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Spok Reports First Quarter Operating Results

Software Revenue and Bookings Increase;

Wireless Trends Continue to Improve;

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--(BUSINESS WIRE)--Apr. 29, 2015-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in critical communications, today announced operating results for the first quarter ended March 31, 2015. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 25, 2015 to stockholders of record on May 22, 2015.

Software revenue increased 10.7 percent to $17.4 million in the first quarter from $15.8 million in the year-earlier quarter, while wireless revenue was $30.7 million versus $34.3 million in the first quarter of 2014. Consolidated revenue for the first quarter was $48.1 million, compared to $50.1 million in the first quarter of 2014.

First quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $10.0 million, or 20.8 percent of revenue, compared to $12.1 million, or 24.2 percent of revenue, in the year-earlier quarter, and $8.7 million, or 16.9 percent of revenue, in the fourth quarter of 2014.

Net income for the first quarter was $3.9 million, or $0.18 per fully diluted share, compared to $4.9 million, or $0.22 per fully diluted share, in the first quarter of 2014.

Other key results and highlights for the first quarter included:

  • Software bookings increased to $17.7 million from $16.9 million in the year-earlier quarter. First quarter bookings included $8.8 million of operations bookings and $8.9 million of maintenance renewals.
  • Software backlog totaled $40.6 million at March 31, 2015, compared to $41.4 million a year earlier.
  • Of the $17.4 million in software revenue for the first quarter, $9.4 million was operations revenue and $8.0 million was maintenance revenue, compared to $8.4 million and $7.4 million, respectively, of the $15.8 million in software revenue for the first quarter of 2014.
  • The renewal rate for software maintenance in the first quarter was 99.7 percent.
  • The quarterly rate of paging unit erosion improved to 2.1 percent in the first quarter, compared to 3.5 percent in the year-earlier quarter, while the annual rate of unit erosion improved to 7.3 percent from 10.3 percent in the year-earlier quarter, and was the Company’s lowest rate of net unit loss in more than a decade. Net paging unit losses total 26,000 versus 49,000 in the first quarter of 2014. Paging units in service at March 31, 2015 totaled 1,230,000, compared to 1,327,000 a year earlier.
  • The quarterly rate of wireless revenue erosion improved to 3.1 percent in the first quarter from 4.1 percent in the year-earlier quarter, while the annual rate of wireless revenue erosion improved to 10.7 percent versus 11.4 percent in the first quarter of 2014.
  • Total paging ARPU (average revenue per unit) was $7.91, compared to $8.11 in the year-earlier quarter and $7.92 in the fourth quarter of 2014.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $38.1 million in the first quarter, compared to $38.0 million in the year-earlier quarter.
  • Capital expenses were $1.0 million, compared to $2.6 million in the year-earlier quarter.
  • Capital returned to stockholders in the form of dividends and share repurchases in the first quarter totaled $3.3 million and $0.5 million, respectively.
  • The Company’s cash balance at March 31, 2015 was $105.6 million.
  • The number of full-time equivalent employees at March 31, 2015 totaled 604, compared to 587 at year-end 2014.

Vincent D. Kelly, president and chief executive officer, said: “Our continued focus is to invest in and build our company for long-term consolidated growth. We are doing that by growing our software revenue while managing our declining paging revenue. We are not yet at the point where our software revenue growth exceeds our paging revenue decline on an annual basis. However, we are on plan and believe we started the year on a very positive note. We met or exceeded our expectations on most key operating metrics for the quarter, including revenue, cash flow, software bookings and subscriber churn. Software revenue and bookings increased from the year-earlier quarter and our backlog and pipeline remained strong. In addition, wireless trends continued to improve as our annual paging unit churn reached its best level in many years. Overall, we continued to operate profitably, enhance our product offerings, expand our global market reach, and generate sufficient cash flow to again return capital to stockholders in the form of cash dividends and share repurchases.”

