Q2 2025 Gogo Inc Earnings Call
Good day and thank you for standing by.
Welcome to the Q2 2025 Go-Go earnings conference call.
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I would now like to turn the conference over to your first Speaker. Today will Davis vice president of investor relations. Please go ahead.
Thank you and good morning everyone. Welcome to go second quarter.
2025 earnings conference call joining me today to talk about our results for Chris Moore CEO and Zach Cotten. Our CFO.
Before we get started, I would like to take this opportunity to remind you that during the course of this call, we may make forward-looking statements regarding future events and the future performance of the company.
We caution you to consider the risk factors that could cause actual results to differ materially from those.
In the forward-looking statements on this call.
Those risk factors are described in our earnings release filed this morning.
And in a more fully detailed note under risk factors, filed in our annual report on 10K and 10q and other documents that we have filed with the SEC.
In addition, please note that the date of this conference call is August 7th 2025.
Any forward-looking statements that we make today are based on assumptions as of this date and we undertake no obligation to update. These statements as a result of more information or future events.
During this call, we'll present both gaap and non-gaap financial measures.
We have included a Reconciliation and explanation of adjustments and other considerations of our non-gaap measures to the most comparable. Gaap measures in our second quarter earnings release.
The webcast.
And available at irs.gov.com.
The earnings release is also available on the website.
after management, comments will host a Q&A session with the financial Community only
It is now my great pleasure to turn the call over to Chris.
Thanks willing. Good morning, everyone.
We believe our cutie performance, reflects the fundamental strengths and capabilities of our business.
To revolutionize in Flight connectivity by leveraging, our strong Market position as the only independent Global multi- orbit, multi-band connectivity company in aviation.
With Leo, Gio and atg Broadband. We are strongly positioned to support durable, demand trends.
In Q2 the business continued to show growth as demand for our Geo Solutions. Remain strong across the global business, Aviation and Military government Mobility markets,
As we see increase Advanced shipments and continued rollout of Gogo Galileo's stc's.
That will provide more details on our financial performance shortly, but I first want to highlight some key areas of growth and success.
Starting with atg. We reached several significant milestones in the quarter.
It gives our team great pride, that we announced an important industry first, as we completed the initial end-to-end call.
Using the Go-Go 5G chip.
We now have the first 5G aircraft in hand and are progressing with the remaining development integration and testing that will prepare us for our expected. Q4 launched this year on the already deployed, an operational 5G terrestrial infrastructure.
We also have positive news regarding our FCC rip and replace program which now provides a 35,000 incentive for C1 installations completed before December 31st 2025.
The C1 incentive enables upgrades.
For over 40, aircraft models to our LTE network this funding, and certification, allow classic customers to seamlessly upgrade. In advance of the May 8th 2026 classic Network cut over.
We also had significant announcements for GoGo Galileo with the 2m wins. Ember era announced it will offer GoGo Galileo HDX as an aftermarket option for the popular thin on 300 light jet, which has over 800 aircraft in operation.
Textron also announced that the HDX will be available for aftermarket installations on certain a citation types.
Once the FAA has confirmed, the FTC, this is expected in late 2025.
We expected to continue delivering on the 38 HDX, stcs, under contract through our dealer and OEM networks. We now have 8 HDX sdc's approved, covering 10 aircraft types with a further 30 in development,
Stc's for the FDX variant are in progress with 10 SDC contracts. In the works, with dealers as previously announced, we have also signed an agreement with an undisclosed OEM confirming. Uh, fbx will be live. The option for all its production aircraft
On the back of this. Good news. I'm looking forward to reviewing our strong QT performance, our cover our quarterly operating results, provide updates on our jio Broadband services and highlights real life acquisition related cost inages. We will also review our demand potential and outline our strategic approach to capitalize on these opportunities to enhance shareholder value.
I'll finish by sharing progress on key strategic initiatives.
Our free cash flow exceeded our internal forecast and consensus expectations.
This is driven by high growth profit due to record equipment Revenue.
Lower operating expenses. Continued Synergy realization and higher than expected. Adjusted ebit da at approximately 62 million.
On the remedy front, the higher expected Advanced Equipment Sales and higher RPA in Geo Services contributed to driving revenue 3% above consensus.
Though we're still seeing a gradual decline in atg units online. We expect to see this slow and perhaps even turn around as classic. Customers start taking advantage of our C1 rebate program and others decide to upgrade from classic to Advanced in anticipation of our classic Network. Cutover to LTE in May 2026.
Set a record for 80g shipments in the quarter with 405, including 276 Advanced and 129 C1 units.
Shipments are strong indicator of future online activations.
We also set a record 144 classic to advance upgrades for the quarter, a shipment turned into activations.
We had strong performance in our HDX, Leo terminals, as we recognize 1.7 million of equipment Revenue.
