Spok Reports First Quarter 2022 Results

Company makes progress on recently announced strategic business plan

Announces conclusion of thorough strategic alternatives review process; Spok’s Board remains open to all pathways to maximize shareholder value

Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the first quarter ended March 31, 2022. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on June 24, 2022, to stockholders of record on May 25, 2022.

2022 First Quarter Highlights:

  • Announced new strategic business plan prioritizing maximizing free cash flow and returning capital to shareholders
  • Reduced size of Board of Directors to better align the Board's size and composition with the Company's recently announced business strategy
  • Capital returned to stockholders in the first quarter of 2022 totaled $6.5 million in the form of the Company's regular quarterly dividend
  • Cash, cash equivalents and short-term investments balance of $46.3 million at March 31, 2022, and no debt
  • University of Rochester Medical Center (URMC) selected Spok Care Connect® to replace URMC's existing operator console and to support its clinical communication needs at its flagship Strong Memorial Hospital

"We have made great progress on our recently announced strategic business plan while also continuing to provide critical communications services to our healthcare customers," said Vincent D. Kelly, president and chief executive officer of Spok Holdings, Inc. "We are on target with our previously announced financial objectives, and our focus remains on creating significant value for our shareholders by maximizing revenue and cash flow generation from our established communication solutions. We continue to believe that we are on the best path forward, and we are optimistic about our prospects for the remainder of 2022 and beyond."

Strategic Review Update:

Spok has concluded the strategic alternatives review process it publicly commenced on September 3, 2021. At this time, Spok has no actionable options for a sale of the Company and the Board has determined it is in the best interests of all shareholders for Spok to focus on executing its strategic plan as a standalone company.

Since initiating the strategic review, the Board, along with its financial and legal advisors, conducted an exceptionally thorough process and reached out to and engaged with a wide range of strategic and financial parties.

Spok’s Board is fully committed to maximizing value for all shareholders.

2022 First Quarter Results:

Consolidated revenue for the first quarter of 2022 under Generally Accepted Accounting Principles (“GAAP”) was $33.8 million, compared to $36.0 million in the first quarter of 2021.

 

For the Three Months Ended March 31,

(Dollars in thousands)

2022

 

2021

 

Change (%)

Wireless revenue

 

 

 

 

 

Paging revenue

$

18,313

 

$

19,353

 

(5.4

) %

Product and other revenue

 

533

 

 

767

 

(30.5

) %

Total wireless revenue

$

18,846

 

$

20,120

 

(6.3

) %

 

 

 

 

 

 

Software revenue

 

 

 

 

 

License

$

1,824

 

$

1,552

 

17.5

%

Professional services

 

3,336

 

 

4,354

 

(23.4

) %

Hardware

 

589

 

 

616

 

(4.4

) %

Maintenance

 

9,230

 

 

9,394

 

(1.7

) %

Total software revenue

 

14,979

 

 

15,916

 

(5.9

) %

Total revenue

$

33,825

 

$

36,036

 

(6.1

) %

Operating expenses in the first quarter of 2022 totaled $42.5 million and included $4.5 million in restructuring costs, compared to $37.8 million in operating expenses in the first quarter of 2021.

Adjusted operating expenses (which excludes depreciation, amortization and accretion, and restructuring costs, and includes capitalized software development costs) totaled $37.1 million in the first quarter of 2022. Adjusted operating expenses for the first quarter of 2021 totaled $38.0 million.

 

For the Three Months Ended March 31,

(Dollars in thousands)

2022

 

2021

 

Change (%)

Operating expenses

$

42,493

 

$

37,776

 

(12.5

) %

Adjusted operating expenses

$

37,064

 

$

37,969

 

2.4

%

GAAP net loss for the first quarter of 2022 was $7.2 million, or a loss of $0.37 per diluted share, compared to net loss of $2.3 million, or $0.12 per diluted share, in the first quarter of 2021. For the first quarter of 2022, adjusted EBITDA loss totaled $2.1 million compared to adjusted EBITDA of $0.3 million in the first quarter of 2021.

