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Spok Reports 2020 Third Quarter Operating Results

Improvement in Software Bookings and Continued Strong Wireless Trends Contribute to Third Quarter Operating Performance 

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va. (October 28, 2020) – Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the third quarter ended September 30, 2020. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on December 10, 2020, to stockholders of record on November 16, 2020.

Key Third Quarter Operating Highlights:

  • Software bookings in the third quarter totaled $21.4 million, up nearly 39% and nearly 5% on a sequential and year-over-year basis, respectively. Third quarter bookings included the Company’s first two Spok Go® deals with an aggregate total contract value of $812,000. Third quarter software bookings included $9.4 million of operations bookings and $12.0 million of maintenance renewals. At September 30, 2020 the software revenue backlog totaled $51.7 million, up almost 7% from the backlog of $48.4 million at June 30, 2020.
  • Third quarter 2020 software revenue totaled $16.9 million, up more than 15% from the prior quarter. Software revenue in the third quarter included $7.4 million of operations revenue and $9.5 million of maintenance revenue. This compares to operations revenue of $5.2 million and maintenance revenue of $9.5 million in the prior quarter.
  • The quarterly rate of paging unit erosion was 1.9% in the third quarter of 2020, down from paging unit erosion of 2.3% in the year-earlier period. Gross disconnects were down on both a sequential and year-over-year basis.
  • The rate of wireless revenue erosion in the third quarter was 1.2%, down 20 basis points from the revenue erosion rate in both the prior quarter and the third quarter of 2019.
  • Total paging ARPU (average revenue per unit) was $7.34 in the third quarter of 2020, compared to $7.24 in the prior quarter and $7.32 in the year-earlier quarter.
  • Operating expenses in the third quarter of 2020 totaled $35.0 million, up from $32.6 million in the prior quarter and down from $42.1 million in the third quarter of 2019. Adjusted operating expenses totaled $35.5 million in the third quarter of 2020, compared to $34.1 million in the prior quarter and $39.8 million in the third quarter of 2019. Benefiting operating expenses in the third quarter of 2020, the Company received $0.4 million in CARES Act tax credits, as well as approximately $2.2 million in cost savings from the previously discussed employee furloughs.
  • Capital expenses were $0.9 million in the third quarter of 2020, compared to $1.4 million in the year-earlier quarter.
  • The number of full-time equivalent employees at September 30, 2020 totaled 613, compared to 617 in the prior year quarter.
  • Capital paid to stockholders in the third quarter of 2020 totaled $2.4 million. This came in the form of the Company’s regular quarterly dividend.
  • The Company’s cash, cash equivalents and short-term investments balance at September 30, 2020, was $79.2 million, up from $77.3 million at December 31, 2019.

2020 Third Quarter and Year-To-Date Results:

Consolidated revenue for the third quarter of 2020 under Generally Accepted Accounting Principles (“GAAP”) was $37.7 million compared to $39.5 million in the third quarter of 2019. For the first nine months of 2020, consolidated revenue totaled $110.7 million, compared to $120.7 million in the first nine months of 2019.

For the three months endedFor the nine months ended
(Dollars in thousands)September 30, 2020September 30, 2019Change

(%)

September 30, 2020September 30, 2019Change
(%)
Wireless revenue
Paging revenue$19,961$21,212(5.9)%$60,403$64,241(6.0)%
Product and other revenue86760244.0%2,8902,31125.1%
Total wireless revenue$20,828$21,814(4.5)%$63,293$66,552(4.9)%
Software revenue
Operations revenue$7,338$7,614(3.6)%$18,728$23,974(21.9)%
Maintenance revenue9,52710,025(5.0)%28,67830,215(5.1)%
Total software revenue16,86517,639(4.4)%47,40654,189(12.5)%
Total revenue$37,693$39,453(4.5)%$110,699$120,741(8.3)%

GAAP net income for the third quarter of 2020 was $3.2 million, or $0.16 per diluted share, compared to a net loss of $1.3 million, or $0.07 per diluted share, in the third quarter of 2019.  GAAP net income for the first nine months of 2020 was $2.4 million, or $0.12 per diluted share, compared to a net loss of $1.3 million, or $0.07 per diluted share, in the first nine months of 2019.

