NextNav (ticker: NN (NASDAQ:)), a pacesetter in 3D geolocation companies, reported a rise in income and a major buy order from the Division of Transportation (DOT) throughout its second quarter 2024 earnings name. Regardless of the income development, the corporate confronted a internet loss and elevated working bills.
CEO Mariam Sorond highlighted the Federal Communications Fee’s (FCC) public discover on NextNav’s petition for rulemaking, which might result in enhanced spectrum options for 5G broadband and a backup to GPS programs.
Key Takeaways
- NextNav’s Q2 2024 income rose to $1.1 million, up from $0.8 million in the identical quarter of the earlier 12 months.
- The corporate acquired a $1.9 million buy order from the DOT to check its 3D PNT expertise.
- Working bills amounted to $16.4 million, together with $1.3 million in depreciation and amortization, and $3.7 million in fairness compensation.
- NextNav reported a internet lack of $24.4 million for the quarter.
- The corporate ended the quarter with $86.3 million in money, money equivalents, and short-term investments.
- NextNav reported $21 million in proceeds from further warrant workout routines and $2.3 million train via July 31, 2024.
- The FCC has not but selected the task of further spectrum licenses acquired from Telesaurus and Skybridge.
Firm Outlook
- NextNav is targeted on delivering an progressive spectrum resolution within the decrease 900 megahertz band.
- The corporate is actively participating with the FCC and stakeholders relating to the task of further spectrum licenses.
- Particulars on the venture with the DOT, together with timeframe and benchmarks, can be offered sooner or later.
Bearish Highlights
- The corporate’s internet loss widened to $24.4 million in Q2 2024.
- Working bills remained excessive, contributing to the general loss.
Bullish Highlights
- Income development signifies progress in NextNav’s enterprise operations.
- The acquisition order from the DOT validates the potential of NextNav’s 3D PNT expertise.
Misses
- No particular misses have been talked about within the offered context.
Q&A Highlights
- CEO Mariam Sorond addressed questions on potential obstacles from unlicensed customers and stakeholders in regards to the FCC’s public discover.
- NextNav plans to rigorously overview and reply to feedback from the FCC’s public discover.
- The corporate is dedicated to working with all events and stakeholders the place cheap and applicable.
NextNav’s Q2 2024 earnings name demonstrated a mixture of progress and challenges. Whereas the corporate’s income development and the DOT buy order are constructive indicators, the online loss and excessive working bills present that there are nonetheless hurdles to beat.
The result of the FCC’s choice on the spectrum license task stays a vital issue for NextNav’s future operations and its capability to ship on its progressive spectrum options. Traders and stakeholders can be watching intently as NextNav continues to navigate the regulatory panorama and advance its expertise within the coming quarters.
InvestingPro Insights
NextNav’s current quarterly efficiency displays an organization at a vital juncture, with promising income development juxtaposed in opposition to monetary challenges. The InvestingPro information and suggestions supply further context to the corporate’s present state of affairs and outlook.
InvestingPro Information highlights the corporate’s market capitalization at $935.62 million, indicating a major presence available in the market regardless of its challenges. The income development for the final twelve months as of Q2 2024 stands at a formidable 49.28%, showcasing the corporate’s capability to extend gross sales. Nevertheless, the gross revenue margin for a similar interval is notably detrimental at -179.79%, underscoring the monetary difficulties NextNav faces with profitability.
InvestingPro Ideas counsel that analysts predict gross sales development within the present 12 months, which aligns with the corporate’s reported income enhance. But, in addition they notice that NextNav suffers from weak gross revenue margins and don’t anticipate the corporate can be worthwhile this 12 months. These insights counsel that whereas NextNav is increasing its prime line, it should deal with underlying profitability points to fulfill investor expectations.
For buyers searching for a deeper dive into NextNav’s monetary well being and future prospects, there are further InvestingPro Ideas accessible on https://www.investing.com/professional/NN. The following pointers present a complete evaluation, together with metrics similar to debt ranges, return on belongings, and valuation multiples, that are essential for making knowledgeable funding choices.