Year to date. We have shipped a total of 77 units.
As I've stated earlier, we now have 8 HDX, sdc's approved, covering 10 aircraft types with a further, 30 FTD seasons.
We have also shipped our first three Go Go Go Galileo FDX units to support STC generation for mid to large business jet customers.
Our go products and Airline aircraft online. Continue to grow up 41 units, from q1 with 1,321. Aircraft connected to go, go.
This is up 177 units from Q2 2024 up. 15%, this demonstrates, the power of the OEM line fit as many of these systems are installed at the factory.
We also believe it shows a predisposition of many heavy jet customers to take both, Leo, and Geo offerings to get the capacity redundancy and Global coverage. But neither, Leo nor Geo can provide a loan.
For instance, no, Leo provider today can provide service in China. That geo can.
In QT, we completed synchronizing our Advanced and SDR routers to schedule.
The router located in the aircraft of the core of inflight connectivity systems and data management.
The FDR sdrg and advanced routers are now compatible for go. Go Galileo, installation allowing for easy, upgrade opportunities for customers.
This adds the approximate 2,400 aircraft equipped with SD routers.
The almost 4,800 Advanced installed go go Fleet.
These aircraft can now be installed with GoGo Galileo without extensive, rewiring by the aircraft. It's also worth noting that the satcom direct routers aligned for it on 3rd models, which adds several hundreds.
A year to that easy, install Fleet.
Additional software and hardware harmonization. For our router family are scheduled for the next 2 years, which will continue to improve performance for customers and lower costs for Go-Go.
GoGo Remains the only company that can satisfy the needs of customers seeking multiple connectivity solutions. From a single Source, the military needs to fulfill Pace primary alternate contingent and emergency requirements.
And Global customers. Want a short redundancy, this gives us a significant competitive advantage in some very attractive, uh, segments of the market.
We are progressing towards our Synergy goals. We've completed most of the key actions.
To reach our now. Anticipated 30 to 35 million, Synergy cost savings. We have completed staff synergies associated with the merger along with other actions such as the Chicago data center transition, to the Melbourne Florida site. The transition of the SD avionics manufacturing to Colorado which is targeted to be completed by the year end.
The SD Melbourne Building sale is expected to be finalized by the end of August, this will offset the 15 to 20 million Investments required to achieve the projected recurring Synergy savings.
In total, we have another 36 integration projects still underway, focused on moving to common systems and processes. We expect further cost synergies from many of these.
Business. Aviation is currently characterized, by strong OEM results, expanding fractional fleets, and robust flight counts.
In Q2 the 5, major, oems increased aircraft deliveries, 11% year-on-year and reported a very strong aggregate booked bill of 1.3 times. The trend is set to continue. And with the 1, big beautiful, bill act signed in July, allowing businesses to deduct the full acquisition cost of eligible aircraft. We believe this positive momentum will continue into 2026
We believe this presents a significant opportunity for the increased Broadband connectivity, and installations and a major opportunity for go go.
This sector remains buoyant with recent announcements. Confirming strong market growth.
Fractional ownership. Operator flexjet announced an investment of 800 million.
We spend on improving passenger experience much of which relies on connectivity.
In addition Bombardier recently announced a new Fleet order for 50 aircraft with an option for a further 70.
Presenting a considerable opportunity for go. Go.
This trend indicates more business. Aircraft will be entering the global Fleet than leaving and more hours being flown as a result. Demand for connectivity, should continue to increase.
International governments are seeking alternative satellite suppliers which provides an opportunity to go. Go and are multi-network approach.
The French government has already strengthened 1 Webbs, competitive position by becoming Utah. Sat's largest shareholder, following a 1.55 billion cattle commitment.
This will support continued 1 Webb Network Investments.
At 1 Word only connectivity service partner for business Aviation we believe this strengthens our position to respond to Growing demand and maximize our Global office expansion.
In summary, we see demand for Quality. In-flight connectivity. In both business, Aviation and Military government Mobility verticals.
surging, while overall penetration remains
Extremely low, only 9,700 or 24% of roughly 41,000, Global business aircraft, which have Broadband connectivity today.
Go go strategy. For Value creation is to grow our share of a highly unpen Market by strengthening existing and creating new. Long-term high margin, recurring Revenue, customer relationships,
We plan to do this.
By first delivering, the many new products I've just described the significantly, improved performance over traditional in-flight connectivity products.
Second engineering equipment. That is purpose-built for our markets and easier to install maintain and upgrade than competitive products.
Third expanding our addressable Market by utilizing the broad product offering and Global footprint facilitated by the SD go. Go merger to satisfy, the needs of all segments of our vertical markets,
4 leveraging, our significant presence in those markets to attract the best technology, distribution, and network, Partners on the best terms to serve our customers. And finally, provide the world-class customer support that our customers demand
This strategy, underpins our approach to multi Network open architecture platforms and enables broad Mission coverage, across both business, Aviation and Military government markets.
