NextNav (NN) 9 Aug 232023 Q2 Earnings call transcript

Good afternoon, everyone, and welcome to NextNav's Second Quarter 2023 Earnings Conference Call. Participating on today's call are Gary Parsons, NextNav's Chairman; Ganesh Pattabiraman, NextNav's Co-Founder and CEO; and Chris Gates, NextNav's Chief Financial Officer.

Before we begin, please note that during today's presentation, the company may make forward-looking statements either in our prepared remarks or in the associated question-and-answer session. In particular, such forward-looking statements may include statements about NextNav's business plans, objectives, expectations and intentions to drive growth in its 3D geolocation businesses and expansion of its next-generation GPS platform, to maximize the value of its IP portfolio spectrum, its international business as well as NextNav's partnerships and the potential success thereof, NextNav's estimated and future business strategies, competitive position, industry environment and other potential growth opportunities.

These statements are based on current expectations or beliefs.

cause are other known which discussed important NextNav's that statements uncertainties, unknown are in forward-looking differ control and to assumptions factors, could the such forward-looking subject the and to risks, outside materially statements. However, from results results actual many of

the level any to, and anticipated relating international functionality associated performance, prospective deployment acquisition losses, retention, products statements business including of of capital projected These limited costs plans relate anticipated pricing timing of subsequent strategies anticipated partnership expectations estimated our or and acceptance timing opportunities realize and approvals, capital but to, obtaining financial regarding services, acquisitions and future may and or expected our of business resources our performance factors mergers, benefits, and about future transactions, services, geolocation marketing and other markets. and similar position, and expenditures plans, acquisitions not objectives, services, regulatory and and our are and expectations projected future commercial commercial operations, of the technical and to financial our competitors, to demand services, and our ability revenue

our licenses acceptance additional and and the obtain size, maintain of adequately Projections growth monitoring market services, and level for of service, necessary. licenses LMS our key property location including our rights to technology, ability market intellectual our LMS protect to ability as or proprietary

foregoing. our and/or key and maintain directors, maintain and as plans and proceedings additional to ability develop effects of flows, or public company, internal and cash including or research controls, the generate known to our the any ability outcome relating factors securities our unknown our for and development being Our to assumptions related adequate on capital employees regulatory as litigation success or retaining on their raise well operational operations maintain costs expansion resources, the recruiting NASDAQ, financial to macroeconomic opportunities, officers, listing and ability to our in of a effective sufficient and

be Accordingly, to do obligation made, after not may should our under representing of events revise views they statements new the otherwise, forward-looking or date, result not any or forward-looking as date to as statements circumstances whether as required relied except of update any and reflect subsequent security any applicable or we future undertake be upon laws. information, a events were

Following our question-and-answer prepared remarks, session. the operator-led an will company host

have Investor today's session. be a question-and-answer In All website. addition, lines noise. discussion on will there at mute After to any our prevent Relations conclusion of the been replay the to a call, speakers' of be placed company's will posted Instructions] remarks, the [Operator background

Gary With turn Chairman, that, the go Please call NextNav's Parsons. over I'll ahead. to

earnings second XXXX Well, conference very to afternoon, good much, thank you NextNav's everyone. quarter Welcome call. and

the today the Chief said, on our me Gates, As our Chris operator be also call Financial will Ganesh and Pattabiraman, joining CEO; Officer.

