News Release

Spok Reports Third Quarter 2024 Results

Strong Q3 Software Operations Bookings Up Both Sequentially and Year-Over-Year
Software Backlog Up More Than 19% From Prior Year Quarter

Plano, Tx. (October 30, 2024) – Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the third quarter ended September 30, 2024. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on December 9, 2024, to stockholders of record on November 18, 2024.

Recent Highlights:

  • Software operations bookings totaled $10.4 million in the third quarter, up 64.4% from the third quarter of 2023, and representing the highest third quarter total in the past six years
  • Third quarter software operations bookings included 24 six-figure customer contracts, double the amount generated in the prior year quarter
  • Software backlog totaled $63.6 million at September 30, 2024, up more than 19% from the prior year quarter
  • Third quarter 2024 Wireless average revenue per unit (ARPU) was $7.95, up nearly 5% on a year-over-year basis
  • Capital returned to stockholders in the third quarter of 2024 totaled $6.3 million
  • Cash and cash equivalents increased by nearly $4.0 million in the third quarter, totaling $27.8 million at September 30, 2024
  • Research and development costs totaled $9.0 million in the first nine months of 2024, supporting Spok’s investment in the Company’s industry-leading solutions to fuel future growth

“I am proud of the performance that our team was able to deliver in the third quarter as we continue to serve our customers at a high level and position Spok for strong growth in the fourth quarter and 2025,” said Vincent D. Kelly, chief executive officer. “We continue to achieve our goal to consistently generate cash flow in order to return capital to our loyal stockholders over the long term. I am particularly pleased with our performance in generating both sequential and year-over-year growth in software operations bookings.”

“I believe Spok is doing an excellent job of balancing the necessary investments in our products and infrastructure in order to fuel future growth, while continuing to return capital to our stockholders,” continued Kelly. “Through the first nine months of this year, Spok has generated more than $11.3 million of net income and over $22.1 million of adjusted EBITDA. More importantly, adjusted EBITDA in the third quarter was more than enough to cover our quarterly dividend payment, as well as our capital expenditure requirements. This also resulted in a nearly $4.0 million increase in our cash and cash equivalents balance, which we believe will continue to build through the remainder of the year.

“We were very pleased with our performance in the third quarter and believe that our results in the first nine months of the year provide a solid foundation for the remainder of 2024. As a result, we are reiterating the guidance ranges for revenue and adjusted EBITDA that we had previously outlined,” concluded Kelly.

 

Financial Highlights:

 

For the three months ended September 30,

 

For the nine months ended September 30,

(Dollars in thousands)

2024

 

2023

 

Change (%)

 

2024

 

2023

 

Change (%)

Revenue

           

Wireless revenue

           

Paging revenue

$           17,605 

 

$           18,119 

 

(2.8) %

 

$         53,208 

 

$         54,915 

 

(3.1) %

Product and other revenue

                  656 

 

                  853 

 

(23.1) %

 

             1,945 

 

             1,962 

 

(0.9) %

Total wireless revenue

$           18,261 

 

$           18,972 

 

(3.7) %

 

$         55,153 

 

$         56,877 

 

(3.0) %

            

Software revenue

           

License

$             2,042 

 

$             2,413 

 

(15.4) %

 

$           6,365 

 

$           7,723 

 

(17.6) %

Professional services

               4,835 

 

               3,833 

 

26.1  %

 

           13,146 

 

           10,909 

 

20.5  %

Hardware

                  395 

 

                  798 

 

(50.5) %

 

             1,113 

 

             2,088 

 

(46.7) %

Maintenance

               9,337 

 

               9,412 

 

(0.8) %

 

           27,984 

 

           27,475 

 

1.9  %

Total software revenue

$           16,609 

 

$           16,456 

 

0.9  %

 

$         48,608 

 

$         48,195 

 

0.9  %

Total revenue

$           34,870 

 

$           35,428 

 

(1.6) %

 

$       103,761 

 

$       105,072 

 

(1.2) %

 

For the three months ended September 30,

 

For the nine months ended September 30,

(Dollars in thousands)

2024

 

2023

 

Change (%)

 

2024

 

2023

 

Change (%)

GAAP

           

