10-Q 1 gogo-20220331.htm 10-Q 10-Q
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

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

(Mark One):

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended March 31, 2022

 

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the transition period from __________ to __________

 

 

Commission File Number: 001-35975

 

 

img233908988_0.jpg 

Gogo Inc.

(Exact name of registrant as specified in its charter)

 

Delaware

 

27-1650905

(State or other jurisdiction of

Incorporation or Organization)

 

(I.R.S. Employer

Identification No.)

 

 

105 Edgeview Dr., Suite 300

Broomfield, CO 80021

(Address of principal executive offices)

Telephone Number (303) 301-3271

(Registrant’s telephone number, including area code)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Class

 

Trading Symbol

 

Name of Each Exchange on Which Registered

Common stock, par value $0.0001 per share

 

GOGO

 

NASDAQ Global Select Market

Preferred Stock Purchase Rights

 

GOGO

 

NASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

Emerging growth company

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YesNo

As of April 29, 2022, 112,002,322 shares of $0.0001 par value common stock were outstanding.

 

 


 

Gogo Inc.

 

INDEX

 

 

 

Page

Part I.

Financial Information

 

Item 1.

Financial Statements

2

 

Unaudited Condensed Consolidated Balance Sheets

2

 

Unaudited Condensed Consolidated Statements of Operations

3

 

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

4

 

Unaudited Condensed Consolidated Statements of Cash Flows

5

 

Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

6

 

Notes to Unaudited Condensed Consolidated Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

25

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

37

Item 4.

Controls and Procedures

37

 

 

 

Part II.

Other Information

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

Signatures

42

 

 

 

1


 

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

 

March 31,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

152,829

 

 

$

145,913

 

Accounts receivable, net of allowances of $1,127 and $894, respectively

 

 

42,102

 

 

 

37,730

 

Inventories

 

 

36,467

 

 

 

33,976

 

Prepaid expenses and other current assets

 

 

39,654

 

 

 

32,295

 

Total current assets

 

 

271,052

 

 

 

249,914

 

Non-current assets:

 

 

 

 

 

 

Property and equipment, net

 

 

71,596

 

 

 

63,672

 

Intangible assets, net

 

 

49,159

 

 

 

49,554

 

Operating lease right-of-use assets

 

 

70,973

 

 

 

70,989

 

Other non-current assets, net of allowances of $515 and $455, respectively

 

 

44,561

 

 

 

28,425

 

Deferred income taxes

 

 

177,934

 

 

 

185,133

 

Total non-current assets

 

 

414,223

 

 

 

397,773

 

Total assets

 

$

685,275

 

 

$

647,687

 

Liabilities and stockholders’ deficit

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

18,119

 

 

$

17,203

 

Accrued liabilities

 

 

58,683

 

 

 

59,868

 

Deferred revenue

 

 

1,599

 

 

 

1,825

 

Current portion of long-term debt

 

 

109,897

 

 

 

109,620

 

Total current liabilities

 

 

188,298

 

 

 

188,516

 

Non-current liabilities:

 

 

 

 

 

 

Long-term debt

 

 

693,617

 

 

 

694,760

 

Non-current operating lease liabilities

 

 

77,074

 

 

 

77,329

 

Other non-current liabilities

 

 

7,326

 

 

 

7,236

 

Total non-current liabilities

 

 

778,017

 

 

 

779,325

 

Total liabilities

 

 

966,315

 

 

 

967,841

 

Stockholders’ deficit

 

 

 

 

 

 

Common stock, par value $0.0001 per share; 500,000,000 shares authorized at March 31, 2022 and December 31, 2021; 118,399,731 and 117,407,468 shares issued at March 31, 2022 and December 31, 2021, respectively; and 111,784,217 and 110,791,954 shares outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

11

 

 

 

11

 

Additional paid-in capital

 

 

1,259,223

 

 

 

1,258,477

 

Accumulated other comprehensive income

 

 

17,961

 

 

 

1,789

 

Treasury stock, at cost

 

 

(128,803

)

 

 

(128,803

)

Accumulated deficit

 

 

(1,429,432

)

 

 

(1,451,628

)

Total stockholders’ deficit

 

 

(281,040

)

 

 

(320,154

)

Total liabilities and stockholders’ deficit

 

$

685,275

 

 

$

647,687

 

 

See the Notes to Unaudited Condensed Consolidated Financial Statements

2


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

(in thousands, except per share amounts)

 

 

 

For the Three Months
Ended March 31,

 

 

 

2022

 

 

2021

 

Revenue:

 

 

 

 

 

 

Service revenue

 

$

70,667

 

 

$

59,355

 

