Hello, and welcome to the NextNav Third Quarter 2024 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. I would now like to turn the conference over to Erica Bartsch. You may begin.

Good afternoon, everyone, and welcome to NextNav Third Quarter 2024 Earnings Conference Call. Participating on today's call are Mariam Sorond, NextNav's Chief Executive Officer; and Chris Gates, NextNav's Chief Financial Officer. Before we begin, let me remind everyone that this call will include certain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as may, anticipate, believe, expect, intends, might, plan, possible potential aim drive, predict, project, should, could, would, will, and similar expressions. You are cautioned not to place undue reliance upon any forward-looking statements, which speak only as of the date made, and NextNav undertakes no commitment to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. I'd now like to turn the call over to Ms. Mariam Sorond, Chief Executive Officer of NextNav. Please go ahead.

Thank you, Erica. Good afternoon, and thank you, everyone, for joining us today. I would like to begin today's call with an update on the business and our latest steps with the FCC and key stakeholders. I will then turn things over to Chris to provide an update on our financials. It's been an exciting few months for NextNav. We are energized by the early momentum as we advance our strategic vision and address the critical need for a terrestrial complement and backup to GPS. Following the release of the FCC's August 6 public notice, the entire NextNav team has been hard at work. We submitted formal comments on September 5 and followed by reply comments on September 20 in support of our petition to reconfigure the lower 900 megahertz band. Our petition offers a unique opportunity to address a national security problem. Specifically, the lack of a wide-scale terrestrial PNT backup and complement to GPS. We are confident that the FCC understands the importance and urgency of this need. This was evident in the thorough public notice they issued back in August. We were pleased to see the FCC asking the right questions and placing specific focus on PNT, validating the national security needs, which we highlighted in our own proposal. In response to the public notice, over 1,800 filings were submitted to the SEC, a vast majority, over 1,500 were from amateur operators who typically file on an individual basis. Of the remaining 300 filings, there were no real surprises or showstoppers. We saw support from select stakeholders, including those in the public safety arena, who understand the impact of not having a backup and complement to GPS. For example, both the California and Massachusetts Fire Chiefs Association came out in support, along with Fairfax County, Virginia, one of the largest counties in the U.S. and which is in close proximity to DC. We also heard from some of the licensed operators who continue to express concerns about the effects of NextNav's next-gen system on their current operations. The National Telecommunications and Information Administration, or NTIA, also filed and said that its views were informed by the concerns of the Department of Transportation. As with any band, licensed operations are critical, and we are committed to coexistence with site-based licensees and minimizing any impact on these licensees. We see the NTIA being active as a positive sign for a timely resolution and an outcome that makes available much-needed commercial spectrum for 5G broadband. The NTIA's filing acknowledges the importance of terrestrial PNT capabilities to back up and complement GPS and calls for additional testing to ensure that the operations of railroads and tolling entities are protected. We agree with the NTIA on both points and have been planning to conduct the necessary technical testing all along. As noted in our reply comments, NextNav previously contacted more than 110 stakeholders, including incumbent tolling entities, railroads, unlicensed users, and amateurs to understand opposition views from a technical standpoint. Our goal was and is to find solutions that minimize potential disruptions to existing licensed operations while enabling the benefits of our proposed terrestrial PNT system. Since our outreach, several stakeholders have been responsive and engaged in active dialogue. For example, NextNav is in discussions with the Association of American Railroads or AAR, and representatives from tolling operators to evaluate the full scope of their operations and address harmful interference concerns. Furthermore, we regard the NTIA's call for testing as a helpful procedural tool to induce incumbents to engage and be responsive. As a reminder, the FCC has the authority to revise the tools and modify licenses when it determines that doing so would promote the public interest. As we move forward, we are committed to continuing engineer-to-engineer dialogue with the appropriate stakeholders in support of our petition. We believe that collaborative analysis is essential to achieving an outcome that best serves the public interest and addresses a national security problem. As we expected and as is typical, a portion of filings were from unlicensed stakeholders in opposition. As a reminder, NextNav is already a spectrum license holder in the 900 megahertz band, though many opposition commenters were unaware of this fact. For the unlicensed community, their assertions appear to exaggerate the potential effects on unlicensed use from our next-gen system. Unlicensed users already operate in the lower 900 megahertz band and coexist with many other users in the band. This is precisely because unlicensed technologies are designed to coexist with both unlicensed and licensed users operating in the band. It is also important to point out that those opposing our petition failed to put forth viable alternative solutions that meet the pressing need for a wide-scale terrestrial PNT service that can be broadly adopted. Even those who oppose our petition acknowledge that a terrestrial complement and backup to a satellite-based PNT service is critically important to safeguarding U.S. national security, public safety, and our economy. Failure to identify terrestrial PNT solutions with the same technical sophistication and business logic as NextNav’s solution only serves to highlight the lack of another wide-scale PNT service solution that operates in consumer devices and serves government entities. As a result, there could not be a more critical time to address the important need for a terrestrial complement and backup to GPS. As noted by retired Rear Admiral David Simpson in his recent white paper published by Virginia Tech University on PNT resiliency, a day without access to PNT services is a scenario the U.S. cannot afford, and the country needs to identify a terrestrial complement and backup to GPS. Today, NextNav offers the only concrete opportunity to enable a wide-scale terrestrial PNT service, one that has a clear path to availability in consumer devices such as cell phones with no cost to taxpayers. This is why we believe we have a compelling proposal and feel confident about our path forward. Since the completion of the comment period in September, the team has remained focused on execution, leveraging feedback gathered during the comment period, and we are actively engaged in engineer-to-engineer dialogue with the appropriate stakeholders. This includes ongoing conversations with the toll companies, railroads, and other licensed incumbents. In late October, we also filed a detailed economic analysis conducted by the Brattle Group. The filing details how NextNav's proposal would prevent hundreds of millions of dollars in losses in the event of a global GPS outage. Based on our initial assessment, the Brattle Group found that a 1-day global GPS outage would cost the American economy $1.6 billion, while our proposal could prevent a loss of $663 million for a 1-day outage. For a 30-day outage, the loss could be as large as $58.2 billion, but our proposal could prevent nearly $31.9 billion of net loss. Given the probability of a potential outage event in the U.S., NextNav’s proposal is the equivalent of offering the American economy a $10.8 billion insurance policy to protect against GPS outages, plus additional benefits of $3.8 billion from increased resiliency. Taken together, the total quantified value of a GPS backup is $14.6 billion based on the Brattle Group's analysis. This is a powerful impact, and why we believe our proposal offers enormous public benefit. We were also pleased to see that in late October, the Flex Association filed in support of the FCC considering NextNav’s proposal. Flex represents U.S. rideshare and delivery platforms, including companies such as Uber, Lyft, and DoorDash. The association emphasizes the crucial role NextNav's enhanced geolocation technology could play in boosting the app-based rideshare and delivery industry communities' annual contribution of over $212 billion to the U.S. economy. This activity, coupled with continued dialogue with the appropriate stakeholders, leaves us energized as we chart our path forward. Concurrently, the FCC is moving forward, reviewing and summarizing the over 1,800 filed comments. The next key milestone could be an NPRM or notice of proposed rule-making; however, there's also the possibility that the FCC will ask for additional data or post additional questions prior to issuing an NPRM. This is all standard procedure and something we are prepared for. We do not anticipate that the FCC will adopt an NPRM in 2024. Finally, with former President Trump reelected to the presidency last week, we would remind everyone that this is a bipartisan issue. Both Republicans and Democrats care about national security and public safety. We have been talking to all commissioners' offices at the FCC, majority and minority members and staffers in the Senate and the House. We look forward to continuing our work with the current FCC commissioners, leadership, and staff. Moving forward, we feel confident in our ability to work closely with the relevant government agencies to address the critical need for a terrestrial complement and backup to GPS. In closing, this is an exciting time for our business. We believe that few challenges are more pressing than incorporating greater resiliency into life-saving and mission-critical terrestrial PNT technologies and ensuring more spectrum makes wireless broadband services more accessible for consumers. Though there is more work ahead, our team is ready to advance our mission and work closely with stakeholders. We look forward to ongoing engagement with the FCC and keeping our investors updated on our progress. With that, let me turn things over to Chris for a discussion of our financials.