NextNav It a quarter busy fronts. of was another number for on

resilience in And timing a or position, we one, reminder, are leader providing the focus we've resilient said navigation executing those quarters specifically number number a I remain, XD and GPS encouraging our priorities. it know as row, and geolocation being as momentum strategic key a We and seeing PNT against of on just backup. but priorities services, on industry

then reach. on the of global we're value capital assets. technology progress and And needs finally, Second, future our expanding These of leveraging three serve pillars second by our strategic both our spectrum and enhance areas encouraged our in the each intellectual these our property reduce guidepost quarter. underlying to as to and the

additional group recent past allocation briefly announced million to additional a June. comes financing closing an go priorities, the debt I key deals facility of before touch this will funding of The million this cover the that into in from total Chris the from from additional now those proceeds the closed However, that both $XX million. want And of I $XX back on of specifics capital, was $XX we investors with additional gross May. original existing financing.

as funding liquidity XD validation as oversubscribed us overarching flexibility GPS the of spectrum an growing IP clear resiliency underlying governmental capital to we years indicator, additional see including and location deployed our multiple of with and sort network of services. support interest industry portfolio, But The in our this market asset. and assets, near-nationwide our funding significant a added provides and

One public which with we're I'm sensitive carriers noticed a licenses, and other that us that's particularly technology Specifically, well industry well grants, and safety extremely products of which as become the EXXX encouraging. agencies, thing degree result aspects of most amongst nature and apparent government work, our seeing traction in to and technology you've of partners, is customers as wireless an security the are of our confidentiality elevated underlying including critical does our significant and government all implementations as sure leaders.

during industry of experienced key or customers disclose partners many As not cases, particularly the of we specifics in be attributable privately would we services even security with national we to may public able which that and work any initially to be providing. never announcements, XXXX, may prefer without our us may

are capabilities we once their greater networks. in implemented as specific and our Verizon's offer with into In are other EXXX work mature to and insights we cases, able however, our relationships, customer experienced contract,

developments only A terms. into number them positive this generalized but disclose of industry in our able right to we're category, now, and fall governmental

these depth can Now, in describe this Ganesh at we his section as point. in as will much

key efforts. So let just an provide me of overview some of the

NextNav's with agreement associated to asset with low-power capabilities. technology chip First, utilizing provide we signed GPS intellectual NextNav global software-defined capabilities tracking licensing property manufacturer license a top-tier to a

with call. technology quarterly provide We're on that in we our into efforts. a are specific also resiliency hopeful anything accelerating support today, in TerraPoiNT not announce insight the to our the PNT on to position interest government's of significant pleased additional in We're front but next traction

key XXXXX significant in exhibited procurement moving the order to advance of interest governmental process, Order in and number Notably, Executive the government-wide. interagency agencies review calls, of had order. that in initial past the finalize implementations forward which required in mentioned formal is of We've with regulations the the a

an Adding nationwide and selected calls. the technology z-axis is XXX carrier US validation services. again, EXXX this its in nationwide US, for Pinnacle of of precision EXXX in top agreement, provide now to With capabilities providing support z-axis recently on carriers of capabilities NextNav advancing to additional new our a expertise clear the technology in three our devices this,

increase from additional EXXX-compliant expect this revenue segment on carriers' roll We networks. out time Pinnacle over these handsets various of as to

call, all spectrum of our milestones noted licenses. successful for our build-out during we and first very approvals positive quarter the key FCC received regarding Finally, our spectrum we've

and We noticed an a allow XG in configurations the that and experimental noted Bay we that also carrier -- we utilizing to to requested deploy Area us power industry standard levels. waveforms implementation, TerraPoiNT a test bandwidth with variety had license of

for throughput. Bay waveform, to quarter, for received fact, experimental Area we and and approval simultaneously while our currently XD we, using to capabilities XG using second that validate and timing the in are provide navigation resilient deploying highly signal During data reliable XG that ability network and geolocation significant that designing license XG in a position

to year, we the completed this and using the FCC allow configuration. later would expect commercial likely deployment we've file to services program, Once this testing with

resiliency facilitating strengthen waveform noted significant has broadband an while our performance industry we've using a and with that services GPS PNT the cost, As XG advantages deployment TerraPoiNT services, consistent past, requirements. in or LTE improved and even