That flexibility is core to our future proofed Hardware design strategy that can support multiple barriers with network. Agnostic modular terminals. Such as our plain simple, go and go, Leo and hen portfolio.
With the upcoming launch of multiple Ka Band, Leo networks GoGo can leverage our terminal Network architecture. So we remain agnostic about our customers enabling the latest developments from satellite providers on any aircraft type.
Our expanding Global Sport Network is a key part of the distribution Partners part of this strategy.
We now have 148 dealers across 233 locations. These dealers are invested in STC generation, ongoing customer support and as our Representatives, across the globe, act as a force multiplier to our sales efforts
Now, I'd like to share a few updates on the progress, we are making towards some of the efforts that support this strategy.
Since the start of operations in April, our Leo Utah SAP 1, Webb customers have used over 1,200 hours. HDX is ideal for the 12,000 midsize and smaller aircraft that fly outside of North America and have no broadband solution. Today, there are among the 11,000 midsize and smaller North American registered aircraft that often fly regionally outside Kona or want faster mean speeds than 5G alone can provide.
The FDX terminal is done designed for the 9700 larger business, aircraft operators, many of which fly into the Continental missions as well as our vvip and government clients.
We are off to a strong start for Galileo. Our early customers are positive about the HDX performance and we have more than 500 plus immediate opportunities for HDX in our sales pipeline.
40% of these are overseas, and we are seeing strong interest from International operators. We've already signed our first multi-air deal with a Middle East.
Charter operator.
Targeted at large segments of the North, American midside and smaller Market.
That want a good connectivity experience, but a lower cost than satellite products. Our chipset Supply successfully completed, the first end-to-end call using the go go 5G. Chip in June
The chip is now in the final phase of testing at our Brainfield and Chicago facilities.
Following the integration into the events. Alex 5 flight testing, is anticipated to commence in September and to go live by year end. It is worth noting that we have already made a bulk chip purchase to ensure supply for our customers. When ready,
more than 300 aircraft are now pre-provision for launch. The 5G Tower network is complete with 170 installed across the US and 7 Canada.
GoGo has already received FAA approval, to produce, and manufacture the advanced lx5. Liu and 25 stc's for the new antenna covering 8,500 aircraft, the new 5G core is installed in our data center,
Our next Generation LTE network deployment is also underway the first LTE tower antenna has been installed and we are beginning Network. Build out in anticipation for the caver. Supporting the transition, we announced a multiple aircraft type SDC for the Go-Go C1 unit. This covers 42 aircraft representing 70% of the installed Go-Go classic Fleet,
We have already shipped 234 units for customers.
As mentioned previously, the FCC rip and replace program. Now provides incentives to C1 installations, assisting customers with the replacement of the old GoGo classic installs.
The C1 LTE box has the same form factor as the old classic product, allowing for a very fast unit swap.
But it has dual evdo and LTE are cards. This enables a seamless Network cut over
for customers lacking the time or budget for a advanced upgrade before the May 2026 transition, this solution enables a cost-effective option.
It keeps our customers connected and preserves go. Go service revenue from this Market segment. We are urging customers to commit before year end to take advantage of the FCC rebate and be ready for the cut over.
In the mill, go vertical. We see an opportunity for go go solutions. To be integrated with fds. Go offerings.
Our current Revenue mix in the segment, includes a significant portion of Legacy narrow band Services, which are expected to decline gradually over the next several years. However, we anticipate Broadband growth in the mil gov sector will materially outplayed the decline in narrow band as the segment transitions to broadband Solutions.
today, almost all male gov
Mobility and aircraft still rely heavily on voice over radio and narrowband for communications, which is limited in bandwidth. There is a significant effort underway to upgrade to new broadband satellite technologies.
The US Air Force 25x, 25 program.
Aims to equip 25% of this 1,100 Mobility, aircraft with satellite Communications by the end of 2025, this still leaves 70% 5% of the fleet without satellite connectivity, which the Air Force believes must be addressed presenting a substantial opportunity for growth. We Believe Go-Go's Leo product, will be an excellent complement to our Geo products. In this market, due to the dod's PACE protocol, which requires military programs to have primary alternate contingent and emergency systems.
With the support of the government, funding GoGo is also leveraging our SD Pro operating system which enables monitoring and utilization of pace.
We also see the opportunity for 5G air to ground.
as a possible new alternative for redundancy while there have been some delays in Awards, the general Trend towards better communication systems for aircraft aligned with the US administration's broader goal for modernizing the military
We've also added a key resource to the go. Go board of directors with a recent appointment of retired. General Mike Mahan.
