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Spok Reports First Quarter 2019 Operating Results; Record First Quarter Software Revenue; Continued Strong Wireless Trends

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--(BUSINESS WIRE)--Apr. 24, 2019-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the first quarter ended March 31, 2019. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 24, 2019, to stockholders of record on May 24, 2019.

Key First-Quarter Operating Highlights:

  • Record first quarter software revenue of $19.2 million was up 1.6 percent from software revenue of $18.8 million in the prior year quarter. Included in first quarter software revenue was $9.0 million of operations revenue and $10.2 million in maintenance revenue, compared to $9.4 million in operations revenue and $9.4 million in maintenance revenue in the first quarter of 2018.
  • Software bookings in the first quarter totaled $14.7 million. First quarter bookings included $6.0 million of operations bookings and $8.7 million of maintenance renewals.
  • The renewal rate for software maintenance revenue in the first quarter of 2019 continued to exceed 99 percent.
  • The quarterly rate of paging unit erosion was 1.0 percent in the first quarter of 2019, compared to 0.7 percent in the prior quarter and down from 1.8 percent in the year-earlier period. Net paging unit losses were 10,000 in the first quarter of 2019, compared to 7,000 in the prior quarter and down from 19,000 in the first quarter of 2018. Paging units in service at March 31, 2019, totaled 982,000, compared to 1,030,000 at March 31, 2018.
  • The quarterly rate of wireless revenue erosion was 2.1 percent in the first quarter of 2019, up from the record-low 0.7 percent erosion in the prior quarter and up from 1.3 percent in the year-earlier quarter.
  • Total paging ARPU (average revenue per unit) was $7.32 in the first quarter of 2019, compared to $7.47 in the year-earlier quarter and $7.36 in the prior quarter.
  • Operating expenses in the first quarter of 2019 totaled $40.6 million, compared to $42.5 million in the prior year quarter. Adjusted operating expenses (excludes depreciation, amortization and accretion) totaled $38.3 million in the first quarter of 2019, down from $40.5 million in the prior quarter and $39.8 million in the year-earlier quarter.
  • Capital expenses were $1.3 million in the first quarter of 2019, compared to $1.2 million in the year-earlier quarter.
  • The number of full-time equivalent employees at March 31, 2019, totaled 591, compared to 599 in the prior year quarter.
  • Capital paid to stockholders in the first quarter of 2019 totaled $4.5 million. This came in the form of approximately $2.7 million from the regular quarterly dividend and approximately $1.8 million from share repurchases.
  • The Company’s cash, cash equivalents and short-term investments balance at March 31, 2019, was $81.8 million, compared to $87.3 million at December 31, 2018.

2019 First-Quarter Results:

Consolidated revenue for the first quarter of 2019 under Generally Accepted Accounting Principles (“GAAP”) was $41.8 million compared to $43.1 million in the first quarter of 2018.

             
      For the three months ended      
                 

Change

(Dollars in thousands)     March 31, 2019     March 31, 2018    

(%)

Wireless revenue                  
Paging revenue     $ 21,687     $ 23,308     (7.0 )%
Product and other revenue       923       961     (4.0 )%
Total wireless revenue     $ 22,610     $ 24,269     (6.8 )%
                   
Software revenue                  
Operations revenue     $ 9,009     $ 9,471     (4.9 )%
Maintenance revenue       10,145       9,374     8.2 %
Total software revenue       19,154       18,845     1.6 %
Total revenue     $ 41,764     $ 43,114     (3.1 )%
                   

GAAP net income for the first quarter of 2019 was $0.7 million, or $0.04 per diluted share, compared to net income of $0.3 million, or $0.02 per diluted share, in the first quarter of 2018. In the first quarter of 2019, the Company generated $3.5 million of EBITDA (earnings before interest, taxes, depreciation and amortization), compared to EBITDA of $3.3 million in the prior year quarter.

