Earnings call transcript Q1 2023

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Operator

Good afternoon, everyone and welcome to NextNav's First 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. These statements, which involve risks and uncertainties relate to analysis and other information that are based on forecasts of future results and estimates of amounts not yet determinable and may also relate to NextNav's future prospects, developments and business strategies.

In particular, such forward-looking statements include statements about NextNav's position to drive growth in its 3D geolocation businesses and expansion of its next-generation GPS platform, the business plans, objectives, expectations and intentions of NexNav.

potential competitive in potential position, the future estimated growth and strategies, business industry partnerships success NextNav thereof and opportunities. NextNav's environment and

in and to risks are subject differ cause materially. statements based statements current to or These are forward-looking subject on actual of the the NextNav's control outside and uncertainties, actual and assumptions results to uncertainties are from unknown and statements. beliefs certain materially other could forward-looking which results cause risks, Such results differ that discussed known may important factors expectations are many to that

The within and management possibility important the deployed markets to, key capital continue key assumptions uncertainties, its risks, adversely effectively with business not its to employees, line NextNav and main NextNav the may strategies, ability gain balance flexibility are affected be to generate in include, retain and limited with These ability to and the that sheet of other both factors and notable by in but to including platforms and/or COVID-XX pandemic, from the NextNav. by traction the risks of economic competitive partners coronavirus with indicated in the TerraPoiNT and grow profitably, time to and ability internationally. and and and ongoing respect and customers suppliers uncertainties NextNav documents its of relationships maintain NextNav time Commission Exchange business including other ability to filed factors and Securities network, growth impact to solution and the with partners, with the XXX manage Pinnacle US

affect events or impossible to us. and may is these us arise for to time from New they predict uncertainties time risks and how it

of only recent which the impact NextNav made. commitment And update may most otherwise. undertakes the whether result reliance You our new revise upon are undue date information to filings. future cautioned identified or any SEC in as that Risk statements, events a performance or factors forward-looking our to as no are statements forward-looking not speak place

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

at the the of call, conclusion a posted our today's Investor to replay website. company's addition, of be In Relations discussion will

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

Gary Parsons

welcome me Pattabiraman; you, Quarter Call. joining NextNav's Good NextNav's to CEO, today said And everyone Thank NextNav's Earnings is the as afternoon CFO, Chris operator Ganesh operator. XXXX and Gates. and First

really is a established to off a XXXX, we operational technology strategic Having in our to and strong product XXXX expanded execute start. solid three against capabilities continuing priorities. are our foundation and

first and PNT. being As position are: leader navigation or an and a timing reminder, those resilient priorities industry

future needs Secondly, capabilities leveraging global our our capital recent significant And finally and then to reduce our add spectrum reach. Nestwave dramatically assets. our acquisition to expanding

for significant this of see milestone spectrum including value both this financing to closed for To notes up begin have million underlying includes short, newly and validation significant a potential announced the we're our to debt and In the our base, levers thrilled $XX however, nationwide I'd deployed property to expansion portfolio, business strong like of which our intellectual million. the on the touch $XX network. additional and our assets transaction our marketplace as of asset

financing Chris into with get the will view my years multiple the in of funding dilution. modest new provides Now some equity with But specifics. of us

and continue traction see increases. and XD but growing from our without in resiliency to revenue we hear you'll customer material location services, As Ganesh, governmental GPS even our

also designed this which unlock our significant provides past accomplishments are consider financing several the funding. refining years to concert with ongoing the months, successful and Given fundamentals expenses over important several value and of to financing our It's additional multiple management of strengthen other the in long-term of our business.

as the we testing first much with the of combined place capabilities the Nestwave of closed we spent speak. And XXXX field network late the two taking the in starting integrating remember quarter You'll acquisition. technologies we

technology combined it only spectral the needs and not significantly of made also The acquisition, state-of-the-art we first efficiency reduces improves about of our use network the of assets dramatically the waveforms. we as XG our but when capital future the spectrum rapid underlying through the talked integration testing and

XG optimizing our our to facilitates the form location data-carrying capabilities. capability way resiliency in of P&T Incorporation addition and XD

For future ongoing calls, on provide these key we'll efforts. updates

concentration and the in from the the we substantial March, buildings focus late in service received SEC's and interest safety standard. urban Importantly FCC finding -- centers promotes needs deployment the order covering public NextNav's public therefore an that the meets as network community tall and of of

