Gogo falls 2.8% on earnings miss, litigation costs weigh
Revenue beat of 3.7% overshadowed by EPS shortfall and $10M litigation settlement as guidance remains flat
Gogo Inc. shares fell 2.8% on Friday after the inflight connectivity provider reported quarterly earnings that missed analyst expectations, weighed down by a $10 million litigation settlement charge despite exceeding revenue projections.
The Chicago-based company reported fourth-quarter revenue of $230.6 million, beating the analyst consensus of approximately $227 million and representing a 67% increase from the same period in 2024. However, the company posted a GAAP net loss of $10 million, or a loss of $0.07 per diluted share, significantly missing analyst expectations for a profit of $0.11 per share.
The earnings shortfall was primarily driven by a $10 million pre-tax accrual for litigation settlement costs, according to the earnings report. The charge follows a November 2025 verdict in which a jury awarded SmartSky Networks $22.7 million in damages for willful infringement of its patents. Gogo has stated it disagrees with the verdict and plans to appeal, maintaining that its independently developed 5G technology does not infringe on SmartSky's patents.
The company's annual revenue growth was bolstered by its acquisition of Satcom Direct in late 2024, according to market analysis. However, operational metrics showed some pressure, with air-to-ground (ATG) aircraft online declining 9% year-over-year, reflecting the challenging transition period between legacy and next-generation networks.
Despite the headline disappointment, Gogo made progress on its strategic initiatives. The company activated its first 5G aircraft in December 2025, with service revenue expected to commence in the first quarter of 2026. The 5G network demonstrated peak download speeds exceeding 80Mbps and upload speeds of 20Mbps during testing, positioning the service as a competitive offering in the business aviation market.
Galileo shipments for the company's Low Earth Orbit (LEO) satellite broadband service accelerated significantly, with equipment shipments rising 80% sequentially in the fourth quarter. Gogo shipped 158 Galileo units in Q4 2025, bringing total 2025 shipments to 318 units. The company completed 35 Supplemental Type Certificates for Gogo Galileo HDX and FDX, opening up a total addressable market of more than 4,000 aircraft.
Looking ahead, Gogo provided 2026 guidance that suggests a period of consolidation rather than rapid expansion. The company projects revenue of $905 million to $945 million, essentially flat compared to 2025's $910.5 million. Free cash flow guidance of $90 million to $110 million indicates modest improvement from current levels. The company expects combined Galileo and 5G shipments to exceed 1,000 units in 2026, suggesting accelerated adoption of next-generation connectivity solutions.
Analysts maintain a cautious outlook on the stock. With one buy rating and three hold ratings, the consensus target price of $10.67 implies significant upside potential from current levels around $4.23, though the recent guidance provides limited catalyst for near-term appreciation. The stock is trading well below its 52-week high of $16.82, reflecting investor concerns about the transition period and litigation overhang.
Gogo's challenge lies in executing its pivot from legacy ATG technology to a hybrid 5G and satellite-based offering while maintaining margins and managing legal expenses. The company's success will depend on its ability to convert strong technological capabilities into commercial adoption, particularly as business aviation customers evaluate connectivity options against emerging competitors.