News Release

Spok Reports 2018 First Quarter Operating Results; Software Revenue and Wireless Trends Improve

Board Declares Regular Quarterly Dividend
SPRINGFIELD, Va. (April 25, 2018) – Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the first quarter ended March 31, 2018. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 22, 2018 to stockholders of record on May 25, 2018.
2018 First Quarter Results:
Consolidated revenue for the first quarter of 2018 under Generally Accepted Accounting Principles (“GAAP”) was $43.1 million compared to $41.4 million in the first quarter of 2017. On January 1, 2018, Spok adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Unless otherwise stated, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted, and continue to be reported in accordance with the Company’s historic accounting under ASC 605.
GAAP net income for the first quarter of 2018 was $0.5 million, or $0.03 per share, compared to $0.9 million, or $0.04 per share, in the first quarter of 2017.
Other key results and highlights for the first quarter of 2018 included:
  • Software bookings of $18.1 million, compared to $19.8 million in the prior year quarter. First quarter 2018 bookings included $7.1 million of operations bookings and $11.0 million of maintenance renewals, compared to $9.5 million of operations bookings and $10.3 million of maintenance renewals in the first quarter of 2017.
  • Software backlog totaled $35.9 million at March 31, 2018, or $42.7 million adjusted to exclude the adoption of ASC 606, compared to $40.6 million in the year earlier period.  As a result of the adoption of ASC 606 approximately $5.3 million of backlog, that could have been recognized in 2018 under prior accounting rules, was re-cast to retained earnings as part of the beginning balance as of January 1, 2018.
  • The revenue renewal rate for software maintenance in the first quarter of 2018 was greater than 99 percent.
  • Paging units in service at March 31, 2018 totaled 1,030,000, compared to 1,091,000 at the end of the prior year period.
  • The quarterly rate of wireless revenue erosion was 1.3 percent in the first quarter of 2018 versus 2.5 percent in the year-earlier quarter.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $39.7 million in the first quarter of 2018, compared to $36.8 million in the year-earlier quarter.
  • Capital returned to stockholders in the first quarter of 2018 totaled $4.7 million, in the form of $2.8 million from the regular quarterly dividend and $1.9 million of share repurchases.
  • The Company’s cash balance at March 31, 2018 was $101.3 million, compared to $118.9 million at March 31, 2017, and $107.2 million at December 31, 2017.
Management Commentary:
“We are encouraged with our performance in the first quarter of 2018 and believe that it provides a solid base for the remainder of the year,” said Vincent D. Kelly, chief executive officer. “First quarter results were in line with our seasonal expectations, and we saw strong year-over-year performance in a number of key operating measures, including revenue levels and average deal size, as well as wireless subscriber retention. We accomplished this as we increased our investment in our business by enhancing and upgrading our product development team and tools as well as our sales infrastructure and management. We believe this effort will yield significant future benefits in the form of our improved, integrated communication platform, Spok Care Connect®, as well as higher future bookings levels, and ultimately margins, supported by our enhanced and upgraded sales team. Overall, we continued to operate profitably, enhance our product offerings, and operate as a debt-free company. We also executed against our capital allocation strategy.” Kelly added, “Throughout 2018, we will remain focused on returning value to our shareholders through our capital allocation strategy, which includes dividends, share repurchases and key strategic investments in our products and business to create sustainable growth.”
Business Outlook:
For the full-year 2018, adjusted to exclude the adoption of ASC 606, the Company continues to expect total revenue to range from $161 million to $177 million, operating expenses (excluding depreciation, amortization and accretion) to range from $158 million to $165 million, and capital expenditures to range from $4 million to $8 million.
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2018 First Quarter Call and Replay:
The Company plans to host a conference call for investors to discuss its 2018 first quarter results at 10:00 a.m. ET on Thursday, April 26, 2018.  Dial-in numbers for the call are 334-323-0522 or 877-260-1479.  The pass code for the call is 9101087.  A replay of the call will be available from 1:00 p.m. ET on April 26, 2018 until 1:00 p.m. ET on Thursday, May 10, 2018.  To listen to the replay, please register at http://tinyurl.com/Spok2018Q1earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.
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About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Plano, Texas, is proud to be a 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 and support administrative compliance. Our customers send over 70 million messages each month through their Spok® solutions. Spok enables smarter, faster clinical communication.

Spok is a trademark of Spok Holdings, Inc. Spok Mobile and Spok Care Connect 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 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; our ability to identify potential acquisitions, finance, consummate and successfully integrate such acquisitions, and achieve the expected benefits of such acquisitions; economic conditions, such as recessionary economic cycles, the impact of trade disputes, tariffs and other trade protection measures,  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 United States healthcare industry; long sales cycle of our software solutions and services; 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; our reliance on data centers and other computer systems, hardware, software and satellite networks and telecommunications systems infrastructure (collectively, “IT Systems”) and technologies provided by third parties, and technology systems and electronic networks supplied and managed by third parties; cyberattacks, data breaches, system disruptions or other compromises to our or our critical third parties’ IT Systems (as defined below), 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 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.

Media Inquiries

Al Galgano
+1 (952) 224-6096
al.galgano@spok.com