 

For the three months ended March 31,

(Dollars in thousands)

2022

 

2021

 

Change (%)

Net loss

$

(7,214

)

 

$

(2,297

)

 

(214.1

) %

Basic and diluted net loss per common share

$

(0.37

)

 

$

(0.12

)

 

(208.3

) %

Adjusted EBITDA

$

(2,124

)

 

$

306

 

 

(794.1

) %

Financial Outlook:

Regarding financial guidance, the Company expects the following for fiscal year 2022, which is unchanged from the previously provided 2022 financial guidance:

(Unaudited and in millions)

 

Current Guidance

Full Year 2022

 

 

From

 

To

Revenue

 

 

 

 

Wireless

 

$

71.6

 

$

77.0

Software

 

$

54.4

 

$

62.2

Total Revenue

 

$

126.0

 

$

139.2

 

 

 

 

 

Adjusted Operating Expenses

 

$

118.8

 

$

128.6

 

 

 

 

 

Capital Expenditures

 

$

3.4

 

$

4.2

2022 First Quarter Call:

Management will host a conference call and webcast to discuss these financial results today at 8:30 a.m. Eastern Daylight Time. The presentation is open to all interested parties and may include forward-looking information.

Conference Call Details

Date/Time:

Thursday, April 28, 2022, at 8:30 a.m. EDT

Webcast:

https://www.webcast-eqs.com/spok042822_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. After the event the OnDemand version of the webcast will be available under the URL as well.

* * * * * * * * *

About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok Care Connect® platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count and patients' lives are at stake, Spok enables smarter, faster clinical communication. For more information, visit spok.com or follow @spoktweets on Twitter.

Spok is a trademark of Spok Holdings, Inc. Spok Care Connect and Spok Mobile are trademarks of Spok, Inc.

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, amortization and accretion, goodwill and restructuring costs, and includes capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense restructuring costs, and stock-based compensation expense and includes capitalized software development costs.

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 do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income 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 expenses and income 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.

Safe Harbor Statement under the Private Securities Litigation Reform Act

Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to Spok's new strategic business plan, including its ability to maximize revenue and cash generation from its established businesses and return capital to shareholders, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok's strategic alternatives review, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

Tables to Follow

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)(b)

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

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

3/31/2021

Revenue:

 

 

 

 

Wireless

 

$

18,846

 

 

$

20,120

 

Software

 

 

14,979

 

 

 

15,916

 

Total revenue

 

 

33,825

 

 

 

36,036

 

Operating expenses:

 

 

 

 

Cost of revenue (exclusive of items shown separately below)

 

 

7,804

 

 

 

7,982

 

Research and development

 

 

6,497

 

 

 

4,444

 

Technology operations

 

 

7,013

 

 

 

7,204

 

Selling and marketing

 

 

5,315

 

 

 

5,139

 

General and administrative

 

 

10,435

 

 

 

10,280

 

Depreciation, amortization and accretion

 

 

934

 

 

 

2,727

 

Severance and restructuring

 

 

4,495

 

 

 

 

Total operating expenses

 

 

42,493

 

 

 

37,776

 

% of total revenue

 

 

125.6

%

 

 

104.8

%

Operating loss

 

 

(8,668

)

 

 

(1,740

)

% of total revenue

 

 

(25.6

) %

 

 

(4.8

) %

Interest income

 

 

67

 

 

 

61

 

Other expense

 

 

(13

)

 

 

(27

)

Loss before income taxes

 

 

(8,614

)

 

 

(1,706

)

Benefit from (provision for) income taxes

 

 

1,400

 

 

 

(591

)

Net loss

 

$

(7,214

)

 

$

(2,297

)

Basic and diluted net loss per common share

 

$

(0.37

)

 

$

(0.12

)

Basic weighted average common shares outstanding

 

 

19,599,526

 

 

 

19,272,786

 

Cash dividends declared per common share

 

 

0.3125

 

 

 

0.125

 

Key statistics:

 

 

 

 

Units in service

 

 

838

 

 

 

874

 

Average revenue per unit (ARPU)

 

$

7.24

 

 

$

7.34

 

Bookings

 

$

14,317

 

 

$

14,597

 

Backlog

 

$

40,532

 

 

$

48,849

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)(b)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

 

$

18,846

 

 

$

19,203

 

 

$

19,644

 

 

$

19,859

 

 

$

20,120

 

 

$

20,300

 

 

$

20,828

 

 

$

21,078

 

Software

 

 

14,979

 

 

 

15,341

 

 

 

16,207

 

 

 