Finally, our touch briefly on tariffs.
We have made provision, and while our decisions remain fluid, we believe that as trade deals currently stand, there is minimal impact on aviation and our exposure is much reduced.
In conclusion, we are pleased that our strategic Investments are now being delivered.
So far, we are achieving the cost product and Commercial synergies. We wanted to accomplish with the SD GoGo combination.
We expect to produce compelling financial resources in 2026, driven by growth in service revenue from our new products.
A significant reduction in product program, spends the full year impact of synergies made in 2025, and full funding of our FCC, rip and replace program. And now I will hand over to Zach to talk about the numbers.
Thanks Chris and good morning everyone like glass quarter and please report the second quarter results for a head of expectations for Revenue, adjusted ibida and free cash flow.
Our integration is progressing. Well, cost controls are taking root and the demand for our new products continues to ramp
as our product Investments. Roll off, we continue to expect solid free, cash flow growth in 26 combined, with further deleveraging
Strong, first half results led to improvements across the board in our 25 Financial guidance which I'll discuss later in my remarks.
our 2025 guidance continues to reflect limited new product Revenue, given most hgx, shipments are STC focused, and our 5G network is anticipated to launch in Q4
2025 remains an investment year, priming the pump for new product, service Revenue in 2026 and Beyond,
I'll now provide an overview of Gogo second quarter financial performance. Then I will turn to our Capital, allocation priorities, and our positive outlook regarding a potential refinancing over the coming quarters. And finally, I'll conclude with additional context on our raised 2025 Financial guidance,
On a combined Pro form of basis, Gogo's, total revenue in the second, quarter was 226 million up 1% year-over-year and down about 2% sequentially.
On a standalone basis, satcom directs, Q2 Revenue group. Approximately 1% from the prior year.
Total service revenue of $194 million increased to 137% over the prior year and declined 2% compared to the prior quarter.
At the end of Q2, total atg aircraft online was 6,730 or decline of approximately 4% versus the prior year period And Down 2 and a half percent sequentially.
Despite the pressure on total atg AOL Advanced AOL grew nearly 14% from the prior year period and now comprises more than 71% of the total atg Fleet.
up from 60% in Q2 2024,
In the last 2 years, our total Advanced AOL has grown nearly by nearly 1,200.
Our 2025 guidance continues to assume Advanced AOL growth, but the total overall atg. AOL will be lower at year end. 25 versus year end 24.
We believe that the rollout of 5G and LTE will help improve the trajectory of our ATG subscriber trends.
Total at grp of 3,445 was relatively flat versus, both the prior year and the prior quarter.
Total Broadband, Gio AOL excluding networks. That are end of life. Reach 1,321 up, 15% from the prior year and 3% sequentially.
The strength under underscores are strong line fit positions with oems. In addition, most jio Broadband aircraft are under fixed-term contracts which helps to create Revenue stability, and our GOP who is holding up better than expected.
Now turn to equipment Revenue.
Total equipment Revenue in the second quarter was 32.1 Million up, 59% year-over-year and 1% sequentially.
Total Advanced Equipment shipments of 276 increased 19% versus the prior year period and 15% sequentially.
this was our highest Advanced Equipment shipment quarter in the last 2 years and we believe the strength bod's, well, for the future conversion of classic customers to advance ahead of our LTE network cut over
Regarding our profitability GoGo delivered, combined service, margins inclusive of satcom direct of 52.9% up slightly sequentially.
Standalone GoGo service margin was approximately 77% and in line with our previously stated targets
Service growth profit accounted for 96% of our total gross profits due to and we focus on driving this recurring high margin service Revenue.
Equipment. Margins were nearly 14% in the second quarter.
As a reminder, we expect Galileo equipment, pricing to be close to cost.
Now turning to our operating expenses total Q2 operating expenses, excluding depreciation and amortization were 55.9 million down, roughly 2 million sequentially.
I will now provide additional commentary on our major strategic initiatives 5G Galileo and the FCC reimbursement program.
In the second quarter, 1 and a half million of 5G. Spending was all tied to capex.
We expect total 5G spend at a client significantly in 2026 as we roll out 5G and Q4
We continue to expect total external development costs for both the HDX and FDX solutions to be less than 50 million of which 31 million was incurred from 2022. Through the first half of 2025, and approximately 9 million is expected for the rest of the year.
We anticipate approximately 80% of Galileo's, external development costs will be in Opex.
And finally, our FCC reimbursement program.
Following the passage of the National Defense authorization, act last year, we continue to anticipate increased reimbursement of about 50 million for our FCC program.
This funding will support the upgrade of our at Network to LTE and provide incentives to upgrade our classic Fleet to advance.
in the second quarter, we received 5.9 million in FCC grant funding bringing our program to date, total to 53.4 million
As of June 30th 2025, we recorded a 9.8 million receivable from the FCC and incurred 5.4 million. In reimbursement will spend during the quarter.
