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Spok Reports Third Quarter Operating Results; Board Declares Regular Quarterly and Special Dividend

Wireless Trends Continue to Improve;

Operating Expenses Decrease; Balance Sheet Remains Strong

Stock Repurchase Plan Extended

SPRINGFIELD, Va.--(BUSINESS WIRE)--Oct. 28, 2015-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in critical communications, today announced operating results for the third quarter ended September 30, 2015. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, plus a special dividend of $0.125 cents per share, both payable on December 10, 2015 to stockholders of record on November 18, 2015.

Consolidated revenue for the third quarter was $46.2 million, compared to $49.8 million in the third quarter of 2014. Software revenue totaled $16.8 million versus $16.9 million in the year-earlier quarter, while wireless revenue was $29.4 million versus $32.9 million in the third quarter of 2014.

Third quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $10.1 million, or 21.8 percent of revenue, compared to $12.3 million, or 24.7 percent of revenue, in the year-earlier quarter, and $9.1 million, or 18.9 percent of revenue, in the second quarter of 2015.

Net income for the third quarter was $4.2 million, or $0.20 per fully diluted share, compared to $4.7 million, or $0.21 per fully diluted share, in the third quarter of 2014.

Other key results and highlights for the third quarter included:

  • Of the $16.8 million in software revenue for the third quarter, $7.9 million was operations revenue and $8.9 million was maintenance revenue, compared to $9.1 million and $7.8 million, respectively, of the $16.9 million in software revenue for the third quarter of 2014.
  • Software bookings totaled $16.7 million, compared to $20.4 million in the year-earlier quarter. Third quarter bookings included $9.3 million of operations bookings and $7.4 million of maintenance renewals.
  • Software backlog was $41.6 million at September 30, 2015 versus $42.1 million a year earlier.
  • The renewal rate for software maintenance in the third quarter was 99.8 percent.
  • The quarterly rate of paging unit erosion improved to 1.5 percent from 1.9 percent in the year-earlier quarter, while the annual rate of unit erosion improved to 6.4 percent from 9.5 percent. Both the quarterly and annual rates of unit erosion were the Company’s lowest in more than a decade. Net paging unit losses for the quarter were 18,000 versus 25,000 in the third quarter of 2014. Paging units in service at September 30, 2015 totaled 1,192,000, compared to 1,274,000 a year earlier.
  • The quarterly rate of wireless revenue erosion was 2.8 percent versus 2.0 percent in the year-earlier quarter, while the annual rate of wireless revenue erosion improved to 10.6 percent versus 11.4 percent in the third quarter of 2014.
  • Total paging ARPU (average revenue per unit) was $7.82, compared to $7.97 in the year-earlier quarter and $7.86 in the second quarter of 2015.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $36.1 million in the third quarter, compared to $37.5 million in the year-earlier quarter.
  • Capital expenses were $1.4 million, compared to a similar total for the third quarter of 2014.
  • Capital returned to stockholders in the form of dividends and share repurchases in the third quarter totaled $2.7 million and $8.3 million, respectively.
  • The Company’s cash balance at September 30, 2015 was $113.4 million.
  • The number of full-time equivalent employees at September 30, 2015 totaled 605, compared to 608 at June 30, 2015.

Vincent D. Kelly, president and chief executive officer, said: “We continued to make solid progress in the third quarter. Software revenue, while flat versus the year-earlier quarter, increased 7.7 percent for the first nine months of 2015 from the same period of 2014 and 20.3 percent from the first nine months of 2013. Our software backlog and pipeline also remained strong at September 30. Wireless trends continued to improve during the quarter as the rates of paging unit churn and revenue erosion either achieved or approached record levels. In addition, we met or exceeded our expectations on most other key operating metrics for the quarter, including cash flow, expenses, operating margins, and average revenue per unit (ARPU). Overall, we continued to operate profitably, enhance our product offerings, 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 bookings came in lower than expected due in part to softer sales in the Asia-Pacific region, which has been experiencing weaker economic conditions and headwinds. The shortfall included the withdrawal of bids on several key sales opportunities and delayed commitments on a few sizable contracts, both in Asia-Pacific and EMEA. The EMEA market has taken a bit longer to evolve. We haven’t lost business to competitors, but the market is opening up slower than we had hoped. Still, domestic healthcare bookings rose 12 percent from the year-earlier quarter, while new customer bookings more than doubled from the third quarter of 2014. In short, we continued to see continuing demand from Spok’s worldwide customer base for upgrades to existing applications as well as for new communications products and solutions. Additionally,” Kelly noted, “maintenance revenue increased to $8.9 million for the quarter from $7.8 million in the year-earlier quarter, reflecting our continued success in achieving maintenance renewals rates in excess of 99 percent.”

