false
0001289945
0001289945
2024-05-01
2024-05-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported):
May 1, 2024
SPOK HOLDINGS, INC
.
(Exact name of registrant as specified in its charter)
Delaware 001-32358 16-1694797
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5911 Kingstowne Village Pkwy, 6th Floor 22315
Alexandria, Virginia
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (
800
)
611-8488
Not Applicable
Former name or former address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol Name of each exchange on which registered
Common Stock, par value $0.0001 per share SPOK NASDAQ
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Indicate by check mark whether the registrant is an emerging growth company as
defined in Rule 405 of the Securities Act of 1933 ((s)230.405 of this chapter)
or Rule 12b-2 of the Securities Exchange Act of 1934 ((s)240.12b-2 of this
chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02 Results of Operations and Financial Condition.
On
May 1, 2024
, Spok Holdings, Inc. (the "Company") issued a press release announcing
financial results for the first quarter ending March 31, 2024. A copy of the
press release is furnished as Exhibit 99.1 to this report.
Item 8.01 Other Events.
On
May 1, 2024
, the Board declared a regular quarterly dividend of $0.3125 per share of the
Company's common stock payable on June 24, 2024, to stockholders of record on
May 24, 2024.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits:
Exhibit
No. Description
99.1 Spok Holdings, Inc. Earnings Press Release dated May 1, 2024
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Spok Holdings, Inc.
Date: May 1, 2024 By: /s/ Calvin C. Rice
Name: Calvin C. Rice
Title: Chief Financial Officer
Exhibit 99.1
NEWS RELEASE
CONTACT:
Al Galgano
952-224-6096
al.galgano@spok.com
Spok Reports First Quarter 2024 Results
Total year-over-year revenue growth exceeds 5%
Software year-over-year revenue growth over 15%
Net income and adjusted EBITDA up 35.9% and 9.2%, respectively, from the prior
year period
Alexandria, Va. (May 1, 2024)
- Spok Holdings, Inc.
(NASDAQ: SPOK), a global leader in healthcare communications, today announced
results for the first quarter ended March 31, 2024. In addition, the Company's
Board of Directors declared a regular quarterly dividend of $0.3125 per share,
payable on June 24, 2024, to stockholders of record on May 24, 2024.
Recent Highlights:
.
Generated net income of $4.2 million, or $0.21 per diluted share, in the first
quarter, compared to net income of $3.1 million, or $0.15 per diluted share,
in the prior year period
.
Generated $7.5 million of adjusted EBITDA in the first quarter, compared to
$6.9 million in the first quarter of 2023
.
Software operations bookings totaled $7.9 million in the first quarter, up 39%
from the prior year period
.
First quarter 2024 Software operations bookings included 19 six-figure
customer contracts
.
Softw
are revenue totaled $16.3 million first quarter of 2024,
up 15%
from the prior year period
.
First quarter 2024 Wireless average revenue per unit (ARPU) was $7.89, up on a
year-over-year basis
.
Improvement in quarterly net unit churn at
1.6%
in the first quarter, down from 2.5% in the prior quarter, with annual net
unit churn of 7.2%
o
n a trailing-twelve-month basis
.
Wireless revenue of $18.6 million in the first quarter of 2024, compared to
revenue of $19.0 million in the same period in 2023
.
Capital returned to stockholders in the first quarter of 2024 totaled $6.3
million in the form of the Company's quarterly dividend
.
Cash and cash equivalents balance of $23.3 million on March 31, 2024, and no
debt
Spok.com
1
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Exhibit 99.1
NEWS RELEASE
"I am proud of the strong performance our team was able to deliver in the
first quarter and believe these results position us well for the remainder of
the year, as we continue to execute on generating cash flow and returning
capital to stockholders, while responsibly investing in and growing our
business," said Vincent D. Kelly, chief executive officer of Spok Holdings,
Inc. "In the first quarter, we made tremendous progress in several key
performance areas, including software revenue growth, wireless trends,
software operations bookings and backlog levels. We were able to accomplish
this while investing in our Spok Care Connect and Wireless solutions. I am
particularly pleased with our performance in generating software operations
bookings in the first quarter, which were up 39% on a year-over-year-basis. In
fact, the $7.9 million of software operations bookings in the first quarter
was the second highest first quarter performance in our history. The strong
level of software operations bookings in the first quarter resulted in a more
than 62% increase in software license revenue from the prior year quarter and
drove total revenue growth of more than 5%.
