Good morning ladies and gentlemen and welcome to the Q4 2020 Gogo Inc. Earnings Conference. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. I would now like to hand the conference over to your speaker today, Mr. William Davis, Vice President of Investor Relations. Please go ahead, sir.

Thank you, and good morning everyone. Welcome to Gogo's fourth quarter 2020 and full year 2020 earnings conference call. Joining me today to talk about our results are Oakleigh Thorne, President and CEO; Barry Rowan, Executive Vice President and CFO. Before we get started, I would like to take this opportunity to remind you that during the course of this call, we may make forward-looking statements regarding future events and the future financial performance of the company. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements on the conference call. These risk factors are described in our earnings press release filed this morning and are more fully detailed under the Risk Factors in our Annual Report on Form 10-K and 10-Q and other documents we have filed with the SEC. In addition, please note that the date of this conference call is March 11, 2021. Any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these statements as a result of more information or future events. During the call, we'll present both GAAP and non-GAAP financial measures. We have included a reconciliation and explanation of adjustments and other considerations of our non-GAAP measures to the most comparable GAAP measures in our fourth quarter earnings press release. This call is being broadcast on the Internet and available on the Investor Relations section of the Gogo website. The earnings press release is also available on the website. After management comments, we will host a Q&A session with the financial community only. It is now my great pleasure to turn the call over to Oakleigh.