Kelly said third quarter bookings of $16.7 million included $9.3 million of operations bookings and $7.4 million in maintenance renewals, while the software backlog at September 30 remained strong at $41.6 million. “Customer demand, especially within our healthcare customer base, remained strongest for secure messaging, call center solutions, applications to increase patient safety, and improved clinical workflows.” Kelly added: “We also experienced steady demand for such software solutions as critical smartphone communications, emergency management, and delivery of critical test results. Overall, we added more than 30 new customers during the quarter.”

The Company again recorded solid results for its wireless products and services for the quarter. “Gross pager placements totaled 36,000 versus 40,000 in the prior quarter, while gross disconnects of 55,000 improved from 59,000 in the prior quarter,” Kelly said. “As a result, the rates of quarterly and annual net pager losses for the third quarter improved to 1.5 percent and 6.4 percent, respectively, and achieved the best levels in many years. In addition, the annual rate of wireless revenue erosion improved from the year-earlier quarter. Wireless sales 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 79.2 percent of our direct units-in-service and 74.8 percent of direct paging revenue at September 30.”

Kelly added that the Company again returned capital to stockholders during the third quarter, distributing cash dividends totaling $2.7 million and repurchasing 502,942 shares of common stock for $8.3 million, or an average price of $16.56 per share, under its stock buy-back program.

Commenting on Spok’s financial results, Shawn E. Endsley, chief financial officer, said: “Solid consolidated revenue combined with effective expense management contributed to higher cash flow and operating margins for the quarter as we continued to position the Company for long-term growth. EBITDA margin improved to 21.8 percent in the third quarter from 18.9 percent in the second quarter, a result of the margin improvement plan we initiated in January. In addition, our balance sheet remained strong at September 30 with no debt and a cash balance of $113.4 million.”

Endsley said the Company is maintaining 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.

The Company announced that its Board of Directors has approved extension of the Company’s stock repurchase program from December 31, 2015 to December 31, 2016. In extending the plan, the Board also reset the repurchase authority in the amount of $10 million to begin at the earlier of January 4, 2016 or the completion of the existing 2015 stock repurchase plan. Since the program began in 2008, Spok has repurchased approximately 7.2 million shares of its common stock at an average price of $10.48 per share while maintaining appropriate cash balances and a strong balance sheet.

Spok plans to host a conference call for investors on its third quarter operating results at 10:00 a.m. Eastern Time on Thursday, October 29, 2015. Dial-in numbers for the call are 212-444-0896 or 877-280-2342. The pass code for the call is 4793188. A replay of the call will be available from 1:00 p.m. ET on October 29 until 1:00 p.m. on Thursday, November 12. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 4793188.

Also, Spok will host its annual “Analyst Day” Investor Meeting for financial analysts on November 3, 2015 in New York City. For further details and to RSVP, please contact Stacy Sloan at stacy.sloan@spok.com (or call 703-269-6950), send an email to investor.relations@spok.com, or sign-up directly at surveymonkey.com/r/M69M6R7.