The receivable is included in prepaid expenses and other current assets on our balance sheet.
The corresponding reductions to property and Equipment, inventory, and contract assets with a pickup in the income statement.
Moving to our bottom line, gov generated 61.7 million in adjusted, EBA in the second quarter.
Are adjusted. Even on margin was 27.3% as compared to our initial long-term view, in the mid 20s. When the sack cam acquisition was announced last year.
Google reported second quarter, net income of 12.8 million and 9 cents of diluted eps.
I will now provide some color on our Synergy progress.
I'm pleased to announce that within 2 years. We now expect to achieve run rate synergies in in the 30-35 million range up from our prior view of 25 to 30 million.
While we achieve the vast majority of headcount. Reductions we expect further cost improvements from non- headcount areas, like real estate and back office software Solutions.
We achieved 18 million of run rate, synergies at the close of the acquisition.
Another 9 million during the first quarter and a further 2 million in the second quarter.
We continue to believe the cost to achieve. These synergies will be within our previously expected range of 15 to 20 million.
Moving to free cash flow GoGo generated. 34 million of free cash flow in the quarter above expectations and totaling 64 million in the first half.
While we expect free cash from the second half of 25, ft below is in the first half. We believe our recent cash flow Trends pretend well, for our longer term, Outlook once Investments, roll off new products, service Revenue begins and we continue to deliver
Now, I'll turn to a discussion of our balance sheet.
Go go into the quarter with 102.1 million in cash and short-term Investments.
And 850 million an hour.
On our 2-term. Loans with our 122 million revolver remain undrawn.
Our cash balance. As of last Monday was 116 million.
For Q2 this equates to a net leverage ratio of 3.2 times and we expect this ratio to remain relatively flat through year end with a slight downward bias.
Our cash interest paid for the second quarter. Net of hedge cash flow was 16 million
As previously, discussed our head agreement, stepped down at the end of July to 250 million with the strike rate. Increasing from 125 basis points to 225 basis points. Resulting in the approximately 30% of the loans being Hedge.
As a reminder, the cash interest paid for 2024 net of hedge cash flow was 33 million and we continue to expect that to be approximately 70 million this year.
Given our improved financial performance and relative strength of the credit markets. We and our banking Partners leave their sufficient Market appetite to pursue a comprehensive refinancing over the coming quarters.
We believe this will be a positive outcome for Gogo and its stakeholders.
Our Capital allocation priorities remain consistent with prior quarters and focused on executing across the following 4 Pryor.
First maintaining adequate liquidity, second continuing to invest in our strategic opportunities, primarily through Galileo, and 5G.
Third maintaining an appropriate level of Leverage for the economic environment with the target net, leverage ratio of 2 and a half to 3 and a half times and finally returning Capital to shareholders.
As a reminder, go has 12.1 million remaining on its 50 million for purchase authorizations that are board approved in September of 2023.
Until we complete our refinancing, we expect to continue to prioritize deleveraging over Equity BuyBacks.
Bottom line. We believe our expected free, cash flow growth over the next few years will provide ample excess cash to pay down debt, reduce our interest expense, and ultimately return Capital to shareholders
And our earnings released this morning, we increased key elements of our 2025 Financial guidance.
Adjusted Eva at the high end of our previously. Guided range of 200 to 220 million reflecting operating expenses of approximately 20 million for strategic Investments including 5G and Galileo versus our prior expectations of 25 million.
Given our guidance.
We expect the second half even, I will decline, slightly versus the first half largely due to timing of planned Investments.
Free cash flow at the high end of our previously, guided range of 60 to 90 million.
and we expect 2025 to be the trough of our free cash flow as we have approximately 60 million slated for strategic Investments net of any FCC reimbursement versus prior expectations of 70 million
Our net capex is still expected to be 40 million after 50 million of capex reimbursement from the FCC reimbursement program.
After 2, full quarters following the close of the SD deal. We are seeing the clear benefits of the combination including Global expansion, product, expertise synergies. And the addition of a milk up business
We have more work to do, but believe we are well, positioned to deliver the balance sheet Drive free cash flow, and create long-term shareholder value.
Before we open up the floor for questions, I want to express my gratitude to the entire Gogo team for their hard work, commitment to our business, and dedication to providing exceptional service to our customers. This now concludes our prepared remarks, and we’re ready to take questions.
Thank you. At this time. We will conduct the question and answer session. As a reminder, to ask a question, you need to press star 1, 1 in your telephone and wait for your name to be announced to withdraw your question. Please, press star 1 1, again please, stand by. While I compile the Q&A roster,
Our first question comes from Scott serrell.
