NextNav Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights:

• FCC Progress: Agreed to acquire spectrum licenses, filed a petition for rule making with the FCC, received support from various organizations, engaged in engineer-to-engineer discussions with stakeholders, and filed a detailed technical analysis of coexistence with unlicensed operations. The FCC released a notice of inquiry on PNT, and NextNav has contributed to the discussion.
• Next Gen Technology: Successfully demonstrated next-gen technology with PRS-based positioning and timing, completed timing synchronization field tests, and entered into agreements with outside suppliers to develop a 5G-based 3D terrestrial positioning capability.
• Leadership Addition: Renee Gregory joined as VP of Regulatory Affairs in February, bringing extensive experience in government and the private sector.
• Capital Structure: Signed a note purchase agreement for a $190 million private offering, which will strengthen the balance sheet and provide financial flexibility.

Segment Performance:

• Fourth quarter revenue: $1.9 million, an increase of $0.7 million from $1.2 million in the prior year period.
• Full-year revenue: $5.7 million, an increase of $1.8 million from $3.9 million in 2023. The increase was primarily driven by a one-year DOT contract and a one-time license fee from soft GPS technology.
• Fourth quarter operating expenses: $16.7 million, down approximately $4.5 million from the same period last year.
• Full-year operating expenses: $65.8 million, compared to $67.4 million in 2023. Excluding stock-based compensation and depreciation/amortization, operating expenses were $46.7 million in 2024 and $40.7 million in 2023.
• Fourth quarter net loss: $32.3 million, including a $14.9 million loss related to the change in fair value of warrants. Full-year net loss was $101.9 million.
• Balance sheet: Ended the quarter with $80.1 million in cash, cash equivalents, and short-term investments. Had $54.6 million in debt net of unamortized discount as of December 31st.

Guidance:

• Signed a $190 million note purchase agreement for private offering, which will enhance balance sheet liquidity and provide financial flexibility for pursuing objectives in 2025 and beyond.
• The new 5% redeemable senior secured convertible notes mature on June 30, 2028. Approximately $70 million of proceeds will be used to redeem existing 10% senior secured notes.
• New notes have a conversion price of $12.56 per share, and the transaction is expected to close on or about March 31, 2025.

Risks: Forward-looking statements are subject to known and unknown risks, uncertainties, and assumptions. Actual results may differ materially from forward-looking statements. Risks include achievement of FCC-related milestones and approvals, ability to realize and broaden spectrum capacity, and advancement of terrestrial 3D PNT services, among others.

Q: Can you talk about what might be capital cost to deploy a 5G network with the timing signal propagated per your IP as you're pursuing in the NPRM and who might bear this capital cost?

A: As we've said previously in our petition, it will be a 5G operator who will be building this network. And because we are using a standards based 5G PRS solution, we don't see major cost in addition to what the 5G network cost would be for the operator to deploy. They add spectrum to their bands all the time, they need 5G spectrum and this is standards based. Our solution is software sitting on top of it.

Q: So could the software sit on top of existing radios and towers or would there need to be all new infrastructure put in by the operator?

A: I mean, the operators have existing towers and radio equipment but every time that an operator adds a new spectrum band, there's new radios to be added. They do this all the time. I mean, they're going to continue to build out more spectrum as capacity demand grows and they're going to continue to add whatever there needs to be added to their existing towers and infrastructure. Our software is completely capable and this is what actually we just demonstrated through our technology trials that it could take an existing 5G PRS based signal that's transmitting from the operator's network as they would deploy any 5G new spectrum and provide accurate positioning and timing.