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Spok Reports 2016 Second Quarter Operating Results; Software Bookings Increase, Wireless Trends Improve

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--(BUSINESS WIRE)--Jul. 27, 2016-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in critical communications, today announced operating results for the second quarter ended June 30, 2016. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 9, 2016 to stockholders of record on August 19, 2016.

2016 Second-Quarter Results:

In the 2016 second quarter, consolidated revenue was $44.6 million, compared to $48.0 million in the second quarter of 2015. Software revenue was $16.8 million in the second quarter of 2016, compared to $17.7 million in the second quarter of 2015. Wireless revenue totaled $27.8 million in the second quarter, compared to $30.3 million in the prior-year quarter.

Net income for the second quarter of 2016 was $3.5 million, or $0.17 per diluted share, up from $3.4 million, or $0.16 per diluted share, in the second quarter of 2015.

Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $8.9 million, or 19.8 percent of revenue, compared to EBITDA of $9.1 million, or 18.9 percent of revenue, in the second quarter of 2015.

Other key results and highlights for the second quarter included:

  • Software bookings for the 2016 second quarter were $20.1 million, in-line with the prior year quarter and up nearly 33 percent from the prior quarter. Second quarter bookings included $10.2 million of operations bookings and $9.9 million of maintenance renewals.
  • Software backlog totaled $39.5 million at June 30, 2016, up from $36.8 million in the prior quarter.
  • Of the $16.8 million in software revenue for the second quarter, $7.7 million was operations revenue and $9.1 million was maintenance revenue, compared to $9.3 million and $8.4 million, respectively, of the $17.7 million in software revenue in the second quarter of 2015.
  • The renewal rate for software maintenance in the second quarter of 2016 continued at greater than 99 percent.
  • The quarterly rate of paging unit erosion slowed to 0.8 percent in the second quarter of 2016, compared to 1.6 percent in the year-earlier quarter. Net paging unit losses were 9,000 in the second quarter of 2016, down from 19,000 in the second quarter of 2015 and less than half of net pager losses in the prior quarter. Paging units in service at June 30, 2016 totaled 1,144,000, compared to 1,211,000 at the end of the prior year quarter.
  • The quarterly rate of wireless revenue erosion continued to slow to 1.1 percent in the second quarter of 2016 versus 1.5 percent in the year-earlier quarter.
  • Total paging ARPU (average revenue per unit) was $7.71 in the second quarter of 2016, compared to $7.77 in the prior quarter and $7.86 in the year-earlier quarter.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $35.8 million in the second quarter of 2016, down from $38.9 million in the year-earlier quarter, and $36.3 million in the prior quarter.
  • Capital expenses were $1.5 million in the second quarter of 2016, compared to $2 million in the year-earlier quarter.
  • The number of full-time equivalent employees at June 30, 2016 totaled 597, compared to 600 at year-end 2015 and 608 at June 30, 2015.
  • Capital returned to stockholders in the second quarter of 2016 totaled $3.7 million, in the form of $2.6 million from dividends and $1.1 million from share repurchases.
  • The Company’s cash balance at June 30, 2016 was $117.1 million, unchanged from June 30, 2015, and up from $111.3 million at December 31, 2015.

2016 Year-to-Date Results:

In the first half of 2016, consolidated revenue was $90 million, compared to $96.1 million in the first half of 2015. Software revenue was $34 million in the first half of 2016, compared to $35.2 million in the prior year period. Wireless revenue totaled $56 million in the first half of 2016, compared to $60.9 million in the year-to-date 2015 period.

Net income for the first half of 2016 was $6.9 million, or $0.33 per diluted share, compared to $7.3 million, or $0.33 per diluted share, in the 2015 year-to-date period.

First half 2016 EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $18.0 million, or 20 percent of revenues, compared to $19.1 million, or 19.9 percent of revenue, in the first half of 2015.

Management Commentary:

“We are pleased with our performance in the second quarter of 2016 and believe that we are beginning to see the benefits from the investments that we made to enhance and upgrade our product development team and tools, as well as our sales infrastructure and management,” said Vincent D. Kelly, chief executive officer. “We saw strong performance in a number of key operating measures and solid sequential improvements in sales bookings and backlog levels, operating expense management, cash flow and subscriber retention. We believe that continued investments will yield significant future benefits in the form of our improved, integrated communication platform, Spok Care Connect®, and continued momentum in bookings levels. Overall, we continued to operate profitably, enhance our product offerings, and further strengthen our balance sheet. Our ability to generate healthy cash flows allowed us to execute against our capital allocation strategy, returning capital to shareholders while adding more than $5 million to our cash balances.”

