Strong Q3 Software Operations Bookings Up Both
Sequentially and Year-Over-Year
Software Backlog Up More Than 19% From Prior
Year Quarter
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.
About Spok
Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Plano,
Texas, 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 70
million messages each month through their Spok® solutions. Spok
enables smarter, faster clinical communication. For more
information, visit spok.com.
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 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.
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; economic conditions
such as recessionary economic cycles, higher interest rates,
inflation and higher levels of unemployment; risks related to our
overall business strategy, including maximizing revenue and cash
generation from our established businesses and returning capital to
stockholders through dividends and repurchases of shares of our
common stock; 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 cyberattacks and
other security issues and disruptions; our reliance on data centers
and other systems and technologies provided by third parties, and
technology systems and electronic networks supplied and managed by
third parties; cyberattacks, data breaches or other compromises to
our or our critical third parties' systems, data, products or
services; our ability to realize the benefits associated with our
deferred income tax assets; future impairments of our long-lived
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
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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030621908/en/
Al Galgano 952-224-6096 al.galgano@spok.com
Spok (NASDAQ:SPOK)
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