In the third quarter of 2020, the Company generated $3.8 million of adjusted EBITDA, compared to adjusted EBITDA of $3.0 million in the prior quarter and $0.6 million in the third quarter of 2019. In the first nine months of 2020, the Company generated $4.3 million of adjusted EBITDA, compared to adjusted EBITDA of $6.0 million in the prior year period.

For the three months endedFor the nine months ended
(Dollars in thousands)September 30, 2020September 30, 2019September 30, 2020September 30, 2019
Net income (loss)$3,165$(1,326)$2,384$(1,255)
Basic net income (loss) per share$0.17$(0.07)$0.13$(0.07)
Diluted net income (loss) per share$0.16$(0.07)$0.12$(0.07)
Adjusted EBITDA$3,777$577$4,291$5,951

Management Commentary:

“While we are still operating under the impact and uncertainty of the pandemic and many of our customers continue to struggle with the challenges presented by COVID-19, our outlook is improving as we saw many positive developments during the third quarter,” said Vincent D. Kelly, president and chief executive officer. “During the quarter, we saw significant increases in software operations bookings on both a sequential and year-over-year basis, as well as continued strong trends in our wireless business. Sustained expense management kept third quarter expense levels consistent with the prior quarter and down sharply from the prior year, even after adding back capitalized software development costs. Our software revenue backlog is at record levels and we generated nearly $4 million of adjusted EBITDA in the quarter. After capital expenditures and paying the quarterly dividend, Spok was able to grow our cash, cash equivalents and short-term investment balances from the prior quarter and prior year-end levels. We are focused on driving positive free cash flow for 2020 and Spok remains committed to paying our regular quarterly dividend. We believe we will be able to achieve this while continuing to support our Spok Care Connect® platform and in the near term, investing in innovation and the evolution of our cloud-native and integrated communication platform, Spok Go®.

“As we pointed out last quarter, many of our new software deals were pushed back due to the pandemic. I am pleased to report that several of those deals were closed during the third quarter, including our first two significant Spok Go deals. And, we expect to report more deals in the fourth quarter as well. During the third quarter our credibility in healthcare continued to grow, as we announced that all 20 adult hospitals and all 10 children’s hospitals named to U.S. News & World Report’s 2020-21 Best Hospitals Honor Roll use Spok clinical communication solutions to facilitate care collaboration and support exceptional patient care. For eight consecutive years Spok has partnered with all of the adult ‘Best Hospitals’. And, we did this while continuing to invest in and develop our software-as-a service, cloud-native platform, Spok Go.  In the third quarter we were pleased to announce that this platform, along with Spok paging solutions, has earned System and Organization Controls (SOC) 2 Type II Compliance. This designation follows an audit performed by a Big 4 auditor and confirms that Spok’s information security practices, policies, procedures, and operations meet the SOC 2 Type II standards for managing customer data based on three trust service principles: security, availability and confidentiality.

“Finally, earlier this month Spok welcomed more than 600 attendees to Connect 20 Virtual, our annual conference for healthcare professionals. The virtual event gave healthcare clinicians, IT experts, and C-suite executives a chance to learn about Spok Go and to share information with each other about the future of care team communication, while sharing insights about how the COVID-19 pandemic has changed how they use health IT. Spok has received excellent feedback from our conference and based on requests that we have received, this year we will be providing access to selected presentations to the investment community on November 10th. We believe that Spok provides a critical function, that will become even more important in this environment. Spok’s clinical communications platform provides hospitals with a system of action, delivering reliable communications and clinical information, including clinical test results, to care teams when and where it matters most to improve patient outcomes. We look forward to having our investors see this first hand.” concluded Kelly.

Business Outlook:

Michael W. Wallace, chief operating officer and chief financial officer, said: “Expense management and strong financial discipline have always been critical in aligning our expense levels with anticipated near and long-term demand for our products, and that continued to be the case in the third quarter. In the period, operating expenses were down nearly 17% and adjusted operating expenses were down nearly 11% from prior year levels, with improvements in all expense categories over that period driven by furloughs, the CARES Act tax credits, and other reductions.  Spok’s balance sheet remains strong, with a cash, cash equivalents and short-term investment balance of $79.2 million at September 30, 2020.”