"I believe Spok is doing an excellent job of balancing the necessary
investments in our products and infrastructure in order to fuel future growth
and continuing to return capital to our stockholders," continued Kelly. "In
the first quarter, we generated over $4.2 million of net income and over $7.5
million of adjusted EBITDA, which covered the $6.3 million we returned to our
stockholders. However, at the same time, we increased the first quarter
research and development investment in our products by $0.5 million, or 18.4%,
on a year-over-year basis, and believe we are on track to invest approximately
$11.0 million in product research and development expenses in 2024. We believe
that this investment will fuel future growth and that our extensive experience
operating our established communication solutions will create significant
value for stockholders by maximizing revenue and cash flow generation.
"We were very pleased with our performance in the first quarter and believe
that it provides a solid springboard for 2024. As a result, we are reiterating
our guidance estimates for revenue and adjusted EBITDA generation for this
year. At the midpoint of that guidance range, we believe we are on track to
again grow consolidated revenue in 2024, on a year-over-year basis, with
slight declines in wireless revenue being more than offset by continued growth
in software revenue. We also anticipate that the midpoint of our adjusted
EBITDA guidance will be consistent with 2023, with additional growth potential
at the high-end of the guidance range. Of course, we will continue to update
you on our outlook each quarter when we report our results," concluded Kelly.
Spok.com
2
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Exhibit 99.1
NEWS RELEASE
Financial Highlights
:
For the three months ended March 31,
(Dollars in thousands) 2024 2023 Change (%)
Revenue
Wireless revenue
Paging revenue $ 17,970 $ 18,525 (3.0) %
Product and other revenue 625 503 24.3 %
Total wireless revenue $ 18,595 $ 19,028 (2.3) %
Software revenue
License $ 2,626 $ 1,618 62.3 %
Professional services 4,025 3,239 24.3 %
Hardware 384 356 7.9 %
Maintenance 9,279 8,939 3.8 %
Total software revenue 16,314 14,152 15.3 %
Total revenue $ 34,909 $ 33,180 5.2 %
For the three months
ended March 31,
(Dollars in 2024 2023 Change
thousands) (%)
GAAP
Operating $ 30,018 $ 28,463 5.5 %
expenses
Net $ 4,236 $ 3,117 35.9 %
income
Cash, cash equivalents, and short-term $ 23,340 $ 29,550 (21.0) %
investments (as of period end)
Capital returned $ 7,386 $ 6,933 6.5 %
to stockholders
Non-GAAP
Adjusted operating $ 28,522 $ 27,217 4.8 %
expenses
Adjusted $ 7,535 $ 6,899 9.2 %
EBITDA
For the three months ended March 31,
(Dollars in thousands, excluding units in service and ARPU) 2024 2023 Change
(%)
Key Statistics
Wireless units in service (000's) 753 811 (7.2) %
Wireless average revenue per unit (ARPU) $ 7.89 $ 7.59 4.0 %
Software operations bookings $ 7,885 $ 5,678 38.9 %
(1)
Software backlog (as of period end) $ 57,980 $ 46,540 24.6 %
(1)
Software operations bookings includes net new (i.e., new customers or
incremental add-on sales to existing customers) sales of license, professional
services, equipment, and first-year maintenance.
Spok.com
3
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Exhibit 99.1
NEWS RELEASE
Financial Outlook:
Regarding financial guidance, the Company reiterated the following
expectations for the full year 2024:
(Unaudited and in millions) Current Guidance
Full Year 2024
From To
Revenue
Wireless $ 72.0 $ 75.0
Software $ 64.0 $ 69.0
Total Revenue $ 136.0 $ 144.0
Adjusted EBITDA $ 27.5 $ 32.5
2024 First Quarter Call:
Management will host a conference call and webcast to discuss these financial
results on Wednesday, May 1, 2024, at 5:00 p.m. Eastern Time. The presentation
is open to all interested parties and may include forward-looking information.