       
      For the three months ended
(Dollars in thousands)     March 31, 2019     March 31, 2018
Net income     $ 742     $ 345
Diluted net income per share     $ 0.04     $ 0.02
EBITDA     $ 3,474     $ 3,297
                 

Management Commentary:

“We are encouraged with our performance in the first quarter of 2019, as it was in-line with our seasonal expectations, and believe it provides a solid basis for continued improvement through the remainder of the year,” said Vincent D. Kelly, president and chief executive officer. “We were particularly pleased with the record-high level of first quarter software revenue and the sustained performance in our wireless business.”

In the first quarter of 2019, Spok paid $4.5 million in capital to stockholders. During the quarter, the Company paid approximately $2.7 million in regular quarterly dividends and repurchased 131,012 shares of common stock, totaling approximately $1.8 million. “In the first quarter of 2019, we were proud to be able to execute against our capital allocation strategy, returning capital through dividends and share repurchases," continued Kelly. "This quarter represents our 51st consecutive quarter of paying a dividend. We have been able to achieve this milestone while continuing to invest in the evolution of our integrated communication platform, Spok Care Connect®, and remaining a debt-free company."

Kelly noted that in addition to the financial performance the Company was able to achieve in the first quarter of 2019, progress was made in several other areas, including product development, sales strategy and key strategic partnership agreements. “Spok continues to build an industry-leading reputation,” commented Kelly. “During the quarter, we added more than a dozen new customers to the Spok family. We intend to carry that momentum throughout 2019 to stimulate long-term growth."

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 first quarter, adjusted operating expenses were down on both a sequential and year-over-year basis, with improvements in most expense categories. Spok’s balance sheet remains strong, with a cash, cash equivalents and short-term investment balance of $81.8 million at March 31, 2019.”

Business Outlook:

Commenting on the Company’s previously provided financial guidance for 2019, Wallace noted: “We are pleased that the first 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 First-Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2019 first quarter results at 10:00 a.m. ET on Thursday, April 25, 2019. Dial-in numbers for the call are 334-323-0522 or 877-260-1479. The pass code for the call is 4329354. A replay of the call will be available from 1:00 p.m. ET on April 25, 2019 until 1:00 p.m. ET on Thursday, May 9, 2019. To listen to the replay, please register at http://tinyurl.com/Spok2019Q1earningsreplay. Please enter the registration information, and you will be given access to the replay.

About Spok

Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., is proud to be the 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. When seconds count, count on Spok. 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.

 
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
     

3/31/2019

   

3/31/2018

Revenue:            
Wireless     $ 22,610       $ 24,269  
Software       19,154         18,845  
Total revenue       41,764         43,114  
Operating expenses:            
Cost of revenue       7,592         7,878  
Research and development       6,167         5,735  
Technology operations       7,674         7,750  
Selling and marketing       6,110         6,490  
General and administrative       10,747         11,964  
Depreciation, amortization and accretion       2,359         2,713  
Total operating expenses       40,649         42,530  
% of total revenue       97.3 %       98.6 %
Operating income       1,115         584  
% of total revenue       2.7 %       1.4 %
Interest income       449         283  
Other (expense) income       (236 )       (47 )
Income before income taxes expense       1,328         820  
                     
Income tax expense       (586 )       (475 )
                     
Net income     $ 742       $ 345  
Basic and diluted net income per common share     $ 0.04       $ 0.02  
Basic weighted average common shares outstanding       19,196,970         20,027,800  
                     
Diluted weighted average common shares outstanding       19,356,712         20,153,291  
                     
Cash dividends declared per common share       0.125         0.125  
Key statistics:            
Units in service       982         1,030  
Average revenue per unit (ARPU)     $ 7.32       $ 7.47  
Bookings     $ 14,654       $ 18,124  
Backlog     $ 37,392       $ 35,930  
             
(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
     

3/31/2019

   

12/31/2018

   

9/30/2018

   

6/30/2018

   

3/31/2018

    12/31/2017    

9/30/2017

   