With call turn to that, Ganesh? the Ganesh. to I'd like over

Thanks, Gary, and good everyone. afternoon,

Notably, the our into As year. second importance and are we strategic as IP we're momentum the towards beginning real that and technology recognition of we're underlying executing. moved Gary mentioned, half through the the seeing of in agreements of several see business to the we effectiveness

we new and the Through technologies we in leverage the and flexibility expansion have of can property our intellectual deploy. opportunities many platforms,

example, will low-power top-tier chip signed agreement we mainline a new prime tracking GPS a as GPS manufacturer's software the with for licensing chipsets receiver provide by As to a that positioning IP. recently manufacturer implementing US a the functionality

component of other recognize this starting with to agreement payment contracts, this royalty year. this in from we the an volume-based by Similar a NRE followed half second business, large to revenue expect

licensing exciting leverages that technical existing alongside one subsidiaries, an of one our our and is This expertise the from office. France agreement new which technology NextNav

have our are software NextNav implementation. versus now of some integration fuller capabilities, of technology only with which the France, we With several

companies acknowledged has PNT PNT the most is us more to evident out is as the we're that its resilience. this government, to Building throughout the which prioritize more parties intention industry us on what and and expert. momentum, of But directly made clear encouraging to federal coming movement seeing are also

in is believe complete. within are agencies the Executive provide interagency the the language And procurement go the feedback the procurements expected is XXXXX, guidelines process offices being we to Order tabletop for an which approval designed coming by a months. on On can now the that reviews,

Executive toughening with government ahead formal its We strategy initiatives several on of see of GPS the moving protecting, the augmenting Order. underway forward of and implementation

protect of this detection on accelerating is is GPS its progress Intentional government example associated interference the ROOK nationwide. Disruption for Situational - One program Awareness HARMONIOUS the in the with realm

technologies beginning They're resilient agencies integrated small-scale the so GPS. the with augmenting of platform being systems by or existing PNT same addition, doing them process are where key call are as on sandboxes several test-beds In resilience. establishing GPS-based they as

how it what PNT the is as One alternate government is PNT takes the enable of and two to us integration, the critical the cost providers as like of for federal of do resilience, providers coexist end systems. well what combined goals understand the and the performance of infrastructure technology collectively systems to

and with many being level with constructed agency participation and universities active and the we with them. sandboxes at facilities coordination are in federal are state discussions in of These research

PNT. most Order Bill, Transportation and In its resilient Congress Senate and further further Executive has XXXXX the to and support funding recent Development reiterated Urban allocated Homeland Security Appropriations Housing to

PNT expect are providing developments to the to weeks in These we're government services and in promising support strategy. very of be resilience announce that their we coming able the to

we're the earlier, at of many mentioned unable details our we to As this of due provide discussions, sensitive time. to nature

EXXX. at Turning work to our

announced nationwide We provide continue arena. we expand XXX expect Pinnacle US capabilities another in that to selected early the to technology this In had for calls. z-axis carrier June, our to precision footprint

z-axis will on agreement the requirements. entire the z-axis XXX for across lifesaving and calls exceeding FCC's expanding EXXX carrier's technology precise of the United made device portfolio, availability enable The States

the to this expected on released z-axis year. the The capabilities utilizing are first network be devices later

communication the have key in Verizon, NextNav's z-axis emergency In device outcomes. recent Pinnacle to select years, including multiple other response caller to operators, solution geolocation continued enhance capabilities industry to and OEMs, and businesses provide wireless

emergency that devices validate the XXX actually technology z-axis. precise we our we can Pinnacle of multiple with now And for have calls, importance

floor in Our towns the above the around the based marketplace, country, covers own Pinnacle a area, on and, in more of half remind the which, cities that may our level. shows if with internal and calls serviceable ground you, the I devices X,XXX data, Technology originate than emergency from nearly

is This and truly this that our lives. response emergency a and our EXXX in important energized Pinnacle technology knowing the is calls. number very improve times it plays needed points as of technology to it ultimately role of of calls to importance by z-axis validation substantial save a the such for We're fact

international. over submitted one greater to Recently PNT PNT in of a Now Prime seeing by Japanese Internationally, the resilience. of Dr. conference Murai the highlighting at chaired key turning Minister's we're on an Japan opinion the importance resonance resilience. advisors scientific

to resilience and way we Japan Japanese paves And tangible outcomes, establishing believe spectrum the the we also two, resilience the will MetCom we PNT in US in Japan. This, European for has allocation believe likely Union market. to the the two to very believe, the Japanese one, this provide follow government for