From Rob Capital Partners, please go ahead.
Hey, good morning. Thanks for taking my questions and thanks for the comprehensive overview.
thank Chris need me to just jump in on
just maybe to jump in on the atg front uh down 170. This quarter, I know there are a lot of moving Parts in terms of 5G transitions uh reimbursement programs that are ongoing, and they've been longer maintenance events. I'm wondering, you know, can you take us through a timeline of when you expect to see a return to growth in atg and what the ultimate opportunity in penetration opportunity is for atg. When you look at um, aircraft within North America, I think there's a lot of
A lot of different issues out there in terms of how much is atg versus the Galileo potential and love to kind of understand of stabilization timelines. Which seemed like it should be coinciding now with 5G commercialization
But how that growth should ramp up into 26 and Beyond with 5G. And with C1
Okay, that's good. There's a lot there. So let me I'll I'll start with kind of like Market opportunity and where we kind of see that and I'll let Zach
Chip in with the numbers and kind of how we see that that playing out. But I think if you look at, um,
uh, the
Suspensions in deactivations over that period of time. And the quarterly, it's a little bit more, uh, than previous. But I think if you look at the advanced shipments
You know, the real reason for that is upgrade. So, you can already see there's strong. Pull in that and the advanced numbers are obviously extremely strong. So we're not concerned with the suspensions, although, obviously they're a little bit higher than previous. Um, I think also now with building the strong backlog in Galileo, product portfolio, we're feeling pretty confident that those customers are looking, uh, the product portfolio as well, and then with the announcement of 5G. So, we're not concerned, uh, or any concerns at this point that we can't migrate customers and then also with the FCC funding, with the C1.
That nowadays customers have really got a good path and we've only just got that done um at zero cost of upgrading themselves to the new LTE network as well. So we think we're going to kind of
Keep customers. Also, they're not just leaving the network, there are a number of suspensions in there. Um, we see that with kind of seasonal Behavior maintenance, we logged out pretty well. So, um, you know, at this point we've been we've got strong growth path. We've got multiple products in the portfolio for customers to go to and we're seeing strong performance with the advanced shipment. So I think I think we're in a good spot. Um, I don't know exactly. You want to add anything to that on the number side? Yeah, I mean, I think the like we've said in the guidance its
Be down this year. But, you know, we're hopeful that next year with the C1 and the 5G launch, like you said that will start to pick back up. Um,
The other thing that's interesting is when we look at deactivation reasoning, it's the the highest drivers are consistent with what we've seen in other quarters, which are like to Chris's Point sold aircraft or management changes, right? So, um, you know, I think we also mentioned in my last call, we were kind of ramping up our inside sales team to really focus on these customers. Um,
It's early days like we said because it just kind of started in Q2 but um they they have they had a little bit of progress but we got to we got to get more focused on it.
Great very helpful and just just to clarify Chris on that front. It's, these are not competitive losses to starlink. This is suspensions and this is the normal transition of that we see in the atg business. Now ahead of 2 major products Cycles,
Yeah, we're not seeing a mass level of um loss of competition. Now it's you know, like Zach said, it's the same reasons we have really comprehensive deactivation uh process. So we're not seeing kind of like Mass losses to competition and the the deactivation.
Gotcha. And lastly if I could and then I'll get back in the queue on the Geo front, you guys, I think continue to outperform the early expectations both in terms of aircraft and I think pricing, I'm wondering if you could just give us
Some longer term thoughts in that market because I, I think at the time of the acquisition, there was some concern around. Uh, the arpa's related to the Geo Market opportunity. It doesn't really seem like that's materializing. At least not as fast. I'm wondering if it just gives some updated thoughts on that opportunity and and how you see Geo progressing over the next couple years. Thanks.
I I'll cover the uh, business side but I you want to cover the off the piece. Yeah. I think. Um,
You know as as we said before we anticipated even last year before the deal that we were going to see more arpa contractions. Um, but I think the nice thing that's happened is
You know, like we said a lot of times this stuff is very expensive to to swap out, right? And if if it's good enough for a lot of folks, they're not going to spend
5 600 thousand dollars. If if it's satisfying their needs. Um I think our view is longer term. It's going to have to come down slightly. It's just the rate at which it does and
You know, it's kind of anybody's guess. But you know, like I said, we're working on our long-term model and it it will assume some, you know, modest degradation over the over the next few years. Yeah, I'll just add to I think customers have been waiting for Galileo, so
Um, I think that's good Testament to customers believing in. Go go, which is great. We've just got to get, obviously, the products out to them, which we're now, executing on, which is, which is fantastic. The other piece with the, um, Geo business. We, we also launched our own products within that within the last few years which actually really enhance the performance.
