Gogo Inc. 2026 Q2 Earnings Call

Please go ahead. Thank you, good morning.

Welcome to Gogo's second quarter 2026 earnings conference call. On the call today to discuss our results are Gogo's CEO, Chris Moore, and CFO, Zach Cotner. During this call, Zach and Chris may make forward-looking statements regarding future events and the future performance of the company. Participants are cautioned to consider the risk factors that could cause actual results to differ materially from those in forward-looking statements on this call. Those risk factors are described in the earnings release filed this morning and in a more detailed note under risk factors filed in the company's annual report on 10-K and 10-Q and other documents that the company has filed with the SEC. In addition, please note that the date of this call is August 6th, 2026.

Any forward-looking statements made today are based on assumptions as of this date, the company undertakes no obligation to update these statements as a result of more information or future events. During this call, Chris and Zach will present both GAAP and non-GAAP financial measures. A reconciliation and explanation of adjustments and other considerations of the company's non-GAAP measures to the most comparable GAAP measures is available in the earnings release. The call is being webcast and available at ir.gogoair.com. The earnings release, infographic, and associated investor presentation are also available on the website. After management comments, Chris and Zach will host a Q&A session with the financial community only. I will now turn the call over to Chris.

Thank you, good morning. This quarter, we continue to execute on our transformation from a domestic provider of air-to-ground connectivity into a global provider of high-speed broadband to the unpenetrated business and Military and Government aviation markets. We are pleased with the strong progress and growing momentum across our next-generation technology portfolio, as well as the record-breaking performance of our Military and Government business this quarter. Consistent with the prior earnings calls, I will focus on the continued progress made across our compelling new product portfolio. These new products include Gogo Galileo with two models, HDX and FDX, both of which provide substantial improvements in capacity, functionality, speed, and global consistency alongside our 5G rollout, legacy ATG, and existing GEO offerings. The investor presentation we published on our investor relations website this quarter provides more detailed information about these products, the customers and markets they serve.

We continue to see steady progress on shipments, installations, and early activations across both 5G and Gogo Galileo during the quarter. I will also highlight the new fleet commitments we secured this quarter, together with the continued progress with the rollouts we announced last quarter. Both demonstrate the expanding reach and growing adoption of our Gogo Galileo platform. I will turn to our military and government business, which delivered another record quarter. The current geopolitical backdrop continues to drive sustained demand for secure, reliable airborne connectivity, our air-to-ground network offerings are uniquely well-positioned to meet that need. Let me begin with the meaningful progress we achieved with Gogo Galileo, our global low Earth orbit, or LEO service, in the second quarter. As a reminder, Gogo Galileo has two products, HDX and FDX.

HDX serves as our entry point LEO solution, purpose-built for smaller aircraft, while FDX extends that capability to mid and large-cabin aircraft with enhanced connectivity performance. Together, they position Gogo Galileo as a scalable, full fleet solution capable of serving the breadth of our customer base globally. This quarter, we shipped 108 units, bringing our cumulative LEO terminal shipped to 518 units, a 17% increase from last quarter. We now have a total of 184 LEO aircraft online, up 66% from the prior quarter. We are encouraged by the acceleration in shipments and growing number of aircraft now operating with our LEO service. The growth in Galileo aircraft online demonstrates our ability to convert shipments into the operational deployment over time, with each installed aircraft generating recurring service revenue.

Given recent competitive developments in the market, we believe our three-year secured pricing is resonating with customers who increasingly value predictability alongside operational reliability. Building on this progress, I want to highlight the continued expansion of our Gogo Galileo fleet wins. The rollouts discussed last quarter with VistaJet, Wheels Up, and NetJets continue to progress well, we added Airshare as a new fleet win this quarter. Airshare is a leading U.S.-based fractional ownership jet card, charter, and aircraft management operator, is equipping its fleet of Embraer Phenom 300s with Galileo HDX. Notably, Airshare's decision followed a live demonstration flight during which the system transferred more than 16 gigabytes of data within a single hour across 23 connected devices. This further reflects the confidence in leading operators across fractional charter and managed fleets continue to place in the Gogo Galileo platform.