In Pinnacle in the and testbed technology technology be testbed first for France. padded accuracy for located This is European we will announced in our location vertical Europe, our area. new high

to to integration Pinnacle offer benefits can the as and The well NextNav provide demonstrate partners. testbed applications agencies of devices emergency will as technology response with

delivering This Pinnacle the demonstrate but partners technology us floor-level XD accuracy, will industry capabilities, pave initial for enable superior not only and to leveraging also PNT resilient our deployment to our way technology. PNT

we European XXXX. shared referred Plan the the Navigation March Center, results Radio end calls, Union's Research released also at from recommendations report This on June. released in the our which, European to were previous was Joint trial of The as at the

existing resilient recognized a GNSS as for NextNav's layer technologies, PNT and report serve or GPS a exceeded relevant The benchmarks mature technology that TerraPoiNT technology. to met as resilient

on this As continue initiatives. advance to European can discussions closely we help we policymakers those in engaged move remain how forward,

to Finally, news. before wanted Chris, highlight I hand to some I over exciting things

capabilities. LTE network we the may progress with TerraPoiNT discussed and recall, You We with and our our significant XG of the timing that on had solutions positioning integration combine successful announced recently NextNav's signals. existing technology testing LTE system

conventional can around GNSS leverage positioning on not that demonstrated is San how area and GPS deliver took or cellular existing in signals. TerraPoiNT timing XD to the reliant Jose, accurate place and This testing satellite-based California and information signals

demonstrated a the PNT expectations. the solution, consistent capabilities resilient integration, prior and this layer alternative, tests and the of lower-cost PNT environments. and as delivers vulnerabilities we our GPS with extends scalable that by which With the XD have excited a highly that with indoor in system ground-based urban cost new overcomes PNT complementary performance they validate We're

And in using of that this our finally, TerraPoiNT results XG deploying a to Bay hope We implementation as Gary indicated, testing Area year. experimental now we're recently the later from approved license. have network implementation also

with it a for over turn that, me financials. let run-through Chris And Chris? our to of

and afternoon, good Thanks, everyone. Ganesh,

debt I'd that results, discuss Gary the financing on. briefly into jumping Before to of million $XX additional touched like the

under May senior of the additional issued $XX $XX underlying the on the As this likewise a sharing same May agreement Gary indenture and that allocation Xth. those portion secured Xth. we that pointed notes These in was out, to and that were addition greater notes closed that the financing, notes to investors the security seeking the million in participated announced warrants, was of same million on

missed review rate, just issued with for interest The that of payable approximately December on this. you secured notes placement. a Senior presentation terms, to on semi-annually. private years X.X key prior mature of XXXX, bear term XX% our The Xst, those total notes at a in a perhaps

notes interest of at And common cash are view, to issuance. any elect we XXX% The principal point of XX% in redeemable initial up of after anniversary shares of our to the importantly, first from of stock. value the a accrued can the pay

of at the with of million $XX the common initial $X.X conjunction price issued issued And these along $X.XX shares sale NextNav that an million warrants we same the with in notes, additional we to closing. stock strike additional warrants the purchase

this partially and In validation XXXX strong business all, The There's are investor and for option of our and no for on objectives. our warrants as long-term beginning cash. callable we exercisable expire are cashless in and exercise see XXXX. Xst, June base asset another support

driven non-recurring our line in decrease $X.X to to integration approximately results. was XXXX. from offset the second year-over-year by predominantly turning from network quarter was customers. Now by The recurring second In top activities $XXX,XXX million a of in quarter, revenue revenue compared revenue the commercial decline

