NextNav(NN) - 2023 Q4 - Annual Results

Executive Summary & Recent Developments NextNav, a PNT and 3D geolocation leader, expanded spectrum assets and appointed a new CEO for strategic growth Company Overview NextNav Inc. is a leader in next-generation positioning, navigation, and timing (PNT) and 3D geolocation, leveraging low-band licensed spectrum to deliver accurate, reliable, and resilient solutions for critical infrastructure, GPS resiliency, and commercial use cases - NextNav Inc. is a leader in next generation positioning, navigation, and timing (PNT) and 3D geolocation, enabling a whole new ecosystem of applications and services that rely upon 3D geolocation and PNT technology[2][10] - Powered by low-band licensed spectrum, NextNav's positioning and timing technologies deliver accurate, reliable, and resilient 3D PNT solutions for critical infrastructure, GPS resiliency and commercial use cases[10] Strategic Initiatives & Leadership Changes NextNav announced an agreement to acquire additional 4 MHz 900 MHz spectrum licenses for up to $50 million, increasing its total low-band spectrum assets to 3.5 billion MHz-PoPs. Mariam Sorond was appointed CEO, and John Muleta joined the Board of Directors, both bringing extensive telecommunications and spectrum expertise to optimize spectrum use and drive growth - NextNav signed an agreement to acquire additional spectrum licenses covering 4 MHz in the lower 900 MHz band for up to $50 million, bringing its combined spectrum assets to a total of 3.5 billion MHz-PoPs of low band spectrum[3][6] - Mariam Sorond was appointed NextNav's new Chief Executive Officer, effective November 29, 2023, bringing over 28 years of technical and strategy experience in the telecommunications industry[3][6] - John Muleta was appointed to the Board of Directors, effective January 18, 2024, bringing deep expertise in wireless policies, spectrum allocation, and public safety[6] Financial Highlights (Summary) NextNav reported increased Q4 revenue but widened losses; full-year revenue was flat, net loss increased, ending with strong cash Fourth Quarter 2023 Financial Performance NextNav reported Q4 2023 revenue of $1.2 million, a significant increase from the prior year, primarily due to higher recurring service revenue. However, the operating loss widened to $19.9 million, and net loss increased to $16.4 million, influenced by increased stock-based compensation and payroll expenses, despite a gain on fair value of warrants Fourth Quarter 2023 Financial Performance | Metric | Q4 2023 (in thousands) | Q4 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $1,200 | $803 | +49.4% | | Operating Loss | $(19,900) | $(14,500) | -37.2% | | Net Loss | $(16,400) | $(12,500) | -31.2% | | Gain on fair value of warrants | $5,700 | $1,500 | +280.0% | - The increase in Q4 revenue was primarily attributable to increased recurring service revenue from technology and services contracts with commercial customers[6] - The increase in Q4 operating loss was primarily driven by increases in stock-based compensation expense and payroll-related expenses[6] Full Year 2023 Financial Performance For the full year 2023, revenue remained flat at $3.9 million, with increased recurring service revenue offsetting a decrease in integration revenue. The operating loss slightly improved to $63.5 million due to lower stock-based compensation, but the net loss significantly increased to $71.7 million, primarily due to a loss on the fair value of warrants compared to a gain in the prior year. The company ended 2023 with $81.9 million in cash and cash equivalents and $48.4 million in net debt Full Year 2023 Financial Performance | Metric | FY 2023 (in thousands) | FY 2022 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Revenue | $3,900 | $3,900 | 0.0% | | Operating Loss | $(63,500) | $(65,500) | +3.1% | | Net Loss | $(71,700) | $(40,100) | -78.8% | | Loss (Gain) on fair value of warrants | $(4,100) | $24,700 | N/A | - Full year revenue was flat with the prior year, with a decrease in integration revenue partially offset by increased recurring service revenue from technology and service contracts with commercial customers[6] - Full year operating loss improved primarily driven by lower stock-based compensation expense, partially offset by an increase in payroll-related expenses[6] Balance Sheet Highlights (as of December 31, 2023) | Metric | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $81.9 | | Short term investments | $4.0 | | Debt (net) | $48.4 | Consolidated Financial Statements NextNav's balance sheet shows increased assets and liabilities, decreased equity, widened comprehensive loss, and improved cash flows Consolidated Balance Sheets As of December 31, 2023, NextNav's total assets increased to $162.2 million from $123.8 million in 2022, driven by a significant