We also received several notable supplemental type certificates, or STCs, during the quarter for Galileo HDX product, materially expanding its total addressable market. These included FAA STCs for the Gulfstream G650 and G650ER, as well as the FAA European Union Aviation Safety Agency, or EASA, STC for the Falcon 7X and 8X, four of the industry's most popular long-range business jets. In addition, our SD government team also received FAA STC approval to install HDX on the Pilatus PC-12, expanding the market for this product to government defense and special mission operators who can now stream mission-critical data in real time, from HD video and imagery to secure communications and live medical information. This exemplifies how we are extending Gogo Galileo into high-value mission profiles previously inaccessible to us.

More broadly, these approvals, driven directly by OEMs and their maintenance, repair, and overhaul, or MRO networks, demonstrate growing industry support for Gogo Galileo and support the line-fit ramp we expect during the second half of the year. While we have received numerous STCs for Gogo Galileo, there remain several key ones for us to lock in over the next few quarters. In the second quarter, we saw continued momentum across the latest ATG offerings, particularly 5G. 5G unit shipments continue to increase, with 138 units sold in Q2 compared to 52 units sold in Q1. Overall, the transition of our air-to-ground customers to our next-generation products remain on track. We shipped 83 of our C1s and ended the quarter with a record 690 C1 systems online, an increase of 24% from the end of the first quarter.

We now have 400 air-to-ground classic customers, those who have not converted to C1 or upgraded to AVANCE. We expect a portion of that remaining classic base to deactivate over time, and that assumption is reflected in our guidance. The substantial majority of our air-to-ground base now possesses hardware that is ready to migrate to LTE and ultimately 5G. Put simply, much of the conversion risk associated with the transition is behind us. Customers intending to make the transition have largely already done so. We also have 4,603 AVANCE units online this quarter, a slight decline compared to the same time period last quarter. Reported ATG units online declined more notably in the second quarter, that headline figure was affected by a small number of identifiable factors.

These include the NetJets fleet transition previously discussed, along with a group of aircraft that deactivated ATG while upgrading to Galileo or 5G. Adjusting for those factors, the underlying rate of ATG attrition was broadly unchanged from the first quarter. A portion of what appears as an ATG deactivation does not represent customer loss, but rather customer migrating to newer Gogo products, either already reflected on our LEO base or expected to reactivate on our 5G network in the coming quarters. Turning to the FCC reimbursement program, we continue to make strong progress toward the completion deadline of November 8th, 2026. The record pace of C1 conversions achieved over the past three quarters gives us confidence that the migration will be completed on schedule.

Under the FCC reimbursement program, we've allocated for a significant portion of our full approved amount of more than $300 million to cover the cost of removal and replacement of covered equipment across the U.S. network and ATG aircraft. Reimbursements continue to offset program costs as expected. This transition provides every classic customer with a clear path to upgrade to a newer equipment, once the EVDO sunset is complete, Gogo will operate the only fully U.S.-based data sovereign ATG network. Turning to our geostationary Earth orbit or GEO business, GEO aircraft online was unchanged from last quarter and down 1% year-over-year, continuing the moderating trend observed over the past two quarters. This continues to perform ahead of our expectations. We anticipated that the broader market transition towards next-generation LEO and hybrid satellite solutions would moderate activity in our GEO business.

Much of this shift reflects the aircraft sales cycle rather than customers actively leaving the platform. Our sales teams continue to engage actively with new owners to capture that business. Given the proven reliability and accessibility of geostationary networks, GEO remains a strategically valuable component of our network net neutral offering, particularly for customers whose mission profiles benefit from the global coverage and who operate where LEO faces regulatory constraints. Our PlaneSimple Ku-band platform continues to gain traction across both commercial and military end markets. The AirX Challenger 850 upgrade program is progressing well, and our U.S. Air Force Mobility Command approval on the C-130 is opening opportunities across a fleet of more than 1,000 aircraft. I would now like to spend some time on our military and government end market, which delivered another record quarter.