Commenting on software results, Kelly said: “Software revenue totaled $17.4 million for the first quarter, a record high for the first quarter of our fiscal year, and third highest quarterly software revenue result in the Company’s history.” He attributed the increase in part to larger contract values of software projects during the quarter, as well as an overall increase in software licenses, hardware and professional services to Spok’s expanding worldwide customer base. “In addition,” Kelly noted, “both operations and maintenance revenue rose from the first quarter of 2014, with the higher maintenance revenue reflecting our continued success in achieving maintenance renewals rates in excess of 99 percent.”

Kelly said first quarter bookings of $17.7 million included $8.8 million of operations bookings, close to a record high for the first quarter, while the software backlog of $40.6 million at March 31st also remained near a record high. “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 also experienced growing demand for such software solutions as critical smartphone communications, secure texting, emergency management, and clinical alerting. Our public safety sector also grew substantially during the quarter with bookings up 50 percent from the first quarter of 2014.”

Kelly said the Company continued to expand software sales outside the United States during the quarter. “While overall demand remained strongest in North America, we continued to grow our customer base in Europe, the Middle East and the Asia-Pacific region where our healthcare solutions – including clinical alerting, mobility strategies, and call center efficiencies -- continued to attract significant interest. At the same time, we continued to build a solid pipeline of new business leads throughout targeted markets worldwide.”

The Company also recorded solid results for its wireless products and services in the first quarter. “Gross pager placements totaled 29,000 versus 39,000 in the year-earlier quarter, while gross disconnects of 55,000 improved from 88,000 a year ago,” Kelly said. “As a result, annual net pager losses for the quarter improved to an all-time low of 7.3 percent. Overall, wireless sales efforts continued to focus primarily on our core market segments of Healthcare, Government and Large Enterprise. Healthcare continued to be our best performing market segment with the highest rate of gross placements and lowest rate of unit disconnects, and comprised 77.9 percent of our direct units-in-service and 73.1 percent of direct paging revenue at March 31st.”

Kelly added that Spok again returned capital to stockholders during the first quarter, distributing cash dividends totaling $3.3 million and repurchasing 27,467 shares of common stock for $465,504, or $16.95 per share, under its stock buy-back program.

Shawn E. Endsley, chief financial officer, said: “Strong revenue from both software and wireless, coupled with focused expense management, resulted in solid operating cash flow and operating margins for the quarter even as we continued to invest in opportunities for long-term growth. Our balance sheet also remained strong with no debt and a cash balance of $105.6 million at March 31st.”

Endsley said the Company is maintaining its previously provided financial guidance for 2015, which projects total revenue to range from $183 million to $201 million, operating expenses (excluding depreciation, amortization and accretion) to range from $145 million to $154 million, and capital expenses to range from $5.5 million to $7.5 million.

* * * * * * * * *

Spok plans to host a conference call for investors on its first quarter operating results at 10:00 a.m. Eastern Time on Thursday, April 30, 2015. Dial-in numbers for the call are 719-325-2144 or 888-438-5524. The pass code for the call is 8073220. A replay of the call will be available from 1:00 p.m. ET on April 30 until 1:00 p.m. on Thursday, May 14. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 8073220.

* * * * * * * * *

About Spok

Spok Holdings, Inc., headquartered in Springfield, Va., is proud to be a 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. Organizations worldwide rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. When communications matter, Spok delivers. Visit us at spok.com or find us on Twitter @Spoktweets.

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.

