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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-14 · 128 added, 108 removed, 339 unchanged (41% of the section changed)

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Company Overview

The Company’s acquisition of Satcom Direct created a combined organization which currently is the only multi-orbit, multi-band in-flight connectivity provider offering connectivity technology purpose-built for business and military/government aviation.

The Transaction united two industry-leading brands, creating a product portfolio that offers best-in-class solutions for small to large aircraft and heavy jets.

As a combined organization, the Company has a holistic approach of providing broadband connectivity services to its customers through Gogo’s air-to-ground (“ATG”) technology and multiple satellite constellations aiming to deliver consistent, global tip-to-tail connectivity with a suite of software, hardware, and advanced infrastructure supported by a 24/7/365 in-person customer support team.

As a result of the Company’s acquisition of Satcom Direct, as described in Note 2, “Acquisition of Satcom Direct,” the Company has two reportable segments as of December 31, 2024:

(i) the legacy pre-acquisition operations of the Company (“Gogo BA”) and (ii) the acquired entity, Satcom Direct.

The consolidated financial statements and the related notes contained elsewhere in this Annual Report on Form 10-K report the results of the Gogo BA segment and, from December 3, 2024 until December 31, 2024 (the period after the Closing of the Satcom Direct acquisition), the Satcom Direct segment.

The Gogo BA segment provides in-flight connectivity for business aviation via air-to-ground and satellite networks.

The Satcom Direct segment primarily provides global satellite-based communication solutions for business, military and government aircraft.

Satcom Direct is managed as a separate reportable segment, but in the future, we may realign our reportable segments after integrating the Satcom Direct business.

This “Management’s Discussion and Analysis of Financial Condition and Results of Operations” discusses the results of both segments for the periods in which they are covered by the consolidated financial statements, except that, for the reasons described below, it does not reflect the impact of the Satcom Direct segment in “Key Business Metrics” and “Results of Operations—Comparison of Years Ended December 31, 2024 and 2023.”

The Company is the only multi-orbit, multi-band in-flight connectivity provider offering connectivity technology purpose-built for business and military/government aviation.

We have a holistic approach of providing broadband connectivity services to our customers from small to large aircraft and heavy jets through our ATG technology and integrated LEO and GEO satellite solutions provided by multiple satellite constellations owned by our satellite network partners.

We aim to deliver to our customers consistent, global tip-to-tail connectivity with a suite of software, hardware, and advanced infrastructure supported by a 24/7/365 in-person customer support team to fit their every need.

Our Company’s chief operating decision maker (“CODM”), who is the Chief Executive Officer, makes resource and operating decisions by evaluating the performance and business results on a consolidated basis.

As we do not have multiple segments, we do not present segment information in this Annual Report on Form 10-K.

Factors and Trends Affecting Our Results of Operations

We believe that our operating and business performance is driven by various factors that affect the business aviation industry, including trends affecting the travel industry and trends affecting the customer bases that we target, as well as factors that affect wireless Internet service providers and general macroeconomic factors.

We believe that our operating and business performance is driven by various factors that affect the business and military/government aviation industries, including trends affecting the travel industry and trends affecting the customer bases that we target, as well as factors that affect wireless Internet service providers and general macroeconomic factors.

Key factors that may affect our future performance include:

• costs associated with the implementation of, and our ability to implement on a timely basis, our technology roadmap, including upgrades to and installation of the ATG Broadband technologies we currently offer, Gogo 5G, Gogo Galileo, LTE and any other next generation or other new technology that we develop or acquire;

• our ability to manage issues and related costs that may arise in connection with the implementation of our technology roadmap, including technological issues and related remediation efforts and failures or delays on the part of antenna, chipset, and other equipment developers and providers or satellite network providers, some of which are single-source;

• our ability to implement on a timely basis and costs associated with the ongoing implementation of our technology roadmap, including installation of and/or upgrades to the ATG Broadband technologies we currently offer, Gogo 5G, Gogo Galileo, LTE and any other next generation or other new technology that we develop or acquire;

• our ability to manage issues and related costs that may arise in connection with the implementation of our technology roadmap, including technological issues and related remediation efforts and technological shifts, failures or delays on the part of antenna, chipset, and other equipment developers and providers or satellite network providers, some of which are single-source;

• our ability to license additional spectrum and make other improvements to our ATG network and operations as technology and user expectations change;

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• our ability to fully utilize portions of our deferred income tax assets;

• changes in laws, regulations and interpretations affecting telecommunications services globally, including those affecting our ability to maintain our licenses for ATG spectrum in the United States, obtain sufficient rights to use additional ATG spectrum and/or other sources of broadband connectivity to deliver our services, including Gogo Galileo, expand our service offerings and manage our network;

• changes in laws, regulations and policies affecting our business or the business of our customers and suppliers globally, including changes that impact the design of our equipment and our ability to obtain required certifications for our equipment.

• changes in laws, regulations, policies and interpretations affecting our business, the business of our customers and suppliers globally, including changes that impact the design of our equipment and our ability to obtain required

certifications for our equipment and services, and telecommunications services globally, including those affecting our ability to maintain our licenses for ATG spectrum in the United States, obtain sufficient rights to use additional ATG spectrum and/or other sources of broadband connectivity to deliver our services, including Gogo Galileo and Gogo 5G, and expand our service offerings and manage our network;

• the enactment of, and proposals for, trade protection measures by the United States as well as other countries (including United States “reciprocal” tariffs that began in April 2025), including increases or changes in tariffs and trade barriers, changes in government policies and international trade arrangements, geopolitical volatility, and global macroeconomic conditions, or uncertainty regarding the impact of proposed or future trade protection measures, may affect our results of operations in some markets.