Thanks, Mariam, and good afternoon, everyone. NextNav's revenue in the third quarter was $1.6 million, a $0.6 million increase from $1.0 million in the prior year period. For the nine-month period, revenue was $3.8 million, a $1.1 million increase from $2.7 million in 2023. The increase in both the three and nine-month periods was driven by an increase in service revenue from technology and services contracts with government and commercial customers. Operating expenses for the third quarter were $15.5 million, down approximately $0.1 million versus the same period last year. Operating expenses included $1.3 million in depreciation and amortization and $3.3 million in equity compensation compared to $1.3 million in depreciation and amortization and $4.4 million in equity compensation in the third quarter of 2023. In the nine-month period, operating expenses were $49.1 million as compared to $46.3 million in 2023. Excluding stock-based compensation expense and depreciation and amortization, operating expenses were $34 million in the first nine months and $30.1 million in the prior year period. Net loss for the third quarter was $13.6 million, which included a $2.5 million gain associated with the change in the fair value of warrants and liability associated with the telesource asset purchase agreement. This compares to a net loss of $23.2 million in the third quarter of 2023, which included a loss of $6.7 million associated with the change in the fair value of warrant liability. For the nine-month period, net loss was $69.6 million, including a $17.3 million loss associated with the change in the fair value of warrant liability, net of a gain associated with the change in liability related to the total source asset purchase agreement. This compares to a net loss of $55.3 million in the first nine months of 2023, including $9.8 million associated with the change in the fair value of warrant liability. Turning to our balance sheet, we finished the quarter with $86.8 million in cash, cash equivalents, and short-term investments. This is a result of our continued disciplined use of our cash, and we enjoyed the benefit of $6.9 million of proceeds from additional warrant exercises in the quarter. At September 30, we had $53 million in debt, net of unamortized discount attributed to transaction costs and the issuance of warrants with a gross value of $70 million. As we've mentioned in the past, we continue to carefully manage our use of capital, taking a disciplined approach to any spend. Overall, it's been another productive quarter for NextNav. We believe our vision offers an innovative spectrum solution in the lower 900 megahertz band, and we are excited for what lies ahead. With that, I will turn the call back to the operator for questions.