Full transcript – Nextnav Acquisition Corp (NASDAQ:) Q2 2024:
Operator: Thanks for standing by. My title is Trilla, and I can be your convention operator right this moment. Right now, I want to welcome everybody to the NextNav Second Quarter 2024 Earnings Convention Name. All traces have been positioned on mute to stop any background noise. After the audio system’ remarks, there can be a question-and-answer session. [Operator Instructions]. Thanks. I might now like to show the convention over to Erica Bartsch. Chances are you’ll start.
Erica Bartsch: Good afternoon, everybody, and welcome to NextNav’s second quarter 2024 earnings convention name. Taking part on right this moment’s name are Mariam Sorond, NextNav’s Chief Govt Officer; and Chris Gates, NextNav’s Chief Monetary Officer. Earlier than we start, let me remind everybody that this name will embody sure statements that represent forward-looking statements inside the that means of the Non-public Securities Litigation Reform Act of 1995. Ahead-looking statements could also be recognized by way of phrases similar to could, anticipate, consider, count on, intend, would possibly, plan, doable potential, goal, drive, predict, venture, ought to, might, would, will and comparable expressions could establish forward-looking statements, however the absence of those phrases don’t imply {that a} assertion is just not forward-looking. Such forward-looking statements, which can relate to NextNav’s forecasts of future outcomes, future prospects, developments and enterprise methods are topic to identified and unknown dangers, uncertainties, assumptions and different essential elements, lots of that are exterior NextNav’s management that might trigger precise outcomes to vary materially from the outcomes mentioned within the forward-looking statements. You might be cautioned to not place undue reliance upon any forward-looking statements, which converse solely as of the date made, and NextNav undertakes no dedication to replace or revise the forward-looking statements, whether or not on account of new data, future occasions or in any other case. For added data relating to threat elements, see Half 2 Merchandise 1A Danger Components of the corporate’s quarterly stories on Type 10-Q and Half 1 Merchandise 1A, Danger Components of NextNav’s annual report on Type 10-Ok for the year-ended December 31, 2023, in addition to these in any other case described or up to date from time-to-time in our different filings with the Securities and Change Fee. Following our ready remarks, the corporate will host an operator-led question-and-answer session. As well as, on the conclusion of right this moment’s name, a replay of our dialogue can be posted to the corporate’s Investor Relations web site. I might now like to show the decision over to Ms. Mariam Sorond, Chief Govt Officer of NextNav. Please go forward.
Mariam Sorond: Thanks, Erica. Good afternoon, and thanks for becoming a member of us. On the decision right this moment, I’ll present an replace on the enterprise, together with the continued course of surrounding our submitting with the SEC in addition to different strategic working highlights. I’ll then hand issues over to Chris to overview our financials. It was one other busy quarter for NextNav as we proceed to push ahead in direction of our strategic imaginative and prescient. We’re seeing good momentum within the enterprise and making tangible progress. Notably, this week, the FCC issued a public discover searching for feedback on NextNav’s petition for rulemaking. This motion is the usual first step in a long term FCC rulemaking course of. Whereas I’ll talk about the main points of the discover and subsequent steps in a second, we admire the FCC’s immediate public discover as this is a vital step in delivering an progressive spectrum resolution within the decrease 900 megahertz band. Our imaginative and prescient allows NextGen terrestrial 3D PNT as a complement and backup to GPS with a 5G resolution that’s simply built-in into the prevailing ecosystem and allows further spectrum for 5G broadband. I’ve had the chance to talk with lots of you since we launched this imaginative and prescient and I am excited by the robust investor sentiment and confidence in what we now have offered. That is evident not solely in our share worth over the previous a number of weeks, but in addition within the current train of further warrants. Whereas Chris will present higher element, in Q2, 9.7 million of warrants have been exchanged for an mixture of $21 million in money. This motion additional validates the market’s confidence in our enterprise and our go ahead technique. As a reminder, we’re targeted on growing a complement and backup to GPS with further spectrum for broadband companies. Leveraging the spectrum we now have acquired, our proposal combines NextNav’s present spectrum holdings with what’s in any other case follows spectrum and places it to make use of for public profit and addresses a serious nationwide safety challenge. Offering a complement and backup to GPS is vital for safeguarding the issues we want each day, from finding emergency callers to addressing vital infrastructure and nationwide safety wants. Our proposal creates abundance from shortage on this band by unleashing a lot wanted spectrum for wi-fi expertise. These commonsense options can