increase in cash and cash equivalents and the addition of long-term debt. Total liabilities rose sharply to $82.1 million from $19.9 million, primarily due to new long-term debt. Stockholders' equity decreased to $78.7 million from $100.0 million Consolidated Balance Sheet Highlights (in thousands) | Metric | Dec 31, 2023 | Dec 31, 2022 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $81,878 | $47,230 | +73.4% | | Total current assets | $91,220 | $61,190 | +49.1% | | Total assets | $162,158 | $123,788 | +30.9% | | Total current liabilities | $9,803 | $8,887 | +10.3% | | Long-term debt, net | $48,447 | — | N/A | | Total liabilities | $82,062 | $19,924 | +311.9% | | Total stockholders' equity (deficit) | $78,734 | $100,017 | -21.3% | Consolidated Statements of Comprehensive Loss For the year ended December 31, 2023, NextNav reported a net loss of $71.7 million, a substantial increase from $40.1 million in 2022. This was primarily influenced by a $4.1 million loss on the fair value of warrants in 2023, compared to a $24.7 million gain in 2022, and increased interest expense. Revenue remained flat at $3.9 million, while operating expenses slightly decreased Consolidated Statements of Comprehensive Loss (in thousands, except per share amounts) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3,862 | $3,926 | -1.6% | | Total operating expenses | $67,391 | $69,462 | -3.0% | | Operating loss | $(63,529) | $(65,536) | +3.1% | | Interest income (expense) | $(3,664) | $901 | N/A | | Change in fair value of warrants | $(4,101) | $24,675 | N/A | | Net loss | $(71,735) | $(40,116) | -78.8% | | Net loss per share (basic and diluted) | $(0.66) | $(0.40) | -65.0% | Consolidated Statements of Cash Flows In 2023, NextNav's net cash used in operating activities decreased to $35.4 million from $37.1 million in 2022. Investing activities generated $1.1 million in cash, a significant improvement from a $15.7 million outflow in 2022, mainly due to higher proceeds from the sale and maturity of marketable securities. Financing activities provided $69.0 million, primarily from $70.0 million in debt proceeds, leading to a net increase in cash and cash equivalents of $34.6 million, ending the year with $81.9 million Consolidated Statements of Cash Flows (in thousands) | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Net cash used in operating activities | $(35,440) | $(37,095) | +4.5% | | Net cash provided by (used in) investing activities | $1,074 | $(15,736) | N/A | | Net cash provided by financing activities | $68,984 | $43 | N/A | | Net increase (decrease) in cash and cash equivalents | $34,648 | $(52,846) | N/A | | Cash and cash equivalents at end of period | $81,878 | $47,230 | +73.4% | - Net cash provided by financing activities in 2023 was primarily driven by $70.0 million in proceeds from debt[20] Additional Information This section covers conference call details and important disclaimers regarding forward-looking statements and business risks Conference Call Details NextNav hosted a conference call for analysts and investors on March 13, 2024, at 5:00 pm ET, with registration available online and a replay accessible via phone or the company's investor relations website until March 20, 2024 - NextNav hosted a conference call for analysts and investors at 5:00 pm ET on Wednesday, March 13, 2024[7] - Registration for the conference call was available online, and a live webcast or replay could be accessed via the Company's investor relations website, with a phone replay available through March 20, 2024[8][9] Forward-Looking Statements & Risks The press release contains forward-looking statements regarding future results, business strategies, spectrum capacity, and PNT services, which are subject to known and unknown risks. Key risks include regulatory approval for license transfers, disruption to operations, ability to realize anticipated benefits, costs, and broader economic factors. NextNav cautions against undue reliance and undertakes no commitment to update these statements - This press release contains 'forward-looking statements' relating to analyses and other information based on forecasts of future results and estimates, including NextNav's future prospects, developments, business strategies, and the advancement of its PNT services[12] - Such statements are subject to known and unknown risks, uncertainties, assumptions, and other important factors, including the risk that requisite regulatory approvals are not obtained, disruption of current plans and operations, the ability to recognize anticipated benefits of transactions, costs related to transactions, and adverse effects from economic, business, and/or competitive factors[13] - NextNav cautions not to place undue reliance upon any forward-looking statements and undertakes no commitment to update or revise them[13]