Key Business Metrics

Our management regularly reviews financial and operating metrics, including the following key operating metrics, to evaluate the performance of our business and our success in executing our business plan, make decisions regarding resource allocation and corporate strategies, and evaluate forward-looking projections.

The metrics below are only for the Gogo BA segment and do not include metrics for the Satcom Direct segment for the period in which it is reflected in the Company’s consolidated financial statements (namely, from the Closing on December 3, 2024 until December 31, 2024), with the exception of the GEO aircraft online (which includes the Satcom Direct business aviation broadband GEO aircraft online but excludes military/government GEO aircraft online), because this reporting period provided insufficient time for management to review, test and select meaningful metrics that would be useful on a standalone basis to both management and investors.

Additionally, these metrics are slightly broader in scope than those previously presented for the Gogo BA segment, due to an ongoing transition after the acquisition of Satcom Direct in management’s view of which financial and operating metrics of the Gogo BA business are most important to the combined Company.

In future periods, after management has integrated the Satcom Direct business and has sufficient information to determine meaningfully which financial and operating metrics are useful to both management and investors, management expects to present such metrics reflecting the major aspects of all of the Company’s businesses, including those in the Gogo BA segment and the Satcom Direct segment.

Certain of these business metrics may be added, removed or updated from time to time as our business evolves.

For the Years Ended December 31,

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GEO aircraft online

Gogo Galileo aircraft online

Average monthly connectivity service revenue per ATG aircraft online

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• AVANCE aircraft online.

We define AVANCE aircraft online as the total number of business aircraft equipped with our AVANCE L5 or L3 system for which we provide ATG services as of the last day of each period presented.

We define AVANCE aircraft online as the total number of business aircraft equipped with our AVANCE L5 or L3 system for which we provide ATG services in the last month of the period presented.

• Gogo Biz aircraft online.

We define Gogo Biz aircraft online as the total number of business aircraft not equipped with our AVANCE L5 or L3 system for which we provide ATG services as of the last day of each period presented.

We define Gogo Biz aircraft online as the total number of business aircraft not equipped with our AVANCE L5 or L3 system for which we provide ATG services in the last month of the period presented.

This number excludes commercial aircraft operated by Intelsat’s airline customers receiving ATG service.

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We define GEO aircraft online as the total number of aircraft for which we provide GEO broadband services to business aviation customers as of the last day of each period presented.

This number excludes aircraft receiving services through GEO satellite networks that are end-of-life.

This number excludes aircraft receiving services through GEO satellite networks that are end-of-life and military/government GEO aircraft online.

• Gogo Galileo aircraft online .

We define Gogo Galileo aircraft online as the total number of aircraft for which we provide Gogo Galileo LEO broadband services in the last month of the period presented.

This number excludes military/government Gogo Galileo aircraft online.

This metric was not presented prior to the fiscal year ended December 31, 2025, as Gogo Galileo was only first deployed in that year.

• Average monthly connectivity service revenue per ATG aircraft online (“ARPU”).

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Service revenue primarily consists of subscription and usage fees paid by aircraft owners and operators for telecommunication, data, and in-flight entertainment services.

Service revenue is recognized as the services are provided to the customer.

Service revenue is recognized as the services which are provided to the customer.

Equipment revenue primarily consists of proceeds from the sale of ATG and satellite connectivity equipment and is recognized when control of the equipment is transferred to the customer, which generally occurs when the equipment is shipped.

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Depreciation and Amortization:

Depreciation expense includes expense associated with the depreciation of our network equipment, buildings, office equipment and furniture, fixtures and leasehold improvements, which is recorded over their estimated useful lives.

Depreciation expenses include expenses associated with the depreciation of our network equipment, buildings, office equipment and furniture, fixtures and leasehold improvements, which are recorded over their estimated useful lives.

Amortization expense includes the amortization of our finite-lived intangible assets on a straight-line basis over their estimated useful lives.

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To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.

We believe that the assumptions and estimates associated with the fair value of service customer relationships and software acquired in the Transaction have the greatest potential impact on and are the most critical to fully understanding and evaluating our reported financial results, and that they require our most difficult, subjective or complex judgments.

For a discussion of our significant

accounting policies to which many of these estimates relate, see Note 1, “Summary of Significant Accounting Policies,” to our consolidated financial statements.

Fair Value – Acquired Service Customer Relationships and Software

We account for the Transaction under the acquisition method of accounting in accordance with ASC 805, Business Combinations.

Accordingly, we allocate the purchase price to the identifiable assets and liabilities based on their respective fair value, including acquired service customer relationships and software (the “acquired intangible assets”).

Service customer relationships were valued at $144.6 million using the multi-period excess earning method.

This method of valuation reflects the present value of the projected cash flows that are expected to be generated by these existing customers less charges representing the contribution of other assets to those cash flows.

Software was valued at $55.2 million using the relief from royalty method, which is equal to the present value of the after-tax royalty savings attributable to owning the software as opposed to paying a third party for its use.

We make significant estimates and assumptions to determine the fair value of the acquired intangible assets.

Critical estimates in valuing the acquired intangible assets include, but are not limited to, future projected revenue and discount rates applied to future cash flows.

The Company engaged third-party valuation advisors to assist in estimating the fair value of identifiable assets and liabilities, including the selection of valuation methodologies.