Commenting on the Company’s previously provided financial guidance for 2020, Wallace noted, “Spok has been focused on continuing to understand the impact of the pandemic on our business and the potential for another spike, particularly given the impact of COVID-19 on the installation of our premise-based solutions and the roll-out of our new, cloud-native, SaaS based, Spok Go software solution. Because of the fluid nature of the situation, we, like many of our peer public companies, believe that it is most prudent to continue to suspend our practice of providing annual guidance for revenues and expenses at this time. We look forward to returning to our normal guidance format for 2021, when we report our financial results for the fourth quarter of 2020.”

* * * * * * * * *

2020 Third Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2020 third quarter results at 10:00 a.m. ET on Thursday, October 29, 2020.  Dial-in numbers for the call are 334-777-6978 or 800-367-2403.  The pass code for the call is 1468983.  A replay of the call will be available from 1:00 p.m. ET on October 29, 2020 until 1:00 p.m. ET on Thursday, November 12, 2020. To listen to the replay, please register at http://tinyurl.com/Spok2020Q3earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

*********

Investor Update:

Spok will be providing access to selected presentations from the October Spok Connect 20 user conference. Presentations from that conference will be made available to investors starting at 10:00 a.m. on November 10, 2020. Information on registering for virtual attendance, as well as an agenda of the presentations, will be provided shortly. An archive of the webcast presentations, including audio, video and presentation slides, will be accessible in the investor section of Spok’s website.

* * * * * * * * *

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, goodwill impairment and capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense, stock based compensation expense, and capitalized software development costs.

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 do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income 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 expenses and income 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.

Tables to Follow

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months endedFor the nine months ended
9/30/20209/30/20199/30/20209/30/2019
Revenue:
Wireless$20,828$21,814$63,293$66,552
Software16,86517,63947,40654,189
Total revenue37,693 39,453 110,699 120,741 
Operating expenses:
Cost of revenue6,5447,19020,70922,021
Research and development3,4597,43711,66220,411
Technology operations7,3577,80522,47223,345
Selling and marketing4,2725,59514,46317,279
General and administrative10,99411,81333,05634,255
Depreciation, amortization and accretion2,3352,3056,5536,999
Total operating expenses34,961 42,145 108,915 124,310 
% of total revenue92.8%106.8%98.4%103.0%
Operating income (loss)2,732 (2,692)1,784 (3,569)
% of total revenue7.2%(6.8)%1.6%(3.0)%
Interest income1273996361,300
Other income151163113528
Income (loss) before income taxes 3,010 (2,130)2,533 (1,741)
Benefit from (provision for) income taxes155804(149)486
Net income (loss)$3,165 $(1,326)$2,384 $(1,255)
Basic net income (loss) per common share$0.17$(0.07)$0.13$(0.07)
Diluted net income (loss)  per common share0.16(0.07)0.12(0.07)
Basic weighted average common shares outstanding19,051,50219,086,81119,008,96919,166,812
Diluted weighted average common shares outstanding19,208,45219,086,81119,273,24319,166,812
Cash dividends declared per common share0.1250.1250.3750.375
Key statistics:
Units in service898955898955
Average revenue per unit (ARPU)$7.34$7.32$7.31$7.33
Bookings$21,414$20,421$52,465$56,410
Backlog$51,708$42,604$51,708$42,604
(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
Revenue:
Wireless$20,828$21,078$21,386$21,615$21,814$22,127$22,610$23,091
Software16,86514,66115,88117,93317,63917,39819,15420,165
Total revenue37,693 35,739 37,267 39,548 39,453 39,525 41,764 43,256 
Operating expenses:
Cost of revenue (b)6,5445,9018,2648,0517,1907,2397,5928,772
Research and development3,4592,7545,4497,1327,4376,8076,1676,618
Technology operations7,3577,2127,9048,0837,8057,8667,6748,120
Selling and marketing4,2723,8316,3615,8915,5955,5746,1106,275
General and administrative10,99410,81011,25111,53111,81311,69610,74710,721
Depreciation, amortization and accretion2,3352,0722,1462,2502,3052,3352,3592,601
Goodwill impairment8,849
Total operating expenses34,961 32,580 41,375 51,787 42,145 41,517 40,649 43,107 
% of total revenue92.8%91.2%111.0%130.9%106.8%105.0%97.3%99.7%
Operating income (loss)2,732 3,159 (4,108)(12,239)(2,692)(1,992)1,115 149 
% of total revenue7.2%8.8%(11.0)%(30.9)%(6.8)%(5.0)%2.7%0.3%
Interest income127146363350399452449628
Other income (expense)151101(137)206163602(236)(593)
Income (loss)  before income taxes3,010 3,406 (3,882)(11,683)(2,130)(938)1,328 184 
Benefit from (provision for) income taxes155353(657)2,172804268(586)5
Net income (loss)$3,165 $3,759 $(4,539)$(9,511)$(1,326)$(670)$742 $189 
Basic net income (loss) per common share$0.17$0.20$(0.24)$(0.50)$(0.07)$(0.03)$0.04$0.01
Diluted net income (loss)\ per common share0.160.20(0.24)(0.50)(0.07)(0.03)0.040.01
Basic weighted average common shares outstanding19,051,50219,016,85318,958,71618,860,02019,086,81119,217,86619,196,97019,445,401
Diluted weighted average common shares outstanding19,208,45219,115,14818,958,71618,860,02019,086,81119,217,86619,356,71219,445,401
Key statistics:
Units in service898915926938955977982992
Average revenue per unit (ARPU)$7.34$7.24$7.31$7.33$7.32$7.26$7.32$7.36
Bookings$21,414$15,411$15,639$21,932$20,421$21,334$14,654$23,076
Backlog$51,708$48,441$49,052$50,553$42,604$39,718$37,392$40,422
(a) Slight variations in totals are due to rounding.
(b) An adjustment of $771 to cost of revenue, identified in the fourth quarter of 2018, has been reflected in this table as an increase to cost of revenue of $166, $196 and $359 in the first, second and third quarters of 2018, respectively. Total operating expenses, operating income (loss), income (loss) before income taxes, Net (loss) income and net (loss) income per share have been adjusted accordingly to reflect these changes.