In resilient felt areas of GPS the licenses market EXXX as covering standard early and a services as FCC or the approach obviously preferred in for FCC CNA. final well April time milestones concurred Wireless was the Bureau the long that deployment P&C both has position. pleased construction We for we're or using cellular XXX the approved this NextNav's this for

released progress first initiatives. P&T the report country with every European recommendation in firm we the Also in of In JRC international support our in allocates quarter, was resilient on alternative significant made a spectrum additional European P&D. that technologies March,

detail creates P&C substantial leaders reports findings on customer active resiliency. This MetCom other as resiliency significant into have much well well as of and other recognized believe globally and on governments our initiatives. P&T us the in conversations opportunity European what Ganesh with a in ahead with opportunity will we like as We product Japan. there's Europe as in the more get spectrum a JRC done as remain in

let me it over Ganesh. that to With turn

Ganesh Pattabiraman

good to get several for afternoon had Gary the from approval on majority major our the financing a Chris and activities Gary vast our been into continue closed of in more P&T team make a It's on globally. resilient and and highlighted. busy markets we've secured everyone. debt achievements quarter as We progress build-out the for notable will the FCC you, requirements Thank that detail,

our from asset-rich priorities significant shareholders platform funding It signals advance portfolio financing the to investment in and maximize provides full of customers. of our value years and debt The multiple with for our assets. also community confidence us the of strategic efficiently

regarding milestones. build-out and We were our FCC also spectrum many very recent pleased with approvals the

be either or coverage holders may requires FCC spectrum using milestones of ability substantial its aware service. to population you construction the meet using to demonstrate two in one As ways

with the had we cover efficiently same build-out and we Consistent service highest areas multistory our This provide the the our need really country adopt allows and planned SEC model structures order for to approach FCC initial to the our capital requirements. on petitioned around to to with the XXX, service the allocate first. us latest

in Chicago. to very cellular in about a the significant milestone are approved L.A., market final the therefore in business were concurrence the XX the obviously and for XXX on markets. The pleased approvals that which San of around We our step markets XX. spectrum in order on major The represents approach country our New March licenses areas FCC's issued they our the like obligations York, these see license SEC Francisco marking meeting

Turning now to our technology. Pinnacle

EXXX this We meet on safety new month launch the we Notably helping Tier continue the requirements. to multiple devices earlier FCC's the expand announced of X our and arena. public them XXX footprint in several networks operator

enabled frontline in available under integrating Kyocera's Verizon Europe our an with stores our Verizon Verizon for device device now feature Verizon This additional We carrier XX and online is Z-axis both phone customers. and agreement recently Extremes nationwide. capabilities into

integrated which in being into been nationwide. is technology T-Mobile stores Pepper by sold phones, Metro Hot currently Z-axis has Our mobile also feature Tabasco,

carriers, Z-axis Pepper in This that XXXX capabilities, NextNav XD devices emergency use areas development off major Hot for which Hot wireless all allows of mobile on in for required across enabling are builds Pepper's agreement announced major geolocation Pinnacle's XXX urban with services.

March And The of report trials on to European Center ultimate at new the the released end now our its P&T technology. global turning initiatives. Research Union's Joint of

GNSS solution point of that solution the NextNav's existing meets to a part a As report, layer JRC Terra resilient exceeds relevant as serve to all recognized or the as benchmarks technology. mature

vertical services, while delivers remaining indoor and tested horizontal deployable both are technologies commercially cost-effective capabilities outdoor for location end and After TerraPointe and users. timing

the resilient of policymakers strategy, begin with serious to policy look European facing navigation European P&T GNSS we working consequences act plan, to their a forward to to outage. to and upcoming radio the use As quickly before these them and findings develop tied

the Executive released over continue the months. government. our touch Finally, procurement XXXXX before to language federal be want I in Order modifications federal that we in I Currently, believe turn outlined coming things briefly on work the Chris, to will as with to

we to exact we In potential discussions be As architecture of implementation the into the extensive continue continue the Therefore, on more the sure hold market interim, update order. we progress executive will to timing, there. we have with make the insight federal officials to

develop in including operations Mountain doing Institute Research Aeronautics work the government to the see in for is officials in several NASA's on NASA the to of Science US, at Committee continue Parimal Technology, technologies systems View, that work Space discussed House its We to PNT Director Dr. of urban alternate air space. mobility presentation PNT & of conversations. the the resilient Ames their in Kopardekar, a highlighting Recently importance

initiatives. we know, with are you NASA to their in of happy support ongoing partner many As of