6/30/2017

Revenue:                                                
Wireless     $ 22,610       $ 23,091       $ 23,259       $ 23,658       $ 24,269       $ 24,579       $ 25,110       $ 25,639  
Software       19,154         20,165         19,217         16,970         18,845         19,191         18,526         16,686  
Total revenue       41,764         43,256         42,476         40,628         43,114         43,770         43,636         42,325  
Operating expenses:                                                
Cost of revenue (b)       7,592         8,772         8,141         7,596         7,878         7,122         7,069         7,190  
Research and development       6,167         6,618         5,934         6,177         5,735         4,934         5,001         4,662  
Technology operations       7,674         8,120         7,787         7,698         7,750         7,617         7,875         7,944  
Selling and marketing       6,110         6,275         5,716         6,093         6,490         6,039         5,533         5,329  
General and administrative       10,747         10,721         13,673         12,741         11,964         11,695         12,058         11,939  
Depreciation, amortization and accretion       2,359         2,601         2,785         2,669         2,713         2,774         2,775         2,851  
Total operating expenses       40,649         43,107         44,036         42,974         42,530         40,181         40,311         39,915  
% of total revenue       97.3 %       99.7 %       103.7 %       105.8 %       98.6 %       91.8 %       92.4 %       94.3 %
Operating income (loss)       1,115         149         (1,560 )       (2,346 )       584         3,589         3,325         2,410  
% of total revenue       2.7 %       0.3 %       (3.7 )%       (5.8 )%       1.4 %       8.2 %       7.6 %       5.7 %
Interest income       449         628         384         342         283         229         214         154  
Other (expense) income       (236 )       (593 )       (110 )       102         (47 )       (282 )       359         89  
Income (loss) before income taxes       1,328         184         (1,286 )       (1,902 )       820         3,536         3,898         2,653  
Income tax (expense) benefit       (586 )       5         446         730         (475 )       (24,920 )       (171 )       (1,155 )
Net income (loss)     $ 742       $ 189       $ (840 )     $ (1,172 )     $ 345       $ (21,384 )     $ 3,727       $ 1,498  
Basic and diluted net (loss) income per common share     $ 0.04       $ 0.01       $ (0.04 )     $ (0.06 )     $ 0.02       $ (1.07 )     $ 0.19       $ 0.07  
Basic weighted average common shares outstanding       19,196,970         19,445,401         19,456,149         19,750,941         20,027,800         19,987,763         19,977,263         20,353,801  
Diluted weighted average common shares outstanding       19,356,712         19,445,401         19,456,149         19,750,941         20,153,291         19,987,763         20,008,321         20,366,102  
Key statistics:                                                
Units in service       982         992         999         1,024         1,030         1,049         1,063         1,086  
Average revenue per unit (ARPU)     $ 7.32       $ 7.36       $ 7.40       $ 7.41       $ 7.47       $ 7.46       $ 7.48       $ 7.52  
Bookings     $ 14,654       $ 23,076       $ 21,580       $ 18,488       $ 18,124       $ 19,190       $ 18,327       $ 20,405  
Backlog     $ 37,392       $ 40,422       $ 36,366       $ 36,295       $ 35,930       $ 42,305       $ 46,900       $ 43,455  
                                                 
(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 (loss) income, (loss) income 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)
             
     

3/31/2019

   

12/31/2018

      Unaudited      
Assets            
Current assets:            
Cash and cash equivalents     $ 62,927       $ 83,343  
Short term investments       18,868         3,963  
Accounts receivable, net       36,721         32,386  
Prepaid expenses and other       8,666         9,578  
Inventory       1,436         1,708  
Total current assets       128,618         130,978  
Non-current assets:            
Property and equipment, net       9,823         10,354  
Operating Lease right-of-use assets       16,965          
Goodwill       133,031         133,031  
Intangible assets, net       4,792         5,417  
Deferred income tax assets       45,967         46,484  
Other non-current assets       1,406         1,448  
Total non-current assets       211,984         196,734  
Total assets     $ 340,602       $ 327,712  
Liabilities and stockholders' equity            
Current liabilities:            
Accounts payable     $ 3,358       $ 2,010  
Accrued compensation and benefits       9,158         11,348  
Accrued taxes       1,812         1,822  
Deferred revenue       28,091         26,106  
Operating lease liabilities       5,286          
Other current liabilities       2,845         3,662  
Total current liabilities       50,550         44,948  
Non-current liabilities:            
Asset Retirement obligations       6,615         6,513  
Deferred revenue       470         476  
Operating lease liabilities       12,204          
Other long-term liabilities       229         1,221  
Total non-current liabilities       19,518         8,210  
Total liabilities       70,068         53,158  
Commitments and contingencies            
Stockholders' equity:            
Preferred stock     $       $  
Common stock       2         2  
Additional paid-in capital       88,266         90,559  
Accumulated other comprehensive loss       (1,361 )       (1,301 )
Retained earnings       183,627         185,294  
Total stockholders' equity       270,534         274,554  
Total liabilities and stockholders' equity     $ 340,602       $ 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 three months ended
     

