Financial Performance - Total revenue for Q4 2024 was $33.9 million, a slight decrease of 0.2% compared to Q4 2023, while total revenue for the year was $137.7 million, down 1.0% from 2023[9] - Operating income for the year ended December 31, 2024, was $18,965,000, a decrease of 10.6% from $21,228,000 in 2023[29] - Net income for the year ended December 31, 2024, was $14,965,000, down 4.5% from $15,666,000 in the previous year[33] - Net income for Q4 2024 increased to $3,644,000 compared to $3,365,000 in Q4 2023, marking an increase of 8.29%[39] - Adjusted EBITDA for the year ended December 31, 2024, was $29,173,000, down from $30,342,000 in 2023, a decrease of 3.85%[39] Revenue Breakdown - Software operations bookings reached $7.1 million in Q4 2024, a 73.2% increase from Q4 2023, contributing to total bookings of $34.1 million for the year, up 13.2% year-over-year[3] - The software backlog was $62.4 million as of December 31, 2024, reflecting a nearly 22% increase from the previous year[3] - Average revenue per unit (ARPU) for Wireless in Q4 2024 was $8.16, up more than 4% year-over-year[3] - Wireless revenue decreased to $18,370,000 for the three months ended December 31, 2024, down 3.8% from $19,091,000 in the prior year[29] - Software revenue increased to $15,522,000 for the three months ended December 31, 2024, up 4.4% from $14,862,000 in the same period last year[29] Expenses and Investments - Research and development costs totaled $11.5 million in 2024, supporting the company's investment in future growth[3] - Total operating expenses for the year ended December 31, 2024, were $118,688,000, an increase of 0.8% from $117,797,000 in 2023[29] - Adjusted operating expenses for Q4 2024 were $28,313,000, a decrease from $28,765,000 in Q4 2023, reflecting a reduction of 1.57%[37] Shareholder Returns - The company returned $6.3 million to stockholders in Q4 2024, a 1.6% increase from the previous year[9] - Cash dividends declared per common share remained constant at $0.3125 for both the three months ended December 31, 2024, and December 31, 2023[29] Guidance and Future Outlook - The company expects 2025 total revenue guidance to be between $134.0 million and $142.0 million, with software revenue projected between $65.0 million and $70.0 million[12] Operational Metrics - The number of wireless units in service decreased by 5.9% year-over-year to 720,000[11] - Total account size ending units in service decreased to 720,000 from 730,000 in the previous quarter, representing a decline of 1.37%[35] - Healthcare segment accounts for 85.6% of total ending units in service, slightly down from 85.7% in the previous quarter[35] - The average revenue per user (ARPU) for accounts with 1 to 100 units increased to $13.08 from $12.70 in the previous quarter, a rise of 2.99%[35] - The number of accounts with more than 1,000 units remained stable at 560,000, unchanged from the previous quarter[35] - The percentage of large enterprise accounts remained stable at 3.9% of total ending units in service[35] Assets and Cash Position - Total assets decreased to $217,103,000 as of December 31, 2024, from $227,684,000 as of December 31, 2023[31] - Cash and cash equivalents at the end of the period were $29,145,000, down from $31,989,000 at the end of the previous year[33] Tax Provisions - The company reported a provision for income taxes of $1,244,000 for Q4 2024, compared to $993,000 in Q4 2023, an increase of 25.31%[39]

Revenue Performance - Total revenue for Q3 2024 was $34,870,000, a decrease of 1.6% from $35,428,000 in Q3 2023[90]. - Wireless revenue decreased by 3.7% to $18,261,000 in Q3 2024 from $18,972,000 in Q3 2023[95]. - Software revenue increased by 0.9% to $16,609,000 in Q3 2024 compared to $16,456,000 in Q3 2023[95]. - Wireless revenue decreased from $18,119 thousand in Q3 2023 to $17,605 thousand in Q3 2024, a decline of 2.8%[97]. - Average Revenue Per User (ARPU) increased from $7.59 in Q3 2023 to $7.95 in Q3 2024, an increase of 4.7%[97]. - Software operations revenue increased in Q3 2024 due to higher professional services