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

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Revenue:
Wireless $ 30,690 $ 31,678 $ 32,855 $ 33,518 $ 34,351 $ 35,831 $ 37,067 $ 37,771
Software   17,448     19,591     16,936     15,576     15,768     18,854     12,602     14,497  
Total revenue   48,138     51,269     49,791     49,094     50,119     54,685     49,669     52,268  
Operating expenses:
Cost of revenue 8,813 10,571 8,000 7,180 6,805 7,500 6,787 6,961
Service, rental and maintenance 11,256 11,285 10,988 11,420 11,792 11,442 11,820 12,018
Selling and marketing 7,048 7,915 7,072 7,780 7,246 7,297 6,388 6,538
General and administrative 11,001 11,905 10,866 10,990 12,135 11,470 11,282 11,022
Severance and restructuring 926 545 4 20 981 2
Depreciation, amortization and accretion   3,747     4,049     4,247     4,352     4,029     3,680     3,858     3,822  
Total operating expenses   41,865     46,651     41,718     41,726     42,027     42,370     40,135     40,363  
% of total revenue 87.0 % 91.0 % 83.8 % 85.0 % 83.9 % 77.5 % 80.8 % 77.2 %
Operating income 6,273 4,618 8,073 7,368 8,092 12,315 9,534 11,905
% of total revenue 13.0 % 9.0 % 16.2 % 15.0 % 16.1 % 22.5 % 19.2 % 22.8 %
Interest expense, net (1 ) (262 ) (63 ) (64 ) (67 ) (64 ) (68 ) (64 )
Other (expense) income, net   60     (188 )   (2 )   (194 )   16     15     84     (75 )
Income before income tax expense 6,332 4,168 8,008 7,110 8,041 12,266 9,550 11,766
Income tax expense   (2,415 )   2,744     (3,356 )   (2,819 )   (3,151 )   (4,251 )   (3,788 )   (4,938 )
Net income $ 3,917   $ 6,912   $ 4,652   $ 4,291   $ 4,890   $ 8,015   $ 5,762   $ 6,828  
Basic net income per common share $ 0.18   $ 0.32   $ 0.21   $ 0.20   $ 0.23   $ 0.37   $ 0.27   $ 0.32  
Diluted net income per common share $ 0.18   $ 0.31   $ 0.21   $ 0.19   $ 0.22   $ 0.36   $ 0.26   $ 0.31  
Basic weighted average common shares outstanding   21,898,792     21,554,746     21,651,347     21,642,163     21,638,198     21,633,706     21,629,289     21,644,281  
Diluted weighted average common shares outstanding   22,053,015     22,101,600     22,135,554     22,099,791     22,037,796     21,969,756     21,919,238     21,827,149  
Reconciliation of operating income to EBITDA (b):
Operating income $ 6,273 $ 4,618 $ 8,073 $ 7,368 $ 8,092 $ 12,315 $ 9,534 $ 11,905
Add back: depreciation, amortization and accretion   3,747     4,049     4,247     4,352     4,029     3,680     3,858     3,822  
EBITDA $ 10,020   $ 8,667   $ 12,320   $ 11,720   $ 12,121   $ 15,995   $ 13,392   $ 15,727  
% of total revenue 20.8 % 16.9 % 24.7 % 23.9 % 24.2 % 29.2 % 27.0 % 30.1 %
Key statistics:
Units in service 1,230 1,256 1,274 1,299 1,327 1,376 1,408 1,445
Average revenue per unit (ARPU) $ 7.91 $ 7.92 $ 7.97 $ 7.98 $ 8.11 $ 8.15 $ 8.22 $ 8.22
Bookings $ 17,740 $ 22,272 $ 20,362 $ 18,959 $ 16,921 $ 16,271 $ 17,302 $ 15,626
Backlog $ 40,551 $ 42,391 $ 42,117 $ 40,182 $ 41,396 $ 40,211 $ 43,831 $ 39,576

(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.

 
 
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

         

3/31/2015

12/31/2014

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 105,637 $ 107,869
Accounts receivable, net 23,374 24,969
Prepaid expenses and other 5,855 7,250
Inventory 3,222 2,673
Deferred income tax assets, net   1,979   2,194
Total current assets 140,067 144,955
Property and equipment, net 16,265 17,395
Goodwill 133,031 133,031
Other intangible assets, net 18,323 19,698
Deferred income tax assets, net 20,167 21,949
Other assets   1,618   862
Total assets $ 329,471 $ 337,890
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 9,653 $ 11,688
Accrued compensation and benefits 9,732 14,041
Deferred revenue   24,612   24,034
Total current liabilities 43,997 49,763
Deferred revenue 888 937
Other long-term liabilities   8,334   8,131
Total liabilities   53,219   58,831
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock 2 2
Additional paid-in capital 122,704 126,678
Retained earnings   153,546   152,379
Total stockholders' equity   276,252   279,059
Total liabilities and stockholders' equity $ 329,471 $ 337,890
 