profit customers and our nationwide curiosity without charge to taxpayers and can appropriately shield incumbent operations. Extra importantly, it bears highlighting that spectrum beneath 1 gigahertz that’s usable for broadband is scarce and intensely helpful to carriers as a result of it penetrates partitions and propagates over lengthy distances. Moreover, having a brand new contiguous 10 megahertz low band block appropriate for broadband downlink is an distinctive alternative. In consequence, the low band spectrum has change into probably the most capital environment friendly manner to supply protection inside buildings. That is additionally why it’s a robust match for deployment of our 5G based mostly PNT service. I’ll contact on that extra in a second. Due to the current concentrate on mid band spectrum, which naturally has higher bandwidth, it is easy to neglect that the majority low band spectrum is in 5 plus 5 megahertz blocks, whereas NextNav expects to have a ten megahertz downlink. The large 4 cellular community operators or MNOs have on common round 25 megahertz of low band downlink spectrum and a few variation throughout geographies. So including a further 10 megahertz downlink would enhance an MNO inventory of low band downlink spectrum by roughly 40%, a fabric addition to their spectrum portfolio. That is why we consider we now have a strong proposal that creates a singular and economically viable alternative to assist deal with the pressing want for widespread complementary and backup PNT companies. It’s also why I used to be happy to see the FCC challenge the PN [ph] for rulemaking this week, serving to to maneuver us one other step ahead within the course of. This follows the April twenty fourth PN issued by the FCC relating to the applying to signal a block licenses that NextNav agreed to amass from Telesaurus. We acquired solely two feedback again on the a block task request throughout the 14 day remark interval and be ok with the place issues stand. Concerning the PN on the Petition for Rulemaking, the FCC has requested feedback from the general public on this continuing inside the subsequent 30 days, adopted by a 15 day reply remark interval. All feedback can be public. The fee then considers the feedback and reply feedback in growing proposed guidelines. We count on the following fee motion can be a Discover of Proposed Rulemaking or NPRM, adopted by one other interval of public remark after which a closing order adopting new guidelines for the financial institution. As a basic rule, an NPRM wouldn’t occur for a while after the general public discover remark interval ends. Usually, after feedback and reply feedback for the PN file, it may possibly take appreciable period of time for the report to be evaluated and the following NPRM to be drafted, reviewed, and launched. General, we be ok with the place issues stand and are happy with our progress to this point. As I’ve stated many occasions earlier than, it is a course of. We plan to proceed working intently with the FCC and are targeted on taking this one step at a time. Whereas we work via the method with the FCC, we concurrently acquired some thrilling information out of the Division of Transportation. On July third, the DOT issued a press launch asserting that NextNav was awarded a purchase order order to check the corporate’s 3D PNT expertise, a terrestrial resolution that delivers PNT as a complement and backup to GPS. The award comes from the DOT Volpe Middle and is part of its complementary PNT motion plan. As you might recall, in 2021, the DOT acknowledged NextNav’s Know-how as one of the best performing PNT expertise in all relevant use instances. This new award is important as a result of it is aligned with the DOT’s complementary PNT motion plan to conduct subject testing of applied sciences with vital infrastructure suppliers. Additional, it validates NextNav’s power and management place in PNT Companies as we have been awarded the biggest greenback worth from the DOT. The award will present practically $1.9 million in funding to NextNav and can check our 3D PNT expertise, a terrestrial resolution that delivers PNT as a complement and backup to GPS. This program aligns nicely with our expertise and spectrum path with the FCC. NextNav’s terrestrial PNT expertise creates a whole 3D resolution for positioning in out of doors, city, and indoor environments, together with extremely correct vertical location. Our resolution additionally features a timing supply that may function backup if GPS is unavailable. We’re excited to companion with the DOT to show our PNT capabilities and to develop expertise options to deal with nationwide safety, financial, and public security wants. Complementing these efforts, we have additionally made a number of strategic strikes internally to make sure that we now have the fitting workforce in place to execute our imaginative and prescient. On the board degree, we just lately introduced that Nikki Palmer joined the NextNav Board of Administrators. Nikki involves us with deep experience within the strategic growth, operation, and growth of ecosystems powered by 5G Know-how and the event of services to advance 5G development. She spent nearly all of her profession with Verizon (NYSE:). Whereas there, her management function spans engineering, operations, and expertise supporting