Annual report advancing aviation 20 for The catalyst 15 ENGINEERING LABS Gogo develops next-generation technologies in our state-of-the-art engineering labs. Mastering the market Gogo leads the market by We will continue to operate a best-in-class network that is vital to our customers. This robust global mastering the requirements network serves over 11,000 aircraft systems – of the aviation industry and more than any other provider in the industry. providing our partners with We believe our global capabilities to install and the world’s most powerful maintain aircraft are unmatched. In 2015, we extended network and platform for our lead by installing connectivity systems on nearly 1,100 planes including 700 business and 400 connecting aircraft. commercial aircraft, while upgrading hundreds more. We also equipped 500 aircraft with Gogo Vision, our With two decades of experience and an open ZLUHOHVVLQʗLJKWHQWHUWDLQPHQWV\VWHP architecture that’s built for the future, Gogo continues WRDGYDQFHLQʗLJKWFRQQHFWLYLW\2XUWHFKQRORJ\ solutions, global operations, and innovative services set the standards across the industry. 11,500 Gogo systems online* 2XUDELOLW\WRGHOLYHUWKHPRVWUHOLDEOHFRQQHFWLYLW\ to aircraft comes from our extensive experience managing a mobile network for commercial and Commercial Aviation aircraft online* EXVLQHVVDYLDWLRQ2XUH[SHULHQFHKDVOHGXVWRDGRSW 2,600 an open architecture that gives our airline partners greater control over the systems they choose and the Commercial Aviation ʗH[LELOLW\WRPHHWYLUWXDOO\DQ\FRQQHFWLYLW\QHHGWKH\ɋOO 2,300 entertainment systems online* encounter – today and tomorrow. This architecture allows us to seamlessly switch from one network to another, enabling our airline partners to upgrade when Business Aviation broadband new technologies come online. With this approach, our 8,900 and satellite systems online* partners can protect themselves against technological obsolescence while minimizing the disruption and cost of taking aircraft out of service. *As of December 2015 NEXT-GENERATION TECHNOLOGY *RJRLQVWDOOHGLWVYHU\ɐUVWDLUFUDIWZLWK.XLQDQG H[SHFWVWRLQVWDOODSSUR[LPDWHO\.XDLUFUDIWLQ Smarter connectivity Gogo continues to bring more bandwidth and new solutions to the sky, enabling innovation across the industry. 2YHUWKHODVW\HDUVZHKDYHEHHQGHYHORSLQJ and implementing advanced solutions to deliver JOREDOLQʗLJKW the reliable connectivity our partners demand. 2Ku FRQQHFWLYLW\ For Commercial Aviation, we developed Gogo 2Ku, VSHFWUDOHIʖFLHQF\FRPSDUHG RXUSURSULHWDU\VDWHOOLWHVROXWLRQZKLFKRIʖFLDOO\ 2x to traditional gimbaled antennas WRRNʗLJKWLQ:LWKLQGXVWU\OHDGLQJVSHHGV DQGVLJQLʖFDQWO\LQFUHDVHGFDSDFLW\.XZLOOJLYH airline partners* passengers the bandwidth they need to stream video 9 and more. For airlines, 2Ku enables Gogo TV, our live IPTV solution, as well as Gogo Connected Aircraft awards* – majority expected Services, which can bring airline operations and aircraft 800+ to be installed by end of 2018 V\VWHPVRQOLQHWROHYHUDJHGDWDIRURSWLPDOHIʖFLHQF\ For Business Aviation, we are developing Gogo Biz 4G, which will take advantage of our proven Air-to-Ground (ATG) network to give business aircraft passengers greater connectivity speeds than ever before. We developed the Universal Cabin System (UCS) 5000 ɇWKHZRUOGɋVʖUVWDOOLQRQHVPDUWFDELQɇDVLQJOH system that brings connectivity and entertainment to passengers, while delivering critical data to owners and operators. *As of March 2016 The global opportunity Gogo has the capabilities and expertise to serve the global aviation industry. $LUFUDIWʗ\HYHU\ZKHUHDQGQHHGWREHVXSSRUWHG around the world, which is why we continue to invest in global operations. With thousands of uncommitted continents with aircraft worldwide, our investments provide an 4 Gogo presence opportunity to expand and deliver greater value to our partners and shareholders. 2Ku is increasing our countries where Gogo presence abroad and it will be a catalyst that drives 60+ HTXLSSHGDLUFUDIWʗ\ airline connectivity decisions. Every airline has unique priorities for connecting uncommitted commercial their passengers and bringing operations online. ~11,000 aircraft globally** The opportunity to serve these airlines is vast, and it will grow exponentially as their passengers, operations, and aircraft consume more data. We believe our open strategy and technology platform allow us to meet these needs, wherever our SDUWQHUVʗ\WRGD\DQGLQWRWKHIXWXUH GOGO’SGOG INTERNATIONAL TEST LAB *RJRɑLHVLWVRZQWRWHVWQHZSURGXFWV*RJR DQGVHUYLFHVIRUWKHJOREDOPDUNHWDQGV *As of 2015 ** MManagement estimate as of December 2015 Dear shareholders 2015 was a transformative year for Gogo. We became a half billion dollar revenue company with strong growth in every segment, and we launched Gogo 2Ku – our proprietary next-generation global VDWHOOLWHLQʗLJKWFRQQHFWLYLW\WHFKQRORJ\:HDOVRFRQVROLGDWHGRXU Commercial Aviation facilities at our new location in downtown Chicago. 