Commenting on software results, Kelly said: “As anticipated, software revenues were in-line with prior quarter levels as we positioned ourselves for the second half of the year, when software sales tend to be more robust.” Kelly attributed the ability to maintain sequential software revenue levels primarily to a more than 99 percent renewal rate on software maintenance contracts. Similar to Spok’s wireless revenue stream, software maintenance revenue is a largely recurring revenue stream that provides the Company with a more stable revenue and margin base.

Kelly said second quarter bookings of $20.1 million were up sharply from $15.1 million in the prior quarter, and included $9.9 million of maintenance renewals bookings, a record high for the second quarter. Additionally, software backlog of $39.5 million at June 30th was up more than 7 percent from the prior quarter level. “We will continue to build on the sequential momentum we saw in the second quarter. We are encouraged as bookings included sales to both new and current customers, with existing customers adding products and applications to expand their portfolio of communications solutions. Customer demand remained strongest for upgrades to call center solutions, healthcare applications to increase patient safety, and improved nursing workflows.” Kelly added: “We continue to see growing demand for our software solutions for critical smartphone communications, secure texting, and emergency management, as well as clinical alerting, and we are proud to be working with more than 2,000 hospitals world-wide, including all of the best adult and children’s hospitals as defined by U.S. News & World Report.”

Kelly also noted that in addition to the Company’s quarterly financial performance, progress was made in several other areas, including product development, sales strategy and key strategic partnership agreements. “Spok continues to generate activity and sales momentum at the conferences we attend,” commented Kelly. “In June, we saw tremendous interest at those conferences, which included the Call Center Conference & Expo, as well as the National Emergency Number Association (NENA) conference earlier in the month. Early in May, we were also pleased to publish the results of a customer study demonstrating how Spok customers are achieving notable improvements in staff efficiency and patient care coordination workflows throughout their organizations using Spok Care Connect solutions. These hospitals and health systems are reporting improvements, including faster code call processes, compliance with Joint Commission standards, reduced patient discharge times, and increased patient satisfaction. Please visit our website to see these customer success statistics in our new infographic, The ROI of Communication Technology. We are confident that Spok is well positioned to capitalize on our sales and marketing efforts in order to stimulate long-term growth.”

The Company posted solid results for its wireless products and services in the second quarter. Gross pager placements of 39,000 were in-line with the year-earlier quarter, and the highest level in the past twelve months, while gross disconnects of 48,000 improved sharply from 59,000 in the second quarter of 2015. “As a result, annual net pager losses declined to an historical low of 5.5 percent from the prior year’s second quarter, and were 0.8 percent in the second quarter, down significantly from 1.6 percent in the prior-year quarter,” continued Kelly. “Overall, wireless sales efforts continued to focus primarily on our core market segments of Healthcare, Government and Large Enterprise, which represented approximately 91.6 percent of our subscriber base and 89.6 percent of our paging revenue at quarter end. Healthcare comprised 78.2 percent of our subscriber base, and continued to be our best performing market segment with the highest rate of gross placements and lowest rate of unit disconnects.”

Spok returned capital to stockholders, totaling $3.7 million, in the second quarter of 2016. During the period, the Company paid $2.6 million in dividends and repurchased 65,791 shares of common stock, totaling $1.1 million, under its stock buy-back program. Kelly added, “Throughout 2016, we will remain focused on returning value to our shareholders through our multi-faceted capital allocation strategy, which includes dividends, share repurchases and key strategic investments in our products and business designed to create sustainable growth.”

Shawn E. Endsley, chief financial officer, said: “Continued expense management and strong financial discipline have allowed us to invest in our business for long-term growth. Our ability to align our expense base with the market demand we are seeing and drive high renewal rates in our recurring revenue categories, helped Spok maintain solid operating cash flow and operating margins for the quarter. We also strengthened our balance sheet, recording a cash balance of $117.1 million at June 30, 2016, and continued to operate as a debt-free company at quarter-end.”