revenue, although license and hardware revenue decreased[105]. Income and Expenses - Operating income for Q3 2024 was $4,961,000, down 20.2% from $6,213,000 in Q3 2023[90]. - Net income for Q3 2024 was $3,660,000, a decrease of 17.8% from $4,451,000 in Q3 2023[90]. - Research and development expenses increased by 10.5% to $2,831,000 in Q3 2024 from $2,561,000 in Q3 2023[90]. - Total operating expenses for Q3 2024 were $29,909,000, an increase of 2.4% from $29,215,000 in Q3 2023[90]. - Technology operations expenses decreased by 5.0% to $6.083 million for the three months ended September 30, 2024, compared to $6.405 million in the same period of 2023[116]. - Selling and marketing expenses decreased by 3.4% to $3.928 million for the three months ended September 30, 2024, compared to $4.067 million in the same period of 2023[118]. - General and administrative expenses increased by 3.9% to $8.534 million for the three months ended September 30, 2024, compared to $8.216 million in the same period of 2023[122]. - Commissions decreased by 20.7% to $899,000 for the three months ended September 30, 2024, compared to $1.134 million in the same period of 2023[120]. - Stock-based compensation increased by 35.0% to $135,000 for the three months ended September 30, 2024, compared to $100,000 in the same period of 2023[118]. - Depreciation and accretion expenses decreased to $1.1 million for the three months ended September 30, 2024, from $1.3 million in the same period of 2023[124]. Tax and Cash Flow - The provision for income taxes decreased by 27.1% to $(1,490,000) in Q3 2024 from $(2,043,000) in Q3 2023[90]. - The provision for income taxes decreased to $1.5 million for the three months ended September 30, 2024, from $2.0 million in the same period of 2023[127]. - For the nine months ended September 30, 2024, net cash provided by operating activities was $20.5 million, an increase of $6.1 million compared to the same period in 2023[137]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $2.3 million, slightly down from $2.4 million in 2023[139]. - Net cash used in financing activities was $22.3 million for the nine months ended September 30, 2024, compared to $20.6 million in 2023, primarily due to cash distributions to stockholders[140]. - The company anticipates positive cash flow generation to continue in future operating periods following the successful completion of its restructuring plan[131]. Employee and Operational Metrics - The number of full-time equivalent employees increased by 6.6% to 406 in Q3 2024 from 381 in Q3 2023[90]. - Active transmitters decreased by 5.6% to 3,064 in Q3 2024 from 3,245 in Q3 2023[90]. - Wireless units in service decreased from 785 thousand as of September 30, 2023, to 730 thousand as of September 30, 2024, reflecting a decline of 7%[98]. Future Outlook and Strategic Initiatives - The company anticipates continued decline in demand for wireless services as products are replaced by competing technologies[99]. - The company is exploring new service offerings, such as encrypted paging and Spok Mobile, to mitigate the decline in wireless revenue[100]. - The GenA pager, launched in late 2021, is expected to help slow wireless revenue attrition due to its unique features and competitive advantage[102]. Financial Position - Cash and cash equivalents as of September 30, 2024, were $27.8 million, with a majority held in accounts exceeding insured limits[128]. - The company incurred severance and restructuring expenses of $0.3 million for the three months ended September 30, 2024, primarily related to lease termination[125]. - The company had no outstanding debt or revolving credit facility as of September 30, 2024, indicating a strong liquidity position[150]. - Total contractual obligations as of September 30, 2024, amounted to $16.3 million, including operating lease obligations of $10.9 million and unconditional purchase obligations of $5.4 million[146]. - The financial impact of foreign currency transactions is immaterial, resulting in no significant exposure to foreign currency exchange rate fluctuations[150].

