NextNav Inc.

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 Patraman, 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 NexNav'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. However, such forward-looking statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside NextNAV's control that could cause actual results to differ materially from the results discussed in the forward-looking statements. These statements may relate to, but are not limited to, expectations regarding our strategies and future financial performance, including future business plans or objectives, expected functionality of our geolocation services, anticipated timing and level of deployment of our services, anticipated demand and acceptance of our services, prospective performance and commercial opportunities and competitors, the timing of obtaining regulatory approvals, commercial partnership acquisition and retention, products and services, pricing and marketing plans, our ability to realize the anticipated technical and business benefits associated acquisitions, and any subsequent mergers acquisitions, or other similar transactions, factors relating to our future operations, projected capital resources and financial position, estimated revenue and losses, projected costs and capital expenditures, and expectations about international markets, projections of market growth and size, including the level of market acceptance for our services, our ability to adequately protect key intellectual property rights or proprietary technology, our ability to maintain our location and monitoring service, LMS licenses, and obtain additional LMS licenses as necessary. Our ability to maintain adequate operational financial resources, including for research and development, or raise additional capital or generate sufficient cash flows. Our ability to develop and maintain effective internal controls. Our success in recruiting and or retaining officers, key employees or directors. Expansion plans and opportunities costs related to being a public company, our ability to maintain the listing of our securities on NASDAQ, microeconomic factors and their effects on our operations, and the outcome of any known and unknown litigation and regulatory proceedings, as well as assumptions relating to the foregoing. Accordingly, forward-looking statements should not be rely upon as representing our views of any subsequent date, and we do not undertake any obligation to update or revise any forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events, or otherwise. Acceptance may be required under applicable security laws. Following our prepared remarks, the company will host an operator-led question and answer session. In addition, at the conclusion of today's call, a replay of our discussion will be posted to the company's investor relations website. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, please press the star and the number one. With that, I'll turn the call over to NextNav's chairman, Gary Parsons. Please go ahead.

Well, thank you very much, and good afternoon, everyone. Welcome to NextNav's second quarter 2023 earnings conference call. As the operator said, joining me today on the call will also be Ganesh Pataparaman, our CEO, and Chris Gates, our chief financial officer. It was another busy quarter for NextNav on a number of fronts. We are seeing encouraging momentum as we focus on executing against our key strategic priorities. And just as a reminder, I know we've said it a number of quarters in a row, but those priorities remain, number one, being the industry leader on 3D geolocation and resilient position navigation and timing, or P&T services, specifically providing GPS resilience and backup. Second, leveraging our intellectual property and technology to both reduce our future capital needs and to enhance the underlying value of our spectrum assets. And then finally, expanding our global reach. These three pillars serve as our strategic guideposts, and we're encouraged by the progress on each of these areas in the second quarter. However, before I go into those key priorities, I want to briefly touch on the recent closing of an additional allocation of $20 million that was announced this past June. The additional funding comes from a group of existing investors from the original $50 million debt financing facility that we closed back in May. And with this additional capital, gross proceeds from both deals now total $70 million. Chris will cover the specifics of the additional financing. But, you know, sort of as an overarching indicator, we see this oversubscribed funding as a clear market validation of our underlying assets. including our IP portfolio, deployed network, and near nationwide spectrum assets. The additional capital provides us significant flexibility with added liquidity and multiple years of funding to support the growing industry and governmental interest in our 3D location and GPS resiliency services. Specifically, we're seeing significant traction with underlying technology licenses, E911 implementations as well as government grants, all of which are extremely encouraging. One thing that's become apparent to us, and which I'm sure you've noticed as well, is that the sensitive nature of our work, most particularly the critical security and public safety aspects of our technology and products, does result in an elevated degree of confidentiality amongst our customers and partners, including government agencies, wireless carriers, and other industry leaders. As we experienced during 2022, many of our key customers and industry partners would prefer to initially work with us privately without attributable public announcements, particularly even in national security cases. which, you know, we may never be able to disclose the specifics of any services that we may or may not be providing. In other cases, however, as