Mic's on? Okay, great. Well welcome to Morgan Stanley's Annual TMT Conference. My name is Justin Lang. I'm a space tech analyst at Morgan Stanley, part of the A&D research franchise here. Delighted to kick off our firesides for this conference with Gogo, and especially thrilled to have CEO Chris Moore and CFO Zachary Cotner up here with us. Welcome both. Thank you. Thank you. Before we begin, I do have to read some disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website at morganstanley.com/researchdisclosures. You're gonna hear a lot of that for the next few days. Look, we have a lot of ground to cover, exciting time in your business. You just reported earnings on Friday. Yeah. This will not be a extended call back, I promise. Okay. I think the discussion's very timely. I, you know, I wanna just start though high level with you because, again, a lot of change in the business, transformational merger a little over a year ago. Yeah ... with Satcom Direct and Gogo. Maybe just step back with me for a second, Chris, and talk about sort of the original thesis, but more importantly, how you grade things a little over a year in here as you brought these two companies together. Yeah. I think, as acquisitions go, it was a really good strategic move by Gogo to buy Satcom, I think, on a number of levels. Mostly for international coverage. Gogo was predominantly a U.S.-centric business and with the air-to-ground network and they were rolling out the LEO service, but they hadn't got any international locations, staff, revenue. This has really just accelerated that. The other big thing with the acquisition as well is Satcom Direct also had a good strong business in the military government sector as well. Really when you look at combined portfolio from a technical perspective, there wasn't a lot of overlap. Satcom Direct was predominantly a satellite communications provider. Gogo's predominantly an air-to-ground provider with the air-to-ground technology and was getting into Satcoms, but it was still early stage. Actually from a synergy point of view, Zachary and I were able very quickly. We did the deal on December third, and by the end of Q1, we'd already done quite a large portion of the synergies, which was mostly headcount. Like a year on from that, we're done with all the synergies. There's some kind of things that we can still kind of refine from a financial perspective. The businesses came together quite quickly. When you look at a lot of other M&A around the space from the operator level, that's a lot more difficult. If you look at the recent acquisitions of Viasat, Inmarsat, they're still going through a lot of those synergies. SES with Intelsat, still a lot of synergies. 'Cause on the technical side, even though you might be in the satellite industry, the technology is still very proprietary. Whereas from a Gogo perspective with the acquisition of Satcom, our technology is very multi-network, which is on a satellite side, which is really beneficial so that you can actually move a lot quicker. You're not married to one technology. Really, our technology is like a foundational platform and that can go across multiple networks. That enabled us to do a lot of synergy savings quickly, and I think the business now is on a good trajectory to really now we've got the synergies done, is really now transforming the customer base, which is a little bit more difficult from legacy-based technology to the new technologies of 5G on air to ground. When I say 5G, it's really broadband, true broadband, so you can stream, do Microsoft Teams in the back of the cabin. Then going into LEO broadband, which again, stream, you can do kind of broadband capable things. Then if you look at GEO, it's more like an underlying architecture. These are all orbits, right? LEO, GEO. That technology lends itself to being more global than LEO at this point in time. For a lot of our customers, they want two services for redundancy. That's really now what we're focused on is kind of, we've got a lot of, legacy customer base that we need to migrate into the new technology. Got it. That makes a lot of sense. I wanna spend a little time on Galileo and your LEO. Yeah ... solution. you know, maybe talk about a little more about what the offering is and then give us the flavor on HDX and FDX. What Gogo Galileo is it's a LEO service. At this point, we're partnered with Eutelsat OneWeb, based out of Europe, and we're utilizing their constellation. The one thing we've done on GEO, which is an important point to make, is we've always been agnostic. We have Ku-band, Ka-band versions. Usually within satellite, there's two flavors the operators usually pick. It's either Ku-band or Ka-band. Our GEO services are agnostic across Ku-band or Ka-band. At some point, I see that being the same for LEO, potentially. At this point in time, our LEO service is predominantly Ku-band. It comes in two form factors, HDX and FDX. HDX is really a 60 by 6 to 10 Meg service. What does that mean? Really the uplink is 6 to 10. When you look at that, what does that enable you to do in a plane? If you look at small