Gogo Inc. (GOGO) Q3 Earnings: What's In Store This Time?
Zacks Investment Research | Nov 01, 2016 09:34PM ET
Gogo Inc. (NASDAQ:GOGO) is slated to release third-quarter 2016 results on Nov 3. Last quarter, Gogo delivered a positive earnings surprise of 26.19%. Also, the company has posted an average positive earnings surprise of 12.24% over the past four quarters. Let’s see how things are shaping up for this announcement.
Factors to Consider
Gogo boasts a dominant position among in-flight Wi-Fi service providers especially in its North America Commercial Aviation business. Also, Gogo’s onboard Internet connectivity services coupled with its innovative value-added services are likely to drive the top line going ahead.
The company reported encouraging second-quarter results. Though it posted a loss of 31 cents, it compared favourably with the Zacks Consensus Estimate of a loss of 42 cents. Also, the top line surpassed the consensus mark. Moreover, revenues increased on a year-over-year basis.
The company’s 2Ku service is gaining traction and can become a key growth driver going ahead. 2Ku is Gogo’s next generation satellite technology, which can offer peak speeds of over 70 Mbps to the aircraft, nearly 20 times the bandwidth provided by its first-generation Air to Ground solution in the U.S. With ATG getting highly congested, Gogo is trying to divert traffic to its 2Ku based satellite service. For the fourth quarter, the company said it has 2Ku backlog of 800 aircrafts. It plans to incorporate 2Ku technology in 75 planes in 2016 and increase the number fourfold by 2017.
However, despite its strength, Gogo’s business is not immune to competition and the resultant pricing pressure from peers like ViaSat Inc. (NASDAQ:VSAT) . In addition, higher operating expenses due to increased investment in the Commercial Aviation – Rest of World segment remain a concern.
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