Thanks, Will and good morning everyone. And welcome to our first quarterly earnings call as the new Gogo. Obviously, the highlight of the fourth quarter was the completion of the sale of our CA business to Intelsat for $400 million. Today, we're a more focused company with industry-leading technology, a strong market position, a dependable recurring revenue model, and a stronger balance sheet, all positioning us well for long-term growth. This morning, I'll walk through the highlights of our financial results from continuing operations for the fourth quarter and full year 2020, give some color on market trends and competitive advantages that we believe will drive the new Gogo's long-term deployments, and describe how those factors contribute to our outlook for fiscal 2021 and beyond. I stress beyond because 2021 will still be impacted by COVID and we'll still bear transition costs as we migrate from being a bigger unprofitable company to being a smaller profitable company. Let me start with the fourth quarter results. The impact of COVID-19 on our 2020 results can't be overstated. However, our team managed extremely well in an extremely challenging environment, and I want to give kudos and thanks to them. We executed a comprehensive 16-lever cost reduction strategy that enabled us to preserve cash and run a leaner, more efficient operation. We completed the sale of the CA business, strengthening our balance sheet and focusing our resources on an attractive resilient market where we have competitive advantages. We actually expanded our install base, growing our ATG Aircraft online or AOL by 2% year-over-year. Gogo delivered Q4 2020 total revenue from continuing operations of $77.6 million, down only 10% year-over-year, which is not bad when you consider that most business travel was still at a standstill in the quarter. On a quarter-over-quarter basis, we obviously did much better as we were still coming back from the COVID low point that occurred in Q2, with total revenue growing nearly 17% from Q3 driven by a 7% increase in service revenue and a 57% increase in equipment revenue. Sequential service revenue was driven by a 4% increase in AOL and a 2% increase in average monthly connectivity revenue per ATG Aircraft or ARPU. Importantly, Gogo entered 2020 with 5,669 ATG subscribers online and ended 2020 with 5,778 subscribers online, topping our pre-COVID quarterly peak. On the equipment side, Q4 was by far our highest quarter of the year at $21 million, up from $13 million in Q3, and equal to our quarterly average for 2019. Total ATG units online set a quarterly record at 5,778 versus 5,669 at year-end 2019. Total advanced units online reached 1,719 at year-end, up 532 or 45% from year-end 2019 and now account for 30% of the ATG broadband installed base. Later, I'll touch on why expanding the proportion of advanced platform users in our subscriber base has such a positive impact on Gogo over the long term. In the fourth quarter, the business aviation industry generally proved its resiliency. We look at business aviation flight activity as a proxy for demand for our products. In Q4, we saw a strong rebound in flights as more passengers shifted from commercial to business aviation travel, and those passengers demanded quality in-flight connectivity. Our customers flew 83% of the number of flights in Q4 2020 that they flew in Q4 2019, up from 81% in Q3 2020 versus Q3 2019 and up from 47% in Q2 2020 versus Q2 2019. In December, that number actually rose to 85% of 2019 flight counts and hit 100% for the last two weeks of December. We continue to see improvement this year, as flight counts rose to 86% of the 2020 count for January and 88% of the 2020 flight count in February. We see the strongest performance recovery among our charter and fractional customers, which in February flew 108% and 103%, respectively, of their February 2020 flight counts. Meanwhile, our corporate flight department customers have cut travel considerably and in February only flew 75% of their February 2020 flight counts. We think this bodes well for future business demand because we expect corporate flying to come back as vaccines are rolled out. Although leisure demand may wane a bit, we expect that aggregate demand for flights to be positive. As demand recovers, we expect more aircraft to be pulled into service and more Gogo systems to be activated. Usage is another important measure for us because it reflects the utility of our products to passengers and their demand to have connectivity on their aircraft. Overall, average data consumption per flight through the end of February 2021 was 20% above average consumption for the same period in 2020, and a major charter and fractional fleet's consumption per flight was 30% over pre-COVID rates. This further demonstrates that reliable in-flight connectivity is more of a must-have than ever. The impact analysis of these trends has been positive. We had 557 growth ATG activations in the quarter, of which 349 or 62% were new accounts. Additionally, 218 of those were upgrades, mostly from our classic product line. We've also seen account suspensions, which spiked in the March-May 2020 timeframe, settle back down to pre-COVID levels. On a more positive note, of the more than 1,100 account suspensions we suffered in the first three months of COVID, about 80% have come back, with 93% of those choosing the same or a higher price plan. Of the 928 plan downgrades we suffered during that period, 87% have restored their old plans or upgraded plans. In general, it was a very strong quarter; however, our profitability was negatively impacted by a $10 million accrual for the full year 2020 bonus payout. Normally, that expense would be accrued over the course of the year and wouldn't hit quarterly numbers with such magnitude. This occurred because, as part of our COVID 16-lever cash management program, our compensation committee decided early last year that we would pay out 2020 bonuses in stock, which was recorded as stock-based compensation and excluded from adjusted EBITDA. However, once we completed the Intelsat transaction and had adequate cash on our balance sheet, the committee decided we would pay the bonus in cash which led us to accounting for the full year bonus in one quarter. Now let me turn to the new Gogo. We entered 2021 as an agile niche-focused company, and we look forward to introducing the new Gogo more comprehensively to the market in the second quarter of this year. But today, I want to touch on the opportunities we see in front of us, and how we plan to take advantage of our core strengths to capitalize on those opportunities. Let me start with the market opportunity. The business aviation market is relatively small compared to other mobility verticals, but it holds a lot of opportunity for a niche-focused company like Gogo. Sixty-six percent of the world's business aircraft are registered in North America, and more than 70% of those, roughly 18,000 aircraft, do not yet have broadband in-flight connectivity. For the last five years, Gogo has added an average net of 400 aircraft online per year, and we feel we can sustain that pace or do a little better over our five-year planning horizon. We think a number of trends support that level of growth, including the growing demand for in-flight connectivity as COVID has led all of us to spend more time online than ever before, the Uberification of business aviation as more connected passengers turned to charter or timeshare models to access travel, the trend of commercial airlines cutting service to secondary markets, the desire of corporations to protect executives from health risks, and the fact that inventory of secondhand aircraft for sale has hit all-time lows which should lead to more new jet orders and aircraft online for Gogo. Let me now turn from the market opportunity to some of our core strengths starting with our ATG network. Our ATG network and proprietary FCC license spectrum give us a unique advantage over our traditional satellite competitors, providing positive vertically integrated owner economics. Our equipment is small and light compared to satellite equipment, making it suitable for midsized, light jets, and turboprop aircraft that cannot support the size and weight of satellite equipment. Even in the large jet market, we have more jets activated in the U.S. than all of our traditional satellite competitors combined because our equipment and services are lower cost, and our services are of better quality given its low latency. I should note that this quality aspect has improved considerably over the past five years, as our former Commercial Aviation division has offloaded most of its mainline aircraft from ATG to satellite connectivity. We anticipate that with advances in technology, namely electronically steerable array antennas, satellite antennas will get smaller over time. But as we invest in improving our ATG network, we expect ATG to remain competitive, especially amid the smaller aircraft that fly U.S.