superior information and wi-fi merchandise, serving as CTO, Chief Engineering Officer, and Head of Wi-fi Networks. We’re thrilled to have Nikki on Board and consider she can be invaluable to our workforce as we advance our imaginative and prescient for an progressive spectrum resolution within the decrease 900 megahertz band. We additionally just lately restructured our inner workforce to raised align our outdated construction with our strategic targets and drive higher operational effectivity. This resulted in a roughly 20% discount in headcount primarily from inside our software program engineering workforce. As well as, we even have made a number of strategic hires, together with our new COO, Sanyogita Shamsunder, that brings the mandatory abilities and background to assist advance our strategic imaginative and prescient. I really feel assured that we’re placing collectively a strong group to assist us transfer ahead. We’ve got a powerful and succesful workforce right here at NextNav, and I’m thrilled to have the chance to work with them each day. I stay up for all that we are able to obtain collectively. In closing we’re seeing strong momentum throughout the enterprise. And I’m excited by our progress. We’ve got extra work forward of us, however I consider we’re placing collectively the fitting workforce and the fitting sources to place us for fulfillment. I stay up for bringing you with us on this thrilling journey. With that, let me flip issues over to Chris to debate our financials. Chris?
Chris Gates: Thanks, Mariam, and good afternoon, everybody. NextNav’s income within the second quarter was $1.1 million a $0.3 million enhance from $0.8 million within the prior 12 months interval. For the primary half of 2024, income was $2.1 million, a $0.5 million enhance from $1.6 million in 2023. The rise in each the three and 6 month intervals was pushed by a rise in service income from expertise and companies contracts with industrial clients, together with in help of presidency alternatives. Staying on the subject of income, as Mariam famous, we have been just lately awarded a $1.9 million buy order from the Division of Transportation. This one 12 months order began in July 2024, and we anticipate seeing the income affect from this starting in third quarter of this 12 months. The federal government has the choice to increase this order by as much as six months below the present phrases and has the choice to increase the order for as much as two years to permit for extra testing. Working bills for the Q2 have been $16.4 million up from roughly $15.8 million in the identical interval final 12 months. Working bills included $1.3 million in depreciation and amortization and $3.7 million in fairness compensation in comparison with $1.2 million in depreciation and amortization and $4.4 million in fairness compensation within the second quarter of 2023. For the primary half of the 12 months, working bills have been $33.6 million in comparison with $30.6 million in 2023. Excluding stock-based compensation expense in depreciation and amortization, working bills have been $23.1 million within the first half of 2024 and $20.1 million within the first half of 2023. Internet loss for the second quarter was $24.4 million, which included a $6.6 million loss related to the change within the truthful worth of warrants, internet of the achieve related to the change in legal responsibility related to the Telesaurus asset buy settlement. That is in comparison with a internet lack of $15.8 million within the quarter of 2023, which included a lack of $0.3 million related to the change within the truthful worth of warrant legal responsibility. For the primary half of the 12 months, internet loss was $56 million together with a $19.8 million loss related to the change within the truthful worth of warrant legal responsibility, internet of the achieve related to the change in legal responsibility related to the Telesaurus asset buy settlement in comparison with a internet lack of $32.1 million within the first half of 2023, together with $3.1 million related to the change within the truthful worth of warrant legal responsibility. From a stability sheet perspective, we completed the quarter with $86.3 million in money, money equivalents and quick time period investments. Our use of money for the quarter included cost of bills, related taxes and accrued compensation of roughly $1.5 million associated to the restructuring talked about earlier within the name. Our money stability additionally contains two vital non-operating parts. As I famous on final quarter’s name, our use of money in 2Q ’24 following quarter approval included the cost of $2.5 million in money in April per the phrases of our asset buy settlement. And as Mariam highlighted, we loved the advantage of $21 million in proceeds from further warrant workout routines within the quarter. I am additionally happy to report that following the shut of the quarter, warrants continued to be exercised with a further $2.3 million train via July 31, 2024, for a further $5 million in proceeds. Lastly, our stability sheet confirmed $51.4 million of debt internet of unamortized low cost attributed to transaction prices and the issuance of warrants with a gross worth of $70 million. And with that, I am going to flip the decision again to the operator. Operator?