(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

3/31/2015

3/31/2014

Cash flows from operating activities:
Net income $ 3,917 $ 4,890
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 3,747 4,029
Amortization of deferred financing costs - 65
Deferred income tax expense 1,997 2,594
Amortization of stock based compensation 443 1,086
Provisions for doubtful accounts, service credits and other 327 340
Adjustments of non-cash transaction taxes (49 ) (115 )
(Gain) Loss on disposals of property and equipment (18 ) (2 )
Changes in assets and liabilities:
Accounts receivable 1,268 (2,586 )
Prepaid expenses and other assets 54 807
Accounts payable, accrued liabilities and accrued compensation and benefits (9,616 ) (3,675 )
Customer deposits and deferred revenue   530     378  
Net cash provided by operating activities   2,600     7,811  
Cash flows from investing activities:
Purchases of property and equipment (1,040 ) (2,643 )
Proceeds from disposals of property and equipment   30     58  
Net cash used in investing activities   (1,010 )   (2,585 )
Cash flows from financing activities:
Cash dividends to stockholders (3,356 ) (2,707 )
Purchase of common stock   (466 )   -  
Net cash used in financing activities   (3,822 )   (2,707 )
Net increase in cash and cash equivalents (2,232 ) 2,519
Cash and cash equivalents, beginning of period   107,869     89,075  
Cash and cash equivalents, end of period $ 105,637   $ 91,594  
Supplemental disclosure:
Interest paid $ 1   $ 2  
Income taxes paid $ 337   $ 161  
 

(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

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Revenue
Paging $ 29,491 $ 30,071 $ 30,776 $ 31,458 $ 32,896 $ 34,015 $ 35,141 $ 36,064
Non-paging   1,199   1,607   2,079   2,060   1,455   1,816   1,926   1,707
Wireless   30,690   31,678   32,855   33,518   34,351   35,831   37,067   37,771
Subscription 398 365 458 377 283 248 220 178
License 2,595 3,474 2,374 2,497 2,929 4,138 2,000 2,458
Services 5,018 5,579 4,305 3,558 3,930 5,493 2,080 3,327
Equipment   1,374   2,145   1,930   1,614   1,250   1,875   1,251   1,589
Operations revenue 9,385 11,563 9,067 8,046 8,392 11,754 5,551 7,552
Maintenance revenue   8,063   8,028   7,869   7,530   7,376   7,100   7,051   6,945
Software   17,448   19,591   16,936   15,576   15,768   18,854   12,602   14,497
Total revenue $ 48,138 $ 51,269 $ 49,791 $ 49,094 $ 50,119 $ 54,685 $ 49,669 $ 52,268
 