Business Outlook:

Commenting on the Company’s previously provided financial guidance for 2016, Endsley noted: “As a result of the solid performance we saw in the second quarter, we are maintaining the 2016 guidance range that we provided last quarter.” With regard to financial guidance for 2016, Endsley reiterated that the Company expects total revenue to range from $174 million to $192 million, operating expenses (excluding depreciation, amortization and accretion) to range from $153 million to $159 million, and capital expenditures to range from $6 million to $8 million.

2016 Second-Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2016 second quarter results at 10:00 a.m. ET on Thursday, July 28, 2016. Dial-in numbers for the call are 719-325-2244 or 888-510-1786. The pass code for the call is 3269514. A replay of the call will be available from 1:00 p.m. ET on July 28, 2016 until 1:00 p.m. ET on Thursday, August 11, 2016. To listen to the replay, please register at http:tinyurl.com/spok2016Q2earningsreplay. Please enter the registration information, and you will be given access to the replay.

About Spok
Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., is proud to be the global leader in critical communications for healthcare, government, public safety, and other industries. We deliver smart, reliable solutions to help protect the health, well-being, and safety of people around the globe. Our customers send over 100 million messages each month through their Spok® solutions, and they rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. When communications matter, Spok delivers.

Spok is a trademark of Spok Holdings, Inc.

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, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, reliance upon third-party providers for certain equipment and services, 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.

 

SPŌK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
         
For the three months ended For the six months ended

6/30/2016

6/30/2015

6/30/2016

6/30/2015

Revenue:
Wireless $ 27,859 $ 30,222 $ 56,031 $ 60,912
Software   16,776     17,747     33,992     35,195  
Total revenue   44,635     47,969     90,023     96,107  
Operating expenses:
Cost of revenue 7,513 9,131 15,528 17,944
Service, rental and maintenance 11,399 11,003 22,612 22,260
Selling and marketing 6,429 6,790 12,957 13,838
General and administrative 10,439 10,472 20,949 21,473
Severance 1,504 (3 ) 1,504
Depreciation, amortization and accretion   3,235     3,448     6,558     7,195  
Total operating expenses   39,015     42,348     78,601     84,214  
% of total revenue 87.4 % 88.3 % 87.3 % 87.6 %
Operating income 5,620 5,621 11,422 11,893
% of total revenue 12.6 % 11.7 % 12.7 % 12.4 %
Interest income (expense), net 61 3 109 2
Other income (expense), net   104     264     357     325  
Income before income tax expense 5,785 5,888 11,888 12,220
Income tax benefit (expense)   (2,334 )   (2,512 )   (4,993 )   (4,927 )
Net income $ 3,451   $ 3,376   $ 6,895   $ 7,293  
Basic net income per common share $ 0.17   $ 0.16   $ 0.33   $ 0.33  
Diluted net income per common share $ 0.17   $ 0.16   $ 0.33   $ 0.33  
Basic weighted average common shares outstanding   20,544,327     21,677,299     20,614,023     21,787,434  
Diluted weighted average common shares outstanding   20,705,206     21,735,829     20,831,740     21,843,591  
Reconciliation of operating income to EBITDA (b):
Operating income $ 5,620 $ 5,621 $ 11,422 $ 11,893
Add back: depreciation, amortization and accretion   3,235     3,448     6,558     7,195  
EBITDA $ 8,855   $ 9,069   $ 17,980   $ 19,088  
% of total revenue 19.8 % 18.9 % 20.0 % 19.9 %
Key statistics:
Units in service 1,144 1,211 1,144 1,211
Average revenue per unit (ARPU) $ 7.71 $ 7.86 $ 7.72 $ 7.87
Bookings $ 20,063 $ 21,027 $ 35,170 $ 38,767
Backlog $ 39,475 $ 43,524 $ 39,475 $ 43,524
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only
 
 