2XUPLVVLRQLVWRDGYDQFHDYLDWLRQE\FRQQHFWLQJHYHU\ aircraft. Based on the demand we see daily from passengers and our aviation partners, it is clear to us that over time, all aspects of the aircraft will be connected. For nearly two decades, Gogo has been at the forefront RIWKHLQʗLJKWFRQQHFWLYLW\LQGXVWU\:HKDYHDOVREXLOW an open-systems architecture designed to meet the bandwidth demands of the aviation industry – ERWKWRGD\DQGLQWRWKHIXWXUH2XURSHUDWLRQDO capabilities and track record of innovating new products and services for our aviation partners further position us for continued success. We enter 2016 with more than 11,000 connectivity systems online and several hundred more waiting to be installed. Today, we provide broadband connectivity to nearly 2,600 commercial aircraft and nearly 3,500 business aircraft, as well as satellite connectivity to another 5,400 business aircraft. This represents more Open architecture and 2Ku than 20 percent of the world’s 40,000 aircraft and a During 2015, it became clear to us that an open substantial lead in the global aviation industry. With architecture strategy for our technology is the way of the majority of global aircraft yet to be connected, the the future. This approach allows us to leverage new opportunity before us is vast. We expect to continue innovations across the industry as they come online winning aircraft as airlines and business jet owners without having to change the antenna or other major recognize the value in connecting their passengers and components of our connectivity system. We developed their daily operations, as well as all the systems onboard 2Ku, our next-generation satellite connectivity system, to their aircraft. be compatible with multiple satellite networks, including existing satellites as well as the new high-throughput Additionally, our wireless entertainment service, Gogo satellites slated for launch in the near future. Vision, is now installed on more than 2,300 aircraft, PDNLQJ*RJRWKHZRUOGɋVODUJHVWZLUHOHVVLQʗLJKW This means that when airlines choose Gogo 2Ku, their entertainment provider. In 2016, we expect to launch GHFLVLRQZRQɋWWUDSWKHPLQDWHFKQRORJLFDOER[2XU our IPTV product, which will allow our airline partners DLUOLQHSDUWQHUVJHWWKHEHQHʖWVRIʗH[LELOLW\DQGULVN to further complement their passenger entertainment management while staying future-ready and ahead of options with live broadcast TV. the technological curve. We are very pleased with the UHFHSWLRQVRIDU2YHUDLUFUDIWDFURVVQLQHDLUOLQHV KKDYHEHHQDZDUGHGWRXVIRU.XLQVWDOODWLRQ2XUSULRULW\DYHEHHQDZDUGHGWRXVIRU.XLQVWDOODWLRQ2XUSULRULW\ now is the commercial launch of this technologytechnology in 2016.2016. GOGO’S NEW HEADQUARTERS *RJRUHORFDWHGWRWKHYLEUDQWEXVLQHVV GLVWULFWLQ&KLFDJRȅV/RRSLQ-XQH GOGO CONNECTIVITY SYSTEMS ONLINE CA-NA AVERAGE REVENUE PER AIRCRAFT (in USD Thousands) 137 11,520 121 14% 5-Year CAGR 21% 5-Year CAGR 10,357 101 9,255 8,296 84 6,938 72 5,927 52 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 CA-NA CA-ROW BA-ATG BA-Satellite COMPANY REVENUE (in USD Millions) COMPANY ADJUSTED EBITDA*(in USD Millions) 501 40% 5-Year CAGR 408 113 328 89 234 49 24 160 37 95 (1) 9 8 11 (45) 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 ADJUSTED EBITDA CA-ROW SEGMENT LOSS CA-NA BA CA-ROW Operational capabilities Beyond 2Ku, our operational capabilities :HH[SHFWWRJHWDSSUR[LPDWHO\SODQHVʗ\LQJZLWK.X are where we really shine. in 2016 and quadruple that number in 2017. From there, we see our 2Ku install numbers continuing to grow as $VWKHZRUOGɋVODUJHVWLQʗLJKWFRQQHFWLYLW\SURYLGHUDV the world’s airlines adopt this technology and realize its measured by systems online, we understand that this potential. Every installation of 2Ku becomes a catalyst business is more than just bringing bandwidth to aircraft. for our next wave of growth. This adoption also plays a :HNHHSDLUFUDIWFRQQHFWHGZKHUHYHUWKH\ʗ\ZKLOH crucial role in opening bandwidth capacity on our HIʖFLHQWO\FHUWLI\LQJDQGLQVWDOOLQJRXUHTXLSPHQWRQ Air-to-Ground (ATG) network in North America. new planes wherever our aviation partners desire. Ultimately, this scale drives operational leverage for Gogo and adds value for our partners and shareholders. Gogo does this better than anyone. In 2015 alone, we installed nearly 1,100 broadband systems and 500 Gogo In our Business Aviation segment and for some of Vision systems, while upgrading hundreds of other our domestic commercial partners, we will continue aircraft with higher capacity connectivity systems. to deploy ATG technology, our original engineering That is more aircraft than any of our competitors marvel that continues to improve.