Operator: Thanks. We’ll now start the question-and-answer session. [Operator Instructions]. Your first query comes from the road of Matthew Miles with B. Riley Securities. Please go forward.
Matthew Miles: Good afternoon. Thanks for taking my query. I used to be simply questioning if you happen to can provide some shade on the place NextNav is at relating to the task of the extra 4 megahertz of spectrum licenses acquired from Telesaurus and Skybridge. Has the FCC decided but to approve, deny, or defer this task?
Mariam Sorond: Hello, sure. Thanks for the query. So the FCC did put the PN out on the applying, and that was launched via an automatic course of. And we are literally at this level ready for the FCC to decide on it. However we now have not acquired any additional updates up to now.
Matthew Miles: All proper. That was useful. That was it for me. Thanks.
Operator: And your subsequent query comes from the road of [indiscernible]. Please go forward.
Unidentified Analyst: Hey, all people. Thanks for taking my query. Concerning yesterday’s submitting, within the petition, there is a listing of unlicensed customers and customers that may pose perhaps an up objection to the plan. I imply, are you anticipating working, what are the plans? So for instance, just like the novice radio or the license so far as perhaps creating an impediment for the corporate? I imply, are you going — I do know that in response to the file, you are going to work with this plan. I imply, how does that work? Do you guys have a special a part of the, like, decrease sideband or higher sideband part you are going to must share or make is it encrypted? I imply, perhaps give a bit little bit of shade on how that is going to work out?
Mariam Sorond: Sure. Thanks. Hello, Jamie. Truly, we’re not going to take a position on feedback with respect to the PM, proper? We’ll wait to see the feedback. We’ll learn them actually rigorously, and we’ll reply to all of the feedback. That is our plan proper now. We intend to and we have finished attain outs. We intend to work with all of the events and the stakeholders the place it is cheap and applicable to work with them. And we stay up for the dialogue and dealing with them via the method.
Unidentified Analyst: All proper. I feel my subsequent query now the DOT con venture. What’s the time-frame on that? It says, it is is perhaps some time, but in addition what are the metrics or the benchmarks, the DOT is form of taking a look at?
Mariam Sorond: Nicely, they chose to start with, they’ve awarded about 9 within the testing section. They’ve a plan out on what the phases are going to be. I feel that, Chris, perhaps you may share a number of the particulars. If not we are able to get you that offline on what precisely their phases are.
Chris Gates: Sure, Jamie, we’ll come again to you on a few of that form of contained in the contract element.
Unidentified Analyst: Okay. All proper. Sure. That is all of the questions I’ve. Thanks for taking my query.
Operator: Thanks. [Operator Instructions]. And there are not any additional questions right now. I want to flip it again to Mariam Sorond for closing remarks.
Mariam Sorond: Thanks all for becoming a member of us right this moment. As you may see, the whole NextNav workforce is difficult at work executing in opposition to our imaginative and prescient. We consider our distinctive imaginative and prescient will present an progressive spectrum resolution within the decrease 900 megahertz band. We’re excited for what lies forward, and we’ll proceed to supply an replace on our progress as we transfer ahead. Thanks all.
Operator: Thanks. And girls and gents, this concludes right this moment’s convention name. Thanks all for collaborating. Chances are you’ll now disconnect.
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