jets that at this point don't have the ability to put GEO services on, GEO services going on the tail, or you put air-to-ground services on the belly of the airplane. The LEO service actually goes onto the fuselage. It looks like two lap tops kind of size. It goes onto the fuselage. You fix it onto the fuselage, and now you've got the same broadband capability that you would have in your home or in the office. You can run your VPN services, be completely tied into the office, and that's kind of. The entry point is HDX. You can get on really small planes, like think of it like 6-person passenger planes, like a Phenom 300 by Embraer or a PC-24 by Pilatus, so very small planes. It could also be supplemented, or standalone with the 5G service, which I can cover in a bit, but that's really HDX. Going into SDX, that's really designed for mid to large cabin airplanes. That's really going from either kind of a Dassault Falcon 2000 right through to a Gulfstream G800 or a Global Express 8000. There's a lot of technical terms, unfortunately, in our business. These are just airplane types. You could go into an Airbus or a Boeing business aircraft. Really we've got from our new technology, when you think of 5G, which is more focused at the smaller aircraft as a primary communications method and a backup for the mid to large jets, we've got something for every single one of our customers. We've got something that goes onto a very small aircraft right through to a very large aircraft. The other exciting thing with HDX going into the government market, we can also put that product onto a drone. We have, you know, we've. That form factor can actually go onto a UAV, and with that government market, that opens that up. The other thing with HDX, which nothing else can do in the market, we can actually put the HDX terminal into the tail of the airplane, and our com-competition can't do that, and that lowers the cost of installation. The one thing we can do is get the cost of installation of this equipment, cheaper than anybody else, which is really kind of important to open up the market opportunity. That's great. You mentioned on Friday that the target for this year is 700 aircraft online equipped with Galileo. Yeah. I think as of the end of 4Q, you're about 75 aircraft. Nice, you know, nice ramp there. Yeah. Talk to me a little bit about the confidence you have in that number. Is that a conservative estimate? Do you see upside there? What are you seeing on sort of equipment side STCs that de-risk the 700? I think it's an aggressive number, but we feel confident in putting out something aggressive at this point in time. When you look at our pipeline, our sales pipeline, we have over 1,000 aircraft in there. The qualified pipeline, which is effectively. When we say qualified, most of it's qualified, but we go 50% and above. Really that means you're very close to closing that customer from a sales perspective. There's a number of metrics in there. We have over 400. This is what I said on the call last week anyway. We feel very confident with the 700 number, although it's aggressive. If you think of it in terms of like our competitor, who's very fast-moving, for the industry, that means in the same time period, we've put on like double what they have. I think that kind of shows a strength of robustness to the business. That, which is great. I think the, it's a very realistic number to focus on, and I think the fact that we've now got contracts with all the OEMs who make the aircraft, outside of a few, we're very confident within the next 12 months, you will not be able to order a business jet without selecting us as an option. A bit like when you're ordering a really fancy car, you know, You might put options on there. I don't know anything about that. No. Hey, I was kind of. Few and far on the road. Yeah. Precisely. You, if you want to upgrade the vehicle, you might want to put something like an option on there. The jets and specifying jets is a very similar process. You end up putting this as, on as an option. Yeah. When you're choosing the carpet, the interior, the veneer, you choose the internet. You will not be able to order a business jet without us, selecting us as an option. That's a big deal. Then we have a very extensive MRO market globally, that can fit this on in what they call the aftermarket, which is really important. We can do that. Again, that strengthens our confidence in the number. Then they're actually actively selling. Not only our sales team's actually selling our product, those MROs and OEMs are actually actively selling our product because they want to sell either an upgrade option because that's good for them. Sure or the MROs are trying to get maintenance work in, at that point, they will fit it onto the jet. We feel confident about that. Our government business, they've got a good target on them, for LEO services this year as well. We believe that market will be slower to ramp just because of the sales cycles. Typical sales cycle from activation from shipment in our business is three to six months because you've got to put it on a plane. That means the equipment leaving our docks and going to an MRO and OEM, we expect it to be activated on the network within that period of time. And then government can be a little bit longer, six to 12. Mm-hmm. If you kind of think of it that way, I think then the numbers this year are good, robust. What's being kind of hidden, you know, that's really explosive growth for LEO from our perspective. That's being probably dampened a little bit with the positive shift that we're now making with our customer base from going from more legacy connectivity services to those services. If you look at our total numbers, it's kind of being a little bit masked at this point in time on- Mm-hmm ... 