15,864

 

 

 

15,916

 

 

 

17,180

 

 

 

16,865

 

 

 

14,661

 

Total revenue

 

 

33,825

 

 

 

34,544

 

 

 

35,851

 

 

 

35,723

 

 

 

36,036

 

 

 

37,480

 

 

 

37,693

 

 

 

35,739

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of items shown separately below)

 

 

7,804

 

 

 

8,290

 

 

 

8,340

 

 

 

7,859

 

 

 

7,982

 

 

 

8,588

 

 

 

7,223

 

 

 

6,372

 

Research and development

 

 

6,497

 

 

 

4,851

 

 

 

4,063

 

 

 

4,156

 

 

 

4,444

 

 

 

4,122

 

 

 

3,445

 

 

 

2,740

 

Technology operations

 

 

7,013

 

 

 

7,331

 

 

 

7,287

 

 

 

7,022

 

 

 

7,204

 

 

 

7,253

 

 

 

7,269

 

 

 

7,174

 

Selling and marketing

 

 

5,315

 

 

 

5,356

 

 

 

5,404

 

 

 

5,184

 

 

 

5,139

 

 

 

5,209

 

 

 

4,483

 

 

 

4,015

 

General and administrative

 

 

10,435

 

 

 

11,099

 

 

 

11,664

 

 

 

10,481

 

 

 

10,280

 

 

 

8,882

 

 

 

10,206

 

 

 

10,162

 

Depreciation, amortization and accretion

 

 

934

 

 

 

2,694

 

 

 

2,568

 

 

 

2,457

 

 

 

2,727

 

 

 

2,503

 

 

 

2,335

 

 

 

2,072

 

Severance and restructuring

 

 

4,495

 

 

 

71

 

 

 

82

 

 

 

173

 

 

 

 

 

 

366

 

 

 

 

 

 

45

 

Goodwill and capitalized software development impairment

 

 

 

 

 

15,663

 

 

 

 

 

 

 

 

 

 

 

 

25,007

 

 

 

 

 

 

 

Total operating expenses

 

 

42,493

 

 

 

55,355

 

 

 

39,408

 

 

 

37,332

 

 

 

37,776

 

 

 

61,930

 

 

 

34,961

 

 

 

32,580

 

% of total revenue

 

 

125.6

%

 

 

160.2

%

 

 

109.9

%

 

 

104.5

%

 

 

104.8

%

 

 

165.2

%

 

 

92.8

%

 

 

91.2

%

Operating (loss) income

 

 

(8,668

)

 

 

(20,811

)

 

 

(3,557

)

 

 

(1,609

)

 

 

(1,740

)

 

 

(24,450

)

 

 

2,732

 

 

 

3,159

 

% of total revenue

 

 

(25.6

) %

 

 

(60.2

) %

 

 

(9.9

) %

 

 

(4.5

) %

 

 

(4.8

) %

 

 

(65.2

) %

 

 

7.2

%

 

 

8.8

%

Interest income

 

 

67

 

 

 

56

 

 

 

141

 

 

 

61

 

 

 

61

 

 

 

51

 

 

 

127

 

 

 

146

 

Other (expense) income

 

 

(13

)

 

 

54

 

 

 

10

 

 

 

29

 

 

 

(27

)

 

 

95

 

 

 

151

 

 

 

101

 

(Loss) income before income taxes

 

 

(8,614

)

 

 

(20,701

)

 

 

(3,406

)

 

 

(1,519

)

 

 

(1,706

)

 

 

(24,304

)

 

 

3,010

 

 

 

3,406

 

Benefit from (provision for) income taxes

 

 

1,400

 

 

 

4,032

 

 

 

912

 

 

 

800

 

 

 

(591

)

 

 

(22,306

)

 

 

155

 

 

 

353

 

Net (loss) income

 

$

(7,214

)

 

$

(16,669

)

 

$

(2,494

)

 

$

(719

)

 

$

(2,297

)

 

$

(46,610

)

 

$

3,165

 

 

$

3,759

 

Basic net (loss) income per common share

 

$

(0.37

)

 

$

(0.86

)

 

$

(0.13

)

 

$

(0.04

)

 

$

(0.12

)

 

$

(2.44

)

 

$

0.17

 

 

$

0.20

 

Diluted net (loss) income per common share

 

 

