Strong improvement in net income and adjusted
EBITDA
Company increases financial guidance for the
full year 2023
Wireless Revenue Growth on both a Sequential
and Year-Over-Year Basis
Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in
healthcare communications, today announced results for the first
quarter ended March 31, 2023. In addition, the Company’s Board of
Directors declared a regular quarterly dividend of $0.3125 per
share, payable on June 23, 2023, to stockholders of record on May
25, 2023.
Recent Highlights:
- Generated net income of $3.1 million, or $0.15 per diluted
share, compared to a net loss of $7.2 million, or $0.37 per diluted
share, in the prior year period
- Generated $6.9 million of adjusted EBITDA in the first quarter,
compared to a loss of $2.1 million in the first quarter of
2022
- Software operations bookings totaled $5.7 million for the first
quarter, compared to $5.2 million in the first quarter of 2022, a
nearly 9% year-over-year increase
- First quarter 2023 software operations bookings included 15
six-figure customer contracts, including four new logo
customers
- First quarter 2023 wireless average revenue per unit (ARPU) was
$7.59, up on both a sequential and year-over-year basis, with units
in service down less than 1% from the prior quarter
- First quarter 2023 wireless revenue of $19.0 million, up 1%
from revenue of $18.8 million in the year ago period
- Capital returned to stockholders in the first quarter of 2023
totaled $6.9 million in the form of the Company’s regular quarterly
dividend
- Cash and equivalents balance of $29.5 million on March 31,
2023, and no debt
"I am proud of what the Spok team has been able to accomplish in
the first quarter and believe that these results position us well
for the remainder of the year, as we continue to execute our focus
on generating cash flow and returning capital to stockholders,”
said Vincent D. Kelly, chief executive officer of Spok Holdings,
Inc. “Last quarter, we made tremendous progress in several key
performance areas, including wireless trends, software bookings and
backlog levels, as well as expense management, as we continued to
see expense declines on both a sequential and year-over-year basis.
We were able to accomplish this while investing in our Spok Care
Connect and Wireless solutions. I am particularly pleased with our
performance in Wireless, as we grew first quarter revenue on both a
sequential and year-over-year basis and further minimized unit
churn. More than half of the nearly 5% annual growth in ARPU in the
first quarter reflects the impacts of pricing actions taken in late
2022 and, to a lesser extent, sales of our new GenA™ pager. We look
forward to continued success in the remainder of the year and
believe our extensive experience operating our established
communication solutions will create significant value for
stockholders by maximizing revenue and cash flow generation.”
Financial Highlights:
For the three months ended
March 31,
(Dollars in thousands)
2023
2022
Change (%)
Revenue
Wireless revenue
Paging revenue
$
18,525
$
18,313
1.2
%
Product and other revenue
503
533
(5.6
) %
Total wireless revenue
$
19,028
$
18,846
1.0
%
Software revenue
License
$
1,618
$
1,824
(11.3
) %
Professional services
3,239
3,336
(2.9
) %
Hardware
356
589
(39.6
) %
Maintenance
8,939
9,230
(3.2
) %
Total software revenue
14,152
14,979
(5.5
) %
Total revenue
$
33,180
$
33,825
(1.9
) %
For the three months ended
March 31,
(Dollars in thousands)
2023
2022
Change (%)
GAAP
Operating expenses
$
28,463
$
42,493
(33.0
) %
Net income (loss)
$
3,117
$
(7,214
)
143.2
%
Cash, cash equivalents, and short-term
investments (as of period end)
$
29,550
$
46,328
(36.2
) %
Capital returned to stockholders
$
6,933
$
6,524
6.3
%
Non-GAAP
Adjusted operating expenses
$
27,217
$
37,064
(26.6
) %
Adjusted EBITDA
$
6,899
$
(2,124
)
424.8
%
For the three months ended
March 31,
(Dollars in thousands, excluding units
and service and ARPU)
2023
2022
Change (%)
Key
Statistics
Wireless units in service
811
838
(3.2
) %
Wireless average revenue per unit
(ARPU)
$
7.59
$
7.24
4.8
%
Software operations bookings(1)
$
5,678
$
5,212
8.9
%
Software maintenance bookings(2)
$
11,300
$
9,105
24.1
%
Software backlog (as of period end)
$
46,540
$
40,532
14.8
%
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 maintenance bookings includes the renewal of
maintenance and term license contracts.
Financial Outlook:
The Company also increased its financial guidance and now
expects the following for the full year 2023:
(Unaudited and in millions)
Current Guidance
Full Year 2023
Prior Guidance
Full Year 2023
From
To
From
To
Revenue
Wireless
$
73.0
$
75.5
$
71.5
$
74.5
Software
$
58.0
$
62.0
$
57.5
$
62.0
Total Revenue
$
131.0
$
137.5
$
129.0
$
136.5
Adjusted EBITDA
$
24.5
$
26.5
$
24.0
$
26.0
2023 First Quarter Call:
Management will host a conference call and webcast to discuss
these financial results on Thursday, May 4, 2023, at 9:30 a.m.
Eastern Time. The presentation is open to all interested parties
and may include forward-looking information.