-based missions. Speaking of investments in new ATG technology, let me touch on Gogo 5G. Our current Gogo 5G network upgrade will allow us to take advantage of the advanced platform's bearer aggregation capability to combine our 4-megahertz of licensed spectrum with 60-megahertz of unlicensed spectrum into what amounts to a single channel for our customers. This aggregation will allow significant expansion of capacity for most of the United States without degradation that interference in the unlicensed band will cause for competitive offerings that rely on only unlicensed spectrum. I should note that our portfolio of 349 patents includes patents related to this aggregation technology. We're extremely pleased with the progress our team and our partners Cisco, Airspan, and FIRST RF have made on this project. However, as is true of many projects in the telecom and satellite space, our schedule has slipped primarily because of a supply chain delay for one particular microchip. We now expect to deploy the network in 2022 instead of 2021. Now, let me turn to the hidden gem at Gogo, our AVANCE platform. We've mentioned AVANCE to the street in the past, but I don't think we've done justice to how AVANCE is truly a software-centric platform, as opposed to just a product. It gives us a unique competitive advantage over competitors who merely have products. So, what do we mean by software-centric? We mean that like Apple, where iOS is the operating system for all of their devices, AVANCE is our operating system, and all our devices whether L3 or L5 on the plane, are applications on the ground in the cloud, they all run on the same software. The AVANCE software has many platform advantages. It can support multiple bearers or networks, including satellite networks. In fact, as I mentioned with 5G, it can aggregate multiple bearers or multiple networks into one channel, or SSID, if one wants to expand capacity for certain users on the airplane. It's engineered to be extensible, easily supporting the addition of new products and features, which soon we'll be able to load over the air. For instance, our Gogo Vision IFE product is embedded in AVANCE and can be turned on or upgraded remotely by simply turning a software key. This year, we'll enable on-air software updates, saving customers time and money when installing new releases. This is important for fleet operators, where installing upgrades manually with USB sticks can take months for every release. AVANCE runs self-diagnostics and reports them remotely, allowing us to often fix issues before customers even notice an issue has occurred. We can do all this with minimal hardware upgrades because, like Tesla, we do it with software upgrades, while competitors do it with hardware upgrades, saving customers hundreds of thousands of dollars on equipment and weeks of downtime. To prove that point, when we upgrade AVANCE L5 customers to 5G, most of the upgrade will be software, with only a small box in the plane and two new antennas that fit exactly where the old antennas fit. The AVANCE platform also standardized componentry across all AVANCE devices, which drives down per unit cost and improves quality because our supply chain consists of a higher quantity of a less diverse component base. We're very bullish on AVANCE, believing it gives us the flexibility to adopt and integrate new technologies as they evolve to both defend and grow our current market position and also attack new market segments in the future. The last core strength I'd like to describe today is the deep relationships we have with our customers and distribution partners. We've been building and delivering products for our partners and customers for more than 20 years, and in the case of our distribution partners, we've been making money for more than 20 years. We have dedicated sales forces focused on the OEM and dealer markets, line fit at all nine of the major business aviation original equipment manufacturers, and we have a network of 120 dealers worldwide that includes all the major MROs. It's significant to note that dealers invest in developing STCs for Gogo equipment because they're confident that they will sell enough installs to earn a return on that investment. That's why today, 36 different dealers have 93 different supplemental type certificates for Gogo equipment, covering more than 200 makes and models of aircraft. Likewise, OEMs invest in STCs, and today, Gogo equipment is an option or standard on 45 different makes of aircraft. We also have dedicated sales teams focused on end customers and on strategic accounts, to ensure that the ultimate user understands the benefits of our platform and pulls demand through the channel. These deep relationships and the teams we have working with customers enable us to drive product penetration quickly once the product is released. We've sold more than 1,700 AVANCE units since we launched the product in 2017, and we believe that's more broadband IFC units than all of our competitors combined have ever sold into the BA market. Now, let me summarize our strategy as we go forward. First, we'll continue to enhance our ATG network to protect our core markets and drive penetration of the AVANCE platform. Second, as technology evolves, we will layer new products and services on top of the AVANCE platform to improve product performance, thereby widening our competitive moats and driving customer loyalty. Finally, I'd like to briefly touch on our financial strategy and trajectory before turning it over to Barry to do the numbers. The last step in our transition to becoming a new Gogo is the refinancing of our current $975 million of first lien notes and settling our $238 million of convertible notes. As of last night, we had cash on the balance sheet of $465 million. As Barry will discuss, we are in the midst of a refinancing aimed at lowering our leverage ratio and lowering our interest expense. Strategically, we'd like to strengthen our balance sheet for three reasons. First, the more free cash flow we generate, the more we can take advantage of future investment opportunities, should we see them. Second, the stronger our balance sheet, the more resilient we can be against competition, should it arise. Third, the more free cash flow we generate, the more quickly we can further enhance shareholder returns. Our approach to settling the converts will now be aimed at producing a stronger balance sheet, and we expect to settle them in shares for the amount then outstanding. In terms of our financial trajectory, our new five-year plan projects more than 10% revenue growth over the planning period, steady 35% to 40% adjusted EBITDA margin throughout the five years, and significant free cash flow growth beginning in 2023 after the 5G network deployment is behind us. Underpinning that thesis is our ability to more fully capitalize on the competitive advantages around our industry-leading advanced technology platform, the deployment of the Gogo 5G network in 2022, and significantly reducing our debt service obligations. In the coming months, we look forward to sharing more about our long-term strategic plan and the outlook for the new Gogo. In the meantime, I'll turn it over to Barry to do the numbers.