We believe that the assumptions and estimates associated with our goodwill impairment analysis and the fair value of the earnout liability associated with the Transaction have the greatest potential impact on and are the most critical to fully understanding and evaluating our reported financial results, and that they require our most difficult, subjective or complex judgments.

For a discussion of our significant accounting policies to which many of these estimates relate, see Note 1, “Summary of Significant Accounting Policies,” to our consolidated financial statements.

Goodwill Impairment

We assess goodwill for impairment on an annual basis as of October 1st of each year or more often if deemed necessary.

To determine whether goodwill is impaired, we are required to assess the fair value of the reporting unit and compare it to the carrying value of goodwill.

We have one reportable segment which is also our only operating segment and reporting unit.

We assess qualitative and quantitative factors to determine the likelihood of impairment.

Our qualitative analysis includes, but is not limited to, assessing the changes in macroeconomic conditions, regulatory environment, industry and market conditions, financial performance versus budget and any other events or circumstances specific to the reporting unit.

If it is more likely than not that the fair value of the reporting unit is greater than the carrying value of goodwill, no further testing is required.

If our qualitative analysis indicates more testing is required, or if we elect not to perform a qualitative analysis, we will apply the quantitative impairment test method.

Our quantitative impairment assessment considers both the market and income approaches to estimate fair value.

The market approach estimates fair value using financial multiples of comparable companies.

The income approach estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to their respective present values.

We make significant estimates and assumptions to determine the fair value of the reporting unit.

Critical estimates in valuing the reporting unit include, but are not limited to forecasted revenue growth rates, forecasted earnings before income taxes, depreciation and amortization (“EBITDA”) margins, the discount rate, long-term growth rate, and the selection of financial multiples of comparable companies.

For 2025, the Company engaged a third-party valuation advisor to assist in estimating the fair value of the reporting unit, including the selection of valuation methodologies.

Our estimates are based on assumptions the Company believes to be reasonable and are inherently uncertain.

Any material changes in these assumptions could result in significant fluctuations in the fair value of acquired service customer relationships and software, potentially affecting amortization expense and future impairment assessments.

Any material changes in these assumptions could result in significant fluctuations in the fair value of the reporting unit, potentially affecting future impairment assessments.

Such adverse impacts may be material.

See Note 2, “Acquisition of Satcom Direct,” to our consolidated financial statements for additional information.

We completed our annual goodwill impairment assessment for 2025 and determined that the fair value of the reporting unit exceeded its carrying value, indicating no impairment.

Fair Value - Earnout Liability

In connection with the Transaction, a portion of the purchase consideration consists of contingent consideration payable based on the achievement of specified performance targets.

The contingent consideration is recorded at fair value on the acquisition date and is remeasured at fair value as of the balance sheet date, with changes in fair value recognized in earnings.

The fair value of the earnout liability is determined using a Monte Carlo simulation model to estimate the range of potential outcomes and the likelihood of achieving the applicable performance targets.

This valuation technique requires the Company to make significant estimates and assumptions, including projected future gross profit of Satcom Direct, and the selection of an appropriate risk-adjusted discount rate.

In developing the forecasted gross profit projections, management considers historical performance, including aircraft retention rates, contractual arrangements, and anticipated market and economic conditions.

These projections are inherently uncertain and are sensitive to changes in business performance, market conditions, and other factors that may affect future operating results.

The discount rate used in the valuation reflects the time value of money and the risks associated with achieving the projected results and realizing the contingent payments.

The Company evaluates the reasonableness of the discount rate and other key assumptions, including by considering observable market data, industry conditions, and company-specific risk factors.

For 2025, the Company engaged a third-party valuation advisor to assist in estimating the fair value of the earnout liability, including the selection of valuation methodologies and key assumptions.

The Company believes the assumptions used in the valuation are reasonable, however, these estimates are inherently uncertain and actual results may differ from those assumed in the valuation model.

Changes in forecasted gross profit, discount rates, or other significant assumptions could result in material adjustments to the fair value of the earnout liability in future periods, and such adjustments could be material to the Company’s consolidated financial statements.

Recent Accounting Pronouncements

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The information contained in the table below should be read in conjunction with our consolidated financial statements and related notes.

The acquisition of Satcom Direct was completed in the fourth quarter of 2024, and as a result, its results of operations are not reflected in our financial statements prior to such date.

Consolidated Statements of Operations

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For the Years Ended December 31,

Satcom Direct

Service revenue

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Cost of service revenue (exclusive of items shown below)

Cost of equipment - product

Cost of equipment - other

Total cost of equipment revenue (exclusive of items shown below)

Cost of equipment revenue (exclusive of items shown below)

Engineering, design and development

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Total operating expenses

Operating income (loss)

Operating income

Other expense (income):

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Interest expense

Change in fair value of earnout liability

Loss on extinguishment of debt

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Total other expense

Income (loss) before income taxes

Income before income taxes

Income tax provision (benefit)

Net income (loss)

Comparison of Years Ended December 31, 2025 and 2024

Below is a discussion of changes in the results in operations for the years ended 2024 and 2023, which as discussed above are for the Gogo BA segment only.

The acquisition of Satcom Direct was completed on December 3, 2024 and is reflected in the combined Company’s consolidated financial statements only for the 29-day period from the Closing until December 31, 2024.

As a result, there is no meaningful prior period comparison point.

Unless otherwise noted below, we expect consolidated revenue and expenses to increase in 2025 as a result of a full year of activity for Satcom Direct.