Financial Data and Key Metrics Changes - In Q3 2024, GAAP net income was $3.7 million or $0.18 per diluted share, down from $4.5 million or $0.22 per diluted share in Q3 2023 [33] - Total GAAP revenue for Q3 2024 was $34.9 million, compared to $35.4 million in the prior year [33] - Adjusted EBITDA for Q3 2024 totaled $7.5 million, down from $8.4 million in the prior year but up $0.5 million from the previous quarter [39] Business Line Data and Key Metrics Changes - Software operations bookings grew nearly 65% year-over-year in Q3 2024, with a backlog increase to $63.6 million, up more than 19% from the prior year [11] - Professional services revenue was $4.8 million, up 26.1% from the prior year, with managed services growing almost 133% [36] - Wireless revenue was $18.3 million, down from $19 million in the prior year, with an increase in ARPU by $0.36 or 4.7% [33][35] Market Data and Key Metrics Changes - The company holds approximately 26% market share in the U.S., with 50% penetration in large hospitals (over 600 beds) and 30% in mid-tier hospitals (200-599 beds) [48][49] - The churn rate for wireless services is expected to range from 4.5% to 6% for the full year, slightly higher than previously anticipated [35] Company Strategy and Development Direction - The company aims to generate cash and return capital to shareholders while investing in business growth, focusing on software solutions and maintaining a strong recurring revenue base [9][43] - Future growth opportunities are anticipated from product upgrades and enhancements, including the deployment of new features in Spok Care Connect [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low-double-digit year-over-year software bookings growth for the full year and reiterated guidance for 2024 [8][41] - The company is optimistic about its competitive position and plans to leverage its established customer relationships to drive future growth [17][70] Other Important Information - The company ended Q3 2024 with $27.8 million in cash, an increase from $23.9 million in the previous quarter, and anticipates annual free cash flow between $25 million and $27 million [40] - The company has a legacy of returning over $690 million to shareholders through dividends and share repurchases over the last 20 years [15] Q&A Session Summary Question: Can you talk about the makeup of the software operations bookings? - Most contracts were from existing larger customers upgrading their services, with a focus on managed services [47] Question: How do you see your market reach expanding in the U.S.? - The company has significant penetration in larger hospitals and aims to increase its presence in smaller facilities [48][49] Question: What is driving the increase in ARPU? - ARPU increases are primarily driven by pricing actions and the introduction of the GenA pager, which commands a higher fee [50][51] Question: Can you provide insights on international growth opportunities? - The company is focusing on the APAC region, particularly Australia, but significant contributions are not expected until 2025 [52][53] Question: What is the status of the cloud software solution for smaller hospitals? - The solution is available but adoption has been slow due to resource constraints at smaller hospitals [63] Question: How does the increase in software bookings flow through to maintenance? - Maintenance revenue starts flowing immediately but is amortized over the life of the contract, typically taking 6 to 12 months for a full comparison [67][68] Question: Are there any changes in the competitive landscape? - The company is strengthening its position against traditional competitors and sees opportunities in integrating with larger vendors looking to replace PBX systems [70][71]

Financial Performance - Total revenue for Q3 2024 was $34.87 million, a decrease of 1.6% compared to $35.43 million in Q3 2023[4] - Net income for Q3 2024 was $3.66 million, down 17.8% from $4.45 million in Q3 2023[4] - Adjusted EBITDA for Q3 2024 was $7.53 million, a decline of 10.5% from $8.42 million in Q3 2023[4] - Operating income for Q3 2024 was $4,961,000, representing 14.2% of total revenue, down from 17.5% in Q3 2023[19] - Total operating expenses increased to $29,909,000, which is 85.8% of total revenue, compared to 82.5% in the prior year[19] - Net income for the nine months ended September 30, 2024, was $11,321,000, down from $12,301,000 for the same period in 2023[22] - Adjusted EBITDA for the three months ended September 30, 2024, was $7,534,000, down from $8,422,000 in the same period last year, a decrease of 10.6%[26] Revenue Breakdown - Wireless average revenue per unit (ARPU) was $7.95 in Q3 2024, reflecting a nearly 5% year-over-year