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

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

9/30/2015

9/30/2014

9/30/2015

9/30/2014

Revenue:
Wireless $ 29,375 $ 32,855 $ 90,287 $ 100,724
Software   16,806     16,936     52,002     48,280  
Total revenue   46,181     49,791     142,289     149,004  
Operating expenses:
Cost of revenue 7,871 8,000 25,816 21,985
Service, rental and maintenance 11,117 10,988 33,376 34,200
Selling and marketing 6,572 7,072 20,409 22,098
General and administrative 10,410 10,866 31,883 33,991
Severance and restructuring 141 545 1,645 569
Depreciation, amortization and accretion   3,413     4,247     10,608     12,628  
Total operating expenses   39,524     41,718     123,737     125,471  
% of total revenue 85.6 % 83.8 % 87.0 % 84.2 %
Operating income 6,657 8,073 18,552 23,533
% of total revenue 14.4 % 16.2 % 13.0 % 15.8 %
Interest income (expense), net 1 (63 ) 3 (194 )
Other income (expense), net   784     (2 )   1,110     (180 )
Income before income tax expense 7,442 8,008 19,665 23,159
Income tax expense   (3,222 )   (3,356 )   (8,150 )   (9,326 )
Net income $ 4,220   $ 4,652   $ 11,515   $ 13,833  
Basic net income per common share $ 0.20   $ 0.21   $ 0.53   $ 0.64  
Diluted net income per common share $ 0.20   $ 0.21   $ 0.53   $ 0.63  
Basic weighted average common shares outstanding   21,301,311     21,651,347     21,623,612     21,643,951  
Diluted weighted average common shares outstanding   21,352,838     22,135,554     21,687,526     22,089,892  
Reconciliation of operating income to EBITDA (b):
Operating income $ 6,657 $ 8,073 $ 18,552 $ 23,533
Add back: depreciation, amortization and accretion   3,413     4,247     10,608     12,628  
EBITDA $ 10,070   $ 12,320   $ 29,160   $ 36,161  
% of total revenue 21.8 % 24.7 % 20.5 % 24.3 %
Key statistics:
Units in service 1,192 1,274 1,192 1,274
Average revenue per unit (ARPU) $ 7.82 $ 7.97 $ 7.85 $ 7.98
Bookings $ 16,746 $ 20,362 $ 55,513 $ 56,242
Backlog $ 41,639 $ 42,117 $ 41,639 $ 42,117
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is
presented for analytical purposes only.
 
 
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
9/30/2015 6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013
Revenue:
Wireless $ 29,375 $ 30,222 $ 30,690 $ 31,678 $ 32,855 $ 33,518 $ 34,351 $ 35,831
Software   16,806     17,747     17,448     19,591     16,936     15,576     15,768     18,854  
Total revenue   46,181     47,969     48,138     51,269     49,791     49,094     50,119     54,685  
Operating expenses:
Cost of revenue 7,871 9,131 8,813 10,571 8,000 7,180 6,805 7,500
Service, rental and maintenance 11,117 11,003 11,256 11,285 10,988 11,420 11,792 11,442
Selling and marketing 6,572 6,790 7,048 7,915 7,072 7,780 7,246 7,297
General and administrative 10,410 10,472 11,001 11,905 10,866 10,990 12,135 11,470
Severance and restructuring 141 1,504 926 545 4 20 981
Depreciation, amortization and accretion   3,413     3,448     3,747     4,049     4,247     4,352     4,029     3,680  
Total operating expenses   39,524     42,348     41,865     46,651     41,718     41,726     42,027     42,370  
% of total revenue 85.6 % 88.3 % 87.0 % 91.0 % 83.8 % 85.0 % 83.9 % 77.5 %
Operating income 6,657 5,621 6,273 4,618 8,073 7,368 8,092 12,315
% of total revenue 14.4 % 11.7 % 13.0 % 9.0 % 16.2 % 15.0 % 16.1 % 22.5 %
Interest income (expense), net 1 3 (1 ) (262 ) (63 ) (64 ) (67 ) (64 )
Other income (expense), net   784     264     60     (188 )   (2 )   (194 )   16     15  
Income before income tax expense 7,442 5,888 6,332 4,168 8,008 7,110 8,041 12,266
Income tax expense   (3,222 )   (2,512 )   (2,415 )   2,744     (3,356 )   (2,819 )   (3,151 )   (4,251 )
Net income $ 4,220   $ 3,376   $ 3,917   $ 6,912   $ 4,652   $ 4,291   $ 4,890   $ 8,015  
Basic net income per common share $ 0.20   $ 0.16   $ 0.18   $ 0.32   $ 0.21   $ 0.20   $ 0.23   $ 0.37  
Diluted net income per common share $ 0.20   $ 0.16   $ 0.18   $ 0.31   $ 0.21   $ 0.19   $ 0.22   $ 0.36  
Basic weighted average common shares outstanding   21,301,311     21,677,299     21,898,792     21,554,746     21,651,347     21,642,163     21,638,198     21,633,706  
Diluted weighted average common shares outstanding   21,352,838     21,735,829     22,053,015     22,101,600     22,135,554     22,099,791     22,037,796     21,969,756  
Reconciliation of operating income to EBITDA (b):
Operating income $ 6,657 $ 5,621 $ 6,273 $ 4,618 $ 8,073 $ 7,368 $ 8,092 $ 12,315
Add back: depreciation, amortization and accretion   3,413     3,448     3,747     4,049     4,247     4,352     4,029     3,680  
EBITDA $ 10,070   $ 9,069   $ 10,020   $ 8,667   $ 12,320   $ 11,720   $ 12,121   $ 15,995  
% of total revenue 21.8 % 18.9 % 20.8 % 16.9 % 24.7 % 23.9 % 24.2 % 29.2 %
Key statistics:
Units in service 1,192 1,211 1,230 1,256 1,274 1,299 1,327 1,376
Average revenue per unit (ARPU) $ 7.82 $ 7.86 $ 7.91 $ 7.92 $ 7.97 $ 7.98 $ 8.11 $ 8.15
Bookings $ 16,746 $ 21,027 $ 17,740 $ 22,272 $ 20,362 $ 18,959 $ 16,921 $ 16,271
Backlog $ 41,639 $ 43,524 $ 40,551 $ 42,391 $ 42,117 $ 40,182 $ 41,396 $ 40,211
 