Below is a discussion of changes in the results in operations for the years ended 2025 and 2024.

Revenue and percent change for the years ended December 31, 2025 and 2024 were as follows (in thousands, except for percent change) :

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Total revenue

Total Gogo BA revenue increased to $404.5 million for the year ended December 31, 2024, as compared with $397.6 million for the prior year, due to an increase in service revenue, partially offset by a decrease in equipment revenue.

Gogo BA’s service revenue increased to $327.1 million for the year ended December 31, 2024, as compared with $318.0 million for the prior year, due to increases in ARPU.

Gogo BA’s equipment revenue decreased to $77.5 million for the year ended December 31, 2024, as compared with $79.6 million for the prior year, due to a decrease in equipment repair revenue.

Total revenue increased to $910.5 million for the year ended December 31, 2025, as compared with $444.7 million for the prior year.

Service revenue increased to $774.4 million for the year ended December 31, 2025, as compared with $364.3 million for the prior year, due to the current year including service revenue earned as a result of the acquisition of Satcom Direct.

Equipment revenue increased to $136.1 million for the year ended December 31, 2025, as compared with $80.4 million for the prior year, due to an increase in equipment revenue earned as a result of the acquisition of Satcom Direct of $26.2 million and an increase of $21.4 million due to Gogo Galileo shipments.

We expect service revenue to decline in the near term as a result of the expected decline in ATG services sold and increase in the future as additional aircraft come online for Gogo 5G and Gogo Galileo.

We expect equipment revenue to increase in the future driven by growth in sales of Gogo 5G and Gogo Galileo units.

Cost of Revenue

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Cost of equipment revenue

Gogo BA’s cost of service revenue increased 8% to $74.9 million for the year ended December 31, 2024, as compared with $69.6 million for the prior year, due to an increase in ATG network costs.

Gogo BA’s cost of equipment revenue increased 1% to $63.7 million for the year ended December 31, 2024, as compared with $63.4 million for the prior year.

Cost of service revenue increased 276.3% to $372.7 million for the year ended December 31, 2025, as compared with $99.0 million for the prior year, due to the current year including cost of service revenue as a result of the acquisition of Satcom Direct.

Cost of equipment revenue increased 99.3% to $134.7 million for the year ended December 31, 2025, as compared with $67.6 million for the prior year due an increase in cost of equipment revenue as a result of the acquisition of Satcom Direct of $21.1 million and an increase of $27.6 million due to Gogo Galileo shipments.

We expect that our cost of equipment revenue will increase with growth in units sold, including Gogo 5G and Gogo Galileo units, due to the launch of those products.

Engineering, Design and Development Expenses

Gogo BA’s engineering, design and development expenses increased 18% to $43.5 million for the year ended December 31, 2024, as compared with $36.7 million for the prior year, due to $2.6 million of personnel costs and a $2.5 million integration-related product write-off.

Engineering, design and development expenses increased 25.4% to $56.1 million for the year ended December 31, 2025, as compared with $44.8 million for the prior year as a result of the acquisition of Satcom Direct.

We expect engineering, design and development expenses to decrease, driven by Gogo Galileo development costs and Gogo 5G program spend nearing completion.

Sales and Marketing Expenses

Gogo BA’s sales and marketing expenses increased 21% to $36.1 million for the year ended December 31, 2024, as compared with $29.8 million for the prior year, due to a $4.2 million increase in personnel costs, including $1.3 million of severance.

Sales and marketing expenses increased 46.9% to $55.8 million for the year ended December 31, 2025, as compared with $38.0 million for the prior year as a result of the acquisition of Satcom Direct.

We expect sales and marketing expenses to increase due to the launch and market adoption of the Gogo 5G and Gogo Galileo offerings.

General and Administrative Expenses

Gogo BA’s general and administrative expenses increased 71% to $98.2 million for the year ended December 31, 2024, as compared with $57.3 million for the prior year, due to increased acquisition and integration-related costs of $26.7 million and legal expense of $13.2 million.

General and administrative expenses decreased 6.7% to $116.7 million for the year ended December 31, 2025, as compared with $125.1 million for the prior year due to the acquisition costs for Satcom Direct in the prior year.

We expect general and administrative expenses to decrease over time as acquisition and integration activities complete.

Depreciation and Amortization

Gogo BA’s depreciation and amortization expense decreased 8% to $15.3 million for the year ended December 31, 2024, as compared with $16.7 million for the prior year, due to a decrease in amortization of intangible assets.

Depreciation and amortization expenses increased 217.7% to $60.3 million for the year ended December 31, 2025, as compared with $19.0 million for the prior year due to amortization expenses related to intangible assets obtained in the acquisition of Satcom Direct.

We expect that our depreciation and amortization expenses will increase in the future as we begin depreciation for our Gogo 5G network.

Other (Income) Expense

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Interest expense

Loss on extinguishment of debt

Other (income) expense, net

Change in fair value of earnout liability

Other expense, net

Percentage changes that are considered not meaningful are denoted with nm.

Total other expense increased to $33.1 million for the year ended December 31, 2024, as compared with $26.6 million for the prior year, due to interest expense, including a reduced benefit from the interest rate caps, the unrealized holding loss on the Investment in Convertible Note in the current-year period as compared with gain on sale of an equity investment in the prior-year period and an expected credit loss reserve recorded in the current year.

These increases were partially offset by the loss on extinguishment of debt in the prior year.

Total other expense increased to $87.3 million for the year ended December 31, 2025, as compared with $33.1 million for the prior year.