(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

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Cost of revenue
Payroll and related $ 4,157 $ 4,222 $ 3,743 $ 3,827 $ 3,959 $ 3,609 $ 3,744 $ 3,743
Cost of sales 3,620 5,225 3,098 2,232 1,917 2,726 1,992 2,133
Stock based compensation 34 81 108 81 81 74 64 49
Other   1,002   1,043   1,051   1,040     848   1,091     987   1,036
Total cost of revenue   8,813   10,571   8,000   7,180     6,805   7,500     6,787   6,961
Service, rental and maintenance
Site rent 3,766 3,834 3,914 3,981 4,015 3,972 4,142 4,237
Telecommunications 1,343 1,487 1,548 1,669 1,736 1,751 1,832 1,885
Payroll and related 4,652 4,533 4,106 4,434 4,594 4,296 4,577 4,589
Stock based compensation 29 30 56 (17 ) 39 32 59 20
Repairs and maintenance 528 467 489 436 508 482 484 480
Other   938   934   875   917     900   909     726   807
Total service, rental and maintenance   11,256   11,285   10,988   11,420     11,792   11,442     11,820   12,018
Selling and marketing
Payroll and related 3,916 3,945 3,859 4,099 4,098 3,717 3,917 3,919
Commissions 1,836 2,481 1,949 2,087 1,952 2,162 1,310 1,519
Stock based compensation 51 131 151 131 131 (24 ) 122 119
Other   1,245   1,358   1,113   1,463     1,065   1,442     1,039   981
Total selling and marketing   7,048   7,915   7,072   7,780     7,246   7,297     6,388   6,538
General and administrative
Payroll and related 4,879 4,737 4,217 4,440 4,796 4,802 4,696 5,074
Stock based compensation 329 780 791 429 835 763 701 440
Bad debt 160 127 136 134 86 262 274 265
Facility rent 941 830 863 899 922 719 883 839
Telecommunications 333 381 427 399 395 420 388 343
Outside services 1,786 1,786 1,698 1,719 1,762 1,811 1,927 1,606
Taxes, licenses and permits 1,125 1,283 1,225 1,383 1,064 1,358 1,106 1,166
Repairs & maintenance 406 506 510 421 374 314 333 278
Financial Services 362 346 336 379 363 357 350 349
Other   680   1,129   663   787     1,538   664     624   662
Total general and administrative   11,001   11,905   10,866   10,990     12,135   11,470     11,282   11,022
Severance and restructuring 926 545 4 20 981 2
Depreciation, amortization and accretion   3,747   4,049   4,247   4,352     4,029   3,680     3,858   3,822
Operating expenses $ 41,865 $ 46,651 $ 41,718 $ 41,726   $ 42,027 $ 42,370   $ 40,135 $ 40,363
Capital expenditures $ 1,040 $ 1,352 $ 1,291 $ 2,393 $ 2,643 $ 2,636 $ 2,504 $ 2,927
 

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

 
 
SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY (a)

(Unaudited and in thousands)

                                 
For the three months ended

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Paging units in service

Beginning units in service
Direct one-way 1,140 1,157 1,179 1,200 1,246 1,275 1,307 1,324
Direct two-way 64   63   64   69   69   70   73   73  
Total direct 1,204   1,220   1,243   1,269   1,315   1,345   1,380   1,397  
Indirect one-way 26 28 29 30 34 35 36 38
Indirect two-way 26   26   27   28   27   28   29   45  
Total indirect 52   54   56   58   61   63   65   83  
Total beginning units in service 1,256   1,274   1,299   1,327   1,376   1,408   1,445   1,480  
Gross placements
Direct one-way 25 31 40 48 34 32 40 49
Direct two-way 3   3   4   2   4   3   3   5  
Total direct 28   34   44   50   38   35   43   54  
Indirect one-way 1 1 1 1 1 1 1
Indirect two-way         1        
Total indirect 1   1   1   1   1   1   1   1  
Total gross placements 29   35   45   51   39   36   44   55  
Gross disconnects
Direct one-way (49 ) (47 ) (62 ) (69 ) (80 ) (61 ) (72 ) (66 )
Direct two-way (3 ) (3 ) (5 ) (7 ) (4 ) (4 ) (6 ) (5 )
Total direct (52 ) (50 ) (67 ) (76 ) (84 ) (65 ) (78 ) (71 )
Indirect one-way (2 ) (2 ) (2 ) (2 ) (4 ) (2 ) (2 ) (3 )
Indirect two-way (1 ) (1 ) (1 ) (1 )   (1 ) (1 ) (16 )
Total indirect (3 ) (3 ) (3 ) (3 ) (4 ) (3 ) (3 ) (19 )
Total gross disconnects (55 ) (53 ) (70 ) (79 ) (88 ) (68 ) (81 ) (90 )
Net loss
Direct one-way (24 ) (16 ) (22 ) (21 ) (46 ) (29 ) (32 ) (17 )
Direct two-way     (1 ) (5 )   (1 ) (3 )  
Total direct (24 ) (16 ) (23 ) (26 ) (46 ) (30 ) (35 ) (17 )
Indirect one-way (1 ) (1 ) (1 ) (1 ) (4 ) (1 ) (1 ) (2 )
Indirect two-way (1 ) (1 ) (1 ) (1 ) 1   (1 ) (1 ) (16 )
Total indirect (2 ) (2 ) (2 ) (2 ) (3 ) (2 ) (2 ) (18 )
Total net change (26 ) (18 ) (25 ) (28 ) (49 ) (32 ) (37 ) (35 )
Ending units in service
Direct one-way 1,116 1,141 1,157 1,179 1,200 1,246 1,275 1,307
Direct two-way 64   63   63   64   69   69   70   73  
Total direct 1,180   1,204   1,220   1,243   1,269   1,315   1,345   1,380  
Indirect one-way 25 27 28 29 30 34 35 36
Indirect two-way 25   25   26   27   28   27   28   29  
Total indirect 50   52   54   56   58   61   63   65  
Total ending units in service 1,230   1,256   1,274   1,299   1,327   1,376   1,408   1,445  
 