Equipment revenue

 

 

22,083

 

 

 

14,514

 

Total revenue

 

 

92,750

 

 

 

73,869

 

Operating expenses:

 

 

 

 

 

 

Cost of service revenue (exclusive of amounts shown below)

 

 

14,634

 

 

 

14,095

 

Cost of equipment revenue (exclusive of amounts shown below)

 

 

14,281

 

 

 

8,282

 

Engineering, design and development

 

 

5,406

 

 

 

5,493

 

Sales and marketing

 

 

6,231

 

 

 

3,729

 

General and administrative

 

 

13,458

 

 

 

10,373

 

Depreciation and amortization

 

 

3,791

 

 

 

4,117

 

Total operating expenses

 

 

57,801

 

 

 

46,089

 

Operating income

 

 

34,949

 

 

 

27,780

 

Other (income) expense:

 

 

 

 

 

 

Interest income

 

 

(47

)

 

 

(57

)

Interest expense

 

 

10,889

 

 

 

29,294

 

Loss on settlement of convertible notes

 

 

 

 

 

4,397

 

Other income, net

 

 

(26

)

 

 

(5

)

Total other expense

 

 

10,816

 

 

 

33,629

 

Income (loss) from continuing operations before income taxes

 

 

24,133

 

 

 

(5,849

)

Income tax provision

 

 

1,937

 

 

 

35

 

Net income (loss) from continuing operations

 

 

22,196

 

 

 

(5,884

)

Net loss from discontinued operations, net of tax

 

 

 

 

 

(1,801

)

Net income (loss)

 

$

22,196

 

 

$

(7,685

)

 

 

 

 

 

 

 

Net income (loss) attributable to common stock per share - basic:

 

 

 

 

 

 

Continuing operations

 

$

0.20

 

 

$

(0.07

)

Discontinued operations

 

 

 

 

 

(0.02

)

Net income (loss) attributable to common stock per share - basic

 

$

0.20

 

 

$

(0.09

)

 

 

 

 

 

 

 

Net income (loss) attributable to common stock per share - diluted:

 

 

 

 

 

 

Continuing operations

 

$

0.18

 

 

$

(0.07

)

Discontinued operations

 

 

 

 

 

(0.02

)

Net income (loss) attributable to common stock per share - diluted

 

$

0.18

 

 

$

(0.09

)

 

 

 

 

 

 

 

Weighted average number of shares

 

 

 

 

 

 

Basic

 

 

111,414

 

 

 

84,649

 

Diluted

 

 

134,095

 

 

 

84,649

 

 

See the Notes to Unaudited Condensed Consolidated Financial Statements

3


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands)

 

 

 

For the Three Months
Ended March 31,

 

 

 

2022

 

 

2021

 

Net income (loss)

 

$

22,196

 

 

$

(7,685

)

Other comprehensive income, net of tax

 

 

 

 

 

 

Currency translation adjustments

 

$

111

 

 

$

101

 

Cash flow hedges:

 

 

 

 

 

 

Net unrealized gain

 

 

16,053

 

 

 

 

Less: income (loss) realized and reclassified to earnings

 

 

(8

)

 

 

 

Changes in fair value of cash flow hedges

 

 

16,061

 

 

 

 

Other comprehensive income, net of tax

 

 

16,172

 

 

 

101

 

Comprehensive income (loss)

 

$

38,368

 

 

$

(7,584

)

 

See the Notes to Unaudited Condensed Consolidated Financial Statements

4


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

(in thousands)

 

 

 

For the Three Months
Ended March 31,

 

 

 

2022

 

 

2021

 

Operating activities from continuing operations:

 

 

 

 

 

 

Net income (loss)

 

$

22,196

 

 

$

(5,884

)

Adjustments to reconcile net income (loss) to cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

3,791

 

 

 

4,117

 

Loss (gain) on asset disposals, abandonments and write-downs

 

 

14

 

 

 

(100

)

Provision for expected credit losses

 

 

259

 

 

 

15

 

Deferred income taxes

 

 

1,887

 

 

 

95

 

Stock-based compensation expense

 

 

4,007

 

 

 

1,849

 

Amortization of deferred financing costs and interest rate caps

 

 

947

 

 

 

1,703

 

Accretion of debt discount

 

 

115

 

 

 

84

 

Loss on settlement of convertible notes

 

 

 

 

 

4,397

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

(4,571

)

 

 

3,586

 

Inventories

 

 

(2,491

)

 

 

(446

)

Prepaid expenses and other current assets

 

 

392

 

 

 

(375

)

Contract assets

 

 

(2,407

)

 

 

(1,886

)