(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)
   

9/30/2015

12/31/2014

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 113,383 $ 107,869
Accounts receivable, net 22,034 24,969
Prepaid expenses and other 5,497 7,250
Inventory 1,896 2,673
Deferred income tax assets, net   1,509   2,194
Total current assets 144,319 144,955
Property and equipment, net 15,377 17,395
Goodwill 133,031 133,031
Other intangible assets, net 16,083 19,698
Deferred income tax assets, net 15,563 21,949
Other assets   1,554   862
Total assets $ 325,927 $ 337,890
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 9,340 $ 11,688
Accrued compensation and benefits 10,785 14,041
Deferred revenue   28,177   24,034
Total current liabilities 48,302 49,763
Deferred revenue 796 937
Other long-term liabilities   8,692   8,131
Total liabilities   57,790   58,831
Commitments and contingencies
Stockholders' equity:
Preferred stock

Common stock 2 2
Additional paid-in capital 113,313 126,678
Retained earnings   154,822   152,379
Total stockholders' equity   268,137   279,059
Total liabilities and stockholders' equity $ 325,927 $ 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 nine months ended

9/30/2015

9/30/2014

Cash flows from operating activities:
Net income $ 11,515 $ 13,833
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 10,608 12,628
Amortization of deferred financing costs - 194
Deferred income tax expense 6,989 7,726
Amortization of stock based compensation 1,497 2,816
Provisions for doubtful accounts, service credits and other 1,040 875
Adjustments of non-cash transaction taxes (530 ) (259 )
Gain on disposals of property and equipment (794 ) (2 )
Changes in assets and liabilities:
Accounts receivable 1,896 (4,615 )
Prepaid expenses and other assets 1,878 (240 )
Accounts payable, accrued liabilities and accrued compensation and benefits (8,446 ) (1,968 )
Customer deposits and deferred revenue 4,002 1,264
Other long-term liabilities   45     -  
Net cash provided by operating activities   29,700     32,252  
Cash flows from investing activities:
Purchases of property and equipment (4,450 ) (6,327 )
Proceeds from disposals of property and equipment   807     63  
Net cash used in investing activities   (3,643 )   (6,264 )
Cash flows from financing activities:
Cash dividends to stockholders (8,739 ) (8,123 )
Purchase of common stock   (11,804 )   -  
Net cash used in financing activities   (20,543 )   (8,123 )
Net increase in cash and cash equivalents 5,514 17,865
Cash and cash equivalents, beginning of period   107,869     89,075  
Cash and cash equivalents, end of period $ 113,383   $ 106,940  
Supplemental disclosure:
Interest paid $ 2   $ 7  
Income taxes paid $ 1,169   $ 1,327  
 
(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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Revenue
Paging $ 28,196 $ 28,782 $ 29,491 $ 30,071 $ 30,776 $ 31,458 $ 32,896 $ 34,015
Non-paging   1,179   1,440   1,199   1,607   2,079   2,060   1,455   1,816
Total wireless revenue   29,375   30,222   30,690   31,678   32,855   33,518   34,351   35,831
 
Subscription 392 419 398 365 458 377 283 248
License 1,457 3,011 2,595 3,474 2,374 2,497 2,929 4,138
Services 4,600 4,609 5,018 5,579 4,305 3,558 3,930 5,493
Equipment   1,434   1,301   1,374   2,145   1,930   1,614   1,250   1,875
Operations revenue 7,883 9,340 9,385 11,563 9,067 8,046 8,392 11,754
 