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

 
 
SPOK HOLDINGS, INC.
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)

(Unaudited)

                                 
For the three months ended

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Paging ARPU

Direct one-way $ 7.45 $ 7.45 $ 7.48 $ 7.48 $ 7.59 $ 7.60 $ 7.64 $ 7.67
Direct two-way   17.69     17.95     18.17     18.21     18.91     19.43     19.93     19.95  
Total direct 7.99 8.00 8.05 8.06 8.19 8.23 8.29 8.33
Indirect one-way 8.08 8.13 8.24 8.18 8.22 8.68 8.90 8.97
Indirect two-way   3.93     4.06     4.31     4.45     4.32     3.97     3.97     3.89  
Total indirect 6.01 6.12 6.32 6.39 6.37 6.47 6.57 6.31
Total one-way 7.46 7.46 7.50 7.50 7.60 7.63 7.68 7.71
Total two-way   13.72     13.87     14.10     14.22     14.70     14.90     15.20     14.40  
Total paging ARPU $ 7.91   $ 7.92   $ 7.97   $ 7.98   $ 8.11   $ 8.15   $ 8.22   $ 8.22  

Gross disconnect rate (b)

Direct one-way (4.3 )% (4.1 )% (5.5 )% (5.7 )% (6.4 )% (4.7 )% (5.6 )% (5.0 )%
Direct two-way   (5.4 )%   (4.5 )%   (7.3 )%   (10.5 )%   (5.6 )%   (6.4 )%   (7.9 )%   (6.7 )%
Total direct (4.4 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )% (5.7 )% (5.1 )%
Indirect one-way (6.7 )% (6.5 )% (6.4 )% (6.8 )% (8.2 )% (6.1 )% (6.3 )% (7.4 )%
Indirect two-way   (4.4 )%   (2.3 )%   (1.9 )%   (2.7 )%   (2.3 )%   (5.7 )%   (4.8 )%   (34.0 )%
Total indirect (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )% (5.6 )% (22.3 )%
Total one-way (4.4 )% (4.2 )% (5.3 )% (5.8 )% (6.5 )% (4.8 )% (5.6 )% (5.1 )%
Total two-way   (5.1 )%   (3.9 )%   (5.7 )%   (8.3 )%   (4.7 )%   (6.2 )%   (7.0 )%   (17.3 )%
Total paging gross disconnect rate   (4.4 )%   (4.1 )%   (5.3 )%   (5.9 )%   (6.3 )%   (4.9 )%   (5.7 )%   (6.1 )%

Net loss rate (c)

Direct one-way (2.1 )% (1.4 )% (1.8 )% (1.9 )% (3.7 )% (2.1 )% (2.5 )% (1.3 )%
Direct two-way   (0.9 )%   (0.1 )%   (3.0 )%   (4.5 )%   (0.6 )%   (2.2 )%   (3.6 )%   (0.4 )%
Total direct (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )% (2.5 )% (1.3 )%
Indirect one-way (4.0 )% (4.3 )% (4.1 )% (4.8 )% (6.3 )% (3.9 )% (3.3 )% (4.7 )%
Indirect two-way   (3.6 )%   (2.0 )%   (1.5 )%   (2.2 )%   (1.9 )%   (4.9 )%   (4.1 )%   (33.7 )%
Total indirect (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )% (3.6 )% (21.0 )%
Total one-way (2.1 )% (1.5 )% (1.9 )% (2.0 )% (3.7 )% (2.2 )% (2.5 )% (1.4 )%
Total two-way   (1.7 )%   (0.6 )%   (2.5 )%   (3.8 )%   (1.0 )%   (3.0 )%   (3.8 )%   (13.3 )%
Total paging net loss rate   (2.1 )%   (1.4 )%   (1.9 )%   (2.1 )%   (3.5 )%   (2.2 )%   (2.6 )%   (2.4 )%

