Executive Summary / Key Takeaways

• Critical Infrastructure Play: NextNav is positioning itself as the essential terrestrial complement and backup to GPS, addressing a critical national security and public safety vulnerability with its proprietary 3D Positioning, Navigation, and Timing (PNT) solutions.
• 5G-Enabled NextGen Platform: The company's strategic pivot to its NextGen platform, leveraging 5G New Radio (5G NR) technologies and its licensed Lower 900 MHz spectrum, aims to deliver wide-scale PNT services and additional broadband capacity through mobile network operator (MNO) partnerships.
• Regulatory Momentum: Recent FCC actions, including the unanimous Notice of Inquiry (NOI) and consent for additional M-LMS license assignments, signal growing regulatory recognition of the urgent need for resilient PNT and NextNav's role in a "system of systems" approach.
• Strong Liquidity for Strategic Execution: A recent $190 million convertible notes financing significantly bolsters NextNav's balance sheet, providing ample liquidity to fund ongoing R&D and regulatory advocacy through 2025 and beyond, without immediate network deployment capital expenditure.
• High-Risk, High-Reward Profile: While current revenues are minimal and losses substantial, the potential for FCC approval of its petition could unlock significant long-term value, establishing NextNav as a foundational technology for an AI-driven, GPS-dependent economy.

The Imperative for Resilient Positioning: NextNav's Foundational Role

In an increasingly interconnected world, the Global Positioning System (GPS) underpins nearly every facet of modern life, from national defense and aviation to emergency response, power grids, and financial systems. Yet, this indispensable system is not infallible. GPS signals are notoriously weak indoors, distorted in urban canyons, and critically, vulnerable to jamming and spoofing with low-cost equipment. This vulnerability represents a single point of failure for national security and the economy, a threat that the U.S. Federal Government and international bodies are increasingly recognizing as urgent. NextNav Inc., founded in 2007, has dedicated itself to addressing this precise challenge, developing resilient, next-generation Positioning, Navigation, and Timing (PNT) solutions designed to complement and back up GPS.

NextNav's core strategy revolves around establishing a wide-scale terrestrial PNT network that can seamlessly integrate with and augment existing space-based systems. The company's historical journey has been one of persistent innovation and strategic positioning, marked by significant investment in research and development and a reliance on debt and equity financing to fuel its ambitious vision. This foundational context is crucial for understanding NextNav's current strategic initiatives and its competitive standing in a market ripe for disruption.

Differentiated Technology: The Core of NextNav's Moat

NextNav's competitive advantage is deeply rooted in its proprietary technology and extensive spectrum holdings. The company offers two primary PNT solutions: Pinnacle and TerraPoiNT, with a strategic evolution towards its NextGen platform.

Pinnacle provides an accurate altitude service, critical for public safety applications. It is currently deployed for enhanced 911 (E911) services with major wireless carriers like Verizon and AT&T (T), covering over 90% of commercial structures exceeding three stories in the U.S. This capability offers a tangible benefit by enabling first responders to pinpoint vertical location, a crucial factor in multi-story buildings where traditional GPS struggles.

TerraPoiNT, NextNav's terrestrially-based 3D PNT network, directly confronts GPS's limitations. Unlike GPS, TerraPoiNT broadcasts a robust, encrypted PNT signal over NextNav's licensed Lower 900 MHz M-LMS spectrum. This allows for reliable reception indoors and in urban areas, significantly enhancing resilience against jamming and spoofing. In 2021, TerraPoiNT received the highest scores in U.S. Department of Transportation (DoT) testing for PNT backup solutions, being the only evaluated solution capable of providing the full suite of GPS services. This independent validation underscores its superior performance in critical scenarios.

The company's strategic future lies with its NextGen platform, an evolution of its PNT solutions to leverage 5G New Radio (5G NR) technologies. NextGen aims to significantly improve operational efficiency, flexibility, and scale by enabling high-quality PNT based on a 5G broadband network. The solution is entirely software-based for extracting positioning from 5G's Positioning Reference Signals (PRS), requiring no hardware modifications to existing 5G equipment. This approach allows for rapid deployment and integration into end-user devices, with NextNav's software providing the expertise, licensing, and IP to convert the 5G signal into precise positioning and timing data. Management has indicated that with swift FCC action, this solution could be available during the current administration.