(0.37

)

 

 

(0.86

)

 

 

(0.13

)

 

 

(0.04

)

 

 

(0.12

)

 

 

(2.44

)

 

 

0.16

 

 

 

0.20

 

Basic weighted average common shares outstanding

 

 

19,599,526

 

 

 

19,483,004

 

 

 

19,464,893

 

 

 

19,395,364

 

 

 

19,272,786

 

 

 

19,088,329

 

 

 

19,051,502

 

 

 

19,016,853

 

Diluted weighted average common shares outstanding

 

 

19,599,526

 

 

 

19,483,004

 

 

 

19,464,893

 

 

 

19,395,364

 

 

 

19,272,786

 

 

 

19,088,329

 

 

 

19,208,452

 

 

 

19,115,148

 

Key statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units in service

 

 

838

 

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

Average revenue per unit (ARPU)

 

$

7.24

 

 

$

7.26

 

 

$

7.29

 

 

$

7.32

 

 

$

7.34

 

 

$

7.30

 

 

$

7.34

 

 

$

7.24

 

Bookings

 

$

14,317

 

 

$

14,793

 

 

$

17,116

 

 

$

13,037

 

 

$

14,597

 

 

$

16,528

 

 

$

21,414

 

 

$

15,411

 

Backlog

 

$

40,532

 

 

$

43,361

 

 

$

45,584

 

 

$

45,632

 

 

$

48,849

 

 

$

50,504

 

 

$

51,708

 

 

$

48,441

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

 

 

 

 

 

 

 

3/31/2022

 

12/31/2021

 

 

 

 

 

ASSETS

 

(Unaudited)

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

31,350

 

 

$

44,583

 

Short-term investments

 

 

14,978

 

 

 

14,999

 

Accounts receivable, net

 

 

23,373

 

 

 

26,908

 

Prepaid expenses

 

 

8,095

 

 

 

6,641

 

Other current assets

 

 

878

 

 

 

922

 

Total current assets

 

 

78,674

 

 

 

94,053

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

 

6,642

 

 

 

6,746

 

Operating lease right-of-use assets

 

 

14,993

 

 

 

15,821

 

Capitalized software development, net

 

 

 

 

 

 

Goodwill

 

 

99,175

 

 

 

99,175

 

Intangible assets, net

 

 

 

 

 

 

Deferred income tax assets, net

 

 

32,684

 

 

 

31,653

 

Other non-current assets

 

 

707

 

 

 

706

 

Total non-current assets

 

 

154,201

 

 

 

154,101

 

Total assets

 

$

232,875

 

 

$

248,154

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

3,863

 

 

$

5,292

 

Accrued compensation and benefits

 

 

15,769

 

 

 

13,948

 

Deferred revenue

 

 

24,223

 

 

 

25,608

 

Operating lease liabilities

 

 

5,112

 

 

 

5,405

 

Other current liabilities

 

 

5,147

 

 

 

4,745

 

Total current liabilities

 

 

54,114

 

 

 

54,998

 

Non-current liabilities:

 

 

 

 

Asset retirement obligations

 

 

6,372

 

 

 

6,355

 

Operating lease liabilities

 

 

11,256

 

 

 

11,883

 

Other non-current liabilities

 

 

1,238

 

 

 

1,227

 

Total non-current liabilities

 

 

18,866

 

 

 

19,465

 

Total liabilities

 

 

72,980

 

 

 

74,463

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

97,197

 

 

 

97,291

 

Accumulated other comprehensive loss

 

 

(1,563

)

 

 

(1,588

)

Retained earnings

 

 

64,259

 

 

 

77,986

 

Total stockholders' equity

 

 

159,895

 

 

 

173,691

 

Total liabilities and stockholders' equity

 

$

232,875

 

 

$

248,154

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)

 

 

 

 

 

For the three months ended

 

3/31/2022

 

3/31/2021

Operating activities:

 

 

 

Net loss

$

(7,214

)

 

$

(2,297

)

Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:

 

 

 

Depreciation, amortization and accretion

 

934

 

 

 

2,727

 

Deferred income tax (benefit) expense

 

(1,024

)

 

 

510

 

Stock-based compensation

 

1,115

 

 

 

2,239

 

Provisions for credit losses, service credits and other

 

594

 

 

 

215

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

2,951

 