Interest expense increased due to the HPS Term Loan Facility and other expense, net increased due to litigation settlement accrual expense.

We expect the change in fair value of the earnout liability to fluctuate in the future depending on performance of the Satcom Direct business.

We expect our interest expense to fluctuate in the future based on changes in the variable rates associated with our indebtedness.

The benefit we receive from our interest rate caps will decrease over time as our hedge notional amount decreases and the strike rate increases.

See Note 9, “Long-Term Debt and Other Liabilities,” to our Unaudited Condensed Consolidated Financial Statements for additional information.

The effective income tax rate for the year ended December 31, 2025 was 51.8%, as compared with 24.2% for the prior year.

The income tax provision was $13.9 million for the year ended December 31, 2025 due to pre-tax income, nondeductible officer’s compensation, stock-based compensation, foreign inclusions and the establishment of valuation allowances on foreign net operating loss carryforwards.

The income tax provision was $4.4 million for the year ended December 31, 2024, due to pre-tax income.

The income tax benefit of $48.1 million for the year ended December 31, 2023 was due to a partial release of the valuation allowance on our deferred income tax assets, partially offset by pre-tax income.

See Note 15, “Income Tax,” to our consolidated financial statements for additional information.

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Comparison of Years Ended December 31, 2024 and 2023

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 28, 2024 and incorporated by reference herein, includes a discussion of changes in our results of operations from fiscal year 2022 to fiscal year 2023.

These include only the results of operations of the Gogo BA segment, as they precede the Company’s acquisition of Satcom Direct in 2024.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 14, 2025 and incorporated by reference herein, includes a discussion of changes in our results of operations from fiscal year 2023 to fiscal year 2024 which was for the legacy pre-acquisition results of the Company (“Gogo BA”).

Non-GAAP Measures

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EBITDA represents net income attributable to common stock before interest expense, interest income, income taxes and depreciation and amortization expense.

Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense, (ii) acquisition and integration-related costs, (iii) change in fair value of convertible note and gain on sale of equity investment and (iv) loss on extinguishment of debt.

Adjusted EBITDA represents EBITDA adjusted for (i) stock-based compensation expense, (ii) acquisition and integration-related costs, including amortization of acquisition-related inventory step-up costs and changes in fair value of the earnout liability,

(iii) litigation settlement accrual costs, (iv) change in fair value of convertible note and gain on sale of equity investment and (v) loss on extinguishment of debt.

Our management believes that the use of Adjusted EBITDA eliminates items that management believes have less bearing on our operating performance, thereby highlighting trends in our core business which may not otherwise be apparent.

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We believe it is useful for an understanding of our operating performance to exclude acquisition and integration-related costs from Adjusted EBITDA because they are infrequent, are outside of the ordinary course of our operations and do not reflect our operating performance.

We believe it is useful for an understanding of our operating performance to exclude the changes in fair value of the earnout liability related to the acquisition of Satcom Direct from Adjusted EBITDA because this activity is outside of the ordinary course of our operations and does not reflect our operating performance.

We believe it is useful for an understanding of our operating performance to exclude litigation settlement accrual costs from Adjusted EBITDA because this activity is outside of the ordinary course of our operations and does not reflect our operating performance.

We believe it is useful for an understanding of our operating performance to exclude the change in fair value of convertible note and gain on sale of equity investment from Adjusted EBITDA because this activity is not related to our operating performance.

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Stock-based compensation expense

Change in fair value of earnout liability

Acquisition and integration-related costs (1)

Amortization of acquisition-related inventory step-up costs

Litigation settlement accrual costs

Change in fair value of convertible note and gain on sale of equity investment

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Free cash flow

(1) Consists of change-in-control bonuses of $29.7 million, severance and other compensation-related costs of $3.8 million, and due diligence and advisory fees of $20.0 million.

(1) For the year ended December 31, 2025, consists of integration-related advisory fees of $6.3 million and severance and other compensation-related costs of $8.1 million.

For the year ended December 31, 2024, consists of change-in-control bonuses of $29.7 million, severance and other compensation-related costs of $3.8 million, and due diligence and advisory fees of $20.0 million.

Material limitations of Non-GAAP measures

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· Adjusted EBITDA does not reflect non-cash components of employee compensation;

· Adjusted EBITDA does not reflect the change in the fair value of the earnout liability from the Satcom Direct acquisition;

· Adjusted EBITDA does not reflect acquisition and integration-related costs;

· Adjusted EBITDA does not reflect amortization of acquisition-related inventory step-up costs;

· Adjusted EBITDA does not reflect litigation settlement accrual costs;

· Adjusted EBITDA does not reflect the change in fair value of convertible note and gain on sale of equity investment;

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See the disclosure below under the heading “Debt Instruments” for the definitions of the debt and convertible debt instruments to which we refer in this section, as well as the indentures and other agreements that govern them.

Based on our current plans, we expect our cash and cash equivalents, cash flows provided by operating activities and access to the Revolving Facility and capital markets will be sufficient to meet the cash requirements of our business, including the acquisition and integration of Satcom Direct, capital expenditure requirements and debt maturities for at least the next twelve months and thereafter for the foreseeable future.

Based on our current plans, we expect our cash and cash equivalents, cash flows provided by operating activities and access to the Revolving Facility and capital markets will be sufficient to meet the cash requirements of our business, capital expenditure requirements and debt maturities for at least the next twelve months and thereafter for the foreseeable future.