growth[2] - Wireless revenue decreased to $18,261,000, down 3.7% from $18,972,000 year-over-year[19] - Software revenue increased slightly to $16,609,000, compared to $16,456,000 in the same quarter last year[19] - Software operations bookings reached $10.4 million in Q3 2024, a 64.4% increase year-over-year, marking the highest total in six years[2] - Software backlog increased to $63.6 million as of September 30, 2024, up more than 19% from the prior year quarter[2] Cash and Assets - Cash and cash equivalents increased by nearly $4.0 million in Q3 2024, totaling $27.8 million as of September 30, 2024[2] - Cash and cash equivalents at the end of the period were $27,830,000, a decrease from $31,989,000 at the beginning of the period[22] - Total assets decreased to $216,762,000 from $227,684,000 at the end of 2023[21] - Total liabilities decreased to $60,474,000 from $63,913,000 at the end of 2023[21] - Stockholders' equity decreased to $156,288,000 from $163,771,000 at the end of 2023[21] Capital and Expenses - Capital returned to stockholders in Q3 2024 totaled $6.33 million, a 1.4% increase from $6.24 million in Q3 2023[4] - Research and development costs for the first nine months of 2024 amounted to $9.0 million, supporting future growth initiatives[2] - Adjusted operating expenses for the three months ended September 30, 2024, were $28,509,000, compared to $27,871,000 for the same period last year, an increase of 2.3%[25] - Total adjusted operating expenses for the nine months ended September 30, 2024, were $85,123,000, compared to $83,963,000 for the same period last year, an increase of 1.4%[25] Units in Service - Total units in service decreased to 730,000 as of September 30, 2024, down from 765,000 a year earlier, representing a decline of 4.6%[23] - The number of units in the >1,000 units category decreased to 564,000 from 579,000 in the previous quarter, a decline of 2.6%[23] - Healthcare segment accounted for 85.7% of total ending units in service, slightly down from 86.1% in the previous quarter[24] - The government segment represented 4.1% of total ending units in service, consistent with the previous quarter's performance[24] Average Revenue Per Unit - Average Revenue Per Unit (ARPU) for units with 1 to 100 units increased to $12.70, up from $12.51 in the previous quarter, reflecting a growth of 1.5%[24] - The ARPU for units with >1,000 units increased to $7.33, up from $7.21 in the previous quarter, reflecting a growth of 1.7%[24]

Core Viewpoint - Spok Holdings, Inc. (NASDAQ: SPOK) is set to report its Q3 '24 earnings on October 23, with expectations for insights into its financial performance and strategic direction [1] Group 1: Company Overview - Spok Holdings is focused on maintaining a long-term investment horizon, typically between 5 to 10 years, emphasizing a simple investment strategy [1] - The company aims to create a diversified portfolio that includes growth, value, and dividend-paying stocks, with a particular focus on value investments [1] Group 2: Investment Strategy - The investment approach includes occasional options trading, indicating a flexible strategy to enhance returns [1]

Revenue Performance - Wireless revenue for Q2 2024 was $18,297,000, a decrease of 3.1% from $18,877,000 in Q2 2023[142] - Software revenue for Q2 2024 was $15,685,000, down 10.8% from $17,586,000 in Q2 2023[142] - Total revenue for Q2 2024 was $33,982,000, a decline of 6.8% compared to $36,463,000 in Q2 2023[142] - Total software revenue decreased by 10.8% to $15.685 million for the three months ended June 30, 2024, compared to $17.586 million in the same period of 2023[201] - Wireless revenue decreased by 3.1% to $18.297 million for the three months ended June 30, 2024, compared to $18.877 million in the same period of 2023[197] - Maintenance revenue increased by 2.7% to $9.368 million for the three months ended June 30, 2024, compared to $9.124 million in the same period of 2023[201] Income and Expenses - Operating income for Q2 2024 was $4,474,000, representing a decrease of 28.0% from $6,215,000 in Q2 2023[142] - Net income for Q2 2024 was $3,425,000, down 27.6% from $4,733,000 in Q2 2023[142] - Total operating expenses for Q2 2024 were $29,508,000, a decrease of 2.4% from $30,248,000 in Q2 2023[142] - Research and development expenses increased by 11.3% to $3,176,000 in Q2 2024 from $2,853,000 in Q2 2023[142] - Selling and marketing expenses decreased by $848,000 (19.5%) for the three months ended June 30, 2024, primarily due to a significant drop in commissions[220] - General and administrative expenses for the three months ended June 30, 2024, decreased by $422,000 (5.0%) compared to the same period in 2023, driven by reductions in facility rent and office