(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(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.
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)

(Unaudited)

                                 
For the three months ended

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Gross placement rate (b)
Healthcare 2.6 % 3.0 % 3.8 % 4.5 % 3.1 % 2.9 % 3.3 % 4.5 %
Government 1.0 % 1.2 % 1.5 % 2.6 % 1.9 % 1.5 % 1.7 % 2.3 %
Large enterprise 2.1 % 2.3 % 2.7 % 2.0 % 2.9 % 3.0 % 4.3 % 2.4 %
Other 1.6 % 2.1 % 4.3 % 2.2 % 2.1 % 1.7 % 2.0 % 1.5 %
Total direct 2.3 % 2.8 % 3.5 % 4.0 % 2.9 % 2.7 % 3.1 % 3.8 %
Total indirect 1.7 % 1.3 % 1.4 % 1.3 % 1.2 % 1.5 % 1.9 % 1.4 %
Total 2.3 % 2.7 % 3.4 % 3.9 % 2.8 % 2.7 % 3.1 % 3.7 %
Gross disconnect rate (b)
Healthcare (3.9 )% (3.8 )% (5.1 )% (5.3 )% (6.5 )% (4.5 )% (5.2 )% (4.4 )%
Government (5.0 )% (4.7 )% (7.5 )% (7.6 )% (5.6 )% (4.7 )% (7.9 )% (7.1 )%
Large enterprise (5.7 )% (4.7 )% (4.8 )% (8.9 )% (5.4 )% (6.4 )% (6.0 )% (6.7 )%
Other (7.1 )% (6.4 )% (6.9 )% (7.7 )% (6.5 )% (6.5 )% (6.5 )% (7.4 )%
Total direct (4.3 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )% (5.7 )% (5.1 )%
Total indirect (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )% (5.6 )% (22.3 )%
Total (4.4 )% (4.1 )% (5.3 )% (5.9 )% (6.3 )% (4.9 )% (5.7 )% (6.1 )%
Net loss rate (b)
Healthcare (1.3 )% (0.7 )% (1.3 )% (0.8 )% (3.5 )% (1.5 )% (2.0 )% %
Government (4.0 )% (3.5 )% (6.0 )% (5.0 )% (3.6 )% (3.2 )% (6.3 )% (4.6 )%
Large enterprise (3.6 )% (2.4 )% (2.1 )% (6.9 )% (2.5 )% (3.3 )% (1.6 )% (4.2 )%
Other (5.5 )% (4.4 )% (2.5 )% (5.5 )% (4.4 )% (4.8 )% (4.5 )% (5.9 )%
Total direct (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )% (2.5 )% (1.3 )%
Total indirect (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )% (3.6 )% (21.0 )%
Total (2.1 )% (1.4 )% (1.9 )% (2.1 )% (3.5 )% (2.2 )% (2.6 )% (2.4 )%
End of period units in service % of total (b)
Healthcare 74.7 % 74.1 % 73.6 % 73.0 % 72.0 % 71.9 % 71.4 % 70.9 %
Government 7.7 % 7.8 % 7.9 % 8.3 % 8.6 % 8.6 % 8.8 % 9.1 %
Large enterprise 7.6 % 7.7 % 7.8 % 7.8 % 8.2 % 8.1 % 8.2 % 8.1 %
Other 6.0 % 6.2 % 6.4 % 6.6 % 6.8 % 7.0 % 7.1 % 7.3 %
Total direct 95.9 % 95.8 % 95.7 % 95.7 % 95.6 % 95.6 % 95.5 % 95.4 %
Total indirect 4.1 % 4.2 % 4.3 % 4.3 % 4.4 % 4.4 % 4.5 % 4.6 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

(a) Slight variations in totals are due to rounding.
(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.