Of those networks, um, with the plain simple range. Um, and then I think, also, it's like what I said in the script, you know, it's just kind of like earlier on, it's, um, a testament to having life fit positions, which were very lucky to have really, and we've worked hard to get. Um, and you can see that kind of working through the oems, as well as the mro's, but those products are predominantly a really strong OEM products. So I think with that mix by Zach said, uh, that business is holding up really, really well.
Okay, great, thanks so much. I'll get back in the queue. Really exciting to see what's going on with, uh, with 5G and the traction that you're seeing with Galileo. Thanks.
Yeah, thank you. Thanks God.
Thank you.
As a reminder, to ask a question, you would need to press star 1, 1 on your telephone and wait for your name to be announced.
I am showing no further questions at this time. I will now turn it over to Will Davis for closing remarks.
1 moment, please.
I think somebody just came in, on Antoine.
Yep.
All right, we have Scott sold from Rob Capital Partners. Please go ahead.
Hey apologize. If if no 1 else is going to hop on here with a few more um
Be ready aircraft at this point in time, you know, as we start to get to that 4G launch time period.
Yeah, the I, I mean, a couple of the, um, government, uh, piece and then I'll let Zach to the stick to the numbers. So then, then I can accurate the, um,
But, uh, with that military business, I, I mean, it's really new to go go. But, um, not from the SB point of view from the business that we've been in the government business, uh,
uh, pretty much, uh, for over 20 years. So, looking at the 5G piece and
The opportunity of those increased speeds. And then looking at, uh, the US DOD, we really do think there's some opportunity there, uh, giving kind of, uh, Broadband resilience with Pace planning. Uh, the other thing we're looking at is the potential with uavs, which I mentioned on a previous call as well. We've started looking at that with, um, HDX as well.
On the fact that we see that market grow massively from the the military markets. Not only from a domestic point of view but from a global point of view, for a Galileo, then actually 5G could be a really interesting alternative um, for konus, and we're pursuing those opportunities at the moment. It's very early days.
The fact that, you know, we're starting to talk, uh, to the customers about that. We're actually getting some level of interest on exploring that. Now, we've got the product. So, you know, our government teams really in tune with the, the dod and
different aspects of government within the us. So I actually we kind of we see that as being a potential new market. So we're just exploring it early days but uh, pretty excited. And then on the backlog, it's um, I think it's a little over 300%. Yeah, they're all pre-provision. So,
The network there. I mean, it's all rolled out. The towers are done. Um, as I said before, uh, it's just kind of
Getting these uh, 5G cards in those boxes and converting those customers really quick. And those customers have been fantastic, really patient. So we're really motivated on getting those guys over really, really quickly.
Great. Thanks so much. I'll get back to you in the queue.
No problem. Thank you.
Thank you.
Our next question comes from Justin lane, from Morgan Stanley, please go ahead.
Yeah. Hi, good morning. Thanks for taking the questions. Um, a few quick ones from me.
Um, maybe can you just provide a little more color on the, on the capex? Guidance change. I understand the net number doesn't change. Uh, but just maybe the underlying drivers of uh, of the difference in the guide.
Yeah, it's all related to the, um, the, uh, reimbursement, for the rip and replace program. Basically, we've accelerated some stuff that would have hit, uh, next year. Um, you know, it's really to make sure and advance of the cutover date that we're totally buttoned up. So it's just pulling pulling in from next year. And then, like I said, it's all reimbursed.
So basically all everything else is pretty similar.
Okay, great. Um, and then maybe just on the HDX shipments in the quarter, it looks like they might have stepped down sequentially. Is there anything to call? I mean, was that a dynamic that was sort of anticipated or anything to call out there? Thanks.
Yeah, that was anticipated at the moment. We're rolling out those stc's and really it. I'm in at the moment this is all just preparation work for 2026. So the from an SDC point of view, we've pretty much, you know, on the HDX got more shipped out to our MRI Partners, so we got great traction there, we do have customers. Uh now, um, starting to deploy, which is great. But, you know, that's the aviation Cycles. Unfortunately, I mean it's good and it's a bad thing. Um, it's a difficult Market to get into
Um, from a competitive point of view, um, which kind of gives us good notes around the business. But equally, um, you've got to get, you know, uh, the products ready, you got them to go through the FAA. Um, you've got all of those, uh, uh, aspects to it. So, as we've said, previously on calls, you know, 2025 for us is really a build year on making sure that we've got those STC. So, this is all kind of anticipated. We don't see any uh, slowdown in um, ramp on the product.
Okay, great. And maybe just lasts 1 on on the milk up business, Chrissy, I think you mentioned and you're prepared to Mark's, you know, some delays in Awards. Um, just curious if you could elaborate there, I mean, is that Trend holding steady or does that look like it might
The president's budget and the 1 big beautiful. Bill act just from a mill gut perspective is there anything about or below expectations in either of those? Thanks.
yeah, I just kind of
things are moving a little bit slower than expected. So, and then, you know, there's just the nature of the government business, really, you know Awards come, um, you try and influence as much as you can, um, the budget Cycles. Uh,
They operate a little bit differently as well.