Operating expenses

$           29,909 

 

$           29,215 

 

2.4  %

 

$          89,434 

 

$          87,926 

 

1.7  %

Net income

$             3,660 

 

$             4,451 

 

(17.8) %

 

$          11,321 

 

$          12,301 

 

(8.0) %

Cash and cash equivalents (as of period end)

$           27,830 

 

$           27,301 

 

1.9  %

 

$          27,830 

 

$          27,301 

 

1.9  %

Capital returned to stockholders

$             6,330 

 

$             6,241 

 

1.4  %

 

$          20,045 

 

$          19,404 

 

3.3  %

            

Non-GAAP

           

Adjusted operating expenses

$           28,509 

 

$           27,871 

 

2.3  %

 

$          85,123 

 

$          83,963 

 

1.4  %

Adjusted EBITDA

$             7,534 

 

$             8,422 

 

(10.5) %

 

$          22,118 

 

$          23,833 

 

(7.2) %

            
            
            
            

 

 

For the three months ended September 30,

 

For the nine months ended September 30,

(Dollars in thousands, excluding units in service and ARPU)

2024

 

2023

 

Change (%)

 

2024

 

2023

 

Change (%)

Key Statistics

           

Wireless units in service (000’s)

                  730 

 

                  785 

 

(7.0) %

 

                 730 

 

                 785 

 

(7.0) %

Wireless average revenue per unit (ARPU)

$               7.95 

 

$               7.59 

 

4.7  %

 

$              7.91 

 

$              7.62 

 

3.8  %

Software operations bookings(1)

$           10,379 

 

$             6,312 

 

64.4  %

 

$         26,959 

 

$         26,000 

 

3.7  %

Software backlog (as of period end)(2)

$           63,579 

 

$           53,309 

 

19.3  %

 

$         63,579 

 

$         53,309 

 

19.3  %

(1) Software operations bookings includes net new (i.e., new customers or incremental add-on sales to existing customers) sales of license, professional services, equipment, and first-year maintenance.

(2) Software backlog excludes $5.3 million and $5.4 million of contractual obligations that are deemed cancellable by the customer without significant penalty as of September 30, 2024 and 2023, respectively.

 

Financial Outlook:

Regarding financial guidance, the Company reiterated the following expectations for the full year 2024:

(Unaudited and in millions)

 

Current Guidance

Full Year 2024

  

From

 

To

Revenue

    

Wireless

 

$                             72.0 

 

$                             75.0 

Software

 

$                             64.0 

 

$                             69.0 

Total Revenue

 

$                           136.0 

 

$                           144.0 

     

Adjusted EBITDA

 

$                             27.5 

 

$                             32.5 


2024 Third Quarter Call:

Management will host a conference call and webcast to discuss these financial results on Wednesday, October 30, 2024, at 5:00 p.m. Eastern Time. The presentation is open to all interested parties and may include forward-looking information.

Conference Call Details

Date/Time:

Wednesday, October 30, 2024, at 5:00 p.m. ET

Webcast:

https://www.webcast-eqs.com/register/spok_q324_en/en

U.S. Toll-Free Dial In:

877-407-0890

International Dial In:

1-201-389-0918

To access the call, please dial in approximately ten minutes before the start of the call. For those unable to join the live call, an OnDemand version of the webcast will be available following the call under the URL link and on the investor relations website.

* * * * * * * * *

 

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: adjusted operating expenses and adjusted EBITDA. Adjusted operating expenses excludes depreciation and accretion expense, impairment of intangible assets and severance and restructuring costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax benefit/expense, depreciation and accretion expense, stock-based compensation expense, impairment of intangible assets and severance and restructuring. With respect to our expectations under “Financial Guidance” above, reconciliation of adjusted EBITDA to net income is not available without unreasonable efforts on a forward-looking basis due to the high variability, complexity and uncertainty with respect to certain items included in net income that are excluded from adjusted EBITDA, in particular, income tax benefit/expense, stock-based compensation expenses, impairment of intangible assets, severance and restructuring and other non-recurring expenses. These items can have unpredictable fluctuations based on unforeseen activity that is out of our control and/or cannot be reasonably predicted.