Accounts payable

 

 

(857

)

 

 

292

 

Accrued liabilities

 

 

(5,926

)

 

 

(10,424

)

Deferred revenue

 

 

(226

)

 

 

646

 

Accrued interest

 

 

1,349

 

 

 

27,559

 

Other non-current assets and liabilities

 

 

(613

)

 

 

(654

)

Net cash provided by operating activities from continuing operations

 

 

17,866

 

 

 

24,574

 

Investing activities from continuing operations:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(7,598

)

 

 

(360

)

Acquisition of intangible assets—capitalized software

 

 

(1,457

)

 

 

(342

)

Net cash used in investing activities from continuing operations

 

 

(9,055

)

 

 

(702

)

Financing activities from continuing operations:

 

 

 

 

 

 

Payments on term loan

 

 

(1,813

)

 

 

 

Payment of debt issuance costs

 

 

 

 

 

(550

)

Payments on financing leases

 

 

(43

)

 

 

(124

)

Stock-based compensation activity

 

 

(23

)

 

 

(2,646

)

Net cash used in financing activities from continuing operations

 

 

(1,879

)

 

 

(3,320

)

Cash flows from discontinued operations:

 

 

 

 

 

 

Cash used in operating activities

 

 

 

 

 

(748

)

Cash used in investing activities

 

 

 

 

 

 

Cash used in financing activities

 

 

 

 

 

 

Net cash used in discontinued operations

 

 

 

 

 

(748

)

Effect of exchange rate changes on cash

 

 

(16

)

 

 

3

 

Increase in cash, cash equivalents and restricted cash

 

 

6,916

 

 

 

19,807

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

146,268

 

 

 

435,870

 

Cash, cash equivalents and restricted cash at end of period

 

$

153,184

 

 

$

455,677

 

Cash, cash equivalents and restricted cash at end of period

 

$

153,184

 

 

$

455,677

 

Less: current restricted cash

 

 

25

 

 

 

525

 

Less: non-current restricted cash

 

 

330

 

 

 

 

Cash and cash equivalents at end of period

 

$

152,829

 

 

$

455,152

 

Supplemental Cash Flow Information:

 

 

 

 

 

 

Cash paid for interest

 

$

8,577

 

 

$

31

 

Cash paid for taxes

 

 

 

 

 

1

 

Non-cash investing activities

 

 

 

 

 

 

Purchases of property and equipment in current liabilities

 

$

7,993

 

 

$

663

 

 

See the Notes to Unaudited Condensed Consolidated Financial Statements

5


 

Gogo Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands, except share data)

 

 

 

For the Three Months Ended March 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Income

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Total

 

Balance at January 1, 2022

 

 

110,791,954

 

 

$

11

 

 

$

1,258,477

 

 

$

1,789

 

 

$

(1,451,628

)

 

 

6,615,449

 

 

$

(128,803

)

 

$

(320,154

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22,196

 

 

 

 

 

 

 

 

 

22,196

 

Currency translation adjustments, net of tax

 

 

 

 

 

 

 

 

 

 

 

111

 

 

 

 

 

 

 

 

 

 

 

 

111

 

Fair value adjustments of cash flow hedges, net of tax

 

 

 

 

 

 

 

 

 

 

 

16,061

 

 

 

 

 

 

 

 

 

 

 

 

16,061

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

4,007

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,007

 

Issuance of common stock upon exercise of stock options

 

 

423,583

 

 

 

 

 

 

1,106

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,106

 

Issuance of common stock upon vesting of restricted stock units and restricted stock awards

 

 

555,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tax withholding related to vesting of restricted stock units

 

 

 

 

 

 

 

 

(4,516

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,516

)

Issuance of common stock in connection with employee stock purchase plan

 

 

13,446

 

 

 

 

 

 

149

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

149

 

Balance at March 31, 2022

 

 

111,784,217

 

 

$

11

 

 

$

1,259,223

 

 

$

17,961

 

 

$

(1,429,432

)

 

 

6,615,449

 

 

$

(128,803

)

 

$

(281,040

)

 

 

 

For the Three Months Ended March 31, 2021

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common Stock

 

 

Paid-In

 

 

Comprehensive

 

 

Accumulated

 

 

Treasury Stock

 

 

 

 

 

 

Shares

 

 

Par Value

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Shares

 

 

Amount

 

 

Total

 

Balance at January 1, 2021

 

 

85,990,499

 

 

$

9

 

 

$

1,088,590

 

 

$

(1,013

)

 

$

(1,629,843

)

 

 

5,077,400

 

 

$

(98,857

)

 

$

(641,114

)

Net loss