Conference Call Details
Date/Time: Wednesday, May 1, 2024, at 5:00 p.m. ET
Webcast: https://www.webcast-eqs.com/register/spok_q12024_en/en
U.S. Toll-Free Dial In: 877-407-0890
International Dial In: 1-201-389-0918
To access the call, please dial in approximately ten minutes before the start
of the call. For those unable to join the live call, an OnDemand version of
the webcast will be available following the call under the URL link and on the
investor relations website.
* * * * * * * * *
About Spok
Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is
proud to be a global leader in healthcare communications. We deliver clinical
information to care teams when and where it
Spok.com
4
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Exhibit 99.1
NEWS RELEASE
matters most to improve patient outcomes. Top hospitals rely on the Spok Care
Connect(R) platform to enhance workflows for clinicians and support
administrative compliance. Our customers send over 70 million messages each
month through their Spok(R) solutions. Spok enables smarter, faster clinical
communication. For more information,
visit spok.com
.
Spok is a trademark of Spok Holdings, Inc. Spok Care Connect and Spok Mobile
are trademarks of Spok, Inc.
Non-GAAP Financial Measures
This press release contains the following non-GAAP financial measures:
adjusted operating expenses and adjusted EBITDA. Adjusted operating expenses
excludes depreciation, amortization and accretion expense, impairment of
intangible assets and severance and restructuring costs. Adjusted EBITDA
represents net income/(loss) before interest income/expense, income tax
benefit/expense, depreciation, amortization and accretion expense, stock-based
compensation expense, impairment of intangible assets and severance and
restructuring. With respect to our expectations under "Financial Guidance"
above, reconciliation of adjusted EBITDA to net income is not available
without unreasonable efforts on a forward-looking basis due to the high
variability, complexity and uncertainty with respect to certain items included
in net income that are excluded from adjusted EBITDA, in particular, income
tax benefit/expense, stock-based compensation expenses, impairment of
intangible assets, severance and restructuring and other non-recurring
expenses. These items can have unpredictable fluctuations based on unforeseen
activity that is out of our control and/or cannot be reasonably predicted.
We believe that these non-GAAP financial measures provide useful information
to management and investors regarding certain financial and business trends
relating to Spok's financial condition and results of operations. We use these
non-GAAP measures for financial, operational, and budgetary decision-making
purposes, to understand and evaluate our core operating performance and
trends, and to generate future operating plans. We believe that these non-GAAP
financial measures permit us to more thoroughly analyze key financial metrics
used to make operational decisions and allow us to assess our core operating
results. We believe that the use of these non-GAAP financial measures provides
an additional tool for investors to use in evaluating ongoing operating
results and trends and in comparing our financial measures with other software
companies who present similar non-GAAP financial measures. We adjust for
certain items because we do not regard these costs as reflective of normal
costs related to the ongoing operation of the business in the ordinary course.
In general, these items possess one or more of the following characteristics:
non-cash expenses, factors outside of our control, items that are
non-operational in nature, and unusual items not expected to occur in the
normal course of business. We believe it is important to exclude these costs,
given that they do not represent future operational costs under this strategic
business plan. This allows us to assess the underlying performance of our core
business under this new strategic business plan.
We do not consider these non-GAAP measures in isolation or as an alternative
to financial measures determined in accordance with GAAP. The principle of
these non-GAAP financial measures is that
Spok.com
5
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Exhibit 99.1
NEWS RELEASE
they exclude significant amounts that are required by GAAP to be recorded in
the Company's financial statements. In addition, they are subject to inherent
limitations as they reflect the exercise of judgment by management about which
items are excluded or included in determining these non-GAAP financial
measures. In order to compensate for these limitations, management presents
non-GAAP financial measures in connection with GAAP results. We urge investors
to review the reconciliation of our non-GAAP financial measures to the
comparable GAAP financial measures, which are included in this press release,
and not to rely on any single financial measure to evaluate our business.