We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to Spok’s financial condition and results of operations. We use these non-GAAP measures for financial, operational, and budgetary decision-making purposes, to understand and evaluate our core operating performance and trends, and to generate future operating plans. We believe that these non-GAAP financial measures permit us to more thoroughly analyze key financial metrics used to make operational decisions and allow us to assess our core operating results. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies who present similar non-GAAP financial measures. We adjust for certain items because we do not regard these costs as reflective of normal costs related to the ongoing operation of the business in the ordinary course. In general, these items possess one or more of the following characteristics: non-cash expenses, factors outside of our control, items that are non-operational in nature, and unusual items not expected to occur in the normal course of business. We believe it is important to exclude these costs, given that they do not represent future operational costs under this strategic business plan. This allows us to assess the underlying performance of our core business under this new strategic business plan.

We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principle of these non-GAAP financial measures is that they exclude significant amounts that are required by GAAP to be recorded in the Company’s financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which items are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release, and not to rely on any single financial measure to evaluate our business.

Tables to Follow

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited and in thousands except share, per share amounts and ARPU)

         
  

For the three months ended

 

For the nine months ended

  

9/30/2024

 

9/30/2023

 

9/30/2024

 

9/30/2023

Revenue:

        

Wireless

 

$          18,261    

 

$          18,972    

 

$          55,153    

 

$          56,877    

Software

 

            16,609    

 

            16,456    

 

            48,608    

 

            48,195    

Total revenue

 

            34,870    

 

            35,428    

 

          103,761    

 

          105,072    

Operating expenses:

        

Cost of revenue (exclusive of items shown separately below)

 

              7,133   

 

              6,622   

 

            21,435    

 

            19,885    

Research and development

 

              2,831   

 

              2,561   

 

              8,958   

 

              7,907   

Technology operations

 

              6,083   

 

              6,405   

 

            18,563    

 

            19,444    

Selling and marketing

 

              3,928   

 

              4,067   

 

            11,582    

 

            12,322    

General and administrative

 

              8,534   

 

              8,216   

 

            24,585    

 

            24,405    

Depreciation and accretion

 

              1,075   

 

              1,267   

 

              3,210   

 

              3,768   

Severance and restructuring

 

                325   

 

                  77   

 

              1,101   

 

                195   

Total operating expenses

 

            29,909    

 

            29,215    

 

            89,434    

 

            87,926    

% of total revenue

 

85.8  %

 

82.5  %

 

86.2  %

 

83.7  %

Operating income

 

              4,961   

 

              6,213   

 

            14,327    

 

            17,146    

% of total revenue

 

14.2  %

 

17.5  %

 

13.8  %

 

16.3  %

Interest income

 

                264   

 

                240   

 

                908   

 

                866   

Other (expense) income

 

                 (75)   

 

                  41   

 

                 (91)   

 

                 (45)   

Income before income taxes

 

              5,150   

 

              6,494   

 

            15,144    

 

            17,967    

Provision for income taxes

 

            (1,490)   

 

            (2,043)   

 

            (3,823)   

 

            (5,666)   

Net income

 

$            3,660   

 

$            4,451   

 

$          11,321    

 

$          12,301    

Basic net income per common share

 

$              0.18   

 

$              0.22   

 

$              0.56   

 

$              0.62   

Diluted net income per common share

 

$              0.18   

 

$              0.22   

 

$              0.55   

 

$              0.61   

Basic weighted average common shares outstanding

 

     20,264,055    

 

     19,970,936    

 

     20,229,146    

 

     19,942,325    

Diluted weighted average common shares outstanding

 

     20,523,873    

 

     20,304,092    

 

     20,534,883    

 

     20,308,973    

Cash dividends declared per common share

 

            0.3125    

 

            0.3125    

 

            0.9375    

 

            0.9375    

 

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

     
  

9/30/2024

 

12/31/2023

     

ASSETS

 

(Unaudited)

 

 

     

Current assets:

    

Cash and cash equivalents

 

$                           27,830 

 

$                           31,989 

Accounts receivable, net

 

                            21,377 

 

                            23,314 

Prepaid expenses

 

                              8,450

 

                              7,885

Other current assets

 

                                 723

 

                                 704

Total current assets

 