Thanks Oak. I'd like to begin by highlighting three key themes running through my remarks today. First, the strong rebound in business aviation is driving continued improvement in our top line. Second, the closing of the CACL positions us to leverage the favorable economics of our proprietary ATG network and industry-leading AVANCE platform, enhancing the long-term value creation potential of our business. Third, closing the transaction materially improved our balance sheet and financial outlook, positioning us well to execute a comprehensive refinancing this spring that will align our capital structure with our new business and result in rapid deleveraging. Turning now to the details of our fourth quarter results from continuing operations. Total revenue for the quarter was $77.6 million. While this was down slightly less than 10% from the prior year period, total revenue grew nearly 17% sequentially. This is solid evidence of the business aviation industry's continuing recovery from COVID. Service revenue was $56.9 million, down 3% from the prior year period. This was driven by a 4% decrease in average monthly connectivity service revenue per ATG unit online or ARPU, partially offset by a 2% increase in ATG units online. On a sequential basis, service revenue increased 7% as ATG aircraft online and ARPU both increased by 4% and 2%, respectively. Gogo delivered equipment revenue of $20.7 million in the fourth quarter of 2020. This was a 57% increase from the third quarter as both L5 and L3 AVANCE product shipments finished the year strongly. This growth is attributable to strong pent-up demand for the AVANCE platform augmented by promotions and accelerated year-end shipments. As Oak outlined, driving penetration of the AVANCE platform into our installed base and with new customers is a centerpiece of our long-term strategy. Adding to the installed base of our AVANCE platform will continue to build on our strong competitive position. Importantly, over 95% of units shipped in the fourth quarter were AVANCE, and the number of AVANCE units online increased 45% year-over-year. Historically, our Business Aviation business has delivered very strong profit performance stemming from the owner economics of our proprietary ATG network and the efficiency of our operations. We continue to maintain attractive profit margins, even during the COVID pandemic. Our fourth quarter service margins declined only modestly year-over-year, in spite of the COVID impact. In 2021, we expect service margins to contract somewhat, mainly due to increased data center and network operations costs. Some of these increased costs are transitional as they relate to separation and migration activities following the sale of our Commercial Aviation business to Intelsat. Our revenue and gross margin percentages will also be modestly affected by our ongoing relationship with Intelsat as a customer. As a reminder, Gogo entered into a 10-year network services agreement with Intelsat in conjunction with the sale of CA. Intelsat maintains exclusive access to Gogo ATG services for the CA market in North America, provided it meets minimum revenue guarantees over the course of this 10-year period. Based on the current schedule for the Gogo 5G launch, these revenue guarantees are expected to total $177.5 million. With the sale of CA, Intelsat revenue share will now be reported as service revenue and all ATG network costs are included in cost of service. Prior to the sale of CA, ATG network costs were shared between BA and CA NA segments. These changes do not meaningfully impact business aviation gross profit in the near term, from what we would have expected, if BA and CA remained as a combined entity. However, with the launch of 5G and the associated contractual increase in the revenue share percentage, we do expect revenue from Intelsat to ramp over the long term. Our equipment margin declined from the third quarter and from the prior year period. This decline is attributable to a $2.6 million inventory reserve taken in the fourth quarter, tied to the expected transition from our older classic ATG product line to our AVANCE platform. We expect equipment margin percentages to remain approximately flat for the full year 2021 versus 2020. Now, let's turn to a discussion of OpEx. Combined ED&D, sales and marketing and G&A expenses increased to $30.4 million in the fourth quarter of 2020 from $25.7 million in the fourth quarter of 2019. This was primarily due to an increase in G&A spending and an increase in employee bonus expense, which I will further explain in a moment. In 2021, we expect operating expenses to increase due to 5G development spend and investment in sales and marketing activities that were largely paused during COVID-19. We expect general and administrative expenses to be approximately flat year-over-year, driven by growth in non-recurring IT-related separation and migration costs associated with the CA sale, offset by a reduction in corporate costs. We plan to exclude these operation and migration costs from adjusted EBITDA in future periods to allow for greater comparability. We stated on our third quarter call that we expected to reduce total G&A expense meaningfully, beginning in 2022. We have now quantified these anticipated savings and expect G&A expense to be approximately $10 million lower in 2022 versus 2021. Turning now to our bottom-line performance, Gogo's fourth-quarter adjusted EBITDA was $19.3 million, a decline from $36.2 million in the year-ago quarter. On our third-quarter call, we noted that we expected our fourth-quarter adjusted EBITDA to decline sequentially from $30.2 million due to increased engineering, design, and development expense. In addition to the increase in ED&D expense, our adjusted EBITDA results also reflect an additional $10 million of employee bonus expense, as Oak highlighted. We had previously assumed that the annual employee bonus would be paid in stock and therefore had recorded the bonus expense as stock-based compensation, which is excluded from adjusted EBITDA. However, after closing the sale of the CA business in December, and based on our enhanced liquidity, we felt we were in a position to revert back to our traditional practice of paying the annual employee bonus in cash. This resulted in us recording bonus expense for the full year in December, negatively impacting adjusted EBITDA by $10 million. Before I move to a discussion of some of Gogo's strategic priorities and our balance sheet position, I'll briefly summarize our full year 2020 results from continuing operations. Our business performed well in 2020, despite the effects of COVID-19. This reflects the resiliency of our subscription-based business model, the underlying demand for our services in the underpenetrated business aviation market and our active expense management. Gogo generated total revenue of $269.7 million in 2020, a decrease of 13% from 2019. Service revenue of $212 million declined just 4% from 2019, despite the impact of COVID, a significant testimony to the quality of the business. Equipment revenue was impacted more severely as customers delayed purchases in the midst of COVID-19. We ended the year at $57.7 million, down 34% from 2019. We posted adjusted EBITDA of $98.3 million, compared to $121.8 million in 2019. A particular significance is that during this COVID-impacted year, we were able to achieve an adjusted EBITDA margin percentage, which was approximately on par with the average level achieved from the previous four years. 