XXXX. compared the flat first Sequentially, revenue was quarter to essentially of

XXXX, compared decline was same half the $X.X the first again to year, resulting the our the For of from drivers. revenue $X.X million in million with

expenses for period second $XX.X approximately quarter from $XX.X Operating the were million year. last down approximately same million in the

were to stock-based amortization, prior Excluding expenses $XX.X in $X.X million quarter. million and compensation and and prior in the compared $XX.X operating million depreciation the approximately year

For $XX.X expenses million in the to first operating compared year, million the of $XX.X were XXXX. half

and Excluding amortization, for depreciation expenses $XX operating stock-based compensation periods. were both and million expense

was with in $XX.X quarter second net the XXXX year million, in XXXX. of the a loss quarter for primarily year this warrant was loss million period a of gain compared down a of approximately a difference ago, of Net to value income $XX.X of the change $XXX,XXX second of from by which the liability, same in the a driven of in the change fair $XXX,XXX

million in year, half $X was value liability, XXXX of For million to $X.X a a change XXXX, $XX.X driven a the the which of change loss $XX loss compared to again million in the in a warrant of fair being loss in net of by was primarily gain first of with million net compared XXXX.

cash attributed warrants debt, the $XX with with From value those $XX.X a debt cash to we of unamortized million quarter in costs transaction and the from million the two deal. $XX.X recently perspective, of million equivalents, between categories, $XX gross a million $XX net issuance short-term discount million of announced together sheet investments in financing balance and with finished in and

end debt quarter. us Now include of multiple liquidity balance reminder, on years $XX because additional as in notes with the in a the closed the cash this either of believe this to the runway does million after provides not Xth strategic in our the objectives. our those we we sheet or achieve July And from line

questions. turn that, the to call the for With operator Operator? over I'll

line first Your question comes from Riley Instructions] Griffin Boss, Securities. B. [Operator the of

-- Hi. Thanks taking for you, Thanks my taking for operator. my thank questions.

Can to the start how sense the of to with should that contribution new on similarly, Is to to perspective? similar back agreements maybe get there's Verizon? the impact of -- off, to what comment a carrier? Pinnacle half all in be be at we Chris. line revenue trying agreement just this you be of implications the expect looking sort year. with from a So going the with one additional then a at for going you new And if top licensing Just material the

that's Griffin, question. great a Yes,

you we As involve components. part with provide of that in know, new because, guidance contracts especially don't course, usage-based

well half that However, in we the agreement quarter. to both to additive do chip second in of first be and recognized revenue EXXX the agreement year we referenced as the that Ganesh expect second recurring the substantially as the this

of chip dependent to looking the that on the in of timing case agreements into have agreement, of of year. term are both to growth the multimillion-dollar longer the the And feature case course, expect attach into those rate the grow device those their be chip in we forward although our contracts, in of think second integration. sales of of agreement, EXXX of of the and the our we is, to starting customers' to sales. I effects then scale course, potential those the So see the half to And

how the great. broadly, along. obviously Thanks, you the just just nice Nestwave any can I coming on if integration wondering That's Okay. is see it's I'm successful testing. all TerraPoiNT to guess Chris. And more updates then provide

to you hit that? want Ganesh,

take stab a that. I can Yes, at

Nestwave started we've TerraPoiNT combine think, started We were. quite to And collecting we've expectations been of we've, to platform. been with both we've our Jose integration -- established as And a our we've been the year. have results, calls, work our this Francisco. where and the gotten in largely team's San the with together I of platform the had able late year. combined I we, what last in well testbeds, a highlighted which, have on consistent the to couple think signals starting earlier as indicated, San the And obviously, few I -- point

seeing OpEx two So meets with in performance to we've been the the combine was believe corresponding matter and the capability. implications platform the to CapEx, in that start of we anticipated the months months, six benefit eight and synergies technologies able originally what the this is new

I net-net, it's and going say, would that. make to well we on extremely So progress to expect continue

see Okay. progress. you, Great. Thank the Nice to Ganesh.