Maintenance revenue   8,923   8,407   8,063   8,028   7,869   7,530   7,376   7,100
Total software revenue   16,806   17,747   17,448   19,591   16,936   15,576   15,768   18,854
 
Total revenue $ 46,181 $ 47,969 $ 48,138 $ 51,269 $ 49,791 $ 49,094 $ 50,119 $ 54,685
 

(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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Cost of revenue
Payroll and related $ 4,277 $ 4,274 $ 4,157 $ 4,222 $ 3,743 $ 3,827 $ 3,959 $ 3,609
Cost of sales 2,549 3,801 3,620 5,225 3,098 2,232 1,917 2,726
Stock based compensation 33 34 34 81 108 81 81 74
Other   1,012   1,022   1,002   1,043   1,051   1,040     848   1,091  
Total cost of revenue   7,871   9,131   8,813   10,571   8,000   7,180     6,805   7,500  
Service, rental and maintenance
Site rent 3,763 3,783 3,766 3,834 3,914 3,981 4,015 3,972
Telecommunications 1,392 1,288 1,343 1,487 1,548 1,669 1,736 1,751
Payroll and related 4,613 4,555 4,652 4,533 4,106 4,434 4,594 4,296
Stock based compensation 29 29 29 30 56 (17 ) 39 32
Repairs and maintenance 395 478 528 467 489 436 508 482
Other   925   870   938   934   875   917     900   909  
Total service, rental and maintenance   11,117   11,003   11,256   11,285   10,988   11,420     11,792   11,442  
Selling and marketing
Payroll and related 3,664 3,732 3,916 3,945 3,859 4,099 4,098 3,717
Commissions 1,858 1,792 1,836 2,481 1,949 2,087 1,952 2,162
Stock based compensation 16 51 51 131 151 131 131 (24 )
Other   1,034   1,215   1,245   1,358   1,113   1,463     1,065   1,442  
Total selling and marketing   6,572   6,790   7,048   7,915   7,072   7,780     7,246   7,297  
General and administrative
Payroll and related 4,320 4,611 4,879 4,737 4,217 4,440 4,796 4,802
Stock based compensation 316 548 329 780 791 429 835 763
Bad debt 113 140 160 127 136 134 86 262
Facility rent 868 841 941 830 863 899 922 719
Telecommunications 370 374 333 381 427 399 395 420
Outside services 1,864 1,728 1,786 1,786 1,698 1,719 1,762 1,811
Taxes, licenses and permits 1,068 1,150 1,125 1,283 1,225 1,383 1,064 1,358
Repairs & maintenance 389 363 406 506 510 421 374 314
Financial Services 378 367 362 346 336 379 363 357
Other   724   350   680   1,129   663   787     1,538   664  
Total general and administrative   10,410   10,472   11,001   11,905   10,866   10,990     12,135   11,470  
Severance and restructuring 141 1,504 926 545 4 20 981
Depreciation, amortization and accretion   3,413   3,448   3,747   4,049   4,247   4,352     4,029   3,680  
Operating expenses $ 39,524 $ 42,348 $ 41,865 $ 46,651 $ 41,718 $ 41,726   $ 42,027 $ 42,370  
Capital expenditures $ 1,418 $ 1,992 $ 1,040 $ 1,352 $ 1,291 $ 2,393 $ 2,643 $ 2,636
 

(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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Paging units in service

