GEE’s CEO Dave Davis explains 3Q14 financial results

During a recent results earnings conference call, Global Eagle Entertainment (GEE) explained the business strategy behind the company’s best 3Q14 performance to date, which resulted in over $100 million in revenue.
Dave Davis (pictured), GEE’s CEO, told listeners the business had made progress in all three of its main focus areas, which are content services, connectivity systems, and digital media solutions.
Davis revealed that content services, “which consist of the creation, acquisition, processing and delivery of video, audio and interactive media to embedded seatback in-flight entertainment (IFE) systems,” drives well over half of GEE’s revenue. He said the company’s currently working on implementing a “standard operating platform or SOP across the content services group,” remarking that by standardising the way GEE processes and delivers content, they hope to be more efficient.Finally, Davis addressed the ongoing issue of licensing audio content. He confirmed GEE has settled a lawsuit involving Sony Music, and continues “to make progress in addressing the larger audio rights issues affecting the IFE industry.”
In terms of connectivity systems, Davis claimed, “GEE now has the strength and critical mass to source from a single bandwidth supplier,” citing the company’s recent partnership with SES. SES already provides over 50% of the company’s satellite connectivity services through an agreement with Hughes Network Systems. Davis clarified that whilst GEE will purchase all of its satellite bandwidth directly from SES over time, it “intends to maintain a strong relationship with Hughes, as they will continue to provide network management services and certain next generation hardware components to GEE.”
Davis also announced: “We are also pleased with the progress that we are making on achieving line-fit offerability for our antenna system with Boeing. We anticipate being provisions offerable on the 737 very soon. Work on Phase 2 of the offerability programme is underway and we expect full catalogue offerability for the system in 2015.”
Lastly, Davis focused on digital media solutions (DMS), which he described as “the bridge between content services and connectivity systems,” or, “the creation, delivery and monetisation of content connectivity and transaction services on smartphones, laptops and tablets.” Examples of DMS include GEE’s recent partnership with Beats Music, offering passengers on Southwest Airlines the possibility “to securely stream in-flight music using encrypted HTTP live streaming, rather than satellite bandwidth.” Davis explained that solutions like these allow low-fare airlines to implement an affordable IFE system, in turn allowing GEE to penetrate more of the airline market.
Davis then handed over to Mike Zemetra, GEE’s new chief financial officer, who announced that “due to organic growth across our content business, higher revenue from new and existing connectivity customers and from the acquisition of IFE services,” as explained by Davis above, GEE’s 3Q14 revenue was up 38% year-on-year.
During a question and answer session that followed Davis and Zemetra’s official statements, Davis revealed he thinks “domestically between Gogo and Global Eagle, and a few others, the market is tied up for the next three or four or five years in long term contracts,” but that “internationally it's wide-open, which is where GEE’s sales efforts are focused right now.” He wrapped up the call saying, “we think we're sort of on the right track. We are very excited about the opportunities that are in front of us. So we look forward to keeping in touch with everyone.”

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