BROOMFIELD, Colo. - Gogo (NASDAQ:GOGO) Business Aviation (NASDAQ: GOGO) has significantly increased production to meet the high demand for its latest inflight connectivity system, Gogo Galileo HDX. The company reports a surge in industry interest as it prepares for the commercial launch of the service, which is set to provide global broadband connectivity via Low-Earth-Orbit (LEO) satellite networks.
President and Chief Operating Officer Sergio Aguirre noted the market's enthusiastic response, with demand outpacing that of the company's previous product, Gogo AVANCE L5. The new service has expanded its potential market through 27 Supplemental Type Certificates (STCs), enabling compatibility with over 18,000 aircraft worldwide.
Flight tests on a Challenger 300 aircraft indicate that the Gogo Galileo HDX system is performing as expected. The company continues to take purchase orders for the HDX, designed to be an easy upgrade for existing AVANCE systems. The anticipated launch of the service, backed by Eutelsat OneWeb's enterprise-grade LEO network, is scheduled for later this year.
In a limited-time offer, Gogo is providing a promotional rebate of $25,000 to current customers upgrading from legacy air-to-ground systems to the new AVANCE SCS and HDX.
Gogo is recognized as a leading provider of broadband connectivity services in the business aviation sector, offering a suite of connectivity and entertainment solutions. As of June 30, 2024, Gogo reported 7,031 business aircraft equipped with its broadband ATG systems, and 4,247 aircraft with narrowband satellite connectivity.
The company's forward-looking statements suggest confidence in the successful deployment and performance of the Galileo HDX service. However, they acknowledge the risks and uncertainties inherent in the introduction of new technologies.
This news article is based on a press release statement.
In other recent news, Gogo Inc . has made significant strides in the aviation communications sector. The company has announced a definitive agreement to acquire Satcom Direct, a move that will position Gogo as the only global in-flight connectivity provider with multi-orbit and multi-band capabilities. The $410 million acquisition is anticipated to have an immediate positive impact on Gogo's financials, according to Roth/MKM.
The purchase will be financed through debt and available cash on Gogo's balance sheet. Satcom Direct, a prominent provider of BA geostationary satellite in-flight connectivity, is expected to generate $485 million in revenue by 2024.
Gogo has also committed $52.5 million to its partnership with Eutelsat OneWeb, enhancing its service offerings. The company continues to expand its connectivity, securing contracts for 25 Supplemental Type Certificates, which will extend Gogo's broadband connectivity to more business aircraft.
In terms of financial performance, Gogo's second quarter 2024 results showed a slight 1% decrease in total revenue, amounting to $102.1 million, but a 4% increase in service revenue, reaching a record high of $81.9 million. Roth/MKM maintained its buy rating on Gogo shares.
In addition, Gogo has entered into a multi-year agreement with Airshare, providing advanced in-flight connectivity options. Despite a delay in the launch of Gogo 5G to the second quarter of 2025, Gogo Inc. has updated its 2024 financial guidance, anticipating revenue ranging from $400 million to $410 million. These are the recent developments for Gogo Inc.
InvestingPro Insights
As Gogo Business Aviation (NASDAQ: GOGO) ramps up production of its Galileo HDX system, InvestingPro data offers additional context to the company's financial position. With a market capitalization of $832.81 million, Gogo's stock is currently trading near its 52-week low, having fallen significantly over the last three months. This price movement could be of interest to investors considering the company's growth prospects with the new Galileo HDX system.
Despite the recent stock performance, Gogo maintains a strong financial foundation. An InvestingPro Tip highlights that the company's liquid assets exceed its short-term obligations, suggesting a solid balance sheet to support its expansion plans. Additionally, Gogo has been profitable over the last twelve months, with a P/E ratio of 12.78, indicating that the market is valuing the company at about 13 times its earnings.
The company's revenue for the last twelve months stands at $402.14 million, with a robust gross profit margin of 67.02%. This high margin could provide Gogo with the financial flexibility to invest in the production and rollout of the Galileo HDX system.
Investors should note that while Gogo does not pay a dividend, analysts predict the company will remain profitable this year. This profitability forecast aligns with the company's optimistic outlook on the demand for its new connectivity system.
For those seeking a deeper dive into Gogo's financials and prospects, InvestingPro offers 7 additional tips, providing a more comprehensive analysis of the company's position in the market.
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