3/31/2019

   

3/31/2018

Cash flows provided by operating activities:            
Net income     $ 742       $ 345  
Adjustments to reconcile net loss to net cash provided by operating activities:            
Depreciation, amortization and accretion       2,359         2,713  
Deferred income tax expense       517         475  
Stock based compensation       528         1,234  
Provisions for doubtful accounts, service credits and other       374         628  
Adjustments of non-cash transaction taxes               (53 )
Changes in assets and liabilities:            
Accounts receivable       (4,791 )       (4,106 )
Prepaid expenses, inventory and other assets       (15,515 )       (1,215 )
Accounts payable, accrued liabilities and other       15,206         (2,182 )
Deferred revenue       1,803         3,106  
Net cash provided by operating activities       1,223         945  
Cash flows from investing activities:            
Purchases of property and equipment       (1,287 )       (1,164 )
Purchase of short-term investments       (14,824 )        
Net cash used in investing activities       (16,111 )       (1,164 )
Cash flows from financing activities:            
Cash distributions to stockholders       (2,647 )       (2,740 )
Purchase of common stock (including commissions)       (1,810 )       (1,927 )
Purchase of common stock for tax withholding on vested equity awards       (1,011 )       (892 )
Net cash used in financing activities       (5,468 )       (5,559 )
Effect of exchange rate on cash       (60 )       (256 )
Net decrease in cash and cash equivalents       (20,416 )       (6,034 )
Cash and cash equivalents, beginning of period       83,343         103,179  
Cash and cash equivalents, end of period     $ 62,927       $ 97,145  
Supplemental disclosure:            
Income taxes paid     $ 80       $ 50  
             
(a) Slight variations in totals are due to rounding.
 
 
SPOK HOLDINGS, INC.
CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
                                                 
      For the three months ended
     

3/31/2019

   

12/31/2018

   

9/30/2018

   

6/30/2018

   

3/31/2018

   

12/31/2017

   

9/30/2017

   

6/30/2017

Revenue                                                
Paging     $ 21,687     $ 21,997     $ 22,442     $ 22,824     $ 23,308     $ 23,624     $ 24,128     $ 24,572
Non-paging       923       1,094       817       834       961       955       982       1,067
Total wireless revenue     $ 22,610     $ 23,091     $ 23,259     $ 23,658     $ 24,269     $ 24,579     $ 25,110     $ 25,639
                                                 
License       2,840       3,496       3,175       1,993       4,376       2,990       2,572       2,264
Services       5,206       5,103       4,555       4,363       4,071       5,437       5,189       3,650
Equipment       963       1,568       1,296       1,107       1,024       945       1,102       1,127
Operations revenue     $ 9,009     $ 10,167     $ 9,026     $ 7,463     $ 9,471     $ 9,372     $ 8,863     $ 7,041
                                                 
Maintenance revenue     $ 10,145     $ 9,998     $ 10,191     $ 9,507     $ 9,374     $ 9,819     $ 9,663     $ 9,645
Total software revenue     $ 19,154     $ 20,165     $ 19,217     $ 16,970     $ 18,845     $ 19,191     $ 18,526     $ 16,686
                                                 