2020 was certainly challenging, but having weathered the depths of the pandemic and completed the transformative sale of the Commercial Aviation business, Gogo exited the year a stronger, more focused company. Now I'll turn to our balance sheet which represents our next major opportunity to improve the financial foundation of Gogo. I mentioned at the beginning of my remarks that the sale of the CA business materially improved our balance sheet. We ended the fiscal year with a cash balance of $435.3 million. This number reflects the proceeds from the transaction, net of transaction-related fees, residual CA costs, CA employee and deal-related bonuses, and the repayment of our ABL facility, which had $19.1 million outstanding and is now zero. At year-end, the principal value of our total debt outstanding was $1.213 billion. As of March 9th, Gogo had $465 million of cash, up $30 million since the end of last year. This growth in our cash position during this relatively short period demonstrates the already meaningful cash flow generation of the BA business. I want to highlight one point relating to the accounting treatment of Gogo's debt, which is tied to the covenants in the senior notes indenture that govern the use of proceeds from certain asset sales. If we don't use the net cash proceeds from the CA sale by December 1st, we will be required to offer to repurchase senior notes in a principal amount equal to the net cash proceeds, which we calculate at approximately $341 million. We have therefore reclassified this amount from long-term to current debt. Our expectation is that the comprehensive refinancing we plan to complete in the next several months will satisfy this near-term obligation. We are now set up well to refinance our balance sheet on much more favorable terms. This is based on the attractive structure of the business aviation industry, along with our strong market position and compelling business model, combined with the resiliency of our results during the COVID crisis. Our strong cash position also positions us well to execute on our plan refinancing. Over the past several months, we have developed robust strategic and long-term financial plans and in light of continuing favorable credit markets, we are now moving with urgency on this important initiative. An important objective of our refinancing is to reduce our leverage. We regularly consider refinancing liability management and other transactions with the goal of improving our balance sheet. Certain of our investors often share their ideas with us for how we can optimize our capital structure. In this regard, we have been approached by certain holders of our convertible debt and are currently evaluating their suggestions relating to potential deleveraging opportunities. We believe that we can reduce our annualized interest payments by at least $50 million through this comprehensive refinancing, which would put Gogo on a path to significantly delever and strengthen the balance sheet going forward. In addition to the comprehensive refinancing opportunity in front of us, Gogo's cash generation potential is enhanced by the significant tax assets we retained after the sale of the CA business. As of December 31st, Gogo had over $800 million in federal net operating loss carryforwards and federal interest expense carryforwards. While the gain from the CA sale will modestly impact our NOL balance, these represent significant tax assets that will benefit Gogo for years to come as our business turns net income positive. Additionally, if a change of control were triggered under the IRS rules, we would expect to retain a substantial majority of these tax assets under current tax laws. I'll now turn to a discussion of our outlook for 2021 and beyond. I'd like to start by providing some background on our planned 5G investment. As Oak described in some detail, the deployment of our 5G network is a near-term strategic priority for us, as we look to deploy our nationwide network by the end of 2022. We plan to approximately double our 5G program investment in 2021, for external development and deployment costs, which will be reflected in both OpEx and CapEx. We expect 5G OpEx to peak in 2021 at approximately $12 million, and CapEx to be about $12 million for this year. We expect CapEx cost to be concentrated in 2022, based on our plans for completing a nationwide 150 cell site network by the end of that year. Our expectations for the total cost of the 5G network have not changed from the figures we initially quoted more than two years ago. We continue to expect to invest approximately $100 million in external development and deployment costs split approximately one-third for OpEx and two-thirds for CapEx. Based on our current plans, we will have spent approximately $41 million of this total amount by the end of 2021, including $24 million in OpEx and $17 million in CapEx. With the 5G deployment largely completed in 2022, we expect ongoing CapEx to be in the range of $15 million to $20 million a year beginning in 2023. I'll now focus on our 2021 guidance. We believe that with the recovery from COVID-19 and the business aviation market well underway, as reflected in our financial results, we are well positioned for growth this year. We expect 2021 service revenue to grow at least 15% over 2020. We expect equipment revenue to remain flat or grow modestly, in part due to the 57% sequential growth we saw in the fourth quarter of 2020. With this context, we're providing the following financial guidance for 2021. We expect total revenue in the range of $300 million to $320 million. We expect adjusted EBITDA in the range of $105 million to $120 million. This adjusted EBITDA range includes approximately $12 million of 5G external development and deployment expense and excludes approximately $4 million of separation and migration costs related to the sale of the CA business. We expect capital expenditures in the range of $25 million to $30 million, with a majority tied to the rollout of 5G. Having now completed our five-year plan, we would also like to share some of our long-term targets which are as follows: at least 10% compounded annual revenue growth from 2020 to 2025, adjusted EBITDA margin of 35% to 40% throughout the planning period, and significant free cash flow growth in 2023 following our 5G network deployment in 2022. These targets reflect our current 5G investment plan. However, they do not reflect some additional strategic growth opportunities we may choose to invest in beyond this baseline plan. But let us be clear, we will only pursue these additional initiatives if they provide tangible strategic benefits and very attractive projected returns on our investment. As this outlook demonstrates, we are looking forward to a bright future for Gogo drawing on our strong market position, our culture of innovation, and the rebound of the industry as we emerge from a pandemic as a stronger, more focused business. Finally, I want to reiterate Oak's thanks to the Gogo team for your unwavering focus and support through the challenges of this past year and our company's ongoing transformation. Your talent and commitment are the reasons we've been able to execute through the effects of COVID-19. You have positioned Gogo to be an even stronger company on the other side of the pandemic. We can't thank you often enough or deeply enough. You are our company. So, thank you again.