SPŌK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
               
For the three months ended

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Revenue:
Wireless $ 27,859 $ 28,172 $ 28,727 $ 29,375 $ 30,222 $ 30,690 $ 31,678 $ 32,855
Software   16,776     17,216     18,612     16,806     17,747     17,448     19,591     16,936  
Total revenue   44,635     45,388     47,339     46,181     47,969     48,138     51,269     49,791  
Operating expenses:
Cost of revenue 7,513 8,017 8,035 7,871 9,131 8,813 10,571 8,000
Service, rental and maintenance 11,399 11,213 11,024 11,117 11,003 11,256 11,285 10,988
Selling and marketing 6,429 6,529 7,036 6,572 6,790 7,048 7,915 7,072
General and administrative 10,439 10,510 10,276 10,410 10,472 11,001 11,905 10,866
Severance (4 ) 1,056 141 1,504 926 545
Depreciation, amortization and accretion   3,235     3,323     3,362     3,413     3,448     3,747     4,049     4,247  
Total operating expenses   39,015     39,588     40,789     39,524     42,348     41,865     46,651     41,718  
% of total revenue 87.4 % 87.2 % 86.2 % 85.6 % 88.3 % 87.0 % 91.0 % 83.8 %
Operating income 5,620 5,800 6,550 6,657 5,621 6,273 4,618 8,073
% of total revenue 12.6 % 12.8 % 13.8 % 14.4 % 11.7 % 13.0 % 9.0 % 16.2 %
Interest income (expense), net 61 49 13 1 3 (1 ) (262 ) (63 )
Other income (expense), net   104     254     71     784     264     60     (188 )   (2 )
Income before income tax expense 5,785 6,103 6,634 7,442 5,888 6,332 4,168 8,008
Income tax benefit (expense)   (2,334 )   (2,659 )   66,087     (3,222 )   (2,512 )   (2,415 )   2,744     (3,356 )
Net income $ 3,451   $ 3,444   $ 72,721   $ 4,220   $ 3,376   $ 3,917   $ 6,912   $ 4,652  
Basic net income per common share $ 0.17   $ 0.17   $ 3.54   $ 0.20   $ 0.16   $ 0.18   $ 0.32   $ 0.21  
Diluted net income per common share $ 0.17   $ 0.17   $ 3.53   $ 0.20   $ 0.16   $ 0.18   $ 0.31   $ 0.21  
Basic weighted average common shares outstanding   20,544,327     20,683,719     20,528,326     21,301,311     21,677,299     21,898,792     21,554,746     21,651,347  
Diluted weighted average common shares outstanding   20,705,206     20,845,661     20,628,053     21,352,838     21,735,829     22,053,015     22,101,600     22,135,554  
Reconciliation of operating income to EBITDA (b):
Operating income $ 5,620 $ 5,800 $ 6,550 $ 6,657 $ 5,621 $ 6,273 $ 4,618 $ 8,073
Add back: depreciation, amortization and accretion   3,235     3,323     3,362     3,413     3,448     3,747     4,049     4,247  
EBITDA $ 8,855   $ 9,123   $ 9,912   $ 10,070   $ 9,069   $ 10,020   $ 8,667   $ 12,320  
% of total revenue 19.8 % 20.1 % 20.9 % 21.8 % 18.9 % 20.8 % 16.9 % 24.7 %
Key statistics:
Units in service 1,144 1,153 1,173 1,192 1,211 1,230 1,256 1,274
Average revenue per unit (ARPU) $ 7.71 $ 7.77 $ 7.79 $ 7.82 $ 7.86 $ 7.91 $ 7.92 $ 7.97
Bookings $ 20,063 $ 15,106 $ 18,511 $ 16,746 $ 21,027 $ 17,740 $ 22,272 $ 20,362
Backlog $ 39,475 $ 36,766 $ 38,650 $ 41,639 $ 43,524 $ 40,551 $ 42,391 $ 42,117
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only
 
 

SPŌK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
     

6/30/2016

12/31/2015

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 117,095 $ 111,332
Accounts receivable, net 23,737 22,638
Prepaid expenses and other 4,116 5,352
Inventory   2,129     2,291  
Total current assets 147,077 141,613
Property and equipment, net 14,297 15,386
Goodwill 133,031 133,031
Other intangible assets, net 12,817 14,964
Deferred income tax assets, net 79,644 83,983
Other assets   1,541     1,445  
Total assets $ 388,407   $ 390,422  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 8,370 $ 9,247
Accrued compensation and benefits 11,618 10,864
Deferred revenue   28,239     27,045  
Total current liabilities 48,227 47,156
Deferred revenue 674 741
Other long-term liabilities   8,960     8,972  
Total liabilities   57,861     56,869  
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock 2 2
Additional paid-in capital 105,867 110,435
Retained earnings   224,677     223,116  
Total stockholders' equity   330,546     333,553  
Total liabilities and stockholders' equity $ 388,407   $ 390,422  
 
(a) Slight variations in totals are due to rounding.
 