Beginning units in service
Direct one-way 1,103 1,116 1,140 1,157 1,179 1,200 1,246 1,275
Direct two-way 64   64   64   63   64   69   69   70  
Total direct 1,167   1,180   1,204   1,220   1,243   1,269   1,315   1,345  
Indirect one-way 24 25 26 28 29 30 34 35
Indirect two-way 20   25   26   26   27   28   27   28  
Total indirect 44   50   52   54   56   58   61   63  
Total beginning units in service 1,211   1,230   1,256   1,274   1,299   1,327   1,376   1,408  
Gross placements
Direct one-way 32 36 25 31 40 48 34 32
Direct two-way 3   4   3   3   4   2   4   3  
Total direct 35   40   28   34   44   50   38   35  
Indirect one-way 1 1 1 1 1 1
Indirect two-way             1    
Total indirect 1     1   1   1   1   1   1  
Total gross placements 36   40   29   35   45   51   39   36  
Gross disconnects
Direct one-way (48 ) (50 ) (49 ) (47 ) (62 ) (69 ) (80 ) (61 )
Direct two-way (5 ) (3 ) (3 ) (3 ) (5 ) (7 ) (4 ) (4 )
Total direct (53 ) (53 ) (52 ) (50 ) (67 ) (76 ) (84 ) (65 )
Indirect one-way (1 ) (1 ) (2 ) (2 ) (2 ) (2 ) (4 ) (2 )
Indirect two-way (1 ) (5 ) (1 ) (1 ) (1 ) (1 )   (1 )
Total indirect (2 ) (6 ) (3 ) (3 ) (3 ) (3 ) (4 ) (3 )
Total gross disconnects (55 ) (59 ) (55 ) (53 ) (70 ) (79 ) (88 ) (68 )
Net loss
Direct one-way (16 ) (13 ) (24 ) (16 ) (22 ) (21 ) (46 ) (29 )
Direct two-way (2 )       (1 ) (5 )   (1 )
Total direct (18 ) (13 ) (24 ) (16 ) (23 ) (26 ) (46 ) (30 )
Indirect one-way (1 ) (1 ) (1 ) (1 ) (1 ) (4 ) (1 )
Indirect two-way (1 ) (5 ) (1 ) (1 ) (1 ) (1 ) 1   (1 )
Total indirect (1 ) (6 ) (2 ) (2 ) (2 ) (2 ) (3 ) (2 )
Total net change (19 ) (19 ) (26 ) (18 ) (25 ) (28 ) (49 ) (32 )
Ending units in service
Direct one-way 1,087 1,103 1,116 1,141 1,157 1,179 1,200 1,246
Direct two-way 62   64   64   63   63   64   69   69  
Total direct 1,149   1,167   1,180   1,204   1,220   1,243   1,269   1,315  
Indirect one-way 24 24 25 27 28 29 30 34
Indirect two-way 19   20   25   25   26   27   28   27  
Total indirect 43   44   50   52   54   56   58   61  
Total ending units in service 1,192   1,211   1,230   1,256   1,274   1,299   1,327   1,376  

 

(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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Paging ARPU

Direct one-way $ 7.37 $ 7.41 $ 7.45 $ 7.45 $ 7.48 $ 7.48 $ 7.59 $ 7.60
Direct two-way   16.84     17.16     17.69     17.95     18.17     18.21     18.91     19.43  
Total direct 7.88 7.93 7.99 8.00 8.05 8.06 8.19 8.23
Indirect one-way 8.02 8.11 8.08 8.13 8.24 8.18 8.22 8.68
Indirect two-way   4.07     4.09     3.93     4.06     4.31     4.45     4.32     3.97  
Total indirect 6.21 6.19 6.01 6.12 6.32 6.39 6.37 6.47
Total one-way 7.39 7.42 7.46 7.46 7.50 7.50 7.60 7.63
Total two-way   13.72     13.69     13.72     13.87     14.10     14.22     14.70     14.90  
Total paging ARPU $ 7.82   $ 7.86   $ 7.91   $ 7.92   $ 7.97   $ 7.98   $ 8.11   $ 8.15  

Gross disconnect rate (b)

Direct one-way (4.4 )% (4.4 )% (4.3 )% (4.1 )% (5.5 )% (5.7 )% (6.4 )% (4.7 )%
Direct two-way   (7.0 )%   (5.9 )%   (5.4 )%   (4.5 )%   (7.3 )%   (10.5 )%   (5.6 )%   (6.4 )%
Total direct (4.5 )% (4.5 )% (4.4 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )%
Indirect one-way (4.7 )% (6.4 )% (6.7 )% (6.5 )% (6.4 )% (6.8 )% (8.2 )% (6.1 )%
Indirect two-way   (2.2 )%   (20.0 )%   (4.4 )%   (2.3 )%   (1.9 )%   (2.7 )%   (2.3 )%   (5.7 )%
Total indirect (3.6 )% (13.2 )% (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )%
Total one-way (4.4 )% (4.5 )% (4.4 )% (4.2 )% (5.3 )% (5.8 )% (6.5 )% (4.8 )%
Total two-way   (5.8 )%   (9.9 )%   (5.1 )%   (3.9 )%   (5.7 )%   (8.3 )%   (4.7 )%   (6.2 )%
Total paging gross disconnect rate   (4.5 )%   (4.9 )%   (4.4 )%   (4.1 )%   (5.3 )%   (5.9 )%   (6.3 )%   (4.9 )%