 

 

1,039

 

Prepaid expenses and other assets

 

(1,421

)

 

 

457

 

Net operating lease liabilities

 

(91

)

 

 

338

 

Accounts payable, accrued liabilities and other

 

879

 

 

 

(3,038

)

Deferred revenue

 

(1,602

)

 

 

(1,471

)

Net cash (used in) provided by operating activities

 

(4,879

)

 

 

719

 

Investing activities:

 

 

 

Purchases of property and equipment

 

(679

)

 

 

(727

)

Capitalized software development

 

 

 

 

(2,920

)

Purchase of short-term investments

 

(14,967

)

 

 

(14,995

)

Maturity of short-term investments

 

15,000

 

 

 

15,000

 

Net cash used in investing activities

 

(646

)

 

 

(3,642

)

Financing activities:

 

 

 

Cash distributions to stockholders

 

(6,524

)

 

 

(2,730

)

Purchase of common stock for tax withholding on vested equity awards

 

(1,209

)

 

 

(1,444

)

Net cash used in financing activities

 

(7,733

)

 

 

(4,174

)

Effect of exchange rate on cash and cash equivalents

 

25

 

 

 

14

 

Net decrease in cash and cash equivalents

 

(13,233

)

 

 

(7,083

)

Cash and cash equivalents, beginning of period

 

44,583

 

 

 

48,729

 

Cash and cash equivalents, end of period

$

31,350

 

 

$

41,646

 

Supplemental disclosure:

 

 

 

Income tax refunds received

$

(39

)

 

$

(118

)

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONSOLIDATED REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paging

 

$

18,313

 

$

18,513

 

$

18,844

 

$

19,135

 

$

19,353

 

$

19,513

 

$

19,961

 

$

19,990

Non-paging

 

$

533

 

$

690

 

$

800

 

$

724

 

$

767

 

$

787

 

$

867

 

$

1,088

Total wireless revenue

 

$

18,846

 

$

19,203

 

$

19,644

 

$

19,859

 

$

20,120

 

$

20,300

 

$

20,828

 

$

21,078

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

1,824

 

$

1,650

 

$

1,807

 

$

908

 

$

1,552

 

$

1,528

 

$

2,012

 

$

749

Services

 

$

3,336

 

$

3,783

 

$

4,159

 

$

4,865

 

$

4,354

 

$

4,778

 

$

4,772

 

$

3,812

Equipment

 

$

589

 

$

573

 

$

596

 

$

482

 

$

616

 

$

961

 

$

554

 

$

601

Operations revenue

 

$

5,749

 

$

6,006

 

$

6,562

 

$

6,255

 

$

6,522

 

$

7,267

 

$

7,338

 

$

5,162

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance revenue

 

$

9,230

 

$

9,335

 

$

9,645

 

$

9,609

 

$

9,394

 

$

9,913

 

$

9,527

 

$

9,499

Total software revenue

 

$

14,979

 

$

15,341

 

$

16,207

 

$

15,864

 

$

15,916

 

$

17,180

 

$

16,865

 

$

14,661

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

33,825

 

$

34,544

 

$

35,851

 

$

35,723

 

$

36,036

 

$

37,480

 

$

37,693

 

$

35,739

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)(b)

(Unaudited and in thousands)

 

 

 

For the three months ended

 

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

$

5,110

 

 

$

5,268

 

 

$

5,208

 

 

$

4,720

 

 

$

5,139

 

 

$

5,244

 

 

$

4,743

 

 

$

4,158

 

Cost of sales

 

 

1,557

 

 

 

1,713

 

 

 

1,699

 

 

 

1,633

 

 

 

1,386

 

 

 

1,924

 

 

 

1,165

 

 

 

1,193

 

Recoverable taxes and fees

 

 

712

 

 

 

781

 

 

 

792

 

 

 

903

 

 

 

867

 

 

 

798

 

 

 

803

 

 

 

591

 

Stock-based compensation

 

 

109

 

 

 

127

 

 

 

220

 

 

 

262

 

 

 

291

 

 

 

112

 

 

 

121

 

 

 

111

 

Other

 

 

316

 

 

 

401

 

 

 

421

 

 

 

341

 

 

 

299

 

 

 

510

 

 

 

391

 

 

 

319

 

Total cost of revenue

 