'cause we're in this technical transformation of the business. Okay. Right. I wanna get there. I wanna hit 5G as well. Yeah. According to it. You know, another product just, you know, it was a long time coming. Finally, you turned the network live, you know, early this year. Must feel good. Also the target is 400 aircraft online with 5G. Yeah ... end of the year. Maybe just a handful as of today. A very steep ramp. Yeah. Talk to us a little bit about where that slots in sort of the overall Gogo portfolio. Yeah. I think that's the bit where just to reiterate, I think now we've got... If you think of the business, say, if you're purchasing something from us, you've got the entry point, which is 5G. That entry point really serves small jets. Could be interesting as well from a governmental perspective, but that we need to prove that case out. If you're specifying, kind of speccing a small jet like a Phenom 300, PC-24, a Citation aircraft, you'll be able to get it line fit from Textron this year. Embraer as well. That's a really great entry point to a true broadband service. Our more legacy service on air-to-ground have been fantastic, but I would put it this way on transformational technology. This is like everybody in this room, and is all going back to a BlackBerry or a Nokia, and then giving you an iPhone. You know, it's completely transformative technology, and the usability of the system is completely different. You know, we have a test aircraft, we've both flown on it, and you can have simultaneous Teams meetings, you can have somebody on Teams, somebody on Netflix, somebody on the corporate network. This is really transformation for kind of those air-to-ground customers, and it's a great entry point. It also adds a level of, we keep talking about multi-network, multi-orbit. That also for more higher end customers, gives them a level of resilience within the U.S. 'cause the air-to-ground network's just a U.S. network. Is it gives them a level of resilience that we have a lot of customers who will not fly unless they have internet connectivity. We believe that service is really there. It's really nice now that we've got a true service that all of our air-to-ground customers can now migrate to if they want to. That is a very low cost option for them to upgrade. We just load the pricing of the equipment, so that we know we can get an installation of that around $150,000 total on an airplane, which is very different to putting LEO services on an airplane, which is really entry point to that's like $300,000. It's half the price of putting this equipment on board. If you're just flying domestically in the U.S., it's a great service. We're pretty excited about it. That's great. You'll have between Galileo and 5G about 1,000 net new aircraft adds by the end of the year. Just maybe unpack a little bit about the transition underneath that's masking it a little bit. Sounds like a legacy will ebb to sort of wash out the numbers this year. Is that? We're migrating a number of services. We're end of lifing one of our networks and has a new network. Actually, it's FCC funded, kind of what we call our LTE network. We have a lot of boxes and a lot of networks, so it kind of gets a little confusing. If you think of air-to-ground, like we have an entry point into broadband, and we can take our legacy customers into that entry point in broadband and grow them into 5G. That's the easiest way of looking at it. That deactivation of those customers is really where we're seeing some of those customers fall off the network, and we're anticipating some won't come back. What's the reason for that? Is it that migrating to alternative technology? They could be. Is it also the age of the airframe? If you look at like business jets, everybody tends to focus on the high end, you know, the $70 million airplanes. They look nice and they're good to talk about. The reality is the bulk of the U.S. fleet is also more older airframes. That could range anything from a million and a half dollar jet right through to what I just said, an $80 million jet. Within that, we've been very successful in the past. We built a really good moat around the business with the classic air-to-ground business, if we call it that. Really, it's migrating those customers across, and some of those customers will fall off because they will not make an investment on the aircraft. That being said, we have a migratory service called