 

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
9/30/202012/31/2019
Unaudited
Assets
Current assets:
Cash and cash equivalents$49,235$47,361
Short term investments29,99429,899
Accounts receivable, net29,67130,174
Prepaid expenses8,0567,517
Other current assets1,6452,714
Total current assets118,601 117,665 
Non-current assets:
Property and equipment, net6,9338,000
Operating lease right-of-use assets14,34216,317
Capitalized software development, net7,784
Goodwill124,182124,182
Intangible assets, net1,0422,917
Deferred income tax assets, net48,30848,983
Other non-current assets1,0811,808
Total non-current assets203,672 202,207 
Total assets$322,273 $319,872 
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable$5,112$3,615
Accrued compensation and benefits13,84511,680
Deferred revenue27,17425,944
Operating lease liabilities5,2205,437
Other current liabilities4,5654,507
Total current liabilities55,91651,183
Non-current liabilities:
Asset retirement obligations6,1236,061
Operating lease liabilities9,76611,575
Other non-current liabilities2,446959
Total non-current liabilities18,33518,595
Total liabilities74,251 69,778 
Commitments and contingencies
Stockholders’ equity:
Preferred stock$$
Common stock22
Additional paid-in capital90,29786,874
Accumulated other comprehensive loss(1,656)(1,601)
Retained earnings159,379164,819
Total stockholders’ equity248,022 250,094 
Total liabilities and stockholders’ equity$322,273 $319,872 
(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
For the nine months ended
9/30/20209/30/2019
Operating activities:
Net income (loss)$2,384 $(1,255)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion6,5536,999
Deferred income tax expense15(569)
Stock based compensation4,1602,521
Provisions for doubtful accounts, service credits, and other914652
Changes in assets and liabilities:
Accounts receivable(1,019)252
Prepaid expenses, inventory and other assets3,7012,131
Accounts payable, accrued liabilities and other liabilities1,566(1,366)
Deferred revenue2,6801,383
Net cash provided by operating activities20,954 10,748 
Investing activities:
Purchases of property and equipment(2,824)(4,162)
Capitalized software development(8,206)
Purchase of short-term investments(44,870)(44,499)
Maturity of short-term investments45,00019,000
Net cash used in investing activities(10,900)(29,661)
Financing activities:
Cash distributions to stockholders(7,388)(7,440)
Purchase of common stock (including commissions)(6,575)
Proceeds from issuance of common stock under the Employee Stock Purchase Plan166119
Purchase of common stock for tax withholding on vested equity awards(903)(1,017)
Net cash used in financing activities(8,125)(14,913)
Effect of exchange rate on cash(55)(198)
Net increase (decrease) in cash and cash equivalents1,874(34,024)
Cash and cash equivalents, beginning of period47,36183,343
Cash and cash equivalents, end of period$49,235 $49,319 
Supplemental disclosure:
Income taxes paid$148$927
(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.
CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
Revenue
Paging$19,961$19,990$20,451$20,826$21,212$21,342$21,687$21,997