                            58,380 

 

                            63,892 

Non-current assets:

    

Property and equipment, net

 

                              6,988

 

                              7,321

Operating lease right-of-use assets

 

                              8,597

 

                            10,526 

Goodwill

 

                            99,175 

 

                            99,175 

Deferred income tax assets, net

 

                            42,635 

 

                            46,260 

Other non-current assets

 

                                 987

 

                                 510

Total non-current assets

 

                           158,382 

 

                           163,792 

Total assets

 

$                         216,762 

 

$                         227,684 

     

LIABILITIES AND STOCKHOLDERS’ EQUITY

    
     

Current liabilities:

    

Accounts payable

 

$                             3,944

 

$                             5,969

Accrued compensation and benefits

 

                              5,188

 

                              7,284

Deferred revenue

 

                            28,743 

 

                            26,298 

Operating lease liabilities

 

                              2,961

 

                              4,184

Other current liabilities

 

                              4,796

 

                              4,273

Total current liabilities

 

                            45,632 

 

                            48,008 

Non-current liabilities:

    

Asset retirement obligations

 

                              7,268

 

                              7,191

Operating lease liabilities

 

                              6,148

 

                              6,902

Other non-current liabilities

 

                              1,426

 

                              1,812

Total non-current liabilities

 

                            14,842 

 

                            15,905 

Total liabilities

 

                            60,474 

 

                            63,913 

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock

 

$                                  —

 

$                                  —

Common stock

 

                                     2

 

                                     2

Additional paid-in capital

 

                           104,119 

 

                           102,936 

Accumulated other comprehensive loss

 

                             (1,747)

 

                             (1,764)

Retained earnings

 

                            53,914 

 

                            62,597 

Total stockholders’ equity

 

                           156,288 

 

                           163,771 

Total liabilities and stockholders’ equity

 

$                         216,762 

 

$                         227,684 

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

    
 

For the nine months ended

 

9/30/2024

 

9/30/2023

Operating activities:

   

Net income

$                           11,321 

 

$                           12,301 

Adjustments to reconcile net income to net cash provided by operating activities:

   

Depreciation and accretion

                              3,210

 

                              3,768

Deferred income tax expense

                              3,624

 

                              5,605

Stock-based compensation

                              3,480

 

                              2,743

Provisions for credit losses, service credits and other

                                 450

 

                                 415

Changes in assets and liabilities:

   

Accounts receivable

                              1,481

 

                              1,305

Prepaid expenses and other assets

                             (1,061)

 

                             (1,102)

Net operating lease liabilities

                                 (48)

 

                             (1,243)

Accounts payable, accrued liabilities and other

                             (4,284)

 

                             (7,396)

Deferred revenue

                              2,342

 

                             (2,000)

Net cash provided by operating activities

                            20,515 

 

                            14,396 

Investing activities:

   

Purchases of property and equipment

                             (2,348)

 

                             (2,419)

Net cash used in investing activities

                             (2,348)

 

                             (2,419)

Financing activities:

   

Cash distributions to stockholders

                           (20,045)

 

                           (19,404)

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

                                 130

 

                                   90

Purchase of common stock for tax withholding on vested equity awards

                             (2,428)

 

                             (1,245)

Net cash used in financing activities

                           (22,343)

 

                           (20,559)

Effect of exchange rate on cash and cash equivalents

                                   17

 

                                 129

Net decrease in cash and cash equivalents

                             (4,159)

 

                             (8,453)

Cash and cash equivalents, beginning of period

                            31,989 

 

                            35,754 

Cash and cash equivalents, end of period

$                           27,830 

 

$                           27,301 

Supplemental disclosure:

   

Income taxes paid

$                               298

 

$                               236

 

SPOK HOLDINGS, INC.

