Executive Summary / Key Takeaways

• NextNav is strategically positioned to address the critical national security and public safety need for a resilient terrestrial complement and backup to GPS, leveraging its licensed Lower 900 MHz spectrum and evolving 5G-based technology.
• The company's NextGen solution, designed for integration with commercial 5G networks, aims to provide wide-scale, accurate positioning, navigation, and timing (PNT) indoors and in urban areas, while also potentially enabling valuable low-band 5G broadband capacity.
• Recent momentum includes a $1.9 million Department of Transportation contract for TerraPoiNT testing, successful lab/field demonstrations of 5G-based PNT technology, and significant progress in the FCC regulatory process, including the FCC's Notice of Inquiry on PNT resilience which specifically referenced NextNav.
• A recent $190 million private placement of convertible notes has substantially strengthened the balance sheet, providing financial flexibility and liquidity to pursue strategic objectives beyond the next 12 months, despite ongoing operating losses.
• Key factors for investors to monitor include the progression of the FCC rulemaking process for the Lower 900 MHz band, the successful establishment of partnerships with mobile network operators for NextGen deployment, and the company's ability to manage operating expenses while investing in future growth initiatives.

The Imperative for Resilient PNT: NextNav's Foundational Strategy

In an era increasingly reliant on precise location and timing, the vulnerabilities of the Global Positioning System (GPS) represent a significant and growing threat to national security, public safety, and economic stability. GPS signals are faint, unencrypted, often unavailable indoors or in urban canyons, and susceptible to jamming and spoofing with readily available, low-cost equipment. This critical dependency, coupled with inherent limitations and vulnerabilities, underscores the urgent need for robust, complementary positioning, navigation, and timing (PNT) solutions.

NextNav Inc. has built its foundational strategy around addressing this precise challenge. Since its inception, the company has focused on developing resilient, next-generation PNT solutions designed to augment and back up space-based systems like GPS and other Global Navigation Satellite Systems (GNSS). Its historical journey has been marked by the development and deployment of initial PNT offerings, establishing a base of technology and expertise. The company's early reliance on debt and equity financing reflects the significant investment required in developing complex network infrastructure and advanced geolocation technologies.

At the core of NextNav's current strategy is the evolution of its PNT solutions to "NextGen," leveraging 5G New Radio (5G NR) technologies and its licensed Lower 900 MHz spectrum. This strategic pivot aims to transition from dedicated PNT infrastructure to a model integrated within the vast and rapidly expanding commercial 5G ecosystem. The vision is to create a wide-scale, terrestrial PNT network that is not only resilient and accurate but also economically viable for broad deployment by potential partners, primarily mobile network operators (MNOs).

Technological Edge: Beyond GPS Limitations

NextNav's technology portfolio provides distinct advantages designed to overcome the shortcomings of satellite-based PNT. Its current operational systems, Pinnacle and TerraPoiNT, demonstrate the company's capability in delivering terrestrial PNT services.

The Pinnacle system provides accurate altitude services, a critical component often lacking or imprecise in traditional GPS, particularly indoors. This vertical location capability is vital for public safety applications, including enhanced 911 (E911), where knowing a caller's floor level in a multi-story building can significantly improve emergency response times. Pinnacle is currently used for E911 by Verizon (VZ) and is being integrated into devices operating on other national cellular networks, covering over 90% of commercial structures over three stories in the U.S.

TerraPoiNT is NextNav's dedicated, terrestrially based 3D PNT network. Operating on the company's licensed Lower 900 MHz M-LMS spectrum, TerraPoiNT broadcasts a PNT signal from a network of wide-area transmitters. Unlike GPS, the TerraPoiNT signal is significantly stronger and more reliable indoors and in urban areas, environments where satellite signals are often blocked or distorted. Furthermore, its signal is inherently more difficult to jam or spoof compared to the weak, unencrypted GPS signal, and it supports signal authentication. In testing conducted by the Department of Transportation (DoT) in 2021, TerraPoiNT received the highest scores in every category evaluated for potential PNT backup solutions and was uniquely capable of providing the full suite of services offered by GPS. This demonstrated performance led to a $1.9 million DoT contract awarded in 2024 to establish performance characteristics for TerraPoiNT, facilitating its potential inclusion in a DoT clearinghouse for Federal government use.