So we're hoping kind of, we start seeing a little bit more movement in Q4, um, where you typically from a trend point of view. We've seen that so and the physical year. Yeah. Yeah. The fiscal year starts, I think it's October, right? So yeah. So I think, hopefully we start seeing things through, but I would say, you know, there's definitely a noggin with the administration on the need for the technology refresh. We've had a lot of interest on demonstrations technology.
The zipper rewards there, you know, the research grant awards, really strong. We're looking at kind of, uh, next year, rolling out our software within the Air Force, which is a really kind of, um, good point for us. I mean, they've been a great partner with us as well. The U.S. Air Force on developing that software platform with them, so I think things will start picking up. Um, but it's a really difficult thing.
Thing to predict. So um, but uh and then the, the 1 piece of it, what we've seen, right? It's small business, but it's exceptional growth. This year has actually been the international market.
and I think that kind of, you know,
Step up of NATO, people. Looking at the budgets, we're starting to see a lot of interest, uh, being generated from overseas clients, and that seems to have been growing quite, um, a lot. And then, the way they contracted is quite different from the DoD as well. And the fiscal cycle is a little bit different, so we're very optimistic. Um, teams are working really hard, doing a really good job. So, um, yeah, we're kind of wait and see, but the technology is there, which is the exciting piece. It's not like we're now waiting for the technology to come. I think with the expanse of the product portfolio and delivering on the product portfolio, I think we've now got something really interesting for the military.
Perfect, thanks for the caller.
Yeah, thank you.
Thank you. Our last question comes from Louie De Palma.
From William Blair, please. Go ahead.
Chris Zack and will good morning.
Do you remain confident in? I think approximately the the 65 million in cost for 2025.
Coming out in 2026 as it relates to the different synergies.
And and Milestone payments for for 5G HDX, and FDX. And how should we think of
The costs and 2025 versus 2026.
Yeah I think we still feel like the vast majority of that will will go away. Um like you said, we get the full the full year of synergies.
um, and then um, you know, obviously we're we're kind of working on our R&D roadmap, um,
We I don't know that we're ready to release what what all the projects are? We working on. So some of that will get back filled with the vast majority will be
um, pulled out.
Great. And, um, 1 final 1 from from a high level as, um, you and, and customers have done more testing of HDX and FDX,
Just in general. How does it compare with
starlink in the market, even though there are many less
1 Webb satellites than starlink it appears that the the 1 website is far, less utilized. So how has the performance and testing been for the different solutions and and also
um, I I missed the first part of the call, but, um,
What is the timing for flight tests of of 5G?
So yeah, we I I'll handle the 5G thing, but Louise says, yeah, we we'll go to customers, ready to go? Um, really got stcs and things flying. So, you know, from a network point of view, um, I think roll out in Q4 is planned and migrating those customers over. Um,
Um, now we've got the chat, um, on the performance on Galileo. Um, within great performance metrics. I think the nice thing is we're not seeing people do futile speed tests in the cabin because they can do what they want to do, and that
Low latency Snappy product, feel it? What they've got, we've got, um, aircraft now flying around. Um, capturing a lot of data. Uh, we've seen very consistent Service, uh, Happy customers. I think the fact that we've truly designed an aviation grade product, and more importantly, we've got the support because, you know, things do happen, um, from, uh, networks, uh, point of view that we make that seamless for customers, we can get an engineer, we advertised under 24 hours on an aircraft anywhere in the world. Um, the reality is, we don't really go beyond 12 hours and having that human touch if we need it. But um, the team's been great uh customers have been fantastic, some big anchor clients have um we've announced before in the past um they're moving ahead and very very happy with the service. So we're we're we're
Very enthusiastic and um, we're seeing great performance on the FDX as well and um, we just uh, wrapping up the stcs on that. So,
yeah, it's um, I think it's
I think this is a bit where everybody kind of looks at Satellite networks and speed tests. Whereas having consistent,
Flight.
And you can fly anywhere in the world with our services, whether you using Dual Purpose, service or uh you're not. So you using multi networks or a single Network. I mean, our aim is to have consistent service anywhere a client lies anywhere in the world so and I think we can, I think we can safely say that we can do that.
Great.
Thanks.
Thank you, thanks.
Thank you.
The question and answer session is now closed. I will now turn it over to Will Davis before closing remarks.
Thank you all for your participation in our second quarter earnings call.
You may disconnect.
Thank you for your participation. In today's conference, this does conclude the program. You may now disconnect
Goodbye.