 

7,804

 

 

 

8,290

 

 

 

8,340

 

 

 

7,859

 

 

 

7,982

 

 

 

8,588

 

 

 

7,223

 

 

 

6,372

 

Research and development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

4,305

 

 

 

4,329

 

 

 

4,291

 

 

 

4,333

 

 

 

4,475

 

 

 

4,358

 

 

 

4,147

 

 

 

4,115

 

Outside services

 

 

1,899

 

 

 

1,760

 

 

 

1,759

 

 

 

2,060

 

 

 

2,277

 

 

 

2,358

 

 

 

2,113

 

 

 

1,803

 

Capitalized software development

 

 

 

 

 

(2,603

)

 

 

(2,621

)

 

 

(2,698

)

 

 

(2,920

)

 

 

(3,046

)

 

 

(2,906

)

 

 

(3,596

)

Stock-based compensation

 

 

130

 

 

 

234

 

 

 

435

 

 

 

305

 

 

 

475

 

 

 

246

 

 

 

240

 

 

 

243

 

Other

 

 

163

 

 

 

1,131

 

 

 

199

 

 

 

156

 

 

 

137

 

 

 

206

 

 

 

(149

)

 

 

175

 

Total research and development

 

 

6,497

 

 

 

4,851

 

 

 

4,063

 

 

 

4,156

 

 

 

4,444

 

 

 

4,122

 

 

 

3,445

 

 

 

2,740

 

Technology operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

2,509

 

 

 

2,584

 

 

 

2,585

 

 

 

2,323

 

 

 

2,467

 

 

 

2,467

 

 

 

2,246

 

 

 

2,213

 

Site rent

 

 

3,067

 

 

 

3,104

 

 

 

3,122

 

 

 

3,143

 

 

 

3,196

 

 

 

3,313

 

 

 

3,467

 

 

 

3,399

 

Telecommunications

 

 

771

 

 

 

826

 

 

 

828

 

 

 

825

 

 

 

837

 

 

 

857

 

 

 

949

 

 

 

961

 

Stock-based compensation

 

 

55

 

 

 

53

 

 

 

139

 

 

 

131

 

 

 

137

 

 

 

48

 

 

 

52

 

 

 

47

 

Other

 

 

611

 

 

 

764

 

 

 

613

 

 

 

600

 

 

 

567

 

 

 

568

 

 

 

555

 

 

 

554

 

Total technology operations

 

 

7,013

 

 

 

7,331

 

 

 

7,287

 

 

 

7,022

 

 

 

7,204

 

 

 

7,253

 

 

 

7,269

 

 

 

7,174

 

Selling and marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

3,468

 

 

 

3,383

 

 

 

3,592

 

 

 

3,361

 

 

 

3,365

 

 

 

3,115

 

 

 

2,971

 

 

 

2,730

 

Commissions

 

 

1,024

 

 

 

1,153

 

 

 

924

 

 

 

1,244

 

 

 

1,105

 

 

 

1,178

 

 

 

1,059

 

 

 

852

 

Stock-based compensation

 

 

79

 

 

 

114

 

 

 

264

 

 

 

277

 

 

 

350

 

 

 

216

 

 

 

235

 

 

 

217

 

Advertising and events

 

 

568

 

 

 

630

 

 

 

527

 

 

 

247

 

 

 

161

 

 

 

539

 

 

 

151

 

 

 

160

 

Other

 

 

176

 

 

 

76

 

 

 

97

 

 

 

55

 

 

 

158

 

 

 

161

 

 

 

67

 

 

 

56

 

Total selling and marketing

 

 

5,315

 

 

 

5,356

 

 

 

5,404

 

 

 

5,184

 

 

 

5,139

 

 

 

5,209

 

 

 

4,483

 

 

 

4,015

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

4,051

 

 

 

4,040

 

 

 

3,911

 

 

 

3,564

 

 

 

3,818

 

 

 

3,373

 

 

 

3,476

 

 

 

3,355

 

Stock-based compensation

 

 

742

 

 

 

675

 

 

 

958

 

 

 

806

 

 

 

986

 

 

 

726

 

 

 

968

 

 

 

744

 

Facility rent, office, and technology costs

 

 

2,680

 

 

 

2,579

 

 

 

2,692

 

 

 

2,484

 

 

 