Your line Horan your from question of open. next Oppenheimer. Tim is Tim, comes the from line

Dan further and Horan. raises the you Thanks feel expect should possible this know a mentioned for see then to for approval? need that to you. file raise? plan you you my those you to I secondly, years take fully guys guys. provide year, question. do McDermott commercial long to multiple after Tim receive runway. how Hi, on funded do But capital of And you taking Thank do for guys later an licenses

specifics much investors have have of still runway envisioning the additional we be the sheet type right that analysts Thanks we $XX aren't are balance an or amount looking or overlooked. liquidity that. and took Obviously, remind the it headroom and we Hi. by we that We in questions. very way, with when any I have million good of often in, very at or offering two equity. But would it's the fundraising, definitely of debt now,

can same with add collateral we that. do million an the have we to additional $XX if to We passu underlying pari wanted the that

they exercise. in an his that's allow penny aren't us. warrants, earlier, opportunity section as a and don't cashless And for these covered So Chris

to million those So that. warrants or candidly that's were if upwards exercised, something like $XX

there plenty elements financing So us. are sufficient available to

network is able use without we're at to for showing all this towards data will can using seeing or results provide can of transmitters again, both commercial to can in we fact, approval value awarded providing or but even contiguous we'll megahertz year to that investors geolocation that near-nationwide. thing this while of harming you a if be XG the international standpoint, the may that I may undertake data expansion strategic for our comfortable spectrum giving the doing thing the the filing. of prove because see not for underlying because in comfortable deploying existing next in later So, It's yes, feel I and traffic, X in lot it think, the us to of things very refer validation of either were license, experimental operationally The mentioned, not type we near fact, one one One of certainly, to element requires the we do very simultaneously. flexibility it. And The debt, to position, actually tell we're a other service. billion waveform. our simultaneously we term that's of using carrying that position TerraPoiNT that? can right a we with or not from test bit commercial waveform, nature. prefer that be do is this the from that us the Bay FCC approve But pointing both a strategically. it's and the then things PoPs that financial cash, where Timing the approach have of licenses a Area, to which guess another the standpoint. We be of in stand actually we fully that, megahertz we're thing as FCC navigation and that from the good It's follow element what true once we XG initially I is, year now, funded probably timing case value received X.X doing key were equity on we navigation or in first, and additional investors that we're that, that that and capacity a and high-quality say really what our underlying XD having they nothing timing. that

have are simply with three comment run that, we may calls, prior that then and you point certainly, after by the public you way, further testing time comments that in right something then which think how is the But received is to what after follow my in I in may go a time, And process that program. right questions, a period, and we're in months. depends may our, similar mentioned There event. that received may years But at a our a XX much looking that we FCC. additional FCC we couple and that show when on that as questions it want with testing undertake when have answer occurs be ago commercial the milestones hope data. first of very licenses our them exactly XXXX did we view, and were this they It's some on additional the to at. upon the what they our

in XXXX event. So a it do I view that as with mind,

much. so you Thank it. Got Great.

back to this no Instructions] Gary there at are the over questions [Operator call further Parsons, If you. time, turn I

you much, us joining very call. everybody, for Thank on this operator, and thanks,

we forward quarterly look you experimental relative deployment a I As on service. talking off, based side TerraPoiNT we when some to operationally, license to strategically will next attendance utilizing number FCC traction announcements are quarter were have the and call. on next hopefully, this for own of we the appreciate and XG our of our and certainly, both that that to already With it that key I on had your seeing, here, said we our again very we there and spectrum revenue-wise, that, kicked

today's This concludes call. conference

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