The strategic future lies in NextGen, which evolves these capabilities onto a 5G platform. This solution leverages existing 5G standards, specifically the Positioning Reference Signal (PRS), which can be transmitted from standard 5G base stations. NextNav's technology is software-based on the device side, designed to extract precise positioning and timing information from this 5G signal. This approach minimizes the need for specialized hardware in end-user devices beyond standard 5G chipsets, enabling wide-scale adoption. The company's technical analysis indicates that utilizing a 10 MHz downlink in the Lower 900 MHz band is critical for achieving the desired accuracy with this 5G-based approach. Recent lab demonstrations and field tests in Palo Alto, CA, successfully validated the effectiveness of this PRS-based positioning and timing technology, demonstrating interoperability with commercial 5G infrastructure and device platforms.

The "so what" for investors is that NextNav's technology offers a compelling, differentiated solution to a critical problem. Its ability to provide reliable, accurate PNT indoors, in urban environments, and under jamming/spoofing conditions directly addresses key GPS vulnerabilities. The evolution to a 5G-integrated, software-based solution significantly enhances the potential for wide-scale deployment and adoption by leveraging existing infrastructure and device ecosystems, creating a powerful competitive moat based on unique spectrum assets and technological expertise.

Strategic Trajectory and Regulatory Catalysts

NextNav's strategic path is intrinsically linked to regulatory developments, particularly at the FCC. A pivotal step was the agreement in March 2024 to acquire an additional 4 MHz of M-LMS licenses in the Lower 900 MHz band, supplementing its existing 8 MHz holdings. This acquisition, currently pending FCC review, is foundational to the company's vision for a 15 MHz nationwide configuration.

Following the acquisition agreement, NextNav filed a Petition for rulemaking with the FCC in April 2024. This petition seeks to update and reconfigure the rules governing the Lower 900 MHz band to allow for greater flexibility, specifically enabling the proposed 15 MHz configuration for both PNT services and 5G broadband capacity. The company argues that this modernization will simultaneously address a critical national security vulnerability (lack of GPS backup) and unleash valuable low-band spectrum for commercial 5G use, a resource that is scarce and highly valued by MNOs for its propagation characteristics.

The FCC responded by issuing a Public Notice in August 2024, initiating a public comment period on NextNav's petition. While over 1,800 filings were received, many from amateur operators, the company has actively engaged in engineer-to-engineer dialogue with licensed incumbents (such as railroads and tolling operators) and unlicensed users to address coexistence concerns. Technical analysis filed by NextNav suggests that its proposed 5G operations would not cause unacceptable interference, arguing that updating decades-old rules is feasible and the public benefits outweigh potential costs of adjusting incumbent systems. An economic analysis also quantified the significant potential economic losses from GPS outages that NextNav's proposal could prevent, estimating the total value of a GPS backup based on this analysis at $14.6 billion.

Further bolstering the regulatory backdrop, the FCC unanimously voted in March 2025 to advance a Notice of Inquiry (NOI) specifically focused on promoting the development of PNT technologies and solutions, including terrestrial backups and complements to GPS. This NOI explicitly referenced NextNav's demonstrated performance and echoed key themes from the company's petition, signaling increased regulatory urgency and focus on the need for a system of systems approach to PNT resilience. This rapid movement and bipartisan support are viewed by management as highly encouraging signs for the future of terrestrial PNT.

The strategic goal is to partner with one or more MNOs to integrate NextNav's spectrum into their 5G networks. The economic incentive for MNOs lies in the significant addition of valuable low-band spectrum for capacity and coverage, which they would deploy as part of their standard network build-out. NextNav's software-based PNT solution would then leverage this deployed infrastructure, enabling wide-scale availability without the need for NextNav to bear the substantial capital costs of network construction. This partnership model is central to the company's path to commercialization and scaling its PNT services.

Competitive Dynamics: A Niche Leader in a Critical Space

NextNav operates within a PNT landscape dominated by established players like QUALCOMM (QCOM), Garmin (GRMN), and Trimble (TRMB), which primarily focus on GPS-based solutions or specific industrial applications. Satellite operators like Iridium (IRDM) also offer alternative PNT services, particularly in remote areas. However, NextNav carves out a distinct niche by focusing on the critical need for resilient, terrestrial PNT, particularly in urban and indoor environments and as a backup to vulnerable satellite signals.