Total revenue     $ 41,764     $ 43,256     $ 42,476     $ 40,628     $ 43,114     $ 43,770     $ 43,636     $ 42,325
                                                 
(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
      3/31/2019     12/31/2018     9/30/2018     6/30/2018     3/31/2018     12/31/2017     9/30/2017     6/30/2017
Cost of revenue                                                
Payroll and related     $ 4,931     $ 4,868     $ 4,923     $ 4,853     $ 4,874     $ 4,374       $ 4,330     $ 4,613
Cost of sales       2,080       3,349       2,623       2,119       2,475       1,990         2,228       1,904
Stock based compensation       107       44       75       75       55       58         4       60
Other       474       511       520       549       474       700         507       613
Total cost of revenue (b)       7,592       8,772       8,141       7,596       7,878       7,122         7,069       7,190
Research and development                                                
Payroll and related       4,263       4,350       4,709       4,506       4,002       3,521         4,005       3,807
Outside services       1,745       2,115       1,040       1,481       1,513       1,361         849       659
Stock based compensation       11       5       71       90       71       (71 )       43       65
Other       148       148       114       100       149       123         104       131
Total research and development       6,167       6,618       5,934       6,177       5,735       4,934         5,001       4,662
Technology operations                                                
Payroll and related       2,647       2,616       2,866       2,618       2,693       2,413         2,582       2,607
Site rent       3,296       3,432       3,482       3,538       3,496       3,471         3,534       3,604
Telecommunications       996       1,021       950       935       898       979         1,060       1,001
Stock based compensation       30       24       24       24       24       20         20       20
Other       705       1,027       465       583       639       734         679       712
Total technology operations       7,674       8,120       7,787       7,698       7,750       7,617         7,875       7,944
Selling and marketing                                                
Payroll and related       3,273       3,047       3,401       3,311       3,294       2,573         3,113       3,039
Commissions       1,424       1,759       1,225       1,397       1,774       1,634         1,234       1,121
Stock based compensation       161       99       135       135       135       93         84       99
Advertising and events       933       1,236       857       996       1,158       1,481         952       840
Other       319       134       98       254       129       258         150       230
Total selling and marketing       6,110       6,275       5,716       6,093       6,490       6,039         5,533       5,329
General and administrative                                                
Payroll and related       4,041       4,087       4,834       4,340       4,416       3,649         4,569       4,420
Stock based compensation       219       860       1,118       943       949       774         711       755
Bad debt       308       303       513       279       528       143         184       107
Facility rent and office costs       2,294       1,573       1,553       1,824       2,144       1,865         2,013       1,995
Outside services       1,776       2,561       3,236       2,942       1,919       2,924         2,351       2,507
Taxes, licenses and permits       921       111       1,081       1,024       1,080       1,120         1,077       1,034
Other       1,188       1,226       1,338       1,389       928       1,220         1,153       1,121
Total general and administrative       10,747       10,721       13,673       12,741       11,964       11,695         12,058       11,939
Depreciation, amortization and accretion       2,359       2,601       2,785       2,669       2,713       2,774         2,775       2,851
Operating expenses     $ 40,649     $ 43,107     $ 44,036     $ 42,974     $ 42,530     $ 40,181       $ 40,311     $ 39,915
Capital expenditures     $ 1,287     $ 830     $ 1,630     $ 2,299     $ 1,164     $ 2,179       $ 1,816     $ 2,353
                                                 
(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
     

3/31/2019

   

12/31/2018

   

9/30/2018

   

6/30/2018

   

3/31/2018

   

12/31/2017

   

9/30/2017

   