costs[217] Cash Flow and Liquidity - As of June 30, 2024, the company held cash and cash equivalents of $23.9 million, which will be used for working capital, operations, and potential investments[224] - The company anticipates that net cash from operating activities and available cash on hand will be adequate to meet cash requirements for both the short term and long term[232] - For the six months ended June 30, 2024, net cash provided by operating activities was $9.4 million, a decrease of $1.8 million compared to $11.2 million for the same period in 2023[239] - Net cash used in financing activities was $16.0 million, compared to $14.3 million for the same period in 2023, indicating an increase of about 11.9%[163] Assets and Liabilities - Total assets decreased from $227,684 thousand as of December 31, 2023, to $216,377 thousand as of June 30, 2024, representing a decline of approximately 5.7%[157] - Current liabilities decreased from $48,008 thousand to $43,356 thousand, a reduction of about 9.3%[157] - Total stockholders' equity decreased from $163,771 thousand to $158,212 thousand, reflecting a decrease of approximately 3.4%[157] Operational Insights - Active transmitters decreased by 5.4% to 3,101 in Q2 2024 from 3,278 in Q2 2023[142] - The number of wireless units in service declined from 806 thousand as of June 30, 2023, to 747 thousand as of June 30, 2024[198] - The company anticipates continued decline in demand for wireless services due to competition from broadband technology[203] - The GenA pager is the only product on the market with advanced capabilities, expected to provide a competitive advantage and slow wireless revenue attrition[193] Dividends and Shareholder Returns - The company declared a quarterly cash dividend of $0.3125 per share, totaling approximately $6.3 million to be paid from available cash[150] - A quarterly cash dividend of $0.3125 per share was declared, amounting to approximately $6.3 million, to be paid from available cash on hand[164] Research and Development - Research and development expenses increased due to higher outside services aimed at enhancing software solutions[208] - The company continues to enhance existing software solutions, which is expected to generate additional revenues for license sales and help reduce gross churn levels[166] Other Financial Metrics - The provision for income taxes decreased to $1.4 million for the three months ended June 30, 2024, down from $1.7 million in the same period in 2023[230] - Stock-based compensation increased by $147,000 (20.9%) for the three months ended June 30, 2024, compared to the same period in 2023, due to rising employee compensation costs[217] - The company incurred severance and restructuring expenses of $0.3 million and $0.8 million for the three and six months ended June 30, 2024, respectively, related to lease terminations[223] Strategic Outlook - The company anticipates continued positive cash flow generation in future operating periods following the successful completion of its restructuring plan[226] - The company continues to review its office and transmitter locations to potentially reduce or consolidate leases[247] - There were no changes to the critical accounting policies reported in the 2023 Annual Report that affect significant judgments and estimates[249] - The company does not have relationships with unconsolidated entities or financial partnerships, mitigating exposure to financing, liquidity, market, or credit risk[237]

Core Insights - Spok Holdings, Inc. reported a decline in both top-line and bottom-line results for the second quarter of 2024, with total revenues of $33.9 million, down 6.8% year over year [4][25] - The company experienced a decrease in earnings per share (EPS) to 17 cents, a 26.1% decline from the previous year's 23 cents [3][25] - The gross profit fell by 9.8% to $26.8 million, with a gross margin contraction of 263 basis points to 78.9% [8][25] Revenue Breakdown - Wireless revenues were $18.3 million, down 3.1% year over year, primarily due to a decline in Paging revenues [1][25] - Software segment revenues totaled $15.7 million, down 10.8% year over year, mainly due to lower revenues from License and Hardware [2][25] - Paging revenues were $17.6 million, down 3.5% year over year, while Product and other revenues increased by 9.6% to $0.7 million [7][25] Profitability Metrics - Adjusted operating profit decreased by 14% to $12.1 million, with an adjusted operating margin contraction of 299 basis points to 35.5% [10][25] - Net income for the quarter was $3.4 million, down 27.6% from the year-ago quarter [17][25] - Adjusted EBITDA was $7 million, reflecting a 17.2% decline year over year [18][25] Expense Analysis - Total adjusted operating