NEXTNAV INC. Q4 FY2024 earnings call

• Progress with FCC: Agreed to acquire spectrum licenses, filed petition for rule making, received support from various organizations, engaged in engineer to engineer discussions, filed technical analysis with FCC. - Next gen technology: Successfully demonstrated next gen technology, completed timing synchronization field test, partnered with outside suppliers to develop 5G based 3D terrestrial positioning, navigation and timing capability. - Leadership addition: Renee Gregory joined as VP of Regulatory Affairs. - Capital structure: Signed $190 million note purchase agreement, which will strengthen balance sheet and provide financial flexibility.

NextNav's revenue in the fourth quarter was $1.9 million, a $0.7 million increase from $1.2 million in the prior year period. For the 12 month period, revenue was $5.7 million, a $1.8 million increase from $3.9 million in 2023. Operating expenses for the fourth quarter were $16.7 million, down approximately $4.5 million versus the same period last year. In the 12 month period, operating expenses were $65.8 million as compared to $67.4 million in 2023. Net loss for the fourth quarter was $32.3 million, and for the full year, net loss was $101.9 million. We finished the quarter with $80.1 million in cash, cash equivalents and short term investments. At December 31st, we had $54.6 million in debt net of unamortized discount attributed to transaction costs and the issuance of warrants with a gross value of $70 million.

• The note purchase agreement provides significant additional financial flexibility as we pursue our objectives in 2025 and beyond. - The new notes will mature in 2028, with proceeds used to redeem existing notes and provide liquidity for future initiatives.

Forward-looking statements are subject to known and unknown risks, uncertainties and assumptions, including achievement of FCC related milestones and approvals, ability to realize and broaden spectrum capacity, and advancement of terrestrial 3D PNT services, which could cause actual results to differ materially from forward-looking statements.

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.

Q: And then my one follow up question would be what potential uses of capital would you have beyond just headcount and legal, et cetera, as you progress toward getting a report in order?

A: And I think you're getting to some extent of course that the financial flexibility that we're building into our balance sheet with this new notes issue that we just signed. Obviously, one of the things that we've been able to achieve is to move the maturity of any potential notes well into mid 2028. But at the same time, we've significantly enhanced the flexibility of capital in our balance sheet and that of course provides us with substantial long term liquidity. And it also allows us to approach not only our existing capital structure but our business opportunities as we kind of look into 2025 and pursue our objectives with a great deal of flexibility. And I'm going to use that word a couple different times there. The other thing that I would highlight, and I think Mariam mentioned this, is that our business plan continues to not require the deployment of a network by ourselves. We intend to partner with third parties in the future for network deployment. And so we're not provisioning in advance of like a major network or CapEx build out program.