6/30/2017

Paging units in service

                                               
Beginning units in service (000's)       992         999         1,024         1,030         1,049         1,063         1,086         1,091  
Gross placements       27         30         31         35         25         26         30         42  
Gross disconnects       (37 )       (37 )       (56 )       (41 )       (44 )       (40 )       (53 )       (47 )
Net change       (10 )       (7 )       (25 )       (6 )       (19 )       (14 )       (23 )       (5 )
Ending units in service       982         992         999         1,024         1,030         1,049         1,063         1,086  
End of period units in service % of total (b)                                                
Healthcare       81.6 %       81.4 %       81.7 %       81.5 %       81.1 %       80.7 %       80.4 %       80.4 %
Government       5.8 %       5.8 %       5.8 %       5.7 %       5.9 %       6.0 %       6.1 %       6.3 %
Large enterprise       5.9 %       5.9 %       6.0 %       6.0 %       6.0 %       6.0 %       6.0 %       6.1 %
Other(b)       6.7 %       6.9 %       6.5 %       6.8 %       7.0 %       7.2 %       7.4 %       7.3 %
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       77         78         81         85         88         92         95         98  
101 to 1,000 units       186         190         192         197         198         198         201         204  
>1,000 units       719         724         726         742         744         759         767         784  
Total       982         992         999         1,024         1,030         1,049         1,063         1,086  
Account size net loss rate(c)                                                
1 to 100 units       (2.3 )%       (1.7 )%       (4.3 )%       (3.8 )%       (4.7 )%       (3.6 )%       (2.8 )%       (3.7 )%
101 to 1,000 units       (2.3 )%       %       (2.7 )%       (0.6 )%       (10.0 )%       (1.1 )%       (1.8 )%       (4.5 )%
>1,000 units       (1.1 )%       (0.1 )%       (2.2 )%       (0.2 )%       (1.9 )%       (1.1 )%       (2.2 )%       1.1 %
Total       (1.1 )%       (0.2 )%       (2.5 )%       (0.6 )%       (1.8 )%       (1.3 )%       (2.2 )%       (0.4 )%
Account size ARPU                                                
1 to 100 units     $ 11.90       $ 11.61       $ 11.33       $ 12.04       $ 12.13       $ 12.11       $ 12.23       $ 12.16  
101 to 1,000 units       8.35         8.28         8.19         8.34         8.47         8.58         8.62         8.61  
>1,000 units       6.57         6.69         6.74         6.62         6.65         6.59         6.59         6.64  
Total     $ 7.32       $ 7.36       $ 7.40       $ 7.41       $ 7.47       $ 7.46       $ 7.48       $ 7.52  
                                                 
(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
     

3/31/2019

   

12/31/2018

   

9/30/2018

   

6/30/2018

   

3/31/2018

   

12/31/2017

   

9/30/2017

   

6/30/2017

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

                                               
Net income (loss) (c)     $ 742       $ 189       $ (840 )     $ (1,172 )     $ 345       $ (21,384 )     $ 3,727       $ 1,498  

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

      586         (5 )       (446 )       (730 )       475         24,920         171         1,155  
Plus (less): Other expense (income)       236         593         110         (102 )       47         282         (359 )       (89 )
Less: Interest income       (449 )       (628 )       (384 )       (342 )       (283 )       (229 )       (214 )       (154 )
Operating income (loss)       1,115         149         (1,560 )       (2,346 )       584         3,589         3,325         2,410  
Plus: depreciation, amortization and accretion       2,359         2,601         2,785         2,669         2,713         2,774         2,775         2,851  
EBITDA (as defined by the Company)     $ 3,474       $ 2,750       $ 1,225       $ 323       $ 3,297       $ 6,363       $ 6,100       $ 5,261  
                                                 

RECONCILIATION FROM OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

       
      For the three months ended
     

3/31/2019

   

12/31/2018

   

9/30/2018

   

6/30/2018

   

3/31/2018

   

12/31/2017

   

9/30/2017

   

6/30/2017

(Dollars in thousands)                                                
Operating expenses     $ 40,649       $ 43,107       $ 44,036       $ 42,974       $ 42,530       $ 40,181       $ 40,311       $ 39,915  
(Less) depreciation, amortization and accretion       2,359         2,601         2,785         2,669         2,713         2,774         2,775         2,851  
Adjusted operating expenses     $ 38,290       $ 40,506       $ 41,251       $ 40,305       $ 39,817       $ 37,407       $ 37,536       $ 37,064  
                                                 
(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