 
 
SPOK HOLDINGS, INC.
SUPPLEMENTAL INFORMATION - DIRECT PAGING UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)

(Unaudited)

                                 
For the three months ended

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

Account size ending units in service (000's)
1 to 3 units 33 35 37 39 41 43 45 47
4 to 10 units 20 21 22 23 24 25 26 28
11 to 50 units 49 51 53 56 57 61 64 67
51 to 100 units 32 34 36 38 41 42 43 45
101 to 1,000 units 252 262 267 275 282 287 293 305
>1,000 units   794     801     805     812     824     857     874     888  
Total   1,180     1,204     1,220     1,243     1,269     1,315     1,345     1,380  
End of period units in service % of total direct
1 to 3 units 2.8 % 2.9 % 3.0 % 3.1 % 3.2 % 3.2 % 3.3 % 3.4 %
4 to 10 units 1.7 % 1.7 % 1.8 % 1.8 % 1.9 % 1.9 % 2.0 % 2.0 %
11 to 50 units 4.2 % 4.2 % 4.3 % 4.5 % 4.5 % 4.6 % 4.8 % 4.8 %
51 to 100 units 2.7 % 2.8 % 3.0 % 3.1 % 3.2 % 3.2 % 3.2 % 3.2 %
101 to 1,000 units 21.4 % 21.8 % 21.9 % 22.1 % 22.3 % 21.9 % 21.8 % 22.1 %
>1,000 units   67.2 %   66.6 %   66.0 %   65.4 %   64.9 %   65.2 %   64.9 %   64.5 %
Total   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Account size net loss rate
1 to 3 units (6.2 )% (4.4 )% (4.8 )% (4.1 )% (4.9 )% (4.4 )% (4.6 )% (5.1 )%
4 to 10 units (6.2 )% (5.5 )% (4.0 )% (5.4 )% (4.1 )% (3.8 )% (5.3 )% (5.3 )%
11 to 50 units (4.6 )% (3.8 )% (5.2 )% (3.2 )% (5.3 )% (4.4 )% (3.9 )% (6.4 )%
51 to 100 units (4.1 )% (5.4 )% (5.2 )% (8.7 )% (1.2 )% (3.5 )% (2.8 )% (5.3 )%
101 to 1,000 units (3.9 )% (2.0 )% (2.9 )% (2.5 )% (1.7 )% (1.7 )% (4.0 )% (5.0 )%
>1,000 units   (0.8 )%   (0.5 )%   (1.0 )%   (1.2 )%   (4.0 )%   (1.8 )%   (1.7 )%   1.1 %
Total   (2.0 )%   (1.4 )%   (1.9 )%   (2.0 )%   (3.5 )%   (2.1 )%   (2.5 )%   (1.3 )%
Account size ARPU
1 to 3 units $ 14.52 $ 14.53 $ 14.65 $ 14.86 $ 14.96 $ 14.98 $ 15.13 $ 15.12
4 to 10 units 14.07 14.09 14.04 14.12 14.22 14.29 14.38 14.29
11 to 50 units 12.02 12.00 11.95 12.00 12.07 11.96 12.06 11.96
51 to 100 units 10.26 10.15 10.16 10.18 10.27 10.34 10.66 10.42
101 to 1,000 units 8.81 8.79 8.69 8.58 8.76 8.89 8.85 8.84
>1,000 units   6.95     6.93     6.99     7.00     7.11     7.11     7.17     7.19  
Total $ 7.99   $ 8.00   $ 8.05   $ 8.06   $ 8.19   $ 8.23   $ 8.29   $ 8.33  
Cellular:
Number of activations   92     264     2,198     1,679     281     690     970     799  
Revenue from cellular services (000's) $ 40   $ 77   $ 395   $ 278   $ 108   $ 129   $ 235   $ 163  
 

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

Source: Spok Holdings, Inc.

Spok Holdings, Inc.
Bob Lougee, 800-611-8488
Bob.Lougee@spok.com