Compared to the broad, hardware-centric PNT solutions offered by chipmakers like QUALCOMM or consumer device companies like Garmin, NextNav's strength lies in its specialized technology designed for challenging environments and its strategic focus on public safety and critical infrastructure needs. While QUALCOMM excels in integrating PNT into mobile chipsets for mass market devices, NextNav's Pinnacle offers superior vertical accuracy crucial for E911, a quantifiable performance difference that can translate into tangible public safety benefits. Garmin dominates consumer wearables and navigation, but NextNav's TerraPoiNT and NextGen are engineered for the resilience and reliability required for critical applications where GPS fails.

Trimble focuses on industrial PNT for sectors like construction and agriculture, areas where NextNav's current focus is less pronounced. Iridium provides global satellite coverage, offering resilience in remote areas, but like GPS, its signals are weaker on the ground and susceptible to jamming, a vulnerability that NextNav's terrestrial network is specifically designed to overcome. Management views satellite PNT efforts as complementary, acknowledging their role while emphasizing the unique value of a robust ground-based layer.

NextNav's competitive advantages, or moats, are primarily its licensed Lower 900 MHz spectrum, its proprietary technology (Pinnacle, TerraPoiNT, NextGen's 5G integration), and its strategic positioning within the regulatory landscape focused on PNT resilience. The spectrum is a scarce, valuable asset, particularly for low-band 5G. The technology offers quantifiable performance benefits in specific use cases (e.g., vertical accuracy, indoor/urban reliability, anti-jamming/spoofing). The ongoing engagement with the FCC and DoT, and the explicit mention of NextNav in the recent FCC NOI, highlight a level of regulatory alignment that is a significant differentiator.

However, NextNav faces competitive disadvantages related to its smaller scale compared to industry giants, which can lead to higher operating costs relative to revenue. While its technology is innovative, achieving wide-scale adoption requires successful partnerships with large MNOs, a process subject to complex negotiations and timelines. Opposition from existing users in the band, while potentially manageable through technical solutions, represents a hurdle in the regulatory process that larger, more established players might navigate differently. The company's financial health, characterized by ongoing losses and reliance on external financing, also contrasts with the profitability and strong cash flow generation of larger competitors like QUALCOMM or Garmin, potentially limiting its ability to outspend rivals on R&D or market development if needed.

Despite these challenges, NextNav's unique value proposition – a terrestrial, resilient, 5G-integrated PNT solution leveraging valuable low-band spectrum – positions it as a potential leader in a critical and underserved segment of the PNT market, particularly as national security concerns regarding GPS vulnerabilities continue to mount.

Financial Performance and Liquidity

NextNav's financial performance reflects its stage as a company investing heavily in technology development and regulatory initiatives aimed at unlocking future growth. Revenue remains relatively limited but is showing growth, increasing by 47.1% to $1.5 million for the three months ended March 31, 2025, compared to $1.0 million in the same period of 2024. This increase was driven by higher service revenue from both government and commercial contracts, including contributions from the DoT award. For the full year 2024, revenue was $5.7 million, up 46.2% from $3.9 million in 2023, primarily due to the DoT contract and a one-time license fee.
The company continues to incur significant net losses, reporting a net loss of $58.6 million for Q1 2025, compared to $31.6 million for Q1 2024. This substantial increase was largely driven by non-cash items and financing costs associated with the recent debt transaction, including a $24.5 million loss from the change in the fair value of the derivative liability embedded in the new convertible notes and a $14.4 million loss on the early extinguishment of the prior debt. Changes in the fair value of warrants also impacted the net loss.

Operating expenses increased to $18.5 million in Q1 2025 from $17.2 million in Q1 2024. This was primarily due to a significant increase in selling, general and administrative (SG&A) expenses, which rose by $2.1 million (24.6%) to $10.5 million, driven by higher professional services, consulting, stock-based compensation, and marketing costs. Research and development (R&D) expenses, however, decreased by $0.6 million (13.5%) to $4.0 million, mainly due to lower stock-based compensation, software license, and payroll costs, partially offset by increased engineering and consulting services. Cost of goods sold also saw a decrease. Depreciation and amortization increased slightly due to network assets being placed in service.

Managing liquidity is a priority, as the company has historically relied on external financing to fund operations and expects to incur additional losses and higher operating expenses in the future as it invests in R&D and PNT networks. Net cash used in operating activities was $12.2 million in Q1 2025, an increase from $7.0 million in Q1 2024, reflecting the higher operating expenses.