Our first question comes from Scott Searle with ROTH Capital.

Hey, good morning. Thanks for taking my questions. Oak, Barry and team hope you guys are all healthy and safe, and your families and your teams. Congratulations on the quarter. It's hard to imagine 12 months ago heading into the pandemic, we'd be sitting here today talking about the new Gogo with this kind of financial performance, so congrats again. Maybe just to quickly dive in, Oak, I'm wondering if there's any additional color or metrics as it relates to now the core BA services business related to geographies or 10% customers, any color that you can provide there? It seems like there's a lot of disparity in terms of some of the flight data related to the Northeast versus the South. Do you have any other exposures there that we should be thinking about?

Well, in terms of geography, we're obviously most U.S. bound because that's where our ATG network is. In terms of flight patterns, I mean, I don't think there's anything that is going on that negatively affects us. We see flights this year, or during COVID, have been slightly longer; people have been traveling further distances. Our data consumption has been up. As we noted, there are more flights per aircraft. That's because the charter and timeshare folks are really getting hit hard; they've got a lot of demand. So, I think that's good, because they will press more aircraft into service, which would mean more installs for us. So, we like that trend. So Scott, does that answer your question? Or are you looking for something else?

No, just looking for any sort of geographic mix within the United States, places like Florida, Southern California have had a lot more flight activity than the Northeast, for instance. But you guys have been growing faster than the industry in terms of the recovery of aircraft that are online, as well as your revenue per aircraft. So, I just didn't know if there was any additional color or things that you're thinking about in terms of metrics going forward on that front? Although you provided a tremendous amount of granularity today.

Yeah, I think in one sense, we're fortunate in that we're so North American centric. Because where you see business aircraft really taking a hit is in global travel. There's very little global travel taking place right now. So, if most of your install base is in large jets that are flying internationally, flights are down. And now most of those competitors are on service plans. So, if people don't cancel, that doesn't matter that much. But if they do suspend their accounts while they're on the ground because they're not flying, that would obviously hit their revenue. We've been fortunate; it's bounced back very quickly here. We're not all the way back, but we're close to former flight levels. And as I noted on the call, we've had suspensions, but most of those have come back. There's still some out there, but not that many, and hopefully we'll get those back over the next couple of months. We had some plan downgrades to pay as you go. So, people wouldn't have to pay while their planes were on the ground. But the plans have really come back strong and a lot of people have actually upgraded as they came back. So that's been helpful, and that's why we had a bounce back in ARPU.

Great. If I could just Barry a clarification on the OpEx, I think you said $12 million this year for 5G. You want to make sure is that what's flowing through the P&L? Is that the total cost or some of that being capitalized just in terms of how we think about that? And then also, the component availability impacting the deployment? Is that having any impact in terms of your ability to deploy just ATG equipment on the aircraft themselves, the L5 AVANCE solution? And lastly, if I could Oak, that 10% long-term growth target. I'm wondering how you think about in terms of penetration of the different aircraft, turboprops have been a very underpenetrated category in general, but smaller aircraft. I mean, are you seeing enough opportunity in the larger aircraft that's really driving that 10% plus growth over the next five-year period? Thanks.

Yeah, I'll start with the two parts of that and I'll turn it over to Barry for the first part. We're not counting on a lot of turboprop penetration to drive that growth rate. That growth rate is just under 8% of that is units and the rest is ARPU. We see that opportunity frankly in the light, medium, and large-sized jets right now. When we look at our addressable market and project forward five years, we are including the turboprop market in this data; the market is still 60% unpenetrated. There's just a lot of room in this market to grow. Business aviation is a slower adopter than commercial aviation or some other verticals. The other question you noted was the delay in supply chain. We've gotten ourselves caught in the world chip shortage crisis here a little bit and the demand is hitting chip manufacturers; a particular manufacturer in particular that had to go back and retake a chip has to get back in line behind a whole bunch of other demand. That's the way that's pushed us into 2022. It doesn't affect L5 at all; it's a 5G chip. So that's what that situation is. Barry, I'll turn it over to you to discuss further.

Yeah, let me comment on that, Scott. So, the $12 million that we cited is $12 million in OpEx and then $12 million or so in CapEx. There's a few million dollars of capitalized internal costs on top of that, but the lion's share of that is as cited.