it me for With Chris turn that, Chris? over our of let financials. a to review

Chris Gates

and Ganesh, everyone. afternoon, Thanks good

payable I more Before quarter's May one due bear financing. approximately accrued a in elect notes we X, closed a of XX% of to we of common point results, any placement. of recently I'd importantly interest from on The stock. senior like the X.X $XX provide pay on into at on On semiannually interest notes view private cash XX% rate a detail shares to of years XXXX, our secured in can first and dive announced term debt our December a million total

after For additional value XX depending have the anniversary secured the to noteholders million. existing $XX future are $XX aggregate the to to $XX the of option initial of the we senior to the in option carried next of or principal option million notes at parties of sell days issuance. have an the to to first of acquire notes on redeemable XXX% new further total $XX the up or on of past-due exercise The the current and million up notes the million

of purchase In XXXX. the an issuing fully expire basis. in conjunction are our with exercisable $XX, warrants with in are June approximately on common The the ownership callable aggregate notes, beginning warrants result are on one also price warrants stock diluted XXXX. will which to The for partially a XX.X% sale strike will and we million cash of

As issuance mentioned, we platform. endorsement market this of opportunity this especially by substantially asset is NextNav's Ganesh Gary and strong a operational note our both in believe and extends presented unique the funding

first And turn results. quarter our now, to I'll

million in revenue XXXX. line the offset $XXX,XXX was quarter. partially from approximately commercial increase one-time fourth was top and driven represents of growth first in sequential by XXXX a quarter integration The from year-over-year $X.X compared the decrease approximately by to revenue an in First revenue, recurring quarter customers decline

to same expenses in million $X.X quarter $X.X million $X.X Operating depreciation XXXX from in compared million $XX.X and in first as first $X.X approximately of equity the equity down and period amortization expenses depreciation million compensation and last were $XX.X well million included the amortization in expense for Operating of compensation million, the quarter in year. expense as in XXXX.

of sheet million, the for $X.X financing of with loss we value warrants value From associated XXXX $X.X quarter the Net not XXXX, include compared quarter the fair with in first first million of the loss does $XX.X finished which included on which we million a of a quarter gain included recently of cash closed. was a the to our perspective, a the which fair warrants $X.X in of balance million. $XX.X benefit million

growth. mentioned, Gary in and multiple PNT runway to continue customers years like while of even see that we new I'd revenue with provides financing this for us reiterate opportunities As without expansion revenue material to

to indicated capital. bring focused in into we've our we we remain the success-based service expenses continuously on working As customers we're and past new refine as

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

Operator

is Instructions]. for The questions. now your [Operator floor open

of from comes the line question first Securities. Mike B. Crawford Riley Our from

open. is line Your

Mike Crawford

get us in And progress Europe. nice of FairPoint? cash balance you you Thank Japan Pinnacle to tell been can that also on sheet thanks the quarter we've What update and with you. It's modeling. one for see ahead your and in about

Ganesh Pattabiraman

Yes.

established their They we MetCom So Osaka progress in to Pinnacle where several good earlier. service later now converging in are their NASA activities P&T we are we P&T And and and partner trials begin Mike organization Jackso responsible folks of finalized expect to lot resilient [ph], commercial for Japanese with for In service. right commercial are – a point work their continue as of with them like this who as make noted and several along strategy. a to now are the equivalent also Tokyo continuing year. we the strategy in or the our to Japan, Japan, government, launched the they've

for the P&T were especially desire the now reinforces spectrum MIC establish heartened capability to as European they from that evaluate And there. next steps progressing on of GRC is so to spectrum services the the bear fruits see they especially report on the to much views piece and their findings in that the Japan within still

Mike Crawford

can way carrying the P&T you. that, Thank then implementing Okay. FCC maybe the now achieved able given extend you efficiency spectrum And and that jurisdictions And you elaborate data the to spectral be for be your you're what and/or to or have, intend access beyond then you're to would capacity appropriate others on signal doing with achieve the the to maybe you excess to what timing other on addition capitalize to and an ask location. enable so? in

Gary Parsons

Thanks very much, Mike.

that are of actually accuracy, all of other Area some acquisition indicated, our I that as are Nestwave of integration there me this which what a reminder, and the ensure in to our that. the I Bay and combines overall system and that deployed the XG of Let such does. and now part the the technology, other the atomic elements as their capability fix just timing an actually of mean hit time from can you we testing that. that services timing corrects accurate the of to technologies from accomplished fix a off right signals combined have clocks carriers our That's be signals and combined the with get technology through XG, the signals server our various some

fewer would you you So of cost achieve it in beacons it. navigation because and as before, dramatically of to or have it to is P&T deployment and that I any for that services far there put mentioned drives itself, the out have timing. also physician And order down speed in

that's the of we what from So get and element first integration that.

