On November 7, 2023, Gogo Inc (GOGO, Financial), the world's largest provider of broadband connectivity services for the business aviation market, announced its financial results for the third quarter of 2023. Despite a 7% decrease in total revenue, the company reported a 6% increase in service revenue and a 4% rise in net income year-over-year.
Financial Performance
The company's total revenue for Q3 2023 was $97.9 million, a decrease of 7% compared to Q3 2022. However, Gogo Inc (GOGO, Financial) reported a record service revenue of $79.5 million, up 6% year-over-year and 1% compared to Q2 2023. Equipment revenue, on the other hand, decreased by 39% compared to Q3 2022 and 24% compared to Q2 2023, amounting to $18.4 million.
Net Income and Earnings Per Share
The company's net income for the quarter was $20.9 million, a 4% increase from $20.2 million in Q3 2022. Diluted earnings per share for Q3 2023 was $0.16, compared to $0.15 in Q3 2022.
Adjusted EBITDA and Cash Flow
Gogo Inc (GOGO, Financial) reported an Adjusted EBITDA of $43.2 million, which includes approximately $2.6 million of operating expenses related to Gogo Galileo. This represents a decrease of 1% compared to Q3 2022 and 2% compared to Q2 2023. Cash provided by operating activities was $18.7 million in Q3 2023, a decrease from $27.7 million in the prior year period. However, Free Cash Flow was $21.0 million in Q3 2023, an increase from $8.5 million in the prior-year period due primarily to a reduction in capital expenditures.
2023 Financial Guidance and Long-Term Financial Targets
The company updated its financial guidance for 2023, projecting total revenue in the range of $390 million to $400 million, predominantly driven by lower equipment revenue. Adjusted EBITDA is expected at the high end of the previously guided range of $150 million to $160 million. Free Cash Flow is expected at the high end of the previously guided range of $60 million to $70 million. The company maintains its long-term targets of approximately 15-17% revenue growth from 2022-2027 and $150 million to $200 million of Free Cash Flow in 2025.
Company's Outlook
"Despite near-term revenue headwinds, Gogo maintains our long-term targets of approximately 15-17% revenue growth from 2022-2027 and $150 million to $200 million of Free Cash Flow in 2025. Our guidance is underpinned by our strong outlook for our planned Gogo 5G and Gogo Galileo product launches, in an underpenetrated global market," said Jessi Betjemann, Executive Vice President and CFO of Gogo Inc (GOGO, Financial).
Explore the complete 8-K earnings release (here) from Gogo Inc for further details.