Net loss rate (c)

Direct one-way (1.4 )% (1.2 )% (2.1 )% (1.4 )% (1.8 )% (1.9 )% (3.7 )% (2.1 )%
Direct two-way   (2.2 )%   (0.2 )%   (0.9 )%   (0.1 )%   (3.0 )%   (4.5 )%   (0.6 )%   (2.2 )%
Total direct (1.5 )% (1.1 )% (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )%
Indirect one-way (2.4 )% (4.4 )% (4.0 )% (4.3 )% (4.1 )% (4.8 )% (6.3 )% (3.9 )%
Indirect two-way   (1.7 )%   (19.4 )%   (3.6 )%   (2.0 )%   (1.5 )%   (2.2 )%   (1.9 )%   (4.9 )%
Total indirect (2.1 )% (11.9 )% (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )%
Total one-way (1.5 )% (1.3 )% (2.1 )% (1.5 )% (1.9 )% (2.0 )% (3.7 )% (2.2 )%
Total two-way   (2.1 )%   (5.7 )%   (1.7 )%   (0.6 )%   (2.5 )%   (3.8 )%   (1.0 )%   (3.0 )%
Total paging net loss rate   (1.5 )%   (1.6 )%   (2.1 )%   (1.4 )%   (1.9 )%   (2.1 )%   (3.5 )%   (2.2 )%
 
(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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Gross placement rate (b)
Healthcare 3.3 % 3.8 % 2.6 % 3.0 % 3.8 % 4.5 % 3.1 % 2.9 %
Government 1.4 % 1.9 % 1.0 %

1.2

% 1.5 % 2.6 % 1.9 % 1.5 %
Large enterprise 2.2 % 1.7 % 2.1 % 2.3 % 2.7 % 2.0 % 2.9 % 3.0 %
Other 2.4 % 1.8 % 1.6 % 2.1 % 4.3 % 2.2 % 2.1 % 1.7 %
Total direct 3.0 % 3.4 % 2.3 % 2.8 % 3.5 % 4.0 % 2.9 % 2.7 %
Total indirect 1.5 % 1.3 % 1.7 % 1.3 % 1.4 % 1.3 % 1.2 % 1.5 %
Total 3.0 % 3.3 % 2.3 % 2.7 % 3.4 % 3.9 % 2.8 % 2.7 %
Gross disconnect rate (b)
Healthcare (4.3 )% (3.8 )% (3.9 )% (3.8 )% (5.1 )% (5.3 )% (6.5 )% (4.5 )%
Government (4.7 )% (7.0 )% (5.0 )% (4.7 )% (7.5 )% (7.6 )% (5.6 )% (4.7 )%
Large enterprise (5.0 )% (7.3 )% (5.7 )% (4.7 )% (4.8 )% (8.9 )% (5.4 )% (6.4 )%
Other (6.1 )% (7.0 )% (7.1 )% (6.4 )% (6.9 )% (7.7 )% (6.5 )% (6.5 )%
Total direct (4.5 )% (4.5 )% (4.3 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )%
Total indirect (3.6 )% (13.1 )% (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )%
Total (4.4 )% (4.9 )% (4.4 )% (4.1 )% (5.3 )% (5.9 )% (6.3 )% (4.9 )%
Net loss rate (b)
Healthcare (1.0 )% 0.1 % (1.3 )% (0.7 )% (1.3 )% (0.8 )% (3.5 )% (1.5 )%
Government (3.3 )% (5.1 )% (4.0 )% (3.5 )% (6.0 )% (5.0 )% (3.6 )% (3.2 )%
Large enterprise (2.8 )% (5.6 )% (3.6 )% (2.4 )% (2.1 )% (6.9 )% (2.5 )% (3.3 )%
Other (3.7 )% (5.1 )% (5.5 )% (4.4 )% (2.5 )% (5.5 )% (4.4 )% (4.8 )%
Total direct (1.5 )% (1.1 )% (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )%
Total indirect (2.1 )% (11.9 )% (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )%
Total (1.5 )% (1.6 )% (2.1 )% (1.4 )% (1.9 )% (2.1 )% (3.5 )% (2.2 )%
End of period units in service % of total (b)
Healthcare 76.3 % 75.9 % 74.7 % 74.1 % 73.6 % 73.0 % 72.0 % 71.9 %
Government 7.2 % 7.4 % 7.7 % 7.8 % 7.9 % 8.3 % 8.6 % 8.6 %
Large enterprise 7.2 % 7.2 % 7.6 % 7.7 % 7.8 % 7.8 % 8.2 % 8.1 %
Other 5.6 % 5.7 % 6.0 % 6.2 % 6.4 % 6.6 % 6.8 % 7.0 %
Total direct 96.3 % 96.2 % 95.9 % 95.8 % 95.7 % 95.7 % 95.6 % 95.6 %
Total indirect 3.7 % 3.8 % 4.1 % 4.2 % 4.3 % 4.3 % 4.4 % 4.4 %
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