Thank you. Your first question comes from the line of Mike Crawford with B. Riley. Your line is open.

Thank you. It's good to hear that you're in active discussions with people that have commented on your petition. You did mention railroads, toll, main operators. Anything of note to convey regarding discussions with others like Edison Electric Institute or the NTIA?

Thank you, Mike, for the question. As I mentioned, we've contacted over 110 stakeholders in the past. And these include the tolls, railroads, unlicensed users, and amateurs to understand their opposition views. We are committed to continuing this dialogue with them. What's very key for us is to make sure that the conversations are fact-based, that we have engineered-to-engineer dialogue, and that we move forward with progress as we anticipate.

Okay, Mariam. Thank you. Do you think the FCC will grant short-term experimental licenses as recommended by the NTIA so that field operations can be tested in the near future?

Generally speaking, we view the NTIA's call for testing as a very helpful procedural tool to induce incumbents to engage and be responsive. We have done testing in the past, and we’re moving forward to a phase of collaborative analysis that includes this engineered-to-engineer dialogue, which could also include testing.

Okay. Thank you. And then it's also great to see all the comments in favor of terrestrial PNT, especially for urban areas where signals from space are hard to reach. But there's also movement to create more resilient LEO space-based PNT. In fact, with four companies picked by the space force to put up some potentially put up satellites in that regard. Are you talking to L3 Harris or ceramic or any of those companies that are involved in that effort to provide some more resilience from space?

We're in agreement with the DOT's view that the complementary action plan is a system of systems, meaning that there could be a satellite element but it must also include a ground-based terrestrial network. So far, we're the only viable wide-scale terrestrial PNT proposal on the table. The vision of the system of systems is a more comprehensive solution for a backup and complement. We are talking to many industry stakeholders regarding our support, our opposition, and broader partnership opportunities.

Thank you. And last question for me is given the administration change where maybe Commissioner Carr gets changed, is there any kind of precedent whether the outgoing commissioner would put forth an NPRM? Or would we need to wait for the actual transition before we should start actively anticipating potential NPRM action in 2025?

You're correct, Mike. Recent news coverage post-election includes predictions that Brendan Carr is likely to be named the next FCC Chair. Ultimately, President-Elect Trump will name a new FCC Commissioner once he is in office in 2025. We will continue our work with the current leadership and also continue to work with Brendan Carr, who is the senior Republican Commissioner. As we’ve said in the past, we do not anticipate an NPRM in 2024, but we're not going to speculate on timing for the current or future administration on an NPRM.

The next question is from Tim Horan with Oppenheimer. Your line is open.

Thanks guys. The reason you see the threshold basis required is for better building penetration or and/or...

I'm sorry, there was static. I need a repeat of that question.

Tim's line has disconnected. Our next question will come from the line of Rosemary Sisson with Odeon Capital. Your line is open.

Yes. Thank you. Hello, Mariam and Chris. I just wanted to understand the timeline. Whenever you do get the NPRM, what would be the next set of events to happen in order for you to actually get moving through the process?

The next step of an NPRM could be a report in order; the FCC could also ask for more data and information. We're not going to speculate on the timing of NPRM or after that, when the report and order will be at this point.

And your next question is from Tim Horan with Oppenheimer.

Sorry, guys. That was the first that's ever happened to me, and I decided to use a wireline phone. The reason you think terrestrial base is required, is that for in-building penetration vertical or just backup the case satellites are out or all the above?