Great. Thanks so much, guys. Nice quarter.

Thanks, Scott.

Thanks, Scott. Appreciate it.

Your next question comes from the line of Ric Prentiss with Raymond James.

Hey, good morning guys. Glad to have 2020 behind us and navigated very well through it. Thanks for all the details today and a lot of visibility into stuff. I'd like to focus on the 5G project; help us understand what kind of speed and capacity that's going to bring to your customers? And I think I heard you but I want to just confirm, what do you think that's going to help with ARPU?

Yeah, I'll jump on that. We haven't given exact data in terms of the speed, exact speeds, because everybody plays with those numbers, and frankly, we don't want to get into that game with competition. But the way to think about it is that it is ten times faster than our classic ATG product and five times faster than the current L5 speeds. I think it's a significant improvement and our customers are going to love it. So, that was the first part of that, Ric. What was the other part of your question? I'm sorry.

Yeah, as far as what increases capacity and also the ARPU.

Yeah, that will help ARPU because 5G will be priced at a higher price than the classic product is in terms of service plans. So, it's a bump to ARPU.

Okay, and to the previous question, I think you threw out kind of a thought about the 10% long-term growth rate; how much is units and how much is ARPU behind this?

Yeah, about 8% is units and 2% is ARPU.

Okay. And then, Barry on the 5G spend. I think I heard through year-end '21, you'll have spent about $41 million. So, does that imply maybe $60 million gets spent in '22 with about $10 million of that OpEx and $50 CapEx? Is that how we should think about that?

Yeah. Most of it gets spent in 2022. Ric, there is a little bit of a tail on the spending beyond 2022. For CapEx, as you know, there are kind of two phases of the CapEx spend initially, it's to provide the nationwide coverage. Capacity gets added after that. But the lion's share of that CapEx spend is, I mean, within a few million dollars is done by the end of 2022. OpEx is virtually all done by the end of '22, just a little bit left after that. We talked about the importance of the maintenance ongoing CapEx of $15 million to $20 million beyond '22, which is really important because when you look at the cash flow generative capacity at the business, it really picks up after that investment bolts in 2022.

And we really like looking at the free cash flow and valuing companies as well. When you think about margins, Oak, I think you've mentioned that margins would be steady; wondering why they couldn't grow over time given that you roll out a new network, and then you sell extra revenue on top of it? What would keep margins in that 35 to 40 range instead of being able to grow over time?

Ric, I think they could grow over time. We're probably going to start more towards the bottom of that range and grow towards the top of it over the five years. We also see opportunities to invest further to enhance growth and improve margins. The AVANCE platform does give us the opportunity to do that in a very cost-effective manner, which would help margins.

Make sense. And last one from me, you've mentioned growth initiatives a couple of times; what is it on the wish list that you would like to have or might be good to have just kind of thematically?

Well, two examples today would be 5G, which is from an equipment perspective. If you have AVANCE L5, you're pretty much all the way to 5G; you get the antennas that are on the plane, they can come off and other antennas go back in the exact same screw holes in the exact same place. It’s a very easy install. Initially, you'll need to add a small box next to your AVANCE L5 box. But most of the workings happen in software. Overtime, we hope to not even have that small box that you have to add. So, that’s an example of an upgrade to our current platform that will significantly enhance performance and is really cheap to install. You're leveraging the AVANCE platform, much cheaper than going to a competitive product. Gogo Vision is another example that leverages AVANCE today. Today, when we ship AVANCE software, Gogo Vision is already in there; it's got a key and if you want to, we can run promotions where we let people use it for three to six months, and they have the right to buy it. If they buy it, it's just turned on permanently with a software key remotely. That’s obviously very high margin and helps ARPU over time. So, those are examples. I don't think we want to get into anything too specific, Ric, in terms of what we're thinking about right now, just for competitive reasons. But we see a lot of different opportunities, and we want to be very careful in selecting those, ensuring they provide strategic benefits, as well as a very high return on invested capital for our shareholders. I think we'll probably have more to say about those opportunities in the future.

Great. Well, I hope you, your family, and employees continue to stay well. Thanks, guys.

Thanks a lot, Ric.

And your next question comes from Louie DiPalma with William Blair.

Oak, Barry good morning.

Good morning. How are you doing?

Good morning.

Barry, can you reaffirm what you just discussed about the net operating losses if there were to be a change in control? Did you say that now you would have the ability to retain them if there was a change of control?

Yes, under the current tax law, we would be able to retain a meaningful majority of those. There are a couple of rules that apply to that. One is that the law currently allows for a net unrealized built-in gain (NUBIG). The calculation is based on the value of the company; then you can spread that over five years. If the calculation is based on current stock prices, we would retain in the order of $500 million of annual values, which is significant. Particularly when you look at the planning horizon, that would largely cover the income for an extended period of time.