expenses decreased by 6% to $14.7 million, with selling and marketing expenses down 19.5% to $3.5 million [9][25] - Research and development expenses increased by 11.3% to $3.2 million, while general and administrative expenses declined by 4.9% to $8.1 million [9][25] Guidance and Future Outlook - The company reiterated its full-year guidance, projecting Wireless revenues between $72 million and $75 million and Software revenues between $64 million and $69 million [12][11] - Adjusted EBITDA for 2024 is expected to range from $27.5 million to $32.5 million [13][11] - Total revenues for 2024 are projected to be between $136 million and $144 million [24][11] Positive Indicators - An increase in Wireless average revenue per unit (ARPU) to $7.84, up 4.1% year over year [14][22] - Software backlog totaled $55 million, up 3.6% from the prior-year quarter [15][22]

Financial Data and Key Metrics Changes - In Q2 2024, GAAP net income was $3.4 million or $0.17 per diluted share, compared to $4.7 million or $0.23 per diluted share in Q2 2023 [68] - Total GAAP revenue for Q2 2024 was $34 million, down from $36.5 million in the prior year, with wireless revenue at $18.3 million and software revenue at $15.7 million [68] - Adjusted EBITDA for Q2 2024 totaled $7 million, down from $8.5 million in the prior year, reflecting a strong performance in Q2 2023 [56][68] Business Line Data and Key Metrics Changes - Software operations bookings in Q2 2024 included 18 six-figure contracts and one seven-figure contract, with an average contract size up nearly 14% from the prior quarter [14] - Professional services revenue increased to $4.3 million in Q2 2024, up nearly 12% from the prior year [51] - Wireless net unit churn improved to 0.8% in Q2 2024, down from 1.6% in the prior quarter, while ARPU increased by $0.31 or 4.1% year-over-year [71] Market Data and Key Metrics Changes - The company serves over 2,200 healthcare facilities, with more than 80% of revenue being recurring in nature [13] - The company anticipates annual free cash flow in the range of $25 million to $27 million, with cash balances expected to be between $28 million and $30 million by the end of 2024 [78] Company Strategy and Development Direction - The company focuses on four major strategic tenets: continued investment in wireless and software solutions, revenue growth, disciplined expense management, and a stockholder-friendly capital allocation plan [8] - The company aims to generate cash and return capital to shareholders while responsibly investing in and growing its business [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for the second half of 2024, reiterating guidance estimates for revenue and adjusted EBITDA [3] - The company believes it is on a sustainable path to grow cash flow and cover its current dividend level [31] Other Important Information - The company has returned nearly $690 million to shareholders over the last 20 years through dividends and share repurchases [6] - The company maintains a strong financial position with no debt, providing significant flexibility [13] Q&A Session Summary Question: What is the expectation for churn in the back half of the year? - Management indicated that while the current churn rate is 0.8%, it may not be sustainable, and they expect it to be in the range of 4% to 5% for the full year [62][88] Question: How did software operations bookings perform in Q2? - Management confirmed that the performance was in line with expectations, with a strong pipeline for Q3 and Q4 anticipated to offset any shortfall from Q2 [85][86] Question: What is the outlook for wireless ARPU? - Management noted a slight sequential step down in ARPU but expects price increases to positively impact it in the coming months [93][94]

NEWS RELEASE Exhibit 99.1 CONTACT: Al Galgano 952-224-6096 al.galgano@spok.com Spok Reports Second Quarter 2024 Results Software Operations Bookings Up 10.3% From Prior Quarter Year-Over-Year Software Revenue Performance Driven by Growth in Maintenance and Services Alexandria, Va. (July 24, 2024) - Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the second quarter ended June 30, 2024. In addition, the Company's Board of Directors declared a regul ...

lay Ranot 95.04 EES (ENID) 19.85 $1.25 7.77% 2.01% Market Cap 58,584 $16.06 I am updating my previous analysis on Spok Holdings, Inc. (NASDAQ:SPOK) in advance of O2 earnings, which will be released post-market on July 24th. I previously rated Spok a buy for the following reasons: Since my last analysis, SPOK has returned 10% while the S&P overall has returned 11%. SPOK Price Target (Seeking Alpha) Target 22.1 SPOK Q2 Earnings Preview | --- | --- | |---------------------------|-------------| | | | | Latest Q ...