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GLOBAL EAGLE REPORTS FINANCIAL RESULTS
FOR THE SECOND QUARTER OF 2019
Gross margin improved 170 basis points sequentially
Record cash flows from operating activities
Generated positive free cash flow*
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LOS ANGELES, CA, August 8, 2019Global Eagle Entertainment Inc. (Nasdaq: ENT) (Global Eagle, the Company or we), a leading provider of media, content, connectivity and data analytics to markets across air, sea and land, today announced financial results for the second quarter ended June 30, 2019. For the second quarter of 2019, Global Eagle recorded revenue of $157 million; incurred a net loss of $38.5 million and generated Adjusted EBITDA* of $22.7 million.
We are delivering technical innovation to our Connectivity and Media & Content customers while driving improving efficiency throughout our cost structure, commented Josh Marks, CEO of Global Eagle. Executing for both our customers and stakeholders is leading to a substantial improvement in cash generation that we expect to build upon, consistent with our goal of sustainable positive free cash flow by year-end.
During the second quarter, Global Eagle drove improved financial performance including executing on Phase II of its cost realignment plan. Revenue of $157 million was driven by growth in Connectivity equipment revenue, which was offset by a decline in Media & Content revenue compared to the prior-year period. Connectivity service gross margins of 17.5% improved from the prior quarter due to lower bandwidth costs and improved cost controls. Operating expenses continued to improve primarily due to the benefits of Phase II of our cost realignment plan. As of June 30, 2019, we had achieved 90% of targeted Phase II savings. We are evaluating additional cost opportunities in order to optimize our spending across all business units. We continue to expect Phase II of our cost realignment plan, together with revenue growth, to drive a minimum of $25 million of Adjusted EBITDA in the fourth quarter of 2019. Upon resolution of Boeing 737 MAX related issues, we expect to transition to positive free cash flow on a sustainable basis.
The Company generated record cash flows from operating activities of approximately $12 million in the second quarter primarily due to favorable working capital dynamics. Capital expenditures during the quarter were approximately $4 million, down more than 50% versus the first quarter of 2019. The Company generated positive free cash flow* of approximately $8 million in the second quarter of 2019. Our strong second quarter performance is an important step towards our goals of significant EBITDA growth and sustainable free cash flow generation. Free cash flow is defined as cash flows from operating activities less capital expenditures. Note that our free cash flow calculation includes approximately $1 million of severance cost related to our Phase II of our cost realignment plan.
The following information was filed by Global Eagle Entertainment Inc. (ENT) on Thursday, August 8, 2019 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.
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