Thanks. I think that is material. And for Oak, many investors have used Gogo's service on commercial airlines such as Delta, and at times, the user experience was poor due to capacity limitations. On the other hand, I have not spoken with any investors that have used Gogo's service on a private jet like a Textron citation, Embraer Legacy or a Bombardier challenger. So, I was just wondering how fast and what is the capacity for the Gogo network for private jets? You discussed how the capacity has increased with the shift of traffic to satellite networks. I'm just wondering, does the private jet network support multiple Zoom sessions at the same time? Does it support VPN? Any high-level color on the overall quality of service would be helpful. Thanks.

Yeah, I'll start with a funny little story if you don't mind. Last week, an Embraer employee posted a video on her LinkedIn page showing her video conferencing on FaceTime with one of her partners who was flying in an Embraer Praetor, I think it was. They were discussing the meeting he just had, and it was live and video back and forth. Somebody piped in on the thread asking what connectivity he was using on that plane. And they said, well, we've got Viasat and we've got L5. The Viasat person was watching and they said, oh, great to see the Viasat system working so well. Then another person chimed in asking which system was running, and they responded, that was L5. So, outside you can have a variety of experiences with our product, depending on which product you have and what plans you buy, right? L5 delivers much more, much faster speeds than the old classic product does. So, you can run into it. If you got in a plane that was very crowded, and I've been on a plane with, say, 15 people using the internet all at once on an old classic product, you could have a bad experience. But that was back when a lot of mainline aircraft were still on the network. Now the network is much better and is relatively empty; we could support three to four times the number of aircraft we have today on today's network, no problem. We have a lot of capacity to grow, and people with L5 are very, very satisfied. Our NPS scores have gone up steadily and are very strong now over the last four years. We’re continuing to enhance that. People’s expectations are driven by what they get on the ground. With the launch of 5G, and then there’s going to be 6G and everything else, we have to continuously improve what we deliver to the aircraft to try and keep up with those on-ground expectations. That’s what we aspire to do.

Awesome, thanks Oak.

Operator, let's take one more question and then that'll be it.

Your next question is from the line of Phil Cusick with JP Morgan.

Hi, thanks. I'll ask 10 if that's okay since I'll be left. You've talked about addressing the convertible debt around this time, and it sounds like you expect to buy it back after the first-quarter earnings. Can you give us some color on how you think about target leverage at this point?

Barry?

Our thinking has evolved regarding the converts, and with the converts being so far into the money now, it's really essentially a decision to make a stock buyback. When we think about the allocation of capital and opportunities to invest in our business, that pushes us to be more willing to equitize those converts and, of course, that would improve the leverage ratio. You'll have to see how that plays out, but that would put us out of the gate with leverage ratios, in that kind of six-times range, but with the opportunity to significantly reduce that leverage in the coming years.

So, it sounds like you let the converts be equity in that results in 6 times leverage is not the math that I remember? Sorry, if I'm...

There are some ranges in there, but if that were to be the case, that's the general zip code and or lower, depending on how you calculate the base.

Is there a mix between the two that we should think about or do you consider running most of that is the right way to think about it?

It's too early to tell on what that would look like, and there are certainly some rules you have to follow to be mindful of how much you can do. But I think our general predisposition is to equitize more of them.

Perfect. And then, is there still a chance for an analyst meeting between now and 1Q earnings? Or is that probably after 1Q?

Probably after, I would think.

Okay.

I think it's late second quarter timeframe.

That's helpful. To follow-up on a couple of other things, you also offered a 10% CAGR in revenue from 2020 to 2025. Do you think you can reliably grow at 10% or better in each of those years as well?

Yeah, I think so, Phil. I mean, there might be years it dips a little below, but it's not significant.

Okay. And the last one. Sorry, go ahead.

It's based in part on coming out of COVID. When you get into the later years, it really is a result of the market being underpenetrated. The kind of growth rate we've projected still reflects that more than half of the aircraft at the end of the five-year planning horizon did not have broadband connectivity.

That sort of goes to my last question, which is L3 sales are doing so well. Given the trend in fixed and mobile, I don't see why someday there isn't nearly 100% penetration of broadband on private planes. Do you want to offer an even smaller or less capable product for the smallest aircraft out there?

Yeah. Today, there's the two products: AVANCE L3 and L5; the only real difference is the size of the box and we got one less card in the L3, I think. The L3 is small and that's meant for the light jet market; turboprops. The L5 is bigger, so we're more easily accommodated in midsize and large aircraft. We do have a product that goes down market and we're having a lot of success in the light jet market and we're getting we don't have a lot of penetration in turboflops, we measured in the hundreds today, but its growing and we're getting some traction down there. The turboprop market is a very diverse market. There's a lot of different segments in that market, and some of them may never buy AIFC and the planes will be retired before anyone wants to spend the money on it. Some very attractive parts of that market with newer aircraft do have IFC, and we're having some success there.

Great, thanks very much, guys.

All right, thanks.

Thank you. That'll be our last question for the day. Thank you, everyone, for joining our call. We'll talk to you soon. Have a great day.

Thanks all.

Thank you.

Ladies and gentlemen, this does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.