On September 5, 2023, we announced a share repurchase program that grants the Company authority to repurchase up to $50 million of shares of the Company’s common stock.

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We do not expect to incur debt to fund the share repurchase program.

No shares were repurchased during the year ended December 31, 2025.

During the years ended December 31, 2024 and 2023, we repurchased an aggregate 4.0 million shares and 0.5 million shares, respectively, of our common stock for $33.2 million and $4.8 million, respectively.

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On December 3, 2024, Gogo and GIH entered into a second amendment to the 2021 Credit Agreement with Morgan Stanley Senior Funding, Inc., as administrative agent, and the lenders party thereto to, among other purposes, (a) increase the aggregate principal amount of revolving commitments available under the 2021 Credit Agreement to an aggregate amount of revolving commitments equal to $122 million and (b) extend the maturity date of the Revolving Facility to December 3, 2029 (subject to such maturity date springing to the date that is 90 days prior to the then-current maturity date of (a) the 2021 Term Loan Facility under the 2021 Credit Agreement and (b) the HPS Term Loan Facility under the HPS Credit Agreement under certain conditions).

The 2021 Term Loan Facility amortizes in nominal quarterly installments equal to 1% of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the 2021 Term Loan Facility.

The 2021 Term Loan Facility amortizes in quarterly installments equal to 1% of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the 2021 Term Loan Facility.

There are no amortization payments under the Revolving Facility.

As detailed in Note 9, “Long-Term Debt and Other Liabilities,” on December 3, 2024, Gogo and GIH entered into a credit agreement (the “HPS Credit Agreement” and together with the 2021 Credit Agreement, the “Credit Agreements”) with the lenders party thereto and HPS Investment Partners, LLC, as the administrative agent, which provides for a term loan credit facility (the “HPS Term Loan Facility”) in an aggregate principal amount of $250 million.

On May 3, 2023, the Company prepaid $100 million of the outstanding principal amount of the 2021 Term Loan Facility.

This prepayment satisfied the required amortization payments for the remaining term of the 2021 Term Loan Facility.

As detailed in Note 9, “Long-Term Debt and Other Liabilities,” on December 3, 2024, the Company and GIH entered into a credit agreement (the “HPS Credit Agreement” and together with the 2021 Credit Agreement, the “Credit Agreements”) with HPS Investment Partners, LLC, as the administrative agent, and the party thereto, which provides for a term loan credit facility in an aggregate principal amount of $250 million.

The HPS Term Loan Facility amortizes in quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the HPS Term Loan Facility on April 30, 2028.

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In May 2021, we purchased interest rate caps with an aggregate notional amount of $650.0 million for $8.6 million.

We receive payments in the amount calculated pursuant to the caps for any period in which the daily compounded secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus a credit spread adjustment of 0.26% increases beyond the applicable strike rate.

We receive payments in the amount calculated pursuant to the caps for any period in which the daily compounded secured overnight financing rate as administered by the Federal Reserve Bank of New York (“SOFR”) plus a credit spread adjustment recommended by the Alternative Reference Rates Committees of 0.26% increases beyond the applicable strike rate.

The termination date of the cap agreements is July 31, 2027.

The notional amounts of the interest rate caps periodically decrease over the life of the caps with the latest reduction of $175.0 million having occurred on July 31, 2024.

The aggregate notional amount of the interest rate caps as of December 31, 2025 is $250.0 million.

The notional amounts of the interest rate caps periodically decrease over the life of the caps with the latest reduction of $100.0 million having occurred on July 31, 2025.

While the interest rate caps are intended to limit our interest rate exposure under our variable rate indebtedness, which includes the Facilities, if our variable rate indebtedness does not decrease in proportion to the periodic decreases in the notional amount hedged under the interest rate caps, then the portion of such indebtedness that will be effectively hedged against possible increases in interest rates will decrease.

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Deferred revenue arrangements (5)

Estimated earnout obligation (6)

Other long-term obligations (7)

(1) See Note 16, “Leases,” to our consolidated financial statements for more information.

(2) As of December 31, 2024, our outstanding purchase obligations represented obligations to vendors incurred in order to meet operational requirements in the normal course of business, including the build out of Gogo 5G, Gogo Galileo, information technology, research and development, sales and marketing, general and administrative and production related activities.

(2) As of December 31, 2025, our outstanding purchase obligations represented obligations to vendors incurred in order to meet operational requirements in the normal course of business, including Gogo 5G, Gogo Galileo, information technology, research and development, sales and marketing, general and administrative and production related activities.

(3) See Note 9, “Long-Term Debt and Other Liabilities,” to our consolidated financial statements for more information.

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(5) Amounts represent obligations to provide services for which we have already received cash from our customers.

(6) Other long-term obligations consist of estimated payments (undiscounted) for our asset retirement obligations, network transmission services and monthly payments of C$0.1 million (using the December 31, 2024 exchange rate) to the licensor of

our Canadian ATG spectrum license over the estimated 25-year term of the agreement.

(6) Amount represents the estimated payment that has been earned based on actual performance through December 31, 2025 and excludes contingent consideration that may be payable based on the achievement of future performance targets.

(7) Other long-term obligations consist of estimated payments (undiscounted) for our asset retirement obligations, network transmission services and monthly payments of C$0.1 million (using the December 31, 2025 exchange rate) to the licensor of our Canadian ATG spectrum license over the estimated 25-year term of the agreement.

Other long-term obligations exclude tax liability payments due to the uncertainty of their timing.

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The maximum potential amount of future payments we could be required to make under these indemnification agreements is uncertain and is typically not limited by the terms of the agreements.