Conference Call Details
Date/Time:
Thursday, May 4, 2023, at 9:30 a.m. ET
Webcast:
https://www.webcast-eqs.com/register/spok_q12023_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.
Investor Day Program:
Following the First Quarter 2023 call, Spok will host an
Investor Day with financial analysts and institutional investors,
from 11:00 a.m. ET to 3:00 p.m. ET. Spok’s executive leadership
team will present an updated view of the Company’s long-term
strategy and capital allocation plans, followed by a live Q&A
session.
A live webcast of the earnings conference call and Investor Day,
along with the earnings release and Investor Day materials, will be
available on Spok’s Investor Relations website at
https://investors.spok.com/. A replay of the Investor Day
presentation will also be accessible on the Company’s website.
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 the Spok Care
Connect® platform to enhance workflows for clinicians and support
administrative compliance. Our customers send over 100 million
messages each month through their Spok® solutions. 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, impairment of intangible assets and severance and
restructuring costs. Adjusted EBITDA represents net income/(loss)
before interest income/expense, income tax benefit/expense,
depreciation, amortization 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 (loss) 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
(loss) 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.
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 our 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 our
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, our ability to manage
wireless network rationalization to lower our costs without causing
disruption of service to our customers; our ability to retain key
management personnel and to attract and retain talent within the
organization; the productivity of our sales organization and our
ability to deliver effective customer support; our ability to
identify potential acquisitions, consummate and successfully
integrate such acquisitions, and achieve the expected benefits of
such acquisitions; risks related to the COVID-19 pandemic; economic
conditions such as recessionary economic cycles, higher interest
rates, inflation and higher levels of unemployment; competition for
our services and products from new technologies or those offered
and/or developed from firms that are substantially larger and have
much greater financial and human capital resources; continuing
decline in the number of paging units we have in service with
customers, commensurate with a continuing decline in our wireless
revenue; our ability to address changing market conditions with new
or revised software solutions; undetected defects, bugs, or
security vulnerabilities in our products; our dependence on the
U.S. healthcare industry; the sales cycle of our software solutions
and services can run from six to eighteen months, making it
difficult to plan for and meet our sales objectives and bookings on
a steady basis quarter-to-quarter and year-to-year; our reliance on
third-party vendors to supply us with wireless paging equipment;
our ability to maintain successful relationships with our channel
partners; our ability to protect our rights in intellectual
property that we own and develop and the potential for litigation
claiming intellectual property infringement by us; our use of open
source software, third-party software and other intellectual
property; the reliability of our networks and servers and our
ability to prevent cyber-attacks and other security issues and
disruptions; unauthorized breaches or failures in cybersecurity
measures adopted by us and/or included in our products and
services; our ability to realize the benefits associated with our
deferred income tax assets; future impairments of our long-lived
assets, amortizable intangible assets or goodwill; risks related to
data privacy and protection-related laws and regulation; and our
ability to manage changes related to regulation, including laws and
regulations affecting hospitals and the healthcare industry
generally, 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
(Unaudited and in thousands
except share, per share amounts and ARPU)
For the three months
ended
3/31/2023
3/31/2022
Revenue:
Wireless
$
19,028
$
18,846
Software
14,152
14,979
Total revenue
33,180
33,825
Operating expenses:
Cost of revenue (exclusive of items shown
separately below)
6,536
7,804
Research and development
2,493
6,497
Technology operations
6,587
7,013
Selling and marketing
3,901
5,315
General and administrative
7,700
10,435
Depreciation, amortization and
accretion
1,236
934
Severance and restructuring
10
4,495
Total operating expenses
28,463
42,493
% of total revenue
85.8
%
125.6
%
Operating income (loss)
4,717
(8,668
)
% of total revenue
14.2
%
(25.6
) %
Interest income
272
67
Other income (expense)
53
(13
)
Income (loss) before income
taxes
5,042
(8,614
)
(Provision for) benefit from income
taxes
(1,925
)
1,400
Net income (loss)
$
3,117
$
(7,214
)
Basic net income (loss) per common
share
$
0.16
$
(0.37
)
Diluted net income (loss) per common
share
0.15