C one, which we have a lot of boxes, a lot of names. What does that do? It really picks that customer up at no cost to them, the FCC funds it, and migrates them to be able to take advantage of the entry point into broadband. That's been very successful to us. It was a bit of a slow ramp, but now where we stand on those numbers, we feel very confident We can take a good proportion of those customers. There will naturally be some fall off, but we've then got a good base to grow into 5G. That's kinda. I don't know whether you wanna expand on that. No, I think the only other point is probably mentioning GEO in with this whole piece. Yeah. Is like the, you know, GEO is what Satcom kind of brought to the table. It's held up incredibly well. This is all in the larger aircraft, right? 'Cause it goes in the tail. It's a higher ARPA. I think, like, we've been thinking it was gonna drop more for the past two years, but it's held up because it is very expensive to upgrade it, right? For a lot of people, the GEO works great, especially the FlexExec network, which is the KU. We do expect that to come down again this year. We're working with a lot of the GEO operators to work on backup solutions to make sure we keep the real estate on. Again, back to your point about the numbers are a little confusing because we have all these strong shipments and ramp, but you have a large bulk of legacy products across the board that just will naturally decline at some rate. I think kind of to the point of on the ATG side, I think the 5G was so late. That's part of the problem is if we had got that launched three years ago, I think we would've had a better moat to build off of. You know, we feel confident we can do it, but it is. You have a lot of moving pieces with legacy networks that are just, it's just, it's the nature of it. Chris and I at Satcom, you know, Satcom was 25 years old, and it had been through three or four of these. The key is you have to start it at well in advance, right? I think some of these were just, took a little longer to get going, and we're doing them all at the same time. Got it. Yeah. Makes sense. Chris, one area that you've been pretty bullish about the past few quarters I've heard you talk about is the fleet opportunity. Yeah. You had the VistaJet win, which was a big win, maybe didn't get recognition in the market that it probably deserved. Then you had this NetJets announcement late last year. Yeah ...that, you know, the stock reacted pretty sharply to. Yeah I mean, I thought you gave good color on Friday's call, but we can flesh it out a little bit. How you're thinking about and contextualizing the NetJets announcement and any shifts to the sort of fleet strategy, or is it steady as she goes? No, I think the fleet strategy is ultimately, I think, the big thing for people to get their head around. We have a competitor. I think for the classic Gogo business, like I said, it had really good moat around the business and really didn't have serious competition. Now I think it's real for people who have been invested in the stock for a long time. Now it's, you're looking at every win or loss, and you're gonna have win and losses on both sides. I think that's quite an important point for conceptually, you're in a competitive market. That doesn't mean that every time your competitor wins something and you haven't won it, either one of you is gonna go out of business. I think that would. Like, there are many competitive markets in the world. Most people, I think competition is a really healthy thing. You should have competition. It makes you better. That's an important point to make. Regarding NetJets specific, we have a fantastic relationship with NetJets. Interestingly, when we announced the NetJets win in our press release, we never actually said we won the whole fleet. We were very specific about what we'd won, and what we said in that press release still stands today. We've won a portion of the fleet, and we're rolling out on NetJets Europe. We will also be rolling out on specific airframes of NetJets North America. What was probably disappointing from our perspective, but not a shock, is we're still rolling out the technology. The antenna, which is called the FDX, we just got that this through the FAA regulations late in the summer last year. We're just rolling out STCs. That usually takes a 6-12 month program. The reality is, NetJets couldn't wait any longer, and they needed to upgrade some of those aircraft, which is specific to that type of antenna. They chose to go on those airframes at this point in time with our competition. NetJets also, in my belief, are some of the best negotiators I've ever come across, and they're amazing. They have an amazing procurement team. We'll see how that goes. I think they've always been a mixed fleet operator when it comes to connectivity because they really do a good job of leveraging their purchasing power. This wasn't a big shock from my perspective. The other thing is just if you focus on the upside with NetJets, we also do cockpit communications, so we do the data link VHF, which is a really important