Competitive Landscape: A System of Systems Approach

NextNav operates within a complex competitive landscape, characterized by both direct and indirect rivals, as well as a broader industry shift towards a "system of systems" approach for PNT resiliency.

Direct competitors like Garmin (GRMN) excel in consumer-focused GPS-enabled devices, leveraging strong brand recognition and distribution. However, Garmin's hardware-centric approach and reliance on space-based signals make it less suited for the high-precision, indoor, and anti-jamming requirements that NextNav's network-based solutions address. Trimble (TRMB) focuses on industrial positioning technologies, offering integrated hardware and software for geospatial data. While strong in scalability across sectors, Trimble's offerings generally lack the advanced encryption and urban precision that NextNav's TerraPoiNT provides for critical infrastructure. Qualcomm (QCOM) is a dominant force in wireless communication, embedding GPS chips into mobile devices. While Qualcomm offers broad integration and scale, NextNav's solutions focus on standalone, secure terrestrial networks, potentially offering superior precision and reliability in challenging conditions compared to Qualcomm's chip-centric approach.

NextNav views satellite-based PNT initiatives, such as those from Iridium (IRDM) or Xona Space Systems, as complementary rather than competitive. While these systems aim to enhance space-based resilience, they remain vulnerable to the inherent weaknesses of satellite signals—weakness, jamming, and spoofing—that terrestrial networks are designed to overcome. NextNav's solution is unique in its ability to provide wide-scale terrestrial PNT that can be incorporated into consumer devices without taxpayer funding, a key differentiator against other terrestrial alternatives that may lack the same technical sophistication or business logic.

The company's strategy involves partnering with Mobile Network Operators (MNOs) to deploy its licensed Lower 900 MHz spectrum. MNOs are motivated by the scarcity of low-band spectrum, which offers superior coverage and capacity enhancement. NextNav's solution, embedded in 5G standards, would utilize this deployed spectrum, with the PRS signal incurring a minimal 2-5% capacity hit to the network. This partnership model allows NextNav to avoid the massive capital expenditure of building out a network independently, leveraging existing 5G infrastructure.

Financial Performance and Liquidity: Investing in the Future

NextNav's financial performance reflects its stage as a growth company heavily investing in R&D and regulatory advocacy. For the second quarter of 2025, NextNav reported revenue of $1.2 million, an 8.8% increase from $1.1 million in the prior year period. For the six months ended June 30, 2025, total revenue was $2.7 million, up 27.4% from $2.2 million in the same period of 2024. This growth was primarily driven by an increase in service revenue from technology and services contracts with government and commercial customers, including a significant contribution from a one-year DoT contract in 2024.

Despite revenue growth, NextNav continues to incur substantial losses. The net loss for Q2 2025 was $63.2 million, significantly higher than $24.4 million in Q2 2024. For the first half of 2025, the net loss totaled $121.8 million, compared to $56.0 million in the prior year. These losses were primarily driven by non-cash charges, including a $39.5 million loss in Q2 2025 (and $58.0 million for H1 2025) associated with changes in the fair value of derivative liabilities and warrants, and a $14.4 million debt extinguishment loss in H1 2025. Operating expenses for Q2 2025 increased to $18.4 million, up approximately $2.0 million year-over-year, mainly due to higher non-recurring engineering services, payroll, professional services, and outside consulting expenses, partially offset by reduced software license and cloud expenses. The company explicitly anticipates continued losses and higher operating expenses as it invests in its NextGen platform and operates as a public company.

Liquidity, however, remains robust. As of June 30, 2025, NextNav held $176.1 million in cash, cash equivalents, and marketable securities. This strong position was significantly bolstered by a strategic financing in March 2025, where the company closed a private placement of $190 million in 5% Senior Secured Convertible Notes due 2028. A portion of these proceeds was used to redeem its existing $70 million 10% Senior Secured Notes due 2026, enhancing financial flexibility and extending debt maturity. Management believes this capital is sufficient to meet working capital and capital expenditure needs beyond the next 12 months, with longer-term requirements to be met through existing balances, cash flows from operations, or future equity/debt offerings. The company was in compliance with all debt covenants as of June 30, 2025.