The following table presents a summary of our consolidated cash flow activity, including the Satcom Direct segment, for the periods set forth below (in thousands) :

The following table presents a summary of our consolidated cash flow activity for the periods set forth below (in thousands) :

For the Years Ended December 31,

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For the year ended December 31, 2025, cash provided by operating activities was $124.5 million, as compared with $41.4 million for the prior year.

The principal contributors to the increase in operating cash flows were:

• A $61.9 million increase in net income and non-cash charges and credits, as noted above under “—Results of Operations.”

• A $21.1 million improvement in cash flows related to operating assets and liabilities resulting from:

o An increase in cash flows due to the following:

▪ Changes in inventories due to an increase in equipment revenue and a decrease in purchases;

▪ Changes in accounts payable and accrued liabilities due to the timing of payments;

o Partially offset by a decrease in cash flows due to the following:

▪ Changes in accounts receivable due to the timing of payments;

▪ Changes in contract assets due to additional promotional sales programs in the current year as compared to the prior year;

▪ Changes in deferred revenue due to the recognition of revenue for transactions in which customer payment was previously received.

For the year ended December 31, 2024, cash provided by operating activities was $41.4 million, as compared with $79.0 million for the prior year.

The principal contributors to the decrease in operating cash flows were:

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▪ Changes in contract assets due to additional promotional sales programs in the current year as compared to the prior year.

For the year ended December 31, 2023, cash provided by operating activities was $79.0 million, as compared with $103.4 million for the prior year.

The principal contributors to the decrease in operating cash flows were:

• A $1.9 million decrease in net income and non-cash charges and credits, as noted above under “—Results of Operations.”

• An $22.5 million decrease in cash flows related to operating assets and liabilities resulting from:

o A decrease in cash flows due to the following:

▪ Changes in prepaid expenses and other current assets due to interest rate caps receivable and receivables related to the FCC Reimbursement Program;

▪ Changes in accrued interest due to the change in timing of payments.

o Partially offset by an increase in cash flows due to changes in accounts receivable due to the timing of collections.

Net cash (used in) provided by investing activities:

Cash used in investing activities was $39.9 million for the year ended December 31, 2025, due to $75.2 million of capital expenditures noted below, partially offset by $29.3 million received from the FCC Reimbursement Program for capital expenditures and $10.6 million of proceeds from interest rate caps.

Cash used in investing activities was $337.2 million for the year ended December 31, 2024, due to $332.7 million of cash consideration for the acquisition of Satcom Direct as well as $27.1 million of capital expenditures noted below and a $5.0 million convertible note investment, partially offset by $23.2 million of proceeds from interest rate caps and $4.4 million received from the FCC Reimbursement Program for capital expenditures.

Cash provided by investing activities was $29.9 million for the year ended December 31, 2023, due to $26.7 million of proceeds from interest rate caps, $24.8 million in net redemptions of short-term investments, $1.3 million in net proceeds from the sale of an equity investment and $1.1 million received from the FCC Reimbursement Program for capital expenditures, partially offset by $24.1 million of capital expenditures noted below.

Cash used in investing activities was $70.4 million for the year ended December 31, 2022, due to $49.9 million of capital expenditures noted below and $24.8 million purchase of short-term investments, partially offset by $4.3 million of proceeds from interest rate caps.

Net cash provided by (used in) financing activities:

Cash used in financing activities for the year ended December 31, 2025 was $1.4 million, due to principal payments on the HPS Term Loan Facility, offset in part by stock-based compensation activities.

Cash provided by financing activities for the year ended December 31, 2024 was $198.7 million, due to $245.0 million of gross proceeds from the HPS Term Loan Facility, offset in part by debt principal payments, share repurchases, payments of deferred financing fees and stock-based compensation activities.

Cash used in financing activities for the year ended December 31, 2023 was $120.4 million, due to principal payments on the 2021 Term Loan Facility, stock-based compensation activities and share repurchases.

Cash used in financing activities for the year ended December 31, 2022 was $28.4 million, due to the repurchase of 1.5 million shares of common stock in a private transaction and principal repayments on the 2021 Term Loan Facility.

Capital Expenditures

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Capital expenditures for the years ended December 31, 2025, 2024 and 2023 were $75.2 million, $27.1 million and $24.1 million, respectively.

The increase in capital expenditures in 2025 as compared to 2024 was due to the build out of the LTE and Gogo 5G networks and Gogo Galileo.

The increase in capital expenditures in 2024 as compared to 2023 was due to capitalized software development costs related to Gogo Galileo.

The decrease in capital expenditures in 2023 as compared to 2022 was due to the build out of the Gogo 5G network during 2022.

We expect that our capital expenditures will increase in the near term due to the build out of the LTE network related to the FCC Reimbursement Program and capital expenditures related to Gogo 5G.

The increase related to the LTE network may be partially offset by reimbursements from the FCC.

We expect that our capital expenditures will decrease starting in 2026 as these programs are completed.

We expect that our capital expenditures will start to decrease as we complete the build out of the LTE network related to the FCC Reimbursement Program and finalize our investment in Gogo 5G.