The well more or too. test useful whether waveforms have characteristics can the that we meet that well, think that they would not is, will determine experimental XG believe in Bay we Area but second particularly be XG I element be as with as our developing the we'll we license to that those both meet

base we if The matter spectrum the spectrum having It's that waveforms to to waveform current base factor your GPS-oriented it's so key not then waveform that over from the a can and of both waveforms, creates. we have fact is, that that converted support much your XG our surplus a a simultaneously simultaneously and would that the navigation first of are services the and capabilities that the as physician and the attractive data gain that XG out a responders your carry full so would government but GPS all EXXX deployed to backup it timing carrier federal signal of normally carries payload that. any XG

significant because combined that capability capability while the and and the a interest a the reinforces So combined beacons capability it's the that that have that actually think carrying interest, improves of the commercial has obviously data needs simultaneously, providing promoting public Public is would that of P&T to value with again, in the public you Safety community, number significant commercial the value. of access we

ability those simultaneously, to So what just the relative we flexibilities, would for. think I the both from do with would it's what obviously, looking request be to FCC? we of

to that question? your responsive is So

Mike Crawford

could one your Gary. last for you the provide are Thanks helpful. vertical promising see might for we trajectory to quite midterm opine to what would markets thereof most on magnitude revenue? might near know extent is, then, opportunities, any but And early I Yes. revenue to to be stage you and/or expect me given guidance reluctant And of some be the upward when

Gary Parsons

Yeah.

possible contracts. or initial comes versus the bidding have mean, whether let that or that Chris me it whether consumers of for the in trials from government these think capabilities address deployment itself, people obviously, it's interest capabilities purchase would on a or that in eventual TerraPoiNT be. various clear manifests potentially as significant government of those what potential I PNT I pretty Let customer agencies

think of significant respond needing backup directly RFPs And I of parties procurements, those resilient much not But that versus clear require to to that will to are those or as part come the are government from GPS bidding contracts. PNT, who elements. government how

expansion element to this currently announcements we EXXX the quarter-after-quarter the capabilities, announcements initially And think of with we're the roll continue is I making other and Verizon that an the contract, not you think anchor out in putting as year from see will only the I decline a we're to go carrier in along you whichever we I can there. process announcing can guess, other that provide as direct projection decline or ones one. but to provide and of Chris, place can

Chris Gates

Yeah.

You I go think nicely key right there. Gary. But you the ahead, captured verticals very

Gary Parsons

see the distorted one together And their year's first make you network. look when integration other past would I of obviously, point quarter you because year. is I can bit NRE like that to we Mike, Verizon at forward for integration, got pull of funding see from sequential you'll the was quarter-over-quarter Last a think going from versus one-time that, things

The Verizon revenue revenue. from quarter recurring all is this

more So type may towards I carriers that flow migrating come recurring portion, fully more recurring United the us other And I more still ongoing and revenue in standpoint. think of for providers think have least will into revenue a mode we're or that we'll that at while pay handset it States. with other an NRE

their it's place or we quite could in capabilities some in that services fact possible international networks. it for helpful either MetCom or Mike? with the do them that provide has to that payments think joint that of deployments integrate I Is to or we as in take that turn ventures up

Mike Crawford

Yes. Thanks very much.

Operator

from Our RF line final the of from Jamie question Lafferty. Perez comes

open. Your line is

Jamie Perez

everybody. Hi. taking Good my Thanks day for question.

point? that going know what's to Now process I maybe it but equipment? question the of what idea long-term you to next mean, I leading it's guys a are give take that some the JRC us for we step? to what's deploying the have start

Ganesh Pattabiraman

… Yeah.

Mike Crawford

guess want Yeah. Do and both? internationally? to one you address I domestically that

Ganesh Pattabiraman

Yeah.