we experienced with Verizon's E911 contract, we are able to offer greater insights into our work and specific customer relationships once our capabilities are implemented and mature in their networks. A number of our positive industry and governmental developments fall into this category. but that right now we're only able to disclose them in generalized terms. Now, Ganesh in his section will describe these in as much depth as we can at this point. So, let me just provide an overview of some of the key efforts. First, we signed a licensing agreement with a top-tier global chip manufacturer to license NextNav technology to provide low-power asset tracking capabilities utilizing NextNav's intellectual property. associated with software-defined GPS capabilities. We're also pleased with the accelerating interest in our TerraPoint technology in support of the government's P&T resiliency efforts. You know, we're not in a position to announce anything specific today, but we are hopeful to provide additional insight into significant traction on that front on our next quarterly call. We've mentioned in the past calls the Executive Order 13905, and the interagency review of that order. Notably, a number of the key agencies have exhibited significant interest in moving forward with initial implementations in advance of the formal governmental process, which is required in order to finalize procurement regulations government-wide. Adding to this, an additional nationwide U.S. carrier recently selected our pinnacle technology, to provide precision z-axis capabilities for 911 calls. With this new agreement, NextNow is now providing its z-axis capabilities in support of E911 devices on three of the top nationwide carriers in the U.S. Again, a clear validation of our technology and expertise in advancing E911 services. We expect revenue from this segment to increase over time as additional Pinnacle E911 compliant handsets roll out on various of these carriers' networks. Finally, during our first quarter call, we noted the very positive FCC approvals we received regarding our spectrum and successful build-out milestones for all of our key spectrum licenses. We also noted that we had requested an experimental license. in the Bay Area to allow us to deploy and test a TerraPoint implementation utilizing industry standard 5G waveforms with a variety of carrier bandwidth configurations and power levels. During the second quarter, we in fact received approval for that experimental license, and we are currently designing and deploying a 5G network in Bay Area to validate our ability to provide highly reliable 3D geolocation and resilient position navigation and timing capabilities using that 5G waveform while simultaneously using that 5G signal for significant data throughput. Once we've completed the deployment and testing program, likely later this year, we would expect to file with the FCC to allow commercial services using this configuration. As we've noted in the past, Using a 5G or even an LTE waveform has significant cost, deployment, and performance advantages that strengthen our TerraPoint P&T and GPS resiliency services while facilitating improved broadband services consistent with industry requirements. With that, I'd like to turn the call over to Ganesh. Ganesh?

Thanks, Gary, and good afternoon, everyone. As Gary mentioned, we're seeing strategic momentum in the business as we moved into the second half of the year. Notably, we're beginning to see real recognition towards the effectiveness and importance of our underlying technology and IP through several of the agreements that we are executing. Through the expansion of our intellectual property platforms, we have many new opportunities and flexibility in the technologies we can leverage and deploy. As a prime example, we recently signed a new licensing agreement with the top-tier U.S. chip manufacturer to provide positioning functionality for low-power GPS tracking to the manufacturer's mainline chipsets by implementing a GPS receiver as a software IP. Similar to other large contracts, we expect an NRE component followed by a volume-based royalty payment with this business. starting to recognize revenue from this agreement in the second half of this year. This is an exciting new licensing agreement and that one which leverages our existing technology alongside technical expertise from one of our subsidiaries, the NextNav France office. With the integration of our technology with NextNav France, we now have several capabilities, some of which are software only versus fuller implementation. But what is most evident to us is that more and more companies and parties throughout the industry are coming directly to us as the acknowledged P&T expert. Building on this momentum, we're also seeing encouraging movement out of the federal government, which has made clear its intention to prioritize P&T resilience. On Executive Order 13905, we believe the tabletop reviews process by which the procurement offices within the agencies can provide feedback on the procurement language that is being designed is now complete, and the guidelines are expected to go for interagency approval in the coming months. We see the government moving forward on its strategy of protecting, toughening, and augmenting GPS, with several initiatives underway ahead of formal implementation of the executive order. One example of this is in the protect realm, is the government accelerating its progress on the harmonious RUC situational awareness for intentional disruption program associated with GPS interference detection nationwide. In addition, several key agencies are beginning the process of augmenting existing GPS-based systems with resilience. They're doing so by establishing small-scale testbeds, or as they call them, sandboxes, where resilient P&T technologies are being integrated on the same