 

SPŌK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
     
For the six months ended

6/30/2016

6/30/2015

Cash flows from operating activities:
Net income $ 6,895 $ 7,293
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 6,558 7,195
Amortization of deferred financing costs - -
Deferred income (benefit) tax expense 4,346 4,086
Stock based compensation 1,368 1,104
Provisions for doubtful accounts, service credits and other 322 716
Adjustments of non-cash transaction taxes (169 ) (97 )
Loss/(Gain) on disposals of property and equipment (1 ) (166 )
Changes in assets and liabilities:
Accounts receivable (1,421 ) 2,239
Prepaid expenses, intangible assets and other assets 1,197 741
Accounts payable, accrued liabilities and other (358 ) (685 )
Customer deposits and deferred revenue   1,142     3,070  
Net cash provided by operating activities   19,879     25,496  
Cash flows from investing activities:
Purchases of property and equipment (2,982 ) (3,033 )
Proceeds from disposals of property and equipment   1     180  
Net cash used in investing activities   (2,981 )   (2,853 )
Cash flows from financing activities:
Cash distributions to stockholders (5,150 ) (6,069 )
Purchase of common stock (including commissions) (5,985 ) (3,475 )
Employee stock based compensation tax withholding   -     (3,825 )
Net cash used in financing activities   (11,135 )   (13,369 )
Net increase in cash and cash equivalents 5,763 9,274
Cash and cash equivalents, beginning of period   111,332     107,869  
Cash and cash equivalents, end of period $ 117,095   $ 117,143  
Supplemental disclosure:
Income taxes paid $ 598   $ 337  
 
(a) Slight variations in totals are due to rounding.
 
 

SPŌK HOLDINGS, INC.

CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
               
For the three months ended

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Revenue
Paging $ 26,564 $ 27,101 $ 27,637 $ 28,196 $ 28,782 $ 29,491 $ 30,071 $ 30,776
Non-paging   1,295     1,071     1,090     1,179     1,440     1,199     1,607     2,079  
Total wireless revenue $ 27,859   $ 28,172   $ 28,727   $ 29,375   $ 30,222   $ 30,690   $ 31,678   $ 32,855  
 
Subscription 503 498 471 392 419 398 365 458
License 1,691 1,593 2,733 1,457 3,011 2,595 3,474 2,374
Services 4,202 4,315 4,610 4,600 4,609 5,018 5,579 4,305
Equipment   1,250     1,729     1,764     1,434     1,301     1,374     2,145     1,930  
Operations revenue $ 7,646   $ 8,135   $ 9,578   $ 7,883   $ 9,340   $ 9,385   $ 11,563   $ 9,067  
 
Maintenance revenue $ 9,130   $ 9,081   $ 9,034   $ 8,923   $ 8,407   $ 8,063   $ 8,028   $ 7,869  
Total software revenue $ 16,776   $ 17,216   $ 18,612   $ 16,806   $ 17,747   $ 17,448   $ 19,591   $ 16,936  
 
Total revenue $ 44,635   $ 45,388   $ 47,339   $ 46,181   $ 47,969   $ 48,138   $ 51,269   $ 49,791  
 
(a) Slight variations in totals are due to rounding.
 
               

SPŌK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
 
For the three months ended

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Cost of revenue
Payroll and related $ 4,406 $ 4,634 $ 4,414 $ 4,277 $ 4,274 $ 4,157 $ 4,222 $ 3,743
Cost of sales 2,227 2,673 2,902 2,549 3,801 3,620 5,225 3,098
Stock based compensation 58 49 33 33 34 34 81 108
Other   822     661     686     1,012     1,022     1,002     1,043     1,051  
Total cost of revenue   7,513     8,017     8,035     7,871     9,131     8,813     10,571     8,000  
Service, rental and maintenance
Payroll and related 5,125 5,072 4,815 4,613 4,555 4,652 4,533 4,106
Site rent 3,668 3,660 3,663 3,763 3,783 3,766 3,834 3,914
Telecommunications 1,127 1,222 1,218 1,392 1,288 1,343 1,487 1,548
Stock based compensation 63 52 29 29 29 29 30 56
Other   1,416     1,207     1,299     1,320     1,348     1,466     1,401     1,364  
Total service, rental and maintenance   11,399     11,213     11,024     11,117     11,003     11,256     11,285     10,988  
Selling and marketing
Payroll and related 3,510 3,666 3,780 3,664 3,732 3,916 3,945 3,859
Commissions 1,559 1,525 1,754 1,858 1,792 1,836 2,481 1,949
Stock based compensation 75 48 (7 ) 16 51 51 131 151
Other   1,285     1,290     1,509     1,034     1,215     1,245     1,358     1,113  
Total selling and marketing   6,429     6,529     7,036     6,572     6,790     7,048     7,915     7,072  
General and administrative
Payroll and related 4,306 4,392 4,029 4,320 4,611 4,879 4,737 4,217
Stock based compensation 534 488 316 316 548 329 780 791
Facility rent 810 839 856 868 841 941 830 863
Outside services 1,921 1,726 1,783 1,864 1,728 1,786 1,786 1,698
Taxes, licenses and permits 1,060 1,055 1,132 1,068 1,150 1,125 1,283 1,788
Other   1,808     2,010     2,160     1,974     1,594     1,941     2,489     1,509  
Total general and administrative   10,439     10,510     10,276     10,410     10,472     11,001     11,905     10,866  
Severance (4 ) 1,056 141 1,504 926 545
Depreciation, amortization and accretion   3,235     3,323     3,362     3,413     3,448     3,747     4,049     4,247  
Operating expenses $ 39,015   $ 39,588   $ 40,789   $ 39,524   $ 42,348   $ 41,865   $ 46,651   $ 41,718  
Capital expenditures $ 1,537 $ 1,445 $ 2,024 $ 1,318 $ 1,992 $ 1,040 $ 1,352 $ 1,291
 
(a) Slight variations in totals are due to rounding.
 
 

SPŌK 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

6/30/2016

3/31/2016

12/31/2015

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

Paging units in service

Beginning units in service (000's) 1,153 1,173 1,192 1,211 1,230 1,256 1,274 1,299
Gross placements 39 28 31 36 40 29 35 45
Gross disconnects   (48 )   (48 )   (50 )   (55 )   (59 )   (55 )   (53 )   (70 )
Net change   (9 )   (20 )   (19 )   (19 )   (19 )   (26 )   (18 )   (25 )
Ending units in service   1,144     1,153     1,173     1,192     1,211     1,230     1,256     1,274  
End of period units in service % of total (b)
Healthcare 78.2 % 77.5 % 77.0 % 76.3 % 75.9 % 74.6 % 74.1 % 73.6 %
Government 6.8 % 6.9 % 7.2 % 7.2 % 7.3 % 7.6 % 7.8 % 7.9 %
Large enterprise 6.6 % 6.9 % 6.9 % 7.1 % 7.3 % 7.6 % 7.6 % 7.8 %
Other(b)   8.3 %   8.7 %   9.0 %   9.3 %   9.5 %   10.2 %   10.4 %   10.7 %
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 114 118 123 128 134 139 145 152
101 to 1,000 units 228 238 243 250 256 266 277 282
>1,000 units   802     797     807     814     821     825     834     840  
Total   1,144     1,153     1,173     1,192     1,211     1,230     1,256     1,274  
Account size net loss rate(c)
1 to 100 units (4.0 )% (4.3 )% (3.9 )% (4.4 )% (3.4 )% (4.3 )% (4.7 )% (5.0 )%
101 to 1,000 units (4.0 )% (2.0 )% (2.9 )% (2.4 )% (3.8 )% (3.8 )% (1.9 )% (2.4 )%
>1,000 units   0.6 %   (1.2 )%   (0.9 )%   (0.8 )%   (0.6 )%   (1.1 )%   (0.7 )%   (1.2 )%
Total   (0.8 )%   (1.7 )%   (1.6 )%   (1.5 )%   (1.6 )%   (2.1 )%   (1.4 )%   (1.9 )%
Account size ARPU
1 to 100 units $ 12.48 $ 12.57 $ 12.52 $ 12.49 $ 12.57 $ 12.58 $ 12.50 $ 12.54
101 to 1,000 units 8.65 8.70 8.65 8.69 8.72 8.74 8.76 8.76
>1,000 units   6.75     6.77     6.79     6.80     6.81     6.84     6.83     6.86  
Total $ 7.71   $ 7.77   $ 7.79   $ 7.82   $ 7.86   $ 7.91   $ 7.92   $ 7.97  
 
(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.

Source: Spok Holdings, Inc.

Spok Holdings, Inc.
Al Galgano, 952-567-0295
Al.Galgano@spok.com