GOGO (GOGO) Q2 2025: Equipment Revenue Surges 59% as Product Cycle Drives Connectivity Upgrade Wave
GoGo’s Q2 results highlight a pivotal transition year, with record equipment shipments and robust OEM traction powering future service revenue streams. Despite a modest dip in legacy ATG units, the mix shift toward advanced connectivity and multi-orbit solutions is accelerating. Management’s confidence in synergy realization, strong free cash flow, and global OEM wins signal a business poised for margin expansion as new networks come online in 2026.
Summary
- Product Cycle Momentum: Record advanced equipment shipments and multi-network portfolio underpin future growth.
- Synergy Capture: Cost takeout and integration milestones drive margin resilience ahead of major launches.
- 2026 Inflection: Investments prime GoGo for a sharp free cash flow and service revenue ramp next year.
Performance Analysis
GoGo’s Q2 financials reflect a business at the intersection of investment and operational leverage. Total revenue reached $226 million, up 1% year over year, with equipment revenue up 59%—a direct result of advanced and C1 LTE unit shipments as customers prepare for the 2026 network transition. Service revenue, now the bulk of gross profit, remains stable, with GEO broadband aircraft online up 15% year over year, demonstrating the stickiness of OEM line-fit wins and contractually anchored ARPU.
Profitability and cash flow exceeded internal and consensus expectations. Adjusted EBITDA reached $61.7 million with a margin of 27.3%, and free cash flow of $34 million (first half total $64 million) outpaced guidance. Operating expenses declined sequentially, aided by synergy realization and cost discipline. The net leverage ratio held at 3.2x, with management aiming for further deleveraging post-refinancing. Equipment margin held at 14%, while service margins remained robust at 77% for the core GoGo business.
- Equipment Revenue Spike: Record advanced shipments and C1 upgrades signal strong demand ahead of the LTE cutover.
- Recurring Revenue Stability: Fixed-term GEO contracts and high-margin service revenue drive gross profit consistency.
- Synergy Execution: Run-rate cost synergies now targeted at $35 million, supporting margin expansion into 2026.
While total ATG units online declined 4% YoY, management frames this as a temporary transition as classic customers migrate to advanced and LTE solutions, with the expectation of stabilization and renewed growth as 5G and C1 upgrades accelerate in 2026.
Executive Commentary
"We believe our Q2 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."
Chris Moore, Chief Executive Officer
"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 2026, combined with further deleveraging."
Zach Cotton, Chief Financial Officer
Strategic Positioning
1. Multi-Orbit, Multi-Band Advantage
GoGo’s unique positioning as the only independent provider offering LEO (Low Earth Orbit), GEO (Geostationary), and ATG (Air-to-Ground) broadband unlocks differentiated value for both business aviation and military/government clients. This flexibility supports redundancy, global coverage, and compliance with military PACE protocols, making GoGo a preferred partner for OEMs and government agencies seeking future-proofed connectivity solutions.
2. OEM and Aftermarket Penetration
OEM line-fit and aftermarket wins with Embraer and Textron validate GoGo’s product roadmap and strengthen pull-through for Galileo terminals. Eight HDX STCs (Supplemental Type Certificates) are now approved, with 30 more in development, positioning GoGo to capture a rising share of the 41,000 global business aircraft—of which only 24% are broadband-connected today.
3. Product Cycle and Upgrade Incentives
The FCC Rip and Replace program and C1 LTE upgrade incentives are catalyzing customer migration from legacy Classic to advanced platforms, with over 40 aircraft models eligible and 234 C1 units shipped. The 5G network, with 170 towers deployed and over 300 aircraft pre-provisioned, is set to launch in Q4, supporting a multi-year upgrade cycle that should stabilize and grow ATG subscribers from 2026 onward.
4. Synergy Realization and Cost Discipline
Integration of SATCOM Direct and GoGo is delivering faster-than-expected synergy capture, now targeted at $35 million run rate within two years. Headcount reductions, facility consolidation, and unified systems are driving opex efficiency, with further cost savings expected as integration projects complete.
5. Global and Military Expansion
GoGo is leveraging its global dealer network (148 dealers across 233 locations) and established military/government relationships to expand internationally. The MilGov vertical, while still transitioning from narrowband to broadband, has a large addressable market as U.S. and allied governments modernize airborne communications, with the U.S. Air Force’s “25 by 25” program a notable catalyst.
Key Considerations
Q2 marks a clear transition phase for GoGo, as the company balances investment in new platforms with disciplined execution on cost and integration. The following considerations are central to the investment case:
Key Considerations:
- Upgrade Cycle Acceleration: FCC incentives and 5G/C1 launches are driving a near-term spike in equipment sales and setting up a service revenue ramp in 2026.
- OEM Channel Strength: Line-fit wins and OEM relationships create high barriers to entry and recurring contract revenue streams.
- Synergy and Cost Takeout: Integration progress is ahead of schedule, with further non-headcount cost savings expected in 2025 and 2026.
- ATG Transition Management: Temporary ATG unit declines are framed as part of the migration to advanced platforms, with stabilization expected as new networks come online.
- International and Military Growth: Early traction in global and MilGov markets provides optionality and diversification beyond North America.
Risks
Execution risk remains elevated as GoGo navigates a complex product transition and integration roadmap, with timing of OEM certifications, government contract awards, and customer upgrade adoption all potential swing factors. ARPU compression in GEO broadband, while slower than feared, remains a multi-year headwind. Additionally, the business remains exposed to regulatory change and competitive responses, particularly from large satellite operators and new entrants like Starlink.
Forward Outlook
For Q3 2025, GoGo guided to:
- Continued strength in equipment sales as C1 and advanced shipments ramp
- Modest service revenue growth as new product launches remain back-half weighted
For full-year 2025, management raised guidance to the high end of prior ranges:
- Total revenue at the high end of $870 to $910 million
- Adjusted EBITDA at the high end of $200 to $220 million
- Free cash flow at the high end of $60 to $90 million
Management emphasized that 2025 is an investment and transition year, with 2026 expected to deliver a sharp ramp in free cash flow and service revenue as product investments roll off and new networks reach scale.
- 5G and Galileo launches to drive new activations and recurring revenue
- Further deleveraging and potential refinancing targeted for 2026
Takeaways
GoGo’s Q2 results underscore a business entering the late innings of a major product and integration cycle, with near-term equipment revenue strength providing visibility into future high-margin service growth.
- Equipment-Driven Inflection: Record advanced and C1 shipments are building a backlog for future service revenue, validating the upgrade cycle thesis.
- Margin and Synergy Leverage: Integration with SATCOM Direct is unlocking higher synergy targets and improving opex discipline, with further gains expected as investments wind down.
- 2026 Ramp Watch: Investors should monitor 5G and Galileo adoption, ATG stabilization, and ARPU trends as leading indicators of the service revenue inflection next year.
Conclusion
GoGo’s Q2 performance cements its position as a leading enabler of in-flight connectivity, with record equipment sales and strong OEM traction setting the stage for a service revenue and margin expansion cycle in 2026. While the business remains in transition, execution on product launches, cost synergies, and customer migration will be the critical variables to watch as the upgrade cycle accelerates.
Industry Read-Through
GoGo’s results provide a clear read-through for the broader aviation connectivity and satellite communications sector: The multi-orbit, multi-band approach is becoming the industry standard for redundancy and global coverage, raising the bar for both legacy and new entrants. OEM relationships and line-fit positions are increasingly critical moats, while government and military modernization initiatives are expanding the addressable market for high-reliability broadband. Investors should expect continued consolidation and product innovation as connectivity becomes a core differentiator for both commercial and government aviation.