platform as GPS. One of the goals is for providers of critical infrastructure and alternate P&T technology providers like us, as well as the federal government, to collectively understand what it takes to enable P&T resilience. What is the cost of integration? How do the two systems coexist? And the end performance of the combined systems. These sandboxes are being constructed in coordination with universities and research facilities at the state level and with federal agency participation, and we are in active discussions with many of them. In the most recent Senate Homeland Security and Transportation, Housing, and Urban Development Appropriations Bill, Congress reiterated its support to Executive Order 13905 and has further allocated funding to further resilient P&T. These developments are very promising, and we expect to be able to announce in the coming weeks that we're providing services to the government in support of their P&T resilience strategy. As we mentioned earlier, due to the sensitive nature of many of our discussions, we're unable to provide details at this time. Turning to our work in E911, we continue to expand our footprint in this arena. In early June, we announced that another nationwide U.S. carrier had selected the Pinnacle technology to provide precision Z-axis capabilities for 911 calls. The agreement will enable precise Z-axis for 911 calls made on the carrier's entire device portfolio, expanding the availability of life-saving technology across the United States and exceeding FCC's Z-axis E-911 requirements. The first devices on the network utilizing the z-axis capabilities are expected to be released later this year. In recent years, multiple wireless operators including Verizon, device OEMs, and other key businesses in the communication industry have continued to select NexNav's pinnacle solution to provide z-axis capabilities to enhance caller geolocation and emergency response outcomes. And now that we have multiple devices with our pinnacle technology for 911 emergency calls, we can actually validate the importance of precise D-axis. Our own internal data based on the devices in the marketplace with pinnacle technology and in our serviceable area, which if I may remind you, covers more than 4,400 cities and towns around the country, shows that nearly half of the emergency calls originate from a floor above the ground level. This is a very important validation of our technology as it points to the importance of Z-axis and the role it plays in E911 calls. We're energized by this fact, knowing that our pinnacle technology is truly needed for such a substantial number of emergency calls to improve response times and ultimately save lives. Now turning over to international. Internationally, we're seeing greater resonance on P&T resilience. Recently in Japan at a conference chaired by the Japanese prime ministers, one of the key scientific advisors, Dr. Murai, submitted an opinion highlighting the importance of P&T resilience. This, we believe, has two very tangible outcomes. One, we believe the Japanese government will likely follow the U.S. and the European Union in establishing P&T resilience for Japan. And two, we believe this also paves the way for the spectrum allocation in Japan to MEDCOM to provide resilience to the Japanese market. In Europe, we announced new testbed for our Pinnacle technology in France. This is our first European testbed for high-accuracy vertical location technology and will be located in the Paris area. The testbed will demonstrate the benefits of Pinnacle technology can offer to emergency response agencies as well as provide integration with applications and devices to NextNet partners. This initial deployment will enable us to demonstrate our pinnacle technology to industry partners and pave the way for delivering not only superior flow level accuracy, but also resilient 3D PNT capabilities, leveraging our PNT technology. The European Radio Navigation Plan was also released at the end of June. This report referred to the recommendations from the European Union's trial results at the Joint Research Center. which, as we shared on our previous calls, were released in March 2023. The report recognized NexNav's resilient P&T technologies, SharePoint, as a mature technology that met or exceeded relevant benchmarks to serve as a resilient layer for existing GPS and GNSS technologies. As European policymakers continue to move this forward, we remain closely engaged in discussions on how we can help advance those initiatives. Finally, before I hand things over to Chris, I wanted to highlight some exciting news. You may recall we had discussed the significant progress on our technology integration with LT capabilities. We recently announced a successful testing of our positioning and timing solution that combined NexNav's TerraPoint system with existing LT and 5G network signals. This testing took place in and around San Jose, California area. and demonstrated how TerraPoint can leverage existing cellular signals to deliver accurate 3D positioning and timing information that is not reliant on conventional satellite-based GPS or GNSS signals. With this integration, we have demonstrated a highly scalable and lower-cost alternative, a 3D PNT solution, which overcomes the vulnerabilities of GPS. with the complementary ground-based resilient P&T layer that extends P&T capabilities in urban and indoor environments. We're excited by the tests as they validate that the new system delivers cost and performance consistent with our prior expectations. And finally, as Gary indicated, we're also now deploying a 5G implementation of TerraPoint in the Bay Area using our recently approved experimental license. We hope to have testing results from that network implementation later this year. And with that, let me turn it over to Chris for a run-through of our financials. Chris?