News Release

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. (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, 2015to 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.

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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 passcode 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 passcode 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 (or call 703-269-6950), send an email to, or sign-up directly at

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