Non-paging8671,0889357896027859231,094
Total wireless revenue$20,828 $21,078 $21,386 $21,615 $21,814 $22,127 $22,610 $23,091 
License1,9887499551,7112,7231,6762,8403,496
Services4,7723,8124,5494,9474,2024,8355,2065,103
Equipment5546017251,1256898429631,568
Subscription24
Operations revenue$7,338 $5,162 $6,229 $7,783 $7,614 $7,353 $9,009 $10,167 
Maintenance revenue$9,527 $9,499 $9,652 $10,150 $10,025 $10,045 $10,145 $9,998 
Total software revenue$16,865 $14,661 $15,881 $17,933 $17,639 $17,398 $19,154 $20,165 
Total revenue$37,693 $35,739 $37,267 $39,548 $39,453 $39,525 $41,764 $43,256 
(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
Cost of revenue
Payroll and related$4,941$4,350$5,785$5,222$5,099$4,749$4,931$4,868
Cost of sales1,0641,0981,9402,2781,5671,9002,0803,349
Stock-based compensation14813411942219710744
Other391319420509503493474511
Total cost of revenue (b)6,544 5,901 8,264 8,051 7,190 7,239 7,592 8,772 
Research and development
Payroll and related4,1474,1154,7615,0565,0834,6394,2634,350
Outside services2,1131,8031,5841,7422,0271,9121,7452,115
Capitalized software development(2,906)(3,596)(1,705)
Stock-based compensation24024323611310284115
Other(135)189573221225172148148
Total research and development3,459 2,754 5,449 7,132 7,437 6,807 6,167 6,618 
Technology operations
Payroll and related2,2462,2132,7122,6562,8232,6622,6472,616
Site rent3,4673,3993,3983,6693,2693,4803,2963,432
Telecommunications9499611,0011,0261,0161,0199961,021
Stock-based compensation5247433230303024
Other6435927507006676757051,027
Total technology operations7,357 7,212 7,904 8,083 7,805 7,866 7,674 8,120 
Selling and marketing
Payroll and related2,7732,5383,5833,3823,5243,3293,2733,047
Commissions1,0598521,2121,1581,1141,2981,4241,759
Stock-based compensation20819417216413712816199
Advertising and events1511607841,0347036569331,236
Other8187610153117163319134
Total selling and marketing4,272 3,831 6,361 5,891 5,595 5,574 6,110 6,275 
General and administrative
Payroll and related3,4763,3554,1343,9744,2204,1364,0414,087
Stock-based compensation968744612770674690219860
Bad debt1786284356402(96)308303
Facility rent, office, and technology costs2,2592,2762,0681,9522,3692,4852,2942,072
Outside services2,1482,0432,0362,3502,0042,3061,7762,062
Taxes, licenses and permits9948048591,000888863921111
Other9719601,4991,4291,2561,3121,1881,226
Total general and administrative10,994 10,810 11,251 11,531 11,813 11,696 10,747 10,721 
Depreciation, amortization and accretion2,3352,0722,1462,2502,3052,3352,3592,601
Goodwill impairment8,849
Operating expenses$34,961 $32,580 $41,375 $51,787 $42,145 $41,517 $40,649 $43,107 
Capital expenditures$934 $846 $1,063 $679 $1,378 $1,495 $1,287 $830 
(a) Slight variations in totals are due to rounding.
(b) An adjustment of $771 to cost of sales, identified in the fourth quarter of 2018, has been reflected in this table as an increase to cost of sales of $166, $196 and $359 in the first, second and third quarters of 2018, respectively. Total cost of revenue and operating expenses have been adjusted accordingly to reflect these changes.