9/30/2015

6/30/2015

3/31/2015

12/31/2014

9/30/2014

6/30/2014

3/31/2014

12/31/2013

Account size ending units in service (000's)

1 to 3 units 31 32 33 35 37 39 41 43
4 to 10 units 18 19 20 21 22 23 24 25
11 to 50 units 44 47 49 51 53 56 57 61
51 to 100 units 31 33 32 34 36 38 41 42

 

101 to 1,000 units 238 244 252 262 267 275 282 287
>1,000 units   787     792     794     801     805     812     824     857  
Total   1,149     1,167     1,180     1,204     1,220     1,243     1,269     1,315  
End of period units in service % of total direct
1 to 3 units 2.7 % 2.8 % 2.8 % 2.9 % 3.0 % 3.1 % 3.2 % 3.2 %
4 to 10 units 1.5 % 1.6 % 1.7 % 1.7 % 1.8 % 1.8 % 1.9 % 1.9 %
11 to 50 units 3.9 % 4.0 % 4.2 % 4.2 % 4.3 % 4.5 % 4.5 % 4.6 %
51 to 100 units 2.7 % 2.8 % 2.7 % 2.8 % 3.0 % 3.1 % 3.2 % 3.2 %
101 to 1,000 units 20.7 % 20.9 % 21.4 % 21.8 % 21.9 % 22.1 % 22.3 % 21.9 %
>1,000 units   68.5 %   67.9 %   67.2 %   66.6 %   66.0 %   65.4 %   64.9 %   65.2 %
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 (4.1 )% (2.9 )% (6.2 )% (4.4 )% (4.8 )% (4.1 )% (4.9 )% (4.4 )%
4 to 10 units (5.3 )% (5.0 )% (6.2 )% (5.5 )% (4.0 )% (5.4 )% (4.1 )% (3.8 )%
11 to 50 units (4.8 )% (4.1 )% (4.6 )% (3.8 )% (5.2 )% (3.2 )% (5.3 )% (4.4 )%
51 to 100 units (5.4 )% 0.2 % (4.1 )% (5.4 )% (5.2 )% (8.7 )% (1.2 )% (3.5 )%
101 to 1,000 units (2.5 )% (3.0 )% (3.9 )% (2.0 )% (2.9 )% (2.5 )% (1.7 )% (1.7 )%
>1,000 units   (0.6 )%   (0.2 )%   (0.8 )%   (0.5 )%   (1.0 )%   (1.2 )%   (4.0 )%   (1.8 )%
Total   (1.5 )%   (1.1 )%   (2.0 )%   (1.4 )%   (1.9 )%   (2.0 )%   (3.5 )%   (2.1 )%
Account size ARPU
1 to 3 units $ 14.34 $ 14.52 $ 14.52 $ 14.53 $ 14.65 $ 14.86 $ 14.96 $ 14.98
4 to 10 units 14.11 14.11 14.07 14.09 14.04 14.12 14.22 14.29
11 to 50 units 12.03 12.13 12.02 12.00 11.95 12.00 12.07 11.96
51 to 100 units 10.48 10.42 10.26 10.15 10.16 10.18 10.27 10.34
101 to 1,000 units 8.79 8.78 8.81 8.79 8.69 8.58 8.76 8.89
>1,000 units   6.87     6.90     6.95     6.93     6.99     7.00     7.11     7.11  
Total $ 7.88   $ 7.93   $ 7.99   $ 8.00   $ 8.05   $ 8.06   $ 8.19   $ 8.23  
Cellular:
Number of activations   33     144     92     264     2,198     1,679     281     690  
Revenue from cellular services (000's) $ 25   $ 39   $ 40   $ 77   $ 395   $ 278   $ 108   $ 129  
 
(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