UNITS IN SERVICE, MARKET SEGMENTS,

AND AVERAGE REVENUE PER UNIT (ARPU)

(Unaudited and in thousands)

                 
  

For the three months ended

  

9/30/2024

 

6/30/2024

 

3/31/2024

 

12/31/2023

 

9/30/2023

 

6/30/2023

 

3/31/2023

 

12/31/2022

Account size ending units in service (000’s)

                

1 to 100 units

 

           41   

 

           42   

 

           43   

 

           44   

 

           46   

 

           48   

 

           48   

 

           50   

101 to 1,000 units

 

         125   

 

         128   

 

         135   

 

         142   

 

         143   

 

         144   

 

         149   

 

         147   

>1,000 units

 

         564   

 

         577   

 

         575   

 

         579   

 

         596   

 

         614   

 

         614   

 

         620   

Total

 

         730   

 

         747   

 

         753   

 

         765   

 

         785   

 

         806   

 

         811   

 

         817   

                 

Market segment as a percent of total ending units in service

                

Healthcare

 

85.7  %

 

85.8  %

 

86.1  %

 

85.9  %

 

86.0  %

 

86.1  %

 

85.7  %

 

85.4  %

Government

 

4.1 %

 

4.4 %

 

4.1 %

 

4.2 %

 

4.2 %

 

4.2 %

 

4.3 %

 

4.4 %

Large enterprise

 

4.0 %

 

4.0 %

 

3.9 %

 

4.1 %

 

4.1 %

 

4.0 %

 

4.1 %

 

4.0 %

Other(1)

 

6.2 %

 

5.8 %

 

5.9 %

 

5.8 %

 

5.7 %

 

5.7 %

 

5.9 %

 

6.2 %

Total

 

100.0  %

 

100.0  %

 

100.0  %

 

100.0  %

 

100.0  %

 

100.0  %

 

100.0  %

 

100.0  %

                 

Account size ARPU

                

1 to 100 units

 

$    12.70   

 

$    12.51   

 

$    12.66   

 

$    12.57   

 

$    12.02   

 

$    11.91    

 

$    12.03   

 

$    11.95    

101 to 1,000 units

 

        9.19   

 

        9.06   

 

        9.14   

 

        9.16   

 

        8.75   

 

        8.56   

 

        8.75   

 

        8.66   

>1,000 units

 

        7.33   

 

        7.21   

 

        7.23   

 

        7.15   

 

        6.97   

 

        6.94   

 

        6.95   

 

        6.86   

Total

 

$      7.95   

 

$      7.84   

 

$      7.89   

 

$      7.84   

 

$      7.59   

 

$      7.53   

 

$      7.59   

 

$      7.50   

                 

(1) Other includes hospitality, resort and indirect units

 

RECONCILIATION OF ADJUSTED OPERATING EXPENSES

(Unaudited and in thousands)

         
  

For the three months ended

 

For the nine months ended

  

9/30/2024

 

9/30/2023

 

9/30/2024

 

9/30/2023

Operating expenses

 

$          29,909 

 

$            29,215 

 

$         89,434 

 

$         87,926 

Add back:

        

Depreciation and accretion

 

                    (1,075)

 

                    (1,267)

 

                    (3,210)

 

                    (3,768)

Severance and restructuring

 

                       (325)

 

                         (77)

 

                    (1,101)

 

                       (195)

Adjusted operating expenses

 

$         28,509 

 

$          27,871 

 

$          85,123 

 

$         83,963 

RECONCILIATION OF ADJUSTED EBITDA

(Unaudited and in thousands)

         
  

For the three months ended

 

For the nine months ended

  

9/30/2024

 

9/30/2023

 

9/30/2024

 

9/30/2023

Net income

 

$            3,660

 

$            4,451

 

$          11,321 

 

$           12,301 

Add back:

        

Provision for income taxes

 

                      1,490

 

                      2,043

 

                      3,823

 

                      5,666

Other expense (income)

 

                          75

 

                         (41)

 

                          91

 

                          45

Interest income

 

                       (264)

 

                       (240)

 

                       (908)

 

                       (866)

Depreciation and accretion

 

                      1,075

 

                      1,267

 

                      3,210

 

                      3,768

EBITDA

 

$             6,036

 

$          7,480

 

$           17,537 

 

$         20,914 

Adjustments:

        

Stock-based compensation

 

                      1,173

 

                        865

 

                      3,480

 

                      2,724

Severance and restructuring

 

                        325

 

                          77

 

                      1,101

 

                        195

Adjusted EBITDA

 

$             7,534

 

$              8,422

 

$       22,118

 

$              23,833