It's all of the above. In order to overcome the vulnerabilities of satellites, which themselves have vulnerabilities, but also spoofing and jamming as it occurs in GPS today, you actually need a terrestrial network. There is more resilience from that perspective, but it can also serve as a compliment, because satellite signals do not penetrate indoors.

Got it. Got it. And just curious, is the spoofing and jamming easier or harder to do for LEO versus GEO?

Jamming is very easy to do with weak signals regardless of whether in the LEO or GEO or above. They continue to have weak signals, and that's why they don't cover indoors and urban canyons. The weaker the signal, the easier it is to jam. Cell phones are on towers in close proximity to us; they are much stronger signals and harder to jam. This will spread out over a smaller coverage area per tower than satellites are.

Very helpful. Can you just remind us, has Brendan Carr made any public comments on your proposal?

To my knowledge, he has not made any public comments on our proposal. There have definitely been comments focusing on national security from the FCC commissioners recently.

Got it. And lastly, any updated thoughts on the highest and best use of the spectrum? Have you studied maybe other things it can be used for? I guess the LEOs are looking to do direct-to-device or direct-to-cell phone type service. Could the spectrum be used for that? Or do you still think being part of one of the big three mobile operators might be the best use?

Our focus continues to be to solve the national security, economic, and public safety needs, which is a complement and backup to GPS, and concurrently, it would unleash 15 megahertz of spectrum into 5G broadband, especially at a current time where the spectrum pipeline is mostly empty. We will remain focused on that objective.

The next question comes from the line of Jamie Perez with RF Lafferty. Your line is open.

Hi, everybody. Thanks for taking my question. In your proposed plan to swap the band, what does that entail—equipment, software? Can you describe what exactly that you have to do to swap the bands?

It's not really a swap. It's a tweaking to update the rules and a little bit of movement on the spectrum to make it viable for 5G broadband. Every time you tweak rules to the spectrum, you would need to look at developing new infrastructure. So that's radios that go on towers; you need to have your devices that include that spectrum. This is the case with any new spectrum that goes into the radios on towers, also the handsets need to accommodate from that spectrum. Infrastructure for 5G consists of both hardware and software. When NextNav rolls that out or finds a carrier to roll that out, we've mentioned that a likely partner could be an existing MNO. But we are talking to the entire industry about partnership.

My next question is a little bit on the technical side. If the licensed use, for example, the toll collection vehicle, the power or the RF frequency was about 150 feet for commercial and 15 feet for the pass. I mean, does that interfere with the change in spectrum since it's a limited distance? I mean how does that work?

Jamie, sorry, I didn't get the first part. What are you referring to with that 150 feet? Can you repeat that?

I think from the filing, the signal from the identification and toll collection was about 15 or 150 feet of double the actual number. Does that interfere, let's say, long distance with the spectrum?

We have not conceded any interference from tolls to our systems. Toll companies operate in licensed spectrum, and our licenses are also in licensed spectrum and there is no current overlap.

All right. And some of the amateur operators, I mean, isn't it true that Part 97 requires them to not cause interference to the primary user, which is you guys, NextNav?

Yes. Both amateurs and Part 15 operators need to operate under the non-interference basis. I believe that is part of the expectation.

Right. Now, as far as our stakeholders, according to your filings, you had a pretty good chart. Is the federal government, is it military use followed by nonmilitary use? So would the military use be the primary users?

Yes, the federal use of the spectrum is the primary use of this spectrum. There is also an ISM use, which is industrial scientific and medical use. Typically, federal use of this band has been seen by the Department of Energy. We're continuously talking to them to understand more about their operations.

I mean what you're reading is basically your customers will be the federal level because of the Department of Defense and Energy mandate for PNT solution. Is that correct?

Yes, that could absolutely be a use case for us.

All right. Okay. And then you updated the Executive Board at 3905 and that's probably too early to mention. As far as military, do you think we could see the next escalation of this executive order because Trump is hawkish on some military usage?

The need for a backup in complement to GPS is a bipartisan issue; both Democrats and Republicans care about national security and public safety. Our advocacy has been designed to be bipartisan from the beginning. I think the executive order was also bipartisan.

That's all the questions I have. Thanks for taking my questions.

This concludes the question-and-answer session. I'll turn the call to Mariam for closing remarks.

Thank you all for joining us today. I am very pleased with the progress we've made to date and feel confident in our path forward. As I have said many times, we are working hard to advance our strategic vision and address the critical need for a terrestrial complement and backup to GPS. We look forward to the opportunities ahead, and we will share additional updates on our next quarterly call. Thank you everyone.

This concludes today's conference call. Thank you for joining. You may now disconnect.