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 our 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 our 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, our ability to manage wireless network rationalization to
lower our costs without causing disruption of service to our customers; our
ability to retain key management personnel and to attract and retain talent
within the organization; the productivity of our sales organization and our
ability to deliver effective customer support; economic conditions such as
recessionary economic cycles, higher interest rates, inflation and higher
levels of unemployment; risks related to our overall business strategy,
including maximizing revenue and cash generation from our established
businesses and returning capital to stockholders through dividends and
repurchases of shares of our common stock; competition for our services and
products from new technologies or those offered and/or developed from firms
that are substantially larger and have much greater financial and human
capital resources; continuing decline in the number of paging units we have in
service with customers, commensurate with a continuing decline in our wireless
revenue; our ability to address changing market conditions with new or revised
software solutions; undetected defects, bugs, or security vulnerabilities in
our products; our dependence on the U.S. healthcare industry; the sales cycle
of our software solutions and services can run from six to eighteen months,
making it difficult to plan for and meet our sales objectives and bookings on
a steady basis quarter-to-quarter and year-to-year; our reliance on
third-party vendors to supply us with wireless paging equipment; our ability
to maintain successful relationships with our channel partners; our ability to
protect our rights in intellectual property that we own and develop and the
potential for litigation claiming intellectual property infringement by us;
our use of open source software, third-party software and other intellectual
property; the reliability of our networks and servers and our ability to
prevent cyberattacks and other security issues and disruptions; our reliance
on data centers and other systems and technologies provided by third parties,
and technology systems and electronic networks supplied and managed by third
parties; cyberattacks, data breaches or other compromises to our or our
critical third parties' systems, data, products or services; our ability to
realize the benefits associated with our deferred income tax assets; future
impairments of our long-lived assets or goodwill; risks related to data
privacy and protection-related laws and regulation; and our ability to manage
changes related to regulation, including laws and regulations affecting
hospitals and the healthcare industry generally, as well as other risks
described from time to time in our periodic reports and other filings with the
Spok.com
6
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Exhibit 99.1
NEWS RELEASE
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.com
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SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months ended
3/31/2024 3/31/2023
Revenue:
Wireless $ 18,595 $ 19,028
Software 16,314 14,152
Total revenue 34,909 33,180
Operating expenses:
Cost of revenue (exclusive of items shown separately below) 7,139 6,536
Research and development 2,951 2,493
Technology operations 6,299 6,587
Selling and marketing 4,149 3,901
General and administrative 7,984 7,700
Depreciation and accretion 1,068 1,236
Severance and restructuring 428 10
Total operating expenses 30,018 28,463
% of total revenue 86.0 % 85.8 %
Operating income 4,891 4,717
% of total revenue 14.0 % 14.2 %
Interest income 254 272
Other (expense) income (2) 53
Income before income taxes 5,143 5,042
Provision for income taxes (907) (1,925)
Net income $ 4,236 $ 3,117
Basic net income per common share $ 0.21 $ 0.16
Diluted net income per common share $ 0.21 $ 0.15
Basic weighted average common shares outstanding 20,170,548 19,897,445
Diluted weighted average common shares outstanding 20,446,587 20,182,692
Cash dividends declared per common share 0.3125 0.3125
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SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
3/31/2024 12/31/2023
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 23,340 $ 31,989
Accounts receivable, net 21,722 23,314
Prepaid expenses 7,198 7,885
Other current assets 672 704
