Spok Reports First Quarter 2019 Operating Results;
Record First Quarter Software Revenue; Continued Strong Wireless Trends
Board Declares Regular Quarterly Dividend
SPRINGFIELD, Va. (April 24, 2019) - Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the first quarter ended March 31, 2019. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 24, 2019, to stockholders of record on May 24, 2019.
Key First-Quarter Operating Highlights:
- Record first quarter software revenue of $19.2 million was up 1.6 percent from software revenue of $18.8 million in the prior year quarter. Included in first quarter software revenue was $9.0 million of operations revenue and $10.2 million in maintenance revenue, compared to $9.4 million in operations revenue and $9.4 million in maintenance revenue in the first quarter of 2018.
- Software bookings in the first quarter totaled $14.7 million. First quarter bookings included $6.0 million of operations bookings and $8.7 million of maintenance renewals.
- The renewal rate for software maintenance revenue in the first quarter of 2019 continued to exceed 99 percent.
- The quarterly rate of paging unit erosion was 1.0 percent in the first quarter of 2019, compared to 0.7 percent in the prior quarter and down from 1.8 percent in the year-earlier period. Net paging unit losses were 10,000 in the first quarter of 2019, compared to 7,000 in the prior quarter and down from 19,000 in the first quarter of 2018. Paging units in service at March 31, 2019, totaled 982,000, compared to 1,030,000 at March 31, 2018.
- The quarterly rate of wireless revenue erosion was 2.1 percent in the first quarter of 2019, up from the record-low 0.7 percent erosion in the prior quarter and up from 1.3 percent in the year-earlier quarter.
- Total paging ARPU (average revenue per unit) was $7.32 in the first quarter of 2019, compared to $7.47 in the year-earlier quarter and $7.36 in the prior quarter.
- Operating expenses in the first quarter of 2019 totaled $40.6 million, compared to $42.5 million in the prior year quarter. Adjusted operating expenses (excludes depreciation, amortization and accretion) totaled $38.3 million in the first quarter of 2019, down from $40.5 million in the prior quarter and $39.8 million in the year-earlier quarter.
- Capital expenses were $1.3 million in the first quarter of 2019, compared to $1.2 million in the year-earlier quarter.
- The number of full-time equivalent employees at March 31, 2019, totaled 591, compared to 599 in the prior year quarter.
- Capital paid to stockholders in the first quarter of 2019 totaled $4.5 million. This came in the form of approximately $2.7 million from the regular quarterly dividend and approximately $1.8 million from share repurchases.
- The Company’s cash, cash equivalents and short-term investments balance at March 31, 2019, was $81.8 million, compared to $87.3 million at December 31, 2018.
2019 First-Quarter Results:
Consolidated revenue for the first quarter of 2019 under Generally Accepted Accounting Principles (“GAAP”) was $41.8 million compared to $43.1 million in the first quarter of 2018.
|For the three months ended|
|(Dollars in thousands)||March 31, 2019||March 31, 2018||Change (%)|
|Product and other revenue||923||961||(4.0)%|
|Total wireless revenue||$22,610||$24,269||(6.8)%|
|Total software revenue||19.154||18.845||1.6%|
GAAP net income for the first quarter of 2019 was $0.7 million, or $0.04 per diluted share, compared to net income of $0.3 million, or $0.02 per diluted share, in the first quarter of 2018. In the first quarter of 2019, the Company generated $3.5 million of EBITDA (earnings before interest, taxes, depreciation and amortization), compared to EBITDA of $3.3 million in the prior year quarter.
|For the three months ended|
|(Dollars in thousands)||March 31, 2019||March 31, 2018|
|Diluted net income per share||$0.04||$0.02|
“We are encouraged with our performance in the first quarter of 2019, as it was in-line with our seasonal expectations, and believe it provides a solid basis for continued improvement through the remainder of the year,” said Vincent D. Kelly, president and chief executive officer. “We were particularly pleased with the record-high level of first quarter software revenue and the sustained performance in our wireless business.”
In the first quarter of 2019, Spok paid $4.5 million in capital to stockholders. During the quarter, the Company paid approximately $2.7 million in regular quarterly dividends and repurchased 131,012 shares of common stock, totaling approximately $1.8 million. “In the first quarter of 2019, we were proud to be able to execute against our capital allocation strategy, returning capital through dividends and share repurchases," continued Kelly. "This quarter represents our 51st consecutive quarter of paying a dividend. We have been able to achieve this milestone while continuing to invest in the evolution of our integrated communication platform, Spok Care Connect®, and remaining a debt-free company."
Kelly noted that in addition to the financial performance the Company was able to achieve in the first quarter of 2019, progress was made in several other areas, including product development, sales strategy and key strategic partnership agreements. “Spok continues to build an industry-leading reputation,” commented Kelly. “During the quarter, we added more than a dozen new customers to the Spok family. We intend to carry that momentum throughout 2019 to stimulate long-term growth."
Michael W. Wallace, chief financial officer, said: “Expense management and strong financial discipline have allowed us to continue to invest in our business for long-term growth. In the first quarter, adjusted operating expenses were down on both a sequential and year-over-year basis, with improvements in most expense categories. Spok’s balance sheet remains strong, with a cash, cash equivalents and short-term investment balance of $81.8 million at March 31, 2019.”
Commenting on the Company’s previously provided financial guidance for 2019, Wallace noted: “We are pleased that the first quarter results are in line with the full year 2019 guidance we had provided last quarter and we are reiterating those expectations." Regarding financial guidance for 2019, Wallace said the Company expects total revenue to range from $156 million to $174 million. Included in that total, the Company expects software revenue to comprise $75 million to $85 million. Also, Spok expects adjusted operating expenses (excludes depreciation, amortization and accretion) to range from $155 million to $165 million, and capital expenses to range from $3 million to $7 million.
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2019 First-Quarter Call and Replay:
Spok plans to host a conference call for investors to discuss its 2019 first quarter results at 10:00 a.m. ET on Thursday, April 25, 2019. Dial-in numbers for the call are 334-323-0522 or 877-260-1479. The pass code for the call is 4329354. A replay of the call will be available from 1:00 p.m. ET on April 25, 2019 until 1:00 p.m. ET on Thursday, May 9, 2019. To listen to the replay, please register at http://tinyurl.com/Spok2019Q1earningsreplay. Please enter the registration information, and you will be given access to the replay.
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Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., is proud to be the global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on the Spok Care Connect® platform to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count, count on Spok. For more information, visit spok.com or follow @spoktweets on Twitter.
Spok is a trademark of Spok Holdings, Inc. Spok Care Connect and Spok Mobile are trademarks of Spok, Inc.
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, particularly third party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, 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.