $13.1 million in the same quarter of 2012. Gogo attributed the wider loss to a number of expenses, including $44.8 million related to accounting for derivative instruments.
Gogo’s technology uses a network of land-based towers that connect to equipment onboard aircraft. Fliers can get broadband Internet access on their mobile devices. The company, which is making a major push into international expansion by investing in satellite technology, went public in June. Its customers include American Airlines and Delta Air Lines.
Revenue in the second quarter was $79.4 million, a 37 percent increase from a year earlier. Gogo said 3,666 aircraft are equipped with its air-to-ground system, with 312 of those carrying a next-generation technology that delivers faster speeds.
Gogo’s North American commercial aviation segment saw revenue rise to $49.8 million from $32.5 million in the year-earlier quarter. The company credited the increase to a greater number of aircraft online and higher average revenue per passenger, as more fliers opted for the service when offered. Gogo’s “take rate,” which represents the percentage of fliers on enabled aircraft that used the WiFi, rose to 5.9 percent from 5.3 percent a year earlier.
For the full year, Gogo is projecting total revenue of $305 million to $315 million. It expects adjusted earnings before interest, tax, depreciation and amortization of zero to negative $6 million, which “reflects increasing investment” in the international expansion of its commercial aviation business.
Gogo is holding a conference call to discuss earnings later this morning.
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