Total current assets 52,932 63,892
Non-current assets:
Property and equipment, net 7,306 7,321
Operating lease right-of-use assets 9,803 10,526
Goodwill 99,175 99,175
Deferred income tax assets, net 45,348 46,260
Other non-current assets 451 510
Total non-current assets 162,083 163,792
Total assets $ 215,015 $ 227,684
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,809 $ 5,969
Accrued compensation and benefits 3,419 7,284
Deferred revenue 24,998 26,298
Operating lease liabilities 3,773 4,184
Other current liabilities 3,890 4,273
Total current liabilities 39,889 48,008
Non-current liabilities:
Asset retirement obligations 7,205 7,191
Operating lease liabilities 6,630 6,902
Other non-current liabilities 1,122 1,812
Total non-current liabilities 14,957 15,905
Total liabilities 54,846 63,913
Commitments and contingencies
Stockholders' equity:
Preferred stock $ - $ -
Common stock 2 2
Additional paid-in capital 101,656 102,936
Accumulated other comprehensive loss (1,722) (1,764)
Retained earnings 60,233 62,597
Total stockholders' equity 160,169 163,771
Total liabilities and stockholders' equity $ 215,015 $ 227,684
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SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited and in thousands)
For the three months ended
3/31/2024 3/31/2023
Operating activities:
Net income $ 4,236 $ 3,117
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion 1,068 1,236
Deferred income tax expense 902 1,886
Stock-based compensation 1,148 936
Provisions for credit losses, service credits and other 272 29
Changes in assets and liabilities:
Accounts receivable 1,318 4,187
Prepaid expenses and other assets 779 (282)
Net operating lease liabilities 41 (197)
Accounts payable, accrued liabilities and other (6,405) (6,680)
Deferred revenue (1,361) (1,621)
Net cash provided by operating activities 1,998 2,611
Investing activities:
Purchases of property and equipment (875) (649)
Net cash used in investing activities (875) (649)
Financing activities:
Cash distributions to stockholders (7,386) (6,933)
Purchase of common stock for tax withholding on vested equity awards (2,428) (1,245)
Net cash used in financing activities (9,814) (8,178)
Effect of exchange rate on cash and cash equivalents 42 12
Net decrease in cash and cash equivalents (8,649) (6,204)
Cash and cash equivalents, beginning of period 31,989 35,754
Cash and cash equivalents, end of period $ 23,340 $ 29,550
Supplemental disclosure:
Income taxes paid (refunded) $ 5 $ (6)
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SPOK HOLDINGS, INC.
UNITS IN SERVICE, MARKET SEGMENTS,
AND AVERAGE REVENUE PER UNIT (ARPU)
(Unaudited and in thousands)
For the three months ended
3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/202
Account
size
ending
units
in
service
(000's)
1 to 43 44 46 48 48 50 51 53
100
units
101 135 142 143 144 149 147 147 149
to
1,000
units
1,000 575 579 596 614 614 620 626 633
units
Total 753 765 785 806 811 817 824 835
Market
segment
as a
percent
of
total
ending
units
in
service
Healthcare 86.1 % 85.9 % 86.0 % 86.1 % 85.7 % 85.4 % 85.0 % 85.0
Government 4.1 % 4.2 % 4.2 % 4.2 % 4.3 % 4.4 % 4.1 % 4.2
Large 3.9 % 4.1 % 4.1 % 4.0 % 4.1 % 4.0 % 3.9 % 4.0
enterprise
Other 5.9 % 5.9 % 5.7 % 5.7 % 6.0 % 6.1 % 7.0 % 6.8
(1)
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0
Account
size
ARPU
1 to $ 12.66 $ 12.57 $ 12.02 $ 11.91 $ 12.03 $ 11.95 $ 11.80 $ 11.41
100
units
101 9.14 9.16 8.75 8.56 8.75 8.66 8.44 8.27
to
1,000
units
1,000 7.23 7.15 6.97 6.94 6.95 6.86 6.69 6.63
units
Total $ 7.89 $ 7.84 $ 7.59 $ 7.53 $ 7.59 $ 7.50 $ 7.40 $ 7.23
(1)
Other includes hospitality, resort and indirect units
2
%
%
%
%
%
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RECONCILIATION OF ADJUSTED OPERATING EXPENSES
(Unaudited and in thousands)
For the three months ended
3/31/2024 3/31/2023
Operating expenses $ 30,018 $ 28,463
Add back:
Depreciation and accretion (1,068) (1,236)
Severance and restructuring (428) (10)
Adjusted operating expenses $ 28,522 $ 27,217
RECONCILIATION OF ADJUSTED EBITDA
(Unaudited and in thousands)
For the three months ended
3/31/2024 3/31/2023
Net income $ 4,236 $ 3,117
Add back:
Provision for income taxes 907 1,925
Other expense (income) 2 (53)
Interest income (254) (272)
Depreciation and accretion 1,068 1,236
EBITDA $ 5,959 $ 5,953
Adjustments:
Stock-based compensation 1,148 936
Severance and restructuring 428 10
Adjusted EBITDA $ 7,535 $ 6,899
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