is and European by U.S. primarily Commission. the Transportation to out in through recommendations came clear, follow very the already the federal is and on Order XXXXX the a place. now the of JRC trying report report similar activities had European Obviously, Executive that's Department of be that and Jamie federal was government initiatives are the to XXXX that set the this driven Union in of that focused state to U.S. So the some and

the So report sort towards report starting government the a we recommendations from in captures In the move the the the Europe, the phase. exists framework is of first and that implementation JRC to see perspective. technology U.S.,

plan, be on to reflected Union perspective they European expect recommendations. to which that recommendations. the navigation to expect attention the think imminently. obviously We do then the radio individual what for European policy have That from policy in And the recommendations pay in we countries be to the will want a governments close and would terms I to released implement

noted, of we as an that the spectrum one and were allocation And technical the we capabilities demonstrate tested of were report recommended P&T on to instance basis. extensive for technologies

similar we established more to follow that footing Poland will it with the experiencing So framework it in much European think act if to given of they're a the and good disruption just follow today the And Europe daily a the the in has we do see that's states. on wanting very and the Eastern U.S. Ukrainian you conflict and Russian the been of basis quickly, nature Baltic governments

system or impact TNT a experimenting has activities we lower capability. just start of instance, that European do the recently see the orbit implement, for they with and And P&T constellation to therefore, already the launched LEO seeing on that Union fast-track several started to

a also Similar Commission multi-technology it's approach the solving to resilience and believe U.S., problem. European the P&T governments to the the European

be the feature terrestrial framework. going that so strong is to in And component a

European lead navigation folks of the radio there. discussions the to see steps towards sort will comes lot have we of the the Union recommendations. we so out And plant some policymakers of of and And concrete implementation continue next that the with a once

Mike Crawford

apply our is technology Jamie, take foundational I'd a A viewed well to we're in platform. to companies or the other that that also In with because things. technology, though has the technology of kind note spectrum allocation. actual place words, spectrum be for the for of more develop license as activity on these It's capability lot may a of revenues. place advance or jointly the other or the partnering whether over to jointly bid there in

that to is order will want with lot or interest a an something as I It's occur, Middle situation reasonable either, think like things where not from has, out executive have And you interest efforts there. steps are have those there a is bids front. Germany actually but East or the that doing formalized overlook with be this France candidly, European States been on I the countries don't could of as next putting the Commission's individual actually JRC, United that intense there. because before the

Jaime Perez

All right.

on working you're both seems it's front. it basically, American, and So, -- working like European the

much with you going to platform, I developers basically be developers. is And going a license you you technology developed How And put out so, much you're since pay the your are yes, so the fee? fee mean, working the pretty structure? to

Gary Parsons

question. whether or pretty a be can may case think And in what company. a equipment or a interest the a for But to gotten a way. JV Well, it's that it's put telecom good licensing developer, a want we And is that the sort the have may them from in together. yes, of I gotten of I potentially say, quite also for fees. place some carried it that that revenues We've purchase take carrier, because necessarily entity for Japan, wouldn't or precedent,

truly a is from that joint it standpoint. So, venture

it's right will of So, form relationships exactly the now, those unclear what be.

clear whether leader are it's tested the States, in I comfortable the think most P&T Europe, we in viewed is, the the part with in very it's Japan, we capabilities. in that feel United as

fact, for across EU. allocate that desire to the spectrum In purpose, deriving this

for all of good a things, So those establish pretty platform us.

Jaime Perez

I right. next go global. step can't All Well, wait

Ganesh Pattabiraman

the are mean, the part obviously, US service technology a that would service potentially in one we that to Japan. Japan we providing Europe, similar from the want is equipment what capability to is in and and I market, done to the partners plan. in and in Jamie that of local partner with clarify In unreasonable. But our do provide thing, is MetCom, license strategic may provider No. us I has service. That's they and other not that the companies

US with end working are where market, certain potentially we of service So, the from to the buying that's service users capability, may we've their you us governments in working or with of on meet benefit we're But Pinnacle right? the with wireless who purposes. what the instance, for several our service, from see of Tier leveraging the requirements got X geolocation operators the

Jaime Perez

All great. I the my Thanks for right, sounds That’s questions all have. taking question.

Gary Parsons

Jamie Thanks

Operator

call for now would over turn like remarks. I closing to to Gary the Parsons,

Gary Parsons

financing, Well, thank you very let's report. the over progress much, number about operator. And once and again, we've we've thanks and had to very to listening substantial of good it, that everybody, feel that made number for this last calling the deal. in achievements particularly the the call let's We that when not It's as it. months to particularly well and We debt dilutive a too. at do want did highly a challenging out financing mentioned there, I looking face marketplace you're of most equity

we standpoint, good awful to the debt an of from that are of base would revenue-wise strategically, which how past we to forward. drive from because think financial that we feel operationally and secured going have that able be have. allow milestones forward knew stability us provides together, asset and about, to And certainty important achieve the We lot we experience, then us a and pulled it's

call, everyone quarter's look to and much to very for we participating. next thanks forward So

NextNav (NN) 10 May 232023 Q1 Earnings call transcript