A significant development in Q1 2025 was the closing of a $190 million private placement of 5% Senior Secured Convertible Notes due 2028 on March 27, 2025. A portion of the proceeds was used to redeem the $70 million 10% Senior Secured Notes due 2026. This transaction dramatically improved the company's liquidity position, with cash and cash equivalents and marketable securities totaling $188.4 million as of March 31, 2025, up from $80.1 million at the end of 2024. Management believes this cash position is sufficient to meet working capital and capital expenditure needs beyond the next 12 months. The new notes have an effective interest rate of 12.00% as of March 31, 2025, and contain restrictive covenants and potential events of default that could impact the company's financial flexibility and operations, including mandatory repurchase obligations under certain asset sale or fundamental change scenarios.

The "so what" for investors is that while NextNav is not yet profitable and continues to burn cash from operations, the recent financing has significantly de-risked its near-term liquidity profile and provided the necessary capital runway to pursue its strategic objectives, particularly the complex and potentially lengthy FCC process and the development of MNO partnerships. The increase in government revenue and the DoT contract signal growing interest and validation of its technology by key potential customers.

Outlook and Risks

NextNav's outlook is primarily tied to the successful execution of its strategic vision, centered on the FCC regulatory process and the establishment of MNO partnerships to enable the wide-scale deployment of its NextGen PNT solution. Management is encouraged by the recent pace of FCC action, particularly the NOI on PNT resilience, and hopes this momentum continues. They remain focused on engineer-to-engineer dialogue to address concerns from existing users in the band and believe the public benefits of their proposal will ultimately be recognized.

The company expects to continue incurring losses and higher operating expenses as it invests in R&D to evolve its technology and supports its PNT networks. While current liquidity is strong, meeting longer-term cash requirements will depend on a combination of existing balances, potential future cash flows from operations (which are not yet positive), and future financing activities.

Key risks to the investment thesis include:

• Regulatory Uncertainty: The FCC rulemaking process for the Lower 900 MHz band is complex and its outcome and timeline are not guaranteed. Opposition from incumbent users could delay or alter the proposed rule changes necessary for NextGen deployment. The acquisition of the additional 4 MHz of spectrum is also still subject to FCC approval.
• Partnership Dependence: The NextGen strategy relies heavily on securing partnerships with MNOs for network deployment. Failure to secure such partnerships on favorable terms or at all would significantly impede the path to wide-scale adoption and revenue generation.
• Technological Adoption: While NextGen is designed for 5G integration, successful adoption also depends on device manufacturers incorporating support for the band and NextNav's software solution into future consumer devices.
• Financial Performance & Liquidity Management: Despite the recent financing, the company's history of losses and negative operating cash flow means it will require careful management of its cash resources and may need future financing, which could be dilutive or on less favorable terms. The terms of the new convertible notes, including restrictive covenants and potential repurchase obligations, also introduce financial risks.
• Competition: While NextNav has unique technological advantages and regulatory focus, it competes with large, well-funded companies offering alternative PNT solutions.

Management's outlook is one of cautious optimism, emphasizing the strategic importance of their mission and the recent positive developments in the regulatory and financing arenas. They believe they are well-positioned for continued momentum, but the path to profitability and widespread commercial success is contingent on navigating these significant external and internal challenges.

Conclusion

NextNav Inc. stands at a critical juncture, aiming to transform the landscape of positioning, navigation, and timing by providing a resilient, terrestrial complement and backup to GPS. Leveraging its licensed Lower 900 MHz spectrum and a strategic evolution towards 5G-integrated technology, the company is addressing a pressing national security and public safety need while also presenting a compelling opportunity to unlock valuable broadband capacity.

Recent progress, including a key DoT contract, successful NextGen technology demonstrations, and positive movement within the FCC regulatory process, underscores the growing recognition and potential of NextNav's solutions. The recent $190 million financing has significantly bolstered the balance sheet, providing essential runway to pursue these strategic objectives.

While the path forward involves navigating complex regulatory hurdles, securing critical MNO partnerships, and managing ongoing operating expenses, NextNav's differentiated technology and unique spectrum position offer a compelling investment thesis centered on solving a fundamental vulnerability in modern infrastructure. For investors, the story of NextNav is one of innovation, strategic execution in a highly regulated environment, and the potential to capture significant value by providing essential PNT resilience in an increasingly connected and vulnerable world. The successful realization of the NextGen vision and the associated regulatory and partnership milestones will be key determinants of the company's long-term success.