part of our business, like safety services through that. We don't have that with NetJets today. That's with another competitor. The GEO business, we don't have with NetJets today. None of that is impacting how people view us, but that just gives you a good broader perspective that NetJets have somebody else look after their GEO business. They've got two LEO providers, and somebody else looks after the cockpit. From my perspective, I think there's a lot of potential upside with our fleet strategy is, can we convince NetJets that we have good enough services in some other areas? They've also been a great air-to-ground customer for us for a long time. Does that mean? In our numbers, we've been very conservative. We've removed those out of our model, but those pieces of equipment haven't been removed off the fleet. Is that a thing that from a redundancy perspective, is that important to NetJets? It's those things that we're still working through with the client. Then pivoting back to VistaJet. If you look at VistaJet, that's a huge win for us. They've just put a potential $5 billion order in with Bombardier. They've announced they're rolling it out across a large proportion of their fleet. They've been a very good customer, as has NetJets, by the way. They're really a proponent to our strategy, and they're really vocal about why they went with us and why they didn't go with our competition. The other thing with the competition, we actually beat them out of that bid. They had two choices. It was all the competitor, and they chose us for a number of reasons. If you look at Luxaviation, who we've announced, multiple hundreds of aircraft, Avcon Jet, over 100 aircraft. If you actually look at our fleet strategy, we still believe we've got over 1,000 aircraft with fleet customers that are with us today. Wheels Up are rolling out our services, and actually did a announcement that it's quite revolutionary, the internet on board, and they're actually gonna speed up their rollout. No impact on our stock with this, which is kind of frustrating from mine and Zachary's point of view, we kind of try not to look at the stock and just focus on running the company at this point. I think we're in that kind of prove-it-out phase, liaryke Zachary said. Like, you know, our numbers at this point, you know, we've got so many moving pieces, but we feel very good about our technology roadmap that if we execute, we can transform these customers into new services. At the same time, we have a very fierce competitor, but we're winning business against the competitor. I think that's a really important point to make. you know, we're still focused on these fleet operators and, I think, we're clearly getting votes of confidence from significant players in the market. Got it. That makes sense. The only other point I would add just I think might have been lost, too, is when we You know, we started reporting the LEO units online, Galileo. A large portion of those were NetJets, are NetJets, and they're in Europe. I think that's also the thing, you know, the announcement, people assumed that, you know, it's the halo effect, right? Like, oh, if they're not happy, then who else is not gonna be happy? They are a large customer, and they are rolling it out, and it's a piece of the business that you saw at year end. We're gonna end up having hundreds of aircraft on with us, with NetJets. Mm-hmm. I mean, they are still a major significant customer from our point of view, very supportive, and we feel good with the rollout to Zachary's point. It's still going as planned with NetJets. Great. No, that's great, and that's encouraging. I wanna come back to the military government opportunity. Yeah. Because that seems super exciting. When I think about the TAM, you got manned aircraft, drones. I think we got a report over the weekend, U.S., one-way drones in Iran were linked with satellite-based connectivity. Drones, EVTOL, sort of a nascent business, but, you know, potentially promising. Just talk to us about how you frame the opportunity set for Mil-Gov. I think, again, we're a business of many parts under this. 'Cause we've been around for over 20-plus years, like Zachary said. That business, we are currently pivoting it away from some narrowband services with sat phones, which it has significant business around, and really focusing on aviation broadband. If we look at our aviation broadband for our government business, it grew 38% last year. We said that on the call last week. That's a significant growth trajectory. Our international market was. I can't remember the percentage. Like, almost double that. Yeah. Yeah. It was like. It was a small book of business, right? 90%, right. 