Gogo Announces Completion of 110 2Ku Installations in Q3

Gogo Inc. GOGO recently announced that it has installed 110 2Ku's - its in-flight connectivity service - in third-quarter 2017. Reportedly, as of Sep 30, 2017, the company installed 2Ku service in 340 aircrafts.

In its last conference call, Gogo had targeted 2Ku installations in 450-550 aircraft, including approximately 150 in Commercial Aviation - Rest of World (CA-ROW) in fiscal 2017. The company also stated that it launched 2Ku service on five new airlines in the quarter.

As previously anticipated the company has been successful in accelerating 2Ku installation post Labor Day (Sep 4). John Wade, Gogo's Executive Vice President and COO, believes that the company is well poised to "nearly double the number of 2Ku installations in the fourth quarter as compared to the third quarter."

Buoyed by the encouraging numbers (including the current installations), Gogo is now projected to install 2Ku service in about 600 aircrafts of 10 airlines by the year end.

Notably, shares have gained 27% year to date, substantially outperforming the industry 's 8.9% decline.

2Ku Installations - Key Catalyst

Gogo's Business Aviation (BA) business has been instrumental in driving the company's top line. In the last reported quarter, BA service revenues grew 30% year over year to $42.2 million. The results encouraged the company to reaffirm its outlook for 2017 wherein revenues are projected to be in the range of $670-$695 million.

We note that Gogo's 2Ku service has been its chief growth driver. Lower bandwidth cost structure coupled with faster installation rate is helping the company to gain traction in the market.

The company has regulatory approval to install the service onboard majority of the important aircrafts. Last month, the company announced receiving an approval to install 2Ku on Boeing Inc's BA 777 aircraft and expects Boeing 767 aircraft to be included in the list by this year end.

In August, the company's 2Ku solution was selected by Alaska Airlines for its entire Boeing and Airbus Fleet. In the same month, Delta Air Lines DAL became the first customer to install the service on Airbus A350.

The company is also expanding overseas with the addition of K5-Aviation as its first 2Ku business aviation customer in Europe. In June, the company got regulatory approval from Chinese aviation to install the service on the international flights.

Gogo Inc. Revenue (TTM)

Gogo Inc. Revenue (TTM) | Gogo Inc. Quote

Increasing Adoption Improves Competitive Position

Per market research firm marketsandmarkets, the in-flight entertainment (IFE) market is anticipated to reach $6.91 billion by 2022 from about $3.18 billion in 2016 at a CAGR of 13.8%.

We believe the increasing adoption rate of Gogo's 2Ku technology will be instrumental in driving top-line growth for the company. This will also help the company to cash in on the growing IFE market amid stiff competition from peers like ViaSat Inc. VSAT .

Currently, Gogo carries a Zacks Rank #4 (Sell).

You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here .

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Delta Air Lines, Inc. (DAL): Free Stock Analysis Report

ViaSat, Inc. (VSAT): Free Stock Analysis Report

Boeing Company (The) (BA): Free Stock Analysis Report

Gogo Inc. (GOGO): Free Stock Analysis Report

To read this article on click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.