(0.37
)
Basic weighted average common shares
outstanding
19,897,445
19,599,526
Diluted weighted average common shares
outstanding
20,182,692
19,599,526
Cash dividends declared per common
share
0.3125
0.3125
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
3/31/2023
12/31/2022
ASSETS
(Unaudited)
Current assets:
Cash and cash equivalents
$
29,550
$
35,754
Accounts receivable, net
22,644
26,861
Prepaid expenses
7,150
6,849
Other current assets
628
587
Total current assets
59,972
70,051
Non-current assets:
Property and equipment, net
7,802
8,223
Operating lease right-of-use assets
13,401
13,876
Goodwill
99,175
99,175
Deferred income tax assets, net
50,706
52,398
Other non-current assets
694
754
Total non-current assets
171,778
174,426
Total assets
$
231,750
$
244,477
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
4,659
$
5,880
Accrued compensation and benefits
6,063
11,628
Deferred revenue
24,629
26,274
Operating lease liabilities
4,964
5,096
Other current liabilities
4,823
4,573
Total current liabilities
45,138
53,451
Non-current liabilities:
Asset retirement obligations
7,353
7,237
Operating lease liabilities
10,064
10,604
Other non-current liabilities
846
1,107
Total non-current liabilities
18,263
18,948
Total liabilities
63,401
72,399
Commitments and contingencies
Stockholders' equity:
Common stock
2
2
Additional paid-in capital
99,599
99,908
Accumulated other comprehensive loss
(1,897
)
(1,909
)
Retained earnings
70,645
74,077
Total stockholders' equity
168,349
172,078
Total liabilities and stockholders'
equity
$
231,750
$
244,477
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited and in
thousands)
For the three months
ended
3/31/2023
3/31/2022
Operating activities:
Net income (loss)
$
3,117
$
(7,214
)
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Depreciation, amortization and
accretion
1,236
934
Deferred income tax expense (benefit)
1,886
(1,024
)
Stock-based compensation
936
1,115
Provisions for credit losses, service
credits and other
29
594
Changes in assets and liabilities:
Accounts receivable
4,187
2,951
Prepaid expenses and other assets
(282
)
(1,421
)
Net operating lease liabilities
(197
)
(91
)
Accounts payable, accrued liabilities and
other
(6,680
)
879
Deferred revenue
(1,621
)
(1,602
)
Net cash provided by (used in)
operating activities
2,611
(4,879
)
Investing activities:
Purchases of property and equipment
(649
)
(679
)
Purchase of short-term investments
—
(14,967
)
Maturity of short-term investments
—
15,000
Net cash used in investing
activities
(649
)
(646
)
Financing activities:
Cash distributions to stockholders
(6,933
)
(6,524
)
Purchase of common stock for tax
withholding on vested equity awards
(1,245
)
(1,209
)
Net cash used in financing
activities
(8,178
)
(7,733
)
Effect of exchange rate on cash and cash
equivalents
12
25
Net decrease in cash and cash
equivalents
(6,204
)
(13,233
)
Cash and cash equivalents, beginning of
period
35,754
44,583
Cash and cash equivalents, end of
period
$
29,550
$
31,350
Supplemental disclosure:
Income taxes paid/(refunded)
$
(6
)
$
(39
)
SPOK HOLDINGS, INC.
UNITS IN SERVICE, MARKET
SEGMENTS,
AND AVERAGE REVENUE PER UNIT
(ARPU) (a)
(Unaudited and in thousands)
For the three months
ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Account size ending units in service
(000's)
1 to 100 units
48
50
51
53
54
55
57
58
101 to 1,000 units
149
147
147
149
150
154
154
155
>1,000 units
614
620
626
633
634
638
642
656
Total
811
817
824
835
838
847
853
869
Market segment as a percent of total
ending units in service
Healthcare
85.7
%
85.4
%
85.0
%
85.0
%
84.7
%
84.7
%
84.6
%
84.5
%
Government
4.3
%
4.4
%
4.1
%
4.2
%
4.7
%
4.8
%
4.8
%
4.9
%
Large enterprise
4.1
%
4.0
%
3.9
%
4.0
%
3.9
%
3.9
%
4.1
%
4.1
%
Other(b)
5.9
%
6.1
%
7.0
%
6.8
%
6.7
%
6.6
%
6.4
%
6.4
%
Total
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
Account size ARPU
1 to 100 units
$
12.21
$
11.95
$
11.80
$
11.41
$
11.52
$
11.58
$
11.67
$
11.69
101 to 1,000 units
8.65
8.66
8.44
8.27
8.24
8.30
8.38
8.35
>1,000 units
6.96
6.86
6.69
6.63
6.64
6.63
6.65
6.68
Total
$
7.59
$
7.50
$
7.40
$
7.23
$
7.24
$
7.26
$
7.29
$
7.32
(a) Slight variations in totals are due to
rounding.
(b) Other includes hospitality, resort and
indirect units
RECONCILIATION OF ADJUSTED
OPERATING EXPENSES
(Unaudited and in
thousands)
For the three months
ended
3/31/2023
3/31/2022
Operating expenses
$
28,463
$
42,493
Add back:
Depreciation, amortization and
accretion
(1,236
)
(934
)
Severance and restructuring
(10
)
(4,495
)
Adjusted operating expenses
$
27,217
$
37,064
RECONCILIATION OF ADJUSTED
EBITDA
(Unaudited and in
thousands)
For the three months
ended
3/31/2023
3/31/2022
Net income (loss)
$
3,117
$
(7,214
)
Add back:
Provision for (benefit from) income
taxes
1,925
(1,400
)
(Other income) expense
(53
)
13
Interest income
(272
)
(67
)
Depreciation, amortization and
accretion
1,236
934
EBITDA
$
5,953
$
(7,734
)
Adjustments:
Stock-based compensation
936
1,115
Severance and restructuring
10
4,495
Adjusted EBITDA
$
6,899
$
(2,124
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230503005759/en/
Al Galgano 952-224-6096 al.galgano@spok.com
Spok (NASDAQ:SPOK)
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