90%+, the international business. Sorry, that number just went out my head. Very, very significant growth. If you look at that, focus that on aviation, the LEO product is really interesting for them because Eutelsat OneWeb doesn't have as big a name as the competition, but it is a European network. We're seeing a lot of interest from NATO. Our HDX product that we talked about before is very small, can get into a UAV. The other thing is the cost of installation, 'cause we really do know aviation very well. We brought the cost of install down, so it makes it more cost effective because everybody thinks just instantly when you're dealing with a government customer, they just have an open check, but that is not the case. We've really brought the cost of ownership down, and we think that's a really interesting space for us. Also, we have within the Satcom Direct acquisition, a global footprint, and we've been selling to heads of state government for a while. We have really good key relationships. A lot of them will not buy from our competition just purely out of a sovereign-based communications need, security needs, and we've built up this underlying architecture in our business as well on the ground that serves, you know, NATO, U.S. DoD, and other countries really, really well. We're really super excited about it. I think, obviously, going to the other point, EVTOL, we're talking to EVTOL players. That model is still not proven out yet. You know, let's see when these guys start flying. I think there's a lot of airspace challenges. I'm sure somebody's gonna get there 100%. I think from our perspective, short term, the next two -three years, the government UAV business and government opportunity with the underserved airframes. If you look at U.S. government had a Twenty-five by Twenty-five, say 25 meg on 25% of its Air Force aircraft. It failed that. A lot of these guys are nowhere near, you know, a very under-penetrated market. I think the under-penetrated market, just the DoD. NATO is even worse because they haven't, like, you know, been funding as much as the DoD. I mean, nobody funds as much as the DoD anyway. If you just look at a C-130, there's over 1,000 of them operational in the world today. It is quite clear that 25% of them do not have broadband connectivity. Outside of the UAVs, if we just focus on that, we have a C-130 certified product on GEO. We can also get LEO into that kind of mix as well. We can really pivot those opportunities over to Gogo. We think that's pretty exciting. Yeah. I think two other points that are. Yeah. critical that we've harped on a lot, but two phrases. One's called vendor lock-in, and the other one's called- Yeah. PACE planning. Yeah. PACE planning refers to the military's view that on all these missions you need to have, it's an acronym, primary, alternative, contingency, and emergency. Backup after backup after backup. I think that's what's critical because we're one of the only people that can do that. Whether it's GEO, LEO, ATG, we can provide the PACE planning. That's also what we've tried to kind of push in to the business aviation market, is making sure you always have backup and connectivity. The vendor lock is kind of another critical concept because they have gotten stuck with vendors before where they, you know, can get gouged, right? They put all these antennas on, then they have no agnostic or flexible capabilities. That's one thing that we've really tried to push, is again, we're the vendor, we're the face, we're the storefront, so to speak, but we will use all these other guys in the background to get you the best deal. I think, you know, it's like you said, it's tough because, you know, there was no Mil-Gov business part of Gogo before, but it operates very differently, but we're still incredibly bullish. It's just these cycles, you know, take a long time. I think, like you saw, our Q4 numbers are up pretty substantially in the Mil-Gov business. I know folks were trying to. When is that gonna hit? When is it gonna hit? You know, we're starting to see traction. We've got under a minute here. Yeah. I want to stick with you, actually. Okay. Zachary, just to close. You know, we talked a little bit moving pieces- Mm-hmm. in 2026. You've talked in the past about the balance sheet. Yep. Actually trying to refi or lower the cost of debt. Talk to us about what we should expect in 2026, if anything? We've been actively talking to our bankers and the board pretty regularly about this for the last probably six months. You know, from my perspective, the single biggest, best use for capital allocation is a deleveraging. We're exploring different ways. We've already been analyzing whether it's a regular debt buyback or a Dutch auction. It's kind of been the views of the board and a lot of our banking partners that, look, we do need to do that. We do have to address the balance sheet. You know, it kind of maybe we should wait and see how much traction we get in the first quarter or two, kind of help with the debt pricing. I think we've said it over and over, we have more cash than we need. Making sure we deploy it at the right time and making sure we get what we need, because the debt does mature in April of 2028. It's just being thoughtful about deleveraging versus also making sure we get the maturity extension that we need and all that. That's my biggest focus this year, is kind of pushing that forward. Good. Okay, we're out of time. Thank you both. Appreciate your time. Thank you. Thank you. Thank you. Great. Thank you.