Debt Instruments

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On December 3, 2024, Gogo and GIH entered into a second amendment to the 2021 Credit Agreement, by and among, Gogo, GIH, guarantors party thereto, Morgan Stanley Senior Funding, Inc., as administrative agent, and the lenders party thereto, among other purposes, (a) increase the aggregate principal amount of revolving commitments available under the 2021 Credit Agreement to an aggregate amount of revolving commitments equal to $122 million and (b) extend the maturity date of the Revolving Facility to December 3, 2029 (subject to such maturity date springing to the date that is 90 days prior to the then-current maturity date of (a) the 2021 Term Loan Facility under the 2021 Credit Agreement and (b) the HPS Term Loan Facility under the HPS Credit Agreement under certain conditions).

The 2021 Term Loan Facility amortizes in nominal quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the 2021 Term Loan Facility.

The 2021 Term Loan Facility amortizes in quarterly installments equal to one percent of the aggregate initial principal amount thereof per annum, with the remaining balance payable upon final maturity of the 2021 Term Loan Facility.

There are no amortization payments under the Revolving Facility.

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(ii) 100% of the net cash proceeds of certain debt offerings;

and (iii) 75% of annual excess cash flow (as defined in the HPS Credit Agreement) commencing in 2026, subject to reduction to 50% if specified senior secured first lien net leverage ratio targets are met.

and (iii) 75% of annual excess cash flow (as defined in the HPS Credit Agreement), subject to reduction to 50% if specified senior secured first lien net leverage ratio targets are met.

The HPS Credit Agreement contains customary events of default, which, if any of them occurred, would permit or require the principal, premium, if any, and interest on all of the then outstanding obligations under the HPS Term Loan Facility to be due and payable immediately.

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The proceeds of the HPS Term Loan Facility were used to finance a portion of the cash consideration for the acquisition of Satcom Direct.

2022 Convertible Notes

In 2018, we issued $237.8 million aggregate principal amount of 6.00% Convertible Senior Notes due 2022 (the “2022 Convertible Notes”) in private offerings to qualified institutional buyers, including pursuant to Rule 144A under the Securities Act, and in concurrent private placements.

In 2021, $135.0 million aggregate principal amount of 2022 Convertible Notes was converted by holders and settled through the issuance of 24,353,006 shares of common stock.

In May 2022, the remaining $102.8 million aggregate principal amount of 2022 Convertible Notes was converted by holders into 17,131,332 shares of common stock.

Forward Transactions

In connection with the issuance of our 3.75% Convertible Senior Notes due 2020 (“the 2020 Convertible Notes”), we paid approximately $140.0 million to enter into prepaid forward stock repurchase transactions (the “Forward Transactions”) with certain financial institutions (the “Forward Counterparties”), pursuant to which we purchased approximately 7.2 million shares of common stock for settlement on or around the March 1, 2020 maturity date for the 2020 Convertible Notes, subject to the ability of each Forward Counterparty to elect to settle all or a portion of its Forward Transactions early.

On December 11, 2019, we entered into an amendment to one of the Forward Transactions (the “Amended and Restated Forward Transaction”) to extend the expected settlement date with respect to approximately 2.1 million shares of common stock held by one of the Forward Counterparties, JPMorgan Chase Bank, National Association (the “2022 Forward Counterparty”), to correspond with the May 15, 2022 maturity date for the 2022 Convertible Notes.

As a result of the Forward Transactions, total shareholders’ equity within our consolidated balance sheets was reduced by approximately $140.0 million.

In March 2020, approximately 5.1 million shares of common stock were delivered to us in connection with the Forward Transactions.

In April 2021, approximately 1.5 million shares of common stock were delivered to us in connection with the Amended and Restated Forward Transaction.

In May 2022, the approximately 0.6 million shares that were remaining under the Amended and Restated Forward Transaction were delivered to us.

There are no longer any additional prepaid forward stock repurchase transactions outstanding.

Restricted Cash

Our restricted cash balances were $0.5 million and $0.3 million, respectively, as of December 31, 2024 and 2023, and consisted of letters of credit issued for the benefit of the landlord of our office location in Chicago, IL and the tower operator for certain of our cell sites in Canada.

For additional information on the 2021 Credit Agreement, HPS Credit Agreement and the 2022 Convertible Notes, see Note 9, “Long-Term Debt and Other Liabilities,” to our consolidated financial statements.

Our restricted cash balances were $0.5 million and $0.5 million, respectively, as of December 31, 2025 and 2024, and consisted of letters of credit issued for the benefit of the landlords of our various office locations and the tower operators for certain of our cell sites.

For additional information on the 2021 Credit Agreement and HPS Credit Agreement, see Note 9, “Long-Term Debt and Other Liabilities,” to our consolidated financial statements.

Quantitative and Qualitat ive Disclosures About Market Risk

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Interest Rate Risk:

We are exposed to interest rate risk on our variable rate indebtedness, which includes borrowings under each of the Facilities (if any).

We are exposed to interest rate risk on our variable rate indebtedness, which includes borrowings under each of the 2021 Facilities (if any) and the HPS Term Loan Facility.

We assess our market risks based on changes in interest rates utilizing a sensitivity analysis that measures the potential impact on earnings and cash flows based on a hypothetical one percentage point change in interest rates.

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Our earnings are affected by changes in interest rates due to the impact those changes have on interest income generated from our cash, cash equivalents and short-term investments.

We believe we have minimal interest rate risk as a 10% decrease in the average

interest rate on our portfolio would have reduced interest income for the years ended December 31, 2024, 2023 and 2022 by immaterial amounts.

We believe we have minimal interest rate risk as a 10% decrease in the average interest rate on our portfolio would have reduced interest income for the years ended December 31, 2025, 2024 and 2023 by immaterial amounts.

We do not believe that inflation has had a material effect on our results of operations.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis