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Spok Reports 2019 Second Quarter Operating Results; Software Bookings up More Than 15 Percent From Prior Year; Continued Strong Wireless Trends

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--(BUSINESS WIRE)--Jul. 31, 2019-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the second quarter ended June 30, 2019. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2019, to stockholders of record on August 16, 2019.

Key Second Quarter Operating Highlights:

  • Second quarter software revenue of $17.4 million was up more than 2.5 percent from software revenue of $17.0 million in the prior year quarter. Included in second quarter software revenue was $7.4 million of operations revenue and $10.0 million in maintenance revenue, compared to $7.5 million in operations revenue and $9.5 million in maintenance revenue in the second quarter of 2018.
  • Software bookings in the second quarter totaled $21.3 million. Second quarter bookings included $9.2 million of operations bookings and a record $12.1 million of maintenance renewals.
  • The renewal rate for software maintenance revenue in the second quarter of 2019 continued to exceed 99 percent.
  • The quarterly rate of paging unit erosion was 0.5 percent in the second quarter of 2019, which matched the record low historical quarterly performance. This also compares to paging unit erosion of 1.0 percent in the prior quarter and 0.6 percent in the year-earlier period. Net paging unit losses were 5,000 in the second quarter of 2019, compared to 10,000 in the prior quarter and 6,000 in the second quarter of 2018. Paging units in service at June 30, 2019, totaled 977,000, compared to 1,024,000 at June 30, 2018.
  • For the second consecutive quarter, the rate of wireless revenue erosion was 2.1 percent, down from 2.5 percent erosion in the second quarter of 2018.
  • Total paging ARPU (average revenue per unit) was $7.26 in the second quarter of 2019, compared to $7.32 in the prior quarter and $7.41 in the year-earlier quarter.
  • Operating expenses in the second quarter of 2019 totaled $41.5 million, compared to $43.0 million in the prior year quarter. Adjusted operating expenses (excludes depreciation, amortization and accretion) totaled $39.2 million in the second quarter of 2019, compared to $38.3 million in the prior quarter and $40.3 million in the year-earlier quarter.
  • Capital expenses were $1.5 million in the second quarter of 2019, compared to $2.3 million in the year-earlier quarter.
  • The number of full-time equivalent employees at June 30, 2019 totaled 600, compared to 607 in the prior year quarter.
  • Capital paid to stockholders in the second quarter of 2019 totaled $2.4 million. This came in the form of the Company's regular quarterly dividend.
  • The Company’s cash, cash equivalents and short-term investments balance at June 30, 2019, was $77.7 million, compared to $87.3 million at December 31, 2018.

2019 Second Quarter and Year-To-Date Results:

Consolidated revenue for the second quarter of 2019 under Generally Accepted Accounting Principles (“GAAP”) was $39.5 million compared to $40.6 million in the second quarter of 2018. For the first six months of 2019, consolidated revenue totaled $81.3 million, compared to $83.7 million in the first six months of 2018.

 

For the three months ended

 

For the six months ended

(Dollars in thousands)

June 30, 2019

June 30, 2018

Change
(%)

 

June 30, 2019

June 30, 2018

Change
(%)

Wireless revenue

 

 

 

 

 

 

 

Paging revenue

$

21,342

 

$

22,824

 

(6.5

)%

 

$

43,029

 

$

46,132

 

(6.7

)%

Product and other revenue

785

 

834

 

(5.9

)%

 

1,708

 

1,795

 

(4.8

)%

Total wireless revenue

$

22,127

 

$

23,658

 

(6.5

)%

 

$

44,737

 

$

47,927

 

(6.7

)%

 

 

 

 

 

 

 

 

Software revenue

 

 

 

 

 

 

 

Operations revenue

$

7,353

 

$

7,463

 

(1.5

)%

 

$

16,361

 

$

16,934

 

(3.4

)%

Maintenance revenue

10,045

 

9,507

 

5.7

%

 

20,190

 

18,881

 

6.9

%

Total software revenue

17,398

 

16,970

 

2.5

%

 

36,551

 

35,815

 

2.1

%

Total revenue

$

39,525

 

$

40,628

 

(2.7

)%

 

$

81,288

 

$

83,742

 

(2.9

)%

GAAP net loss for the second quarter of 2019 was $0.7 million, or $0.03 per diluted share, compared to a net loss of $1.2 million, or $0.06 per diluted share, in the second quarter of 2018. GAAP net income for the first half of 2019 was $0.1 million, compared to a net loss of $0.8 million, or $0.04 per diluted share, in the first half of 2018.

In the second quarter of 2019, the Company generated $0.3 million of EBITDA (earnings before interest, taxes, depreciation and amortization), compared to EBITDA of $0.3 million in the prior year quarter. In the first half of 2019, the Company generated $3.8 million of EBITDA, compared to EBITDA of $3.6 million in the prior year period.

 

For the three months ended

 

For the six months ended

(Dollars in thousands)

June 30, 2019

June 30, 2018

 

June 30, 2019

June 30, 2018

Net (loss) income

$

(670

)

$

(1,172

)

 

$

72

 

$

(827

)

Diluted net (loss) income per share

$

(0.03

)

$

(0.06

)

 

$

 

$

(0.04

)

EBITDA

$

343

 

$

323

 

 

$

3,816

 

$

3,621

 

Management Commentary:

“Our performance in the second quarter of 2019 was in line with our seasonal expectations. We believe our year-to-date results provide a solid base as we enter the typically more robust second half of the year” said Vincent D. Kelly, president and chief executive officer. “During the quarter, we saw strong performance in a number of key operating measures, including solid growth in year-over-year software bookings levels, both sequential and year-over-year improvements in wireless subscriber retention, increased software backlog levels, and continued operating expense management. These improvements allowed us to return $2.4 million of capital to our stockholders in the form of a quarterly dividend, while enhancing our product offerings through continued investments in our integrated communication platform, Spok Care Connect®.”

Kelly also noted that in addition to the Company’s quarterly financial performance, Spok made progress in several other areas, including product development, as well as its sales and marketing efforts. “During the quarter, Spok continued to build on our industry-leading reputation as we participated in the American Organization of Nurse Executives (AONE) annual meeting, the Healthcare IT Institute and the Association of Medical Directors of Information Systems Physician-Computer Connection Symposium (AMDIS PCC Symposium) in June. Earlier this month, we strengthened our position as an industry thought leader with the release of the findings from our Spok clinician burnout survey. Also, for the seventh consecutive year we are proud and honored to report that all of the adult hospitals named to U.S. News & World Report’s 2019-20 Best Hospitals Honor Roll use Spok clinical communication solutions to facilitate care collaboration and support exceptional patient care. Finally, during the quarter we started working with more than two dozen new customers. We are proud of our team, as we continue to make significant progress in enhancing our Care Connect platform offering and add experienced product and development leadership, staff and consulting resources.”

Michael W. Wallace, chief financial officer, said: “Expense management and strong financial discipline have allowed us to continue to invest in our business for long-term growth. In the second quarter, operating expenses were down on a year-over-year basis. Our balance sheet remains strong, with a cash, cash equivalents and short-term investments balance of $77.7 million at June 30, 2019.”

Business Outlook:

Commenting on the Company’s previously provided financial guidance for 2019, Wallace noted: “We are pleased that the second quarter results are in line with the full year 2019 guidance we had provided last quarter and we are reiterating those expectations." Regarding financial guidance for 2019, Wallace said the Company expects total revenue to range from $156 million to $174 million. Included in that total, the Company expects software revenue to comprise $75 million to $85 million. Also, Spok expects adjusted operating expenses (excludes depreciation, amortization and accretion) to range from $155 million to $165 million, and capital expenses to range from $3 million to $7 million.

2019 Second-Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2019 second quarter results at 10:00 a.m. ET on Thursday, August 1, 2019. Dial-in numbers for the call are 323-794-2597 or 800-458-4148. The pass code for the call is 4023312. A replay of the call will be available from 1:00 p.m. ET on August 1, 2019 until 1:00 p.m. ET on Thursday, August 15, 2019. To listen to the replay, please register at http://tinyurl.com/Spok2019Q2earningsreplay. Please enter the registration information, and you will be given access to the replay.

About Spok

Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, 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, support administrative compliance, and provide a better experience for patients. Our customers send over 100 million messages each month through their Spok® solutions. Spok is making care collaboration easier. 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.

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, 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, 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 INCOME (a)

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

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the six months ended

 

 

6/30/2019

 

6/30/2018

 

6/30/2019

 

6/30/2018

Revenue:

 

 

 

 

 

 

 

 

Wireless

 

$

22,127

 

 

$

23,658

 

 

$

44,737

 

 

$

47,927

 

Software

 

17,398

 

 

16,970

 

 

36,551

 

 

35,815

 

Total revenue

 

39,525

 

 

40,628

 

 

81,288

 

 

83,742

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

7,239

 

 

7,596

 

 

14,831

 

 

15,495

 

Research and development

 

6,807

 

 

6,177

 

 

12,974

 

 

11,912

 

Technology operations

 

7,866

 

 

7,698

 

 

15,540

 

 

15,448

 

Selling and marketing

 

5,574

 

 

6,093

 

 

11,684

 

 

12,562

 

General and administrative

 

11,696

 

 

12,741

 

 

22,443

 

 

24,704

 

Depreciation, amortization and accretion

 

2,335

 

 

2,669

 

 

4,694

 

 

5,382

 

Total operating expenses

 

41,517

 

 

42,974

 

 

82,166

 

 

85,503

 

% of total revenue

 

105.0

%

 

105.8

%

 

101.1

%

 

102.1

%

Operating loss

 

(1,992

)

 

(2,346

)

 

(878

)

 

(1,761

)

% of total revenue

 

(5.0

)%

 

(5.8

)%

 

(1.1

)%

 

(2.1

)%

Interest income

 

452

 

 

342

 

 

901

 

 

625

 

Other income

 

602

 

 

102

 

 

367

 

 

54

 

(Loss) income before income taxes

 

(938

)

 

(1,902

)

 

390

 

 

(1,082

)

Benefit from (provision for) income taxes

 

268

 

 

730

 

 

(318

)

 

255

 

Net (loss) income

 

$

(670

)

 

$

(1,172

)

 

$

72

 

 

$

(827

)

Basic and diluted net (loss) income per common share

 

$

(0.03

)

 

$

(0.06

)

 

$

 

 

$

(0.04

)

Basic weighted average common shares outstanding

 

19,217,866

 

 

19,750,941

 

 

19,207,476

 

 

19,888,606

 

Diluted weighted average common shares outstanding

 

19,217,866

 

 

19,750,941

 

 

19,375,599

 

 

19,888,606

 

Cash dividends declared per common share

 

0.125

 

 

0.125

 

 

0.25

 

 

0.25

 

Key statistics:

 

 

 

 

 

 

 

 

Units in service

 

977

 

 

1,024

 

 

977

 

 

1,024

 

Average revenue per unit (ARPU)

 

$

7.26

 

 

$

7.41

 

 

$

7.28

 

 

$

7.42

 

Bookings

 

$

21,334

 

 

$

18,488

 

 

$

35,989

 

 

$

36,612

 

Backlog

 

$

39,718

 

 

$

36,295

 

 

$

39,718

 

 

$

36,295

 

 

 

 

 

 

 

 

 

 

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

 

$

22,127

 

 

$

22,610

 

 

$

23,091

 

 

$

23,259

 

 

$

23,658

 

 

$

24,269

 

 

$

24,579

 

 

$

25,110

 

Software

 

17,398

 

 

19,154

 

 

20,165

 

 

19,217

 

 

16,970

 

 

18,845

 

 

19,191

 

 

18,526

 

Total revenue

 

39,525

 

 

41,764

 

 

43,256

 

 

42,476

 

 

40,628

 

 

43,114

 

 

43,770

 

 

43,636

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (b)

 

7,239

 

 

7,592

 

 

8,772

 

 

8,141

 

 

7,596

 

 

7,878

 

 

7,122

 

 

7,069

 

Research and development

 

6,807

 

 

6,167

 

 

6,618

 

 

5,934

 

 

6,177

 

 

5,735

 

 

4,934

 

 

5,001

 

Technology operations

 

7,866

 

 

7,674

 

 

8,120

 

 

7,787

 

 

7,698

 

 

7,750

 

 

7,617

 

 

7,875

 

Selling and marketing

 

5,574

 

 

6,110

 

 

6,275

 

 

5,716

 

 

6,093

 

 

6,490

 

 

6,039

 

 

5,533

 

General and administrative

 

11,696

 

 

10,747

 

 

10,721

 

 

13,673

 

 

12,741

 

 

11,964

 

 

11,695

 

 

12,058

 

Depreciation, amortization and accretion

 

2,335

 

 

2,359

 

 

2,601

 

 

2,785

 

 

2,669

 

 

2,713

 

 

2,774

 

 

2,775

 

Total operating expenses

 

41,517

 

 

40,649

 

 

43,107

 

 

44,036

 

 

42,974

 

 

42,530

 

 

40,181

 

 

40,311

 

% of total revenue

 

105.0

%

 

97.3

%

 

99.7

%

 

103.7

%

 

105.8

%

 

98.6

%

 

91.8

%

 

92.4

%

Operating (loss) income

 

(1,992

)

 

1,115

 

 

149

 

 

(1,560

)

 

(2,346

)

 

584

 

 

3,589

 

 

3,325

 

% of total revenue

 

(5.0

)%

 

2.7

%

 

0.3

%

 

(3.7

)%

 

(5.8

)%

 

1.4

%

 

8.2

%

 

7.6

%

Interest income

 

452

 

 

449

 

 

628

 

 

384

 

 

342

 

 

283

 

 

229

 

 

214

 

Other income (expense)

 

602

 

 

(236

)

 

(593

)

 

(110

)

 

102

 

 

(47

)

 

(282

)

 

359

 

Income (loss) before income taxes

 

(938

)

 

1,328

 

 

184

 

 

(1,286

)

 

(1,902

)

 

820

 

 

3,536

 

 

3,898

 

Benefit from (provision for) income taxes

 

268

 

 

(586

)

 

5

 

 

446

 

 

730

 

 

(475

)

 

(24,920

)

 

(171

)

Net (loss) income

 

$

(670

)

 

$

742

 

 

$

189

 

 

$

(840

)

 

$

(1,172

)

 

$

345

 

 

$

(21,384

)

 

$

3,727

 

Basic and diluted net (loss) income per common share

 

$

(0.03

)

 

$

0.04

 

 

$

0.01

 

 

$

(0.04

)

 

$

(0.06

)

 

$

0.02

 

 

$

(1.07

)

 

$

0.19

 

Basic weighted average common shares outstanding

 

19,217,866

 

 

19,196,970

 

 

19,445,401

 

 

19,456,149

 

 

19,750,941

 

 

20,027,800

 

 

19,987,763

 

 

19,977,263

 

Diluted weighted average common shares outstanding

 

19,217,866

 

 

19,356,712

 

 

19,445,401

 

 

19,456,149

 

 

19,750,941

 

 

20,153,291

 

 

19,987,763

 

 

20,008,321

 

Key statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units in service

 

977

 

 

982

 

 

992

 

 

999

 

 

1,024

 

 

1,030

 

 

1,049

 

 

1,063

 

Average revenue per unit (ARPU)

 

$

7.26

 

 

$

7.32

 

 

$

7.36

 

 

$

7.40

 

 

$

7.41

 

 

$

7.47

 

 

$

7.46

 

 

$

7.48

 

Bookings

 

$

21,334

 

 

$

14,654

 

 

$

23,076

 

 

$

21,580

 

 

$

18,488

 

 

$

18,124

 

 

$

19,190

 

 

$

18,327

 

Backlog

 

$

39,718

 

 

$

37,392

 

 

$

40,422

 

 

$

36,366

 

 

$

36,295

 

 

$

35,930

 

 

$

42,305

 

 

$

46,900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(b) An adjustment of $771 to cost of revenue, identified in the fourth quarter of 2018, has been reflected in this table as an increase to cost of revenue of $166, $196 and $359 in the first, second and third quarters of 2018, respectively. Total operating expenses, operating income (loss), income (loss) before income taxes, Net (loss) income and net (loss) income per share have been adjusted accordingly to reflect these changes.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

 

 

 

 

 

 

 

6/30/2019

 

12/31/2018

 

 

Unaudited

 

 

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

47,829

 

 

$

83,343

 

Short term investments

 

29,854

 

 

3,963

 

Accounts receivable, net

 

38,554

 

 

32,386

 

Prepaid expenses and other

 

9,310

 

 

9,578

 

Inventory

 

1,229

 

 

1,708

 

Total current assets

 

126,776

 

 

130,978

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

9,759

 

 

10,354

 

Operating Lease right-of-use assets

 

16,773

 

 

 

Goodwill

 

133,031

 

 

133,031

 

Intangible assets, net

 

4,167

 

 

5,417

 

Deferred income tax assets

 

46,229

 

 

46,484

 

Other non-current assets

 

1,338

 

 

1,448

 

Total non-current assets

 

211,297

 

 

196,734

 

Total assets

 

$

338,073

 

 

$

327,712

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

3,795

 

 

$

2,010

 

Accrued compensation and benefits

 

8,793

 

 

11,348

 

Accrued taxes

 

1,785

 

 

1,822

 

Deferred revenue

 

27,938

 

 

26,106

 

Operating lease liabilities

 

5,261

 

 

 

Other current liabilities

 

2,567

 

 

3,662

 

Total current liabilities

 

50,139

 

 

44,948

 

Non-current liabilities:

 

 

 

 

Asset Retirement obligations

 

6,681

 

 

6,513

 

Operating lease liabilities

 

12,084

 

 

 

Other long-term liabilities

 

669

 

 

1,697

 

Total non-current liabilities

 

19,434

 

 

8,210

 

Total liabilities

 

69,573

 

 

53,158

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

2

 

 

2

 

Additional paid-in capital

 

89,415

 

 

90,559

 

Accumulated other comprehensive loss

 

(1,394

)

 

(1,301

)

Retained earnings

 

180,477

 

 

185,294

 

Total stockholders' equity

 

268,500

 

 

274,554

 

Total liabilities and stockholders' equity

 

$

338,073

 

 

$

327,712

 

 

 

 

 

 

(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 six months ended

 

 

6/30/2019

 

6/30/2018

Cash flows provided by operating activities:

 

 

 

 

Net income (loss)

 

$

72

 

 

$

(827

)

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

 

 

 

 

Depreciation, amortization and accretion

 

4,694

 

 

5,382

 

Deferred income tax expense

 

208

 

 

(472

)

Stock based compensation

 

1,557

 

 

2,501

 

Provisions for doubtful accounts, service credits and other

 

272

 

 

1,016

 

Adjustments of non-cash transaction taxes

 

 

 

(104

)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable

 

(6,682

)

 

(2,986

)

Prepaid expenses, inventory and other assets

 

2,075

 

 

(309

)

Accounts payable, accrued liabilities and other

 

(3,161

)

 

(3,184

)

Deferred revenue

 

1,734

 

 

4,981

 

Net cash provided by operating activities

 

769

 

 

5,998

 

Cash flows from investing activities:

 

 

 

 

Purchases of property and equipment

 

(2,783

)

 

(3,464

)

Purchase of short-term investments

 

(29,650

)

 

(3,911

)

Maturities of short-term investments

 

4,000

 

 

4,000

 

Net cash used in investing activities

 

(28,433

)

 

(3,375

)

Cash flows from financing activities:

 

 

 

 

Cash distributions to stockholders

 

(5,049

)

 

(5,201

)

Purchase of common stock (including commissions)

 

(1,810

)

 

(9,467

)

Purchase of common stock for tax withholding on vested equity awards

 

(1,017

)

 

(894

)

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

 

119

 

 

143

 

Net cash used in financing activities

 

(7,757

)

 

(15,419

)

Effect of exchange rate on cash

 

(93

)

 

(598

)

Net decrease in cash and cash equivalents

 

(35,514

)

 

(13,394

)

Cash and cash equivalents, beginning of period

 

83,343

 

 

103,179

 

Cash and cash equivalents, end of period

 

$

47,829

 

 

$

89,785

 

Supplemental disclosure:

 

 

 

 

Income taxes paid

 

$

683

 

 

$

457

 

 

 

 

 

 

(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

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paging

 

$

21,342

 

 

$

21,687

 

 

$

21,997

 

 

$

22,442

 

 

$

22,824

 

 

$

23,308

 

 

$

23,624

 

 

$

24,128

 

Non-paging

 

785

 

 

923

 

 

1,094

 

 

817

 

 

834

 

 

961

 

 

955

 

 

982

 

Total wireless revenue

 

$

22,127

 

 

$

22,610

 

 

$

23,091

 

 

$

23,259

 

 

$

23,658

 

 

$

24,269

 

 

$

24,579

 

 

$

25,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

1,676

 

 

2,840

 

 

3,496

 

 

3,175

 

 

1,993

 

 

4,376

 

 

2,990

 

 

2,572

 

Services

 

4,835

 

 

5,206

 

 

5,103

 

 

4,555

 

 

4,363

 

 

4,071

 

 

5,437

 

 

5,189

 

Equipment

 

842

 

 

963

 

 

1,568

 

 

1,296

 

 

1,107

 

 

1,024

 

 

945

 

 

1,102

 

Operations revenue

 

$

7,353

 

 

$

9,009

 

 

$

10,167

 

 

$

9,026

 

 

$

7,463

 

 

$

9,471

 

 

$

9,372

 

 

$

8,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance revenue

 

$

10,045

 

 

$

10,145

 

 

$

9,998

 

 

$

10,191

 

 

$

9,507

 

 

$

9,374

 

 

$

9,819

 

 

$

9,663

 

Total software revenue

 

$

17,398

 

 

$

19,154

 

 

$

20,165

 

 

$

19,217

 

 

$

16,970

 

 

$

18,845

 

 

$

19,191

 

 

$

18,526

 

 

Total revenue

 

$

39,525

 

 

$

41,764

 

 

$

43,256

 

 

$

42,476

 

 

$

40,628

 

 

$

43,114

 

 

$

43,770

 

 

$

43,636

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

Cost of revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

$

4,749

 

 

$

4,931

 

 

$

4,868

 

 

$

4,923

 

 

$

4,853

 

 

$

4,874

 

 

$

4,374

 

 

$

4,330

 

Cost of sales

 

1,900

 

 

2,080

 

 

3,349

 

 

2,623

 

 

2,119

 

 

2,475

 

 

1,990

 

 

2,228

 

Stock based compensation

 

97

 

 

107

 

 

44

 

 

75

 

 

75

 

 

55

 

 

58

 

 

4

 

Other

 

493

 

 

474

 

 

511

 

 

520

 

 

549

 

 

474

 

 

700

 

 

507

 

Total cost of revenue (b)

 

7,239

 

 

7,592

 

 

8,772

 

 

8,141

 

 

7,596

 

 

7,878

 

 

7,122

 

 

7,069

 

Research and development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

4,639

 

 

4,263

 

 

4,350

 

 

4,709

 

 

4,506

 

 

4,002

 

 

3,521

 

 

4,005

 

Outside services

 

1,912

 

 

1,745

 

 

2,115

 

 

1,040

 

 

1,481

 

 

1,513

 

 

1,361

 

 

849

 

Stock based compensation

 

84

 

 

11

 

 

5

 

 

71

 

 

90

 

 

71

 

 

(71

)

 

43

 

Other

 

172

 

 

148

 

 

148

 

 

114

 

 

100

 

 

149

 

 

123

 

 

104

 

Total research and development

 

6,807

 

 

6,167

 

 

6,618

 

 

5,934

 

 

6,177

 

 

5,735

 

 

4,934

 

 

5,001

 

Technology operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

2,662

 

 

2,647

 

 

2,616

 

 

2,866

 

 

2,618

 

 

2,693

 

 

2,413

 

 

2,582

 

Site rent

 

3,480

 

 

3,296

 

 

3,432

 

 

3,482

 

 

3,538

 

 

3,496

 

 

3,471

 

 

3,534

 

Telecommunications

 

1,019

 

 

996

 

 

1,021

 

 

950

 

 

935

 

 

898

 

 

979

 

 

1,060

 

Stock based compensation

 

30

 

 

30

 

 

24

 

 

24

 

 

24

 

 

24

 

 

20

 

 

20

 

Other

 

675

 

 

705

 

 

1,027

 

 

465

 

 

583

 

 

639

 

 

734

 

 

679

 

Total technology operations

 

7,866

 

 

7,674

 

 

8,120

 

 

7,787

 

 

7,698

 

 

7,750

 

 

7,617

 

 

7,875

 

Selling and marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

3,329

 

 

3,273

 

 

3,047

 

 

3,401

 

 

3,311

 

 

3,294

 

 

2,573

 

 

3,113

 

Commissions

 

1,298

 

 

1,424

 

 

1,759

 

 

1,225

 

 

1,397

 

 

1,774

 

 

1,634

 

 

1,234

 

Stock based compensation

 

128

 

 

161

 

 

99

 

 

135

 

 

135

 

 

135

 

 

93

 

 

84

 

Advertising and events

 

656

 

 

933

 

 

1,236

 

 

857

 

 

996

 

 

1,158

 

 

1,481

 

 

952

 

Other

 

163

 

 

319

 

 

134

 

 

98

 

 

254

 

 

129

 

 

258

 

 

150

 

Total selling and marketing

 

5,574

 

 

6,110

 

 

6,275

 

 

5,716

 

 

6,093

 

 

6,490

 

 

6,039

 

 

5,533

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

4,136

 

 

4,041

 

 

4,087

 

 

4,834

 

 

4,340

 

 

4,416

 

 

3,649

 

 

4,569

 

Stock based compensation

 

690

 

 

219

 

 

860

 

 

1,118

 

 

943

 

 

949

 

 

774

 

 

711

 

Bad debt

 

(96

)

 

308

 

 

303

 

 

513

 

 

279

 

 

528

 

 

143

 

 

184

 

Facility rent and office costs

 

2,485

 

 

2,294

 

 

1,573

 

 

1,235

 

 

1,824

 

 

2,144

 

 

1,865

 

 

2,013

 

Outside services

 

2,306

 

 

1,776

 

 

2,561

 

 

3,554

 

 

2,942

 

 

1,919

 

 

2,924

 

 

2,351

 

Taxes, licenses and permits

 

863

 

 

921

 

 

111

 

 

1,081

 

 

1,024

 

 

1,080

 

 

1,120

 

 

1,077

 

Other

 

1,312

 

 

1,188

 

 

1,226

 

 

1,338

 

 

1,389

 

 

928

 

 

1,220

 

 

1,153

 

Total general and administrative

 

11,696

 

 

10,747

 

 

10,721

 

 

13,673

 

 

12,741

 

 

11,964

 

 

11,695

 

 

12,058

 

Depreciation, amortization and accretion

 

2,335

 

 

2,359

 

 

2,601

 

 

2,785

 

 

2,669

 

 

2,713

 

 

2,774

 

 

2,775

 

Operating expenses

 

$

41,517

 

 

$

40,649

 

 

$

43,107

 

 

$

44,036

 

 

$

42,974

 

 

$

42,530

 

 

$

40,181

 

 

$

40,311

 

Capital expenditures

 

$

1,495

 

 

$

1,287

 

 

$

830

 

 

$

1,630

 

 

$

2,299

 

 

$

1,164

 

 

$

2,179

 

 

$

1,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

(b) An adjustment of $771 to cost of sales, identified in the fourth quarter of 2018, has been reflected in this table as an increase to cost of sales of $166, $196 and $359 in the first, second and third quarters of 2018, respectively. Total cost of revenue and operating expenses have been adjusted accordingly to reflect these changes.

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

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

Paging units in service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning units in service (000's)

 

982

 

 

992

 

 

999

 

 

1,024

 

 

1,030

 

 

1,049

 

 

1,063

 

 

1,086

 

Gross placements

 

35

 

 

27

 

 

30

 

 

31

 

 

35

 

 

25

 

 

26

 

 

30

 

Gross disconnects

 

(40

)

 

(37

)

 

(37

)

 

(56

)

 

(41

)

 

(44

)

 

(40

)

 

(53

)

Net change

 

(5

)

 

(10

)

 

(7

)

 

(25

)

 

(6

)

 

(19

)

 

(14

)

 

(23

)

Ending units in service

 

977

 

 

982

 

 

992

 

 

999

 

 

1,024

 

 

1,030

 

 

1,049

 

 

1,063

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

81.7

%

 

81.6

%

 

81.4

%

 

81.7

%

 

81.5

%

 

81.1

%

 

80.7

%

 

80.4

%

Government

 

5.6

%

 

5.8

%

 

5.8

%

 

5.8

%

 

5.7

%

 

5.9

%

 

6.0

%

 

6.1

%

Large enterprise

 

5.9

%

 

5.9

%

 

5.9

%

 

6.0

%

 

6.0

%

 

6.0

%

 

6.0

%

 

6.0

%

Other(b)

 

6.8

%

 

6.7

%

 

6.9

%

 

6.5

%

 

6.8

%

 

7.0

%

 

7.2

%

 

7.4

%

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

 

74

 

 

77

 

 

78

 

 

81

 

 

85

 

 

88

 

 

92

 

 

95

 

101 to 1,000 units

 

179

 

 

186

 

 

190

 

 

192

 

 

197

 

 

198

 

 

198

 

 

201

 

>1,000 units

 

724

 

 

719

 

 

724

 

 

726

 

 

742

 

 

744

 

 

759

 

 

767

 

Total

 

977

 

 

982

 

 

992

 

 

999

 

 

1,024

 

 

1,030

 

 

1,049

 

 

1,063

 

Account size net loss rate(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

(3.2

)%

 

(2.3

)%

 

(1.7

)%

 

(4.3

)%

 

(3.8

)%

 

(4.7

)%

 

(3.6

)%

 

(2.8

)%

101 to 1,000 units

 

(3.9

)%

 

(2.3

)%

 

%

 

(2.7

)%

 

(0.6

)%

 

(10.0

)%

 

(1.1

)%

 

(1.8

)%

>1,000 units

 

0.7

%

 

(1.1

)%

 

(0.1

)%

 

(2.2

)%

 

(0.2

)%

 

(1.9

)%

 

(1.1

)%

 

(2.2

)%

Total

 

(0.5

)%

 

(1.1

)%

 

(0.2

)%

 

(2.5

)%

 

(0.6

)%

 

(1.8

)%

 

(1.3

)%

 

(2.2

)%

Account size ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

$

12.00

 

 

$

11.90

 

 

$

11.61

 

 

$

11.33

 

 

$

12.04

 

 

$

12.13

 

 

$

12.11

 

 

$

12.23

 

101 to 1,000 units

 

8.47

 

 

8.35

 

 

8.28

 

 

8.19

 

 

8.34

 

 

8.47

 

 

8.58

 

 

8.62

 

>1,000 units

 

6.47

 

 

6.57

 

 

6.69

 

 

6.74

 

 

6.62

 

 

6.65

 

 

6.59

 

 

6.59

 

Total

 

$

7.26

 

 

$

7.32

 

 

$

7.36

 

 

$

7.40

 

 

$

7.41

 

 

$

7.47

 

 

$

7.46

 

 

$

7.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 FROM NET INCOME (LOSS) TO EBITDA (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

Reconciliation of net income (loss) to EBITDA (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) (c)

 

$

(670

)

 

$

742

 

 

$

189

 

 

$

(840

)

 

$

(1,172

)

 

$

345

 

 

$

(21,384

)

 

$

3,727

 

Plus (less): provision for (benefit from) income taxes

 

(268

)

 

586

 

 

(5

)

 

(446

)

 

(730

)

 

475

 

 

24,920

 

 

171

 

Plus (less): Other expense (income)

 

(602

)

 

236

 

 

593

 

 

110

 

 

(102

)

 

47

 

 

282

 

 

(359

)

Less: Interest income

 

(452

)

 

(449

)

 

(628

)

 

(384

)

 

(342

)

 

(283

)

 

(229

)

 

(214

)

Operating income (loss)

 

(1,992

)

 

1,115

 

 

149

 

 

(1,560

)

 

(2,346

)

 

584

 

 

3,589

 

 

3,325

 

Plus: depreciation, amortization and accretion

 

2,335

 

 

2,359

 

 

2,601

 

 

2,785

 

 

2,669

 

 

2,713

 

 

2,774

 

 

2,775

 

EBITDA (as defined by the Company)

 

$

343

 

 

$

3,474

 

 

$

2,750

 

 

$

1,225

 

 

$

323

 

 

$

3,297

 

 

$

6,363

 

 

$

6,100

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the six months ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6/30/2019

 

6/30/2018

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of net income (loss) to EBITDA (b):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

72

 

 

$

(827

)

 

 

 

 

 

 

 

 

 

 

 

 

(Less) plus: (Benefit from) provision for income taxes

 

318

 

 

(255

)

 

 

 

 

 

 

 

 

 

 

 

 

Plus (less): Other income (expense)

 

(367

)

 

(54

)

 

 

 

 

 

 

 

 

 

 

 

 

Less: Interest income

 

(901

)

 

(625

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

(878

)

 

(1,761

)

 

 

 

 

 

 

 

 

 

 

 

 

Plus: depreciation, amortization and accretion

 

4,694

 

 

5,382

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA (as defined by the Company)

 

$

3,816

 

 

$

3,621

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION FROM OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

 

 

 

 

 

For the three months ended

 

 

6/30/2019

 

3/31/2019

 

12/31/2018

 

9/30/2018

 

6/30/2018

 

3/31/2018

 

12/31/2017

 

9/30/2017

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

41,517

 

 

$

40,649

 

 

$

43,107

 

 

$

44,036

 

 

$

42,974

 

 

$

42,530

 

 

$

40,181

 

 

$

40,311

 

Less: depreciation, amortization and accretion

 

2,335

 

 

2,359

 

 

2,601

 

 

2,785

 

 

2,669

 

 

2,713

 

 

2,774

 

 

2,775

 

Adjusted operating expenses

 

$

39,182

 

 

$

38,290

 

 

$

40,506

 

 

$

41,251

 

 

$

40,305

 

 

$

39,817

 

 

$

37,407

 

 

$

37,536

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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. Management and the Board of Directors rely on EBITDA for purposes of determining the Company’s capital allocation policies. EBITDA is also the starting point for the calculation of operating cash flow for purposes of determining whether management has achieved certain performance objectives in the Company’s short-term and long-term incentive plans.

(c) An adjustment to cost of revenue identified in the fourth quarter of 2018 of $771 has been reflected in this table as a reduction of Net income (loss) of $166, $196 $359, and $771 in the first, second third, and fourth quarters respectively.

 

Source: Spok Holdings, Inc.

Al Galgano
952-567-0295
Al.Galgano@spok.com