Outlook and Strategic Momentum

NextNav's outlook is intrinsically linked to its progress with the FCC and its ability to execute on its NextGen vision. The company is actively advocating for its Petition for Rulemaking, which seeks to modernize rules for the Lower 900 MHz band to enable a 15 MHz nationwide configuration for PNT and 5G broadband. The FCC's unanimous vote to advance a Notice of Inquiry (NOI) on PNT technologies in March 2025, and its subsequent consent in June 2025 for NextNav to acquire an additional 128 M-LMS licenses (including a crucial waiver of an FCC rule), signal significant regulatory momentum and recognition of the urgency of GPS resiliency.

NextNav has filed extensive technical and economic studies to counter opposition claims regarding interference with unlicensed devices and tolling operations. These studies demonstrate coexistence is feasible with minimal retuning costs, establishing substantial national benefits potentially amounting to tens of billions of dollars from band optimization. While the exact timing of an FCC Notice of Proposed Rulemaking (NPRM) cannot be predicted, NextNav believes the technical record is sufficient and continues to drive urgency.

Strategic partnerships are also key to NextNav's future. The recent collaboration with Adtran (ADTN) and Oscilloquartz to integrate NextGen technology into a multisource timing receiver highlights the "system of systems" approach, demonstrating improved resiliency through 5G-based timing. Furthermore, the company's 3D mapping system is live in parts of North Central Texas for 9-1-1 telecommunicators, and a partnership with First Due aims to provide vertical location and 3D visualization for fire and EMS agencies, showcasing tangible applications of its current Pinnacle technology.

NextNav sees resilient PNT as a critical backbone for emerging technologies like Artificial Intelligence (AI). Accurate, real-time PNT data is essential for AI use cases in autonomous vehicles, critical infrastructure, and defense systems, where faulty positioning could lead to dangerous and mission-failing outcomes. This positions NextNav at the intersection of two powerful, long-term growth trends.

Risks and Challenges

Despite the compelling vision, NextNav faces significant risks. The regulatory approval process for its FCC petition is complex and uncertain, with potential for delays or unfavorable outcomes. While NextNav has submitted extensive technical data, opposition from incumbent users, though lacking robust technical analysis according to NextNav, could still prolong the process. The company's business model relies heavily on future partnerships with MNOs for network deployment, and securing these agreements on favorable terms is not guaranteed.

Financially, NextNav's continued substantial losses and negative cash flows from operations mean it remains dependent on its current liquidity and future capital raises. Although the recent $190 million financing provides a cushion, the terms of the 2028 Senior Secured Convertible Notes include restrictions on incurring additional debt, issuing preferred equity, and other financial activities, which could limit strategic flexibility. Furthermore, the significant number of outstanding warrants (37.27 million as of June 30, 2025) represents a potential source of future dilution for existing stockholders.

Conclusion

NextNav Inc. stands at a pivotal juncture, poised to address one of the most pressing national security and economic challenges of our time: the vulnerability of GPS. Its core investment thesis is built on a foundation of proprietary, differentiated terrestrial PNT technology, strategically evolving towards a 5G-enabled NextGen platform. This technological leadership, validated by DoT testing and designed for seamless integration with existing 5G infrastructure, offers superior accuracy, resilience, and indoor/urban coverage compared to traditional GPS and many alternatives.

While the company's financial performance currently reflects its heavy investment phase, with ongoing losses and negative cash flows, its robust liquidity position, significantly enhanced by the recent $190 million convertible notes financing, provides the necessary runway to pursue its strategic objectives. The increasing regulatory momentum, evidenced by recent FCC actions and bipartisan support for GPS resiliency, underscores the growing recognition of NextNav's critical role in a "system of systems" approach. For investors with a long-term horizon and an appetite for a high-risk, high-reward opportunity, NextNav represents a compelling play on the future of secure, resilient, and AI-compatible positioning technology, with its technological edge and strategic positioning potentially unlocking substantial value upon regulatory success and commercial scale.