2,480

 

 

 

2,412

 

 

 

2,260

 

 

 

2,276

 

Outside services

 

 

1,900

 

 

 

2,392

 

 

 

3,078

 

 

 

2,219

 

 

 

1,825

 

 

 

1,584

 

 

 

2,148

 

 

 

2,043

 

Taxes, licenses and permits (b)

 

 

265

 

 

 

408

 

 

 

211

 

 

 

214

 

 

 

214

 

 

 

(314

)

 

 

190

 

 

 

213

 

Bad debt

 

 

(14

)

 

 

255

 

 

 

(29

)

 

 

328

 

 

 

106

 

 

 

202

 

 

 

178

 

 

 

628

 

Other

 

 

811

 

 

 

750

 

 

 

843

 

 

 

866

 

 

 

851

 

 

 

899

 

 

 

986

 

 

 

903

 

Total general and administrative

 

 

10,435

 

 

 

11,099

 

 

 

11,664

 

 

 

10,481

 

 

 

10,280

 

 

 

8,882

 

 

 

10,206

 

 

 

10,162

 

Depreciation, amortization and accretion

 

 

934

 

 

 

2,694

 

 

 

2,568

 

 

 

2,457

 

 

 

2,727

 

 

 

2,503

 

 

 

2,335

 

 

 

2,072

 

Severance and restructuring

 

 

4,495

 

 

 

71

 

 

 

82

 

 

 

173

 

 

 

 

 

 

366

 

 

 

 

 

 

45

 

Goodwill and capitalized software development impairment

 

 

 

 

 

15,663

 

 

 

 

 

 

 

 

 

 

 

 

25,007

 

 

 

 

 

 

 

Operating expenses

 

$

42,493

 

 

$

55,355

 

 

$

39,408

 

 

$

37,332

 

 

$

37,776

 

 

$

61,930

 

 

$

34,961

 

 

$

32,580

 

Capital expenditures

 

$

684

 

 

$

1,295

 

 

$

905

 

 

$

1,480

 

 

$

727

 

 

$

638

 

 

$

934

 

 

$

846

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

Paging units in service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning units in service (000's)

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

 

 

926

 

Gross placements

 

 

19

 

 

 

19

 

 

 

23

 

 

 

31

 

 

 

20

 

 

 

20

 

 

 

25

 

 

 

35

 

Gross disconnects

 

 

(28

)

 

 

(25

)

 

 

(39

)

 

 

(36

)

 

 

(31

)

 

 

(33

)

 

 

(42

)

 

 

(46

)

Net change

 

 

(9

)

 

 

(6

)

 

 

(16

)

 

 

(5

)

 

 

(11

)

 

 

(13

)

 

 

(17

)

 

 

(11

)

Ending units in service

 

 

838

 

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

End of period units in service % of total (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

84.7

%

 

 

84.7

%

 

 

84.6

%

 

 

84.5

%

 

 

84.1

%

 

 

83.6

%

 

 

83.7

%

 

 

83.6

%

Government

 

 

4.7

%

 

 

4.8

%

 

 

4.8

%

 

 

4.9

%

 

 

4.8

%

 

 

5.3

%

 

 

5.3

%

 

 

5.5

%

Large enterprise

 

 

3.9

%

 

 

3.9

%

 

 

4.1

%

 

 

4.1

%

 

 

4.3

%

 

 

4.3

%

 

 

4.3

%

 

 

4.4

%

Other(b)

 

 

6.7

%

 

 

6.6

%

 

 

6.4

%

 

 

6.4

%

 

 

6.8

%

 

 

6.8

%

 

 

6.6

%

 

 

6.6

%

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Account size ending units in service (000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

 

54

 

 

 

55

 

 

 

57

 

 

 

58

 

 

 

59

 

 

 

61

 

 

 

63

 

 

 

65

 

101 to 1,000 units

 

 

150

 

 

 

154

 

 

 

154

 

 

 

155

 

 

 

163

 

 

 

167

 

 

 

167

 

 

 

165

 

>1,000 units

 

 

634

 

 

 

638

 

 

 

642

 

 

 

656

 

 

 

652

 

 

 

657

 

 

 

668

 

 

 

685

 

Total

 

 

838

 

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

Account size net loss rate (c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

 

(1.8

) %

 

 

(3.5

) %

 

 

(1.1

) %

 

 

(1.7

) %

 

 

(3.3

) %

 

 

(3.2

) %

 

 

(2.9

) %

 

 

(3.1

) %

101 to 1,000 units

 

 

(2.6

) %

 

 

%

 

 

(0.9

) %

 

 

(4.9

) %

 

 

(2.4

) %

 

 

%

 

 

1.5

%

 

 

(4.2

) %

>1,000 units

 

 

(0.6

) %

 

 

(0.6

) %

 

 

(2.2

) %

 

 

0.6

%

 

 

(0.8

) %

 

 

(1.6

) %

 

 

(2.5

) %

 

 

(0.4

) %

Total

 

 

(1.1

) %

 

 

(0.7

) %

 

 

(1.8

) %

 

 

(0.6

) %

 

 

(1.2

) %

 

 

(1.4

) %

 

 

(1.9

) %

 

 

(1.3

) %

Account size ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

$

11.52

 

 

$

11.58

 

 

$

11.67

 

 

$

11.69

 

 

$

11.72

 

 

$

11.62

 

 

$

11.80

 

 

$

11.65

 

101 to 1,000 units

 

 

8.24

 

 

 

8.30

 

 

 

8.38

 

 

 

8.35

 

 

 

8.33

 

 

 

8.35

 

 

 

8.37

 

 

 

8.24

 

>1,000 units

 

 

6.64

 

 

 

6.63

 

 

 

6.65

 

 

 

6.68

 

 

 

6.68

 

 

 

6.62

 

 

 

6.67

 

 

 

6.57

 

Total

 

$

7.24

 

 

$

7.26

 

 

$

7.29

 

 

$

7.32

 

 

$

7.34

 

 

$

7.30

 

 

$

7.34

 

 

$

7.24

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) Other includes hospitality, resort and indirect units

(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

 

 

SPOK HOLDINGS, INC.

RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

3/31/2021

Net loss

 

$

(7,214

)

 

$

(2,297

)

Add back:

 

 

 

 

(Benefit from) provision for income taxes

 

 

(1,400

)

 

 

591

 

Other expenses

 

 

13

 

 

 

27

 

Interest income

 

 

(67

)

 

 

(61

)

Operating loss

 

 

(8,668

)

 

 

(1,740

)

Depreciation, amortization and accretion

 

 

934

 

 

 

2,727

 

EBITDA

 

$

(7,734

)

 

$

987

 

Capitalized software development costs

 

 

 

 

 

(2,920

)

Stock-based compensation

 

 

1,115

 

 

 

2,239

 

Severance and restructuring

 

 

4,495

 

 

 

 

Adjusted EBITDA

 

$

(2,124

)

 

$

306

 

 

(a) Slight variations in totals are due to rounding.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

For the three months ended

 

 

3/31/2022

 

3/31/2021

Operating expenses

 

$

42,493

 

 

$

37,776

 

Add back:

 

 

 

 

Depreciation, amortization and accretion

 

 

(934

)

 

 

(2,727

)

Capitalized software development costs

 

 

 

 

 

2,920

 

Severance and restructuring

 

 

(4,495

)

 

 

 

Adjusted operating expenses

 

$

37,064

 

 

$

37,969

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

2022 FINANCIAL OUTLOOK

(Unaudited and in millions)

 

 

 

Guidance Range

 

 

From

 

To

Revenues

 

 

 

 

Wireless

 

$

71.6

 

 

$

77.0

 

Software

 

 

54.4

 

 

 

62.2

 

Total Revenues

 

$

126.0

 

 

$

139.2

 

 

 

 

 

 

Adjusted Operating Expenses (a)

 

$

118.8

 

 

$

128.6

 

 

 

 

 

 

Capital Expenditures

 

$

3.4

 

 

$

4.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in millions)

 

 

 

Guidance Range

 

 

From

 

To

Operating expenses

 

$

128.7

 

 

$

142.3

 

Add back:

 

 

 

 

Depreciation, amortization and accretion

 

 

(3.5

)

 

 

(3.5

)

Severance and restructuring

 

$

(6.4

)

 

$

(10.2

)

Adjusted operating expenses

 

$

118.8

 

 

$

128.6

 

 

 

 

 

 

(a) Adjusted operating expenses exclude depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs.

 

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