 

SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN
AND AVERAGE REVENUE PER UNIT (ARPU) (a)
(Unaudited and in thousands)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
Paging units in service
Beginning units in service (000’s)915 926 938 955 977 982 992 999 
Gross placements2535242228352730
Gross disconnects(42)(46)(36)(39)(50)(40)(37)(37)
Net change(17)(11)(12)(17)(22)(5)(10)(7)
Ending units in service898 915 926 938 955 977 982 992 
End of period units in service % of total (b)
Healthcare83.7%83.6%82.6%82.4%81.7%81.7%81.6%81.4%
Government5.3%5.5%5.4%5.4%5.5%5.6%5.8%5.8%
Large enterprise4.3%4.4%5.5%5.5%6.1%5.9%5.9%5.9%
Other(b)6.6%6.6%6.5%6.6%6.7%6.8%6.7%6.9%
Total100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %100.0 %
Account size ending units in service (000’s)
1 to 100 units6365676972747778
101 to 1,000 units167165171173175179186190
>1,000 units668685688696708724719724
Total898 915 926 938 955 977 982 992 
Account size net loss rate(c)
1 to 100 units(2.9)%(3.1)%(3.0)%(3.8)%(2.1)%(3.2)%(2.3)%(1.7)%
101 to 1,000 units1.5%(4.2)%(1.0)%(1.0)%(2.4)%(3.9)%(2.3)%%
>1,000 units(2.5)%(0.4)%(1.2)%(1.8)%(2.2)%0.7%(1.1)%(0.1)%
Total(1.8)%(1.3)%(1.3)%(1.8)%(2.2)%(0.5)%(1.1)%(0.2)%
Account size ARPU
1 to 100 units$11.80$11.65$12.01$11.99$11.84$12.00$11.90$11.61
101 to 1,000 units8.378.248.348.318.418.478.358.28
>1,000 units6.676.576.596.626.596.476.576.69
Total$7.34 $7.24 $7.31 $7.33 $7.32 $7.26 $7.32 $7.36 
(a) Slight variations in totals are due to rounding.
(b) Other includes hospitality, resort and indirect units
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

 

SPOK HOLDINGS, INC.
RECONCILIATION FROM NET (LOSS) INCOME TO EBITDA (a)
(Unaudited and in thousands)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
Reconciliation of net (loss) income to EBITDA:
Net income (loss) (b)$3,165 $3,759 $(4,539)$(9,511)$(1,326)$(670)$742 $189 
(Less) plus: benefit from (provision for)  income taxes(155)(353)657(2,172)(804)(268)586(5)
(Less) plus: Other expense (income)(151)(101)137(206)(163)(602)236593
Less: Interest income(127)(146)(363)(350)(399)(452)(449)(628)
Operating income (loss)2,732 3,159 (4,108)(12,239)(2,692)(1,992)1,115 149 
Plus: depreciation, amortization and accretion2,3352,0722,1462,2502,3052,3352,3592,601
EBITDA$5,067 $5,231 $(1,962)$(9,989)$(387)$343 $3,474 $2,750 
Less: capitalized software development costs(2,906)(3,596)(1,705)
Plus: stock-based compensation1,6161,3621,1821,1219641,0295281,032
Plus: goodwill impairment8,849
Adjusted EBITDA$3,777 $2,997 $(2,485)$(19)$577 $1,372 $4,002 $3,782 
For the nine months ended
9/30/20209/30/2019
Reconciliation of net income (loss) to EBITDA:
Net (loss) income$2,384 $(1,255)
Plus (less): Benefit from (provision for) income taxes149(486)
Less: Other (expense) income(113)(528)
Less: Interest income(636)(1,300)
Operating loss1,784 (3,569)
Plus: depreciation, amortization and accretion6,5536,999
EBITDA$8,337 $3,430 
Less: capitalized software development costs(8,206)
Plus: stock-based compensation4,1602,521
Adjusted EBITDA$4,291 $5,951 
RECONCILIATION FROM OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)
For the three months ended
9/30/20206/30/20203/31/202012/31/20199/30/20196/30/20193/31/201912/31/2018
(Dollars in thousands)
Operating expenses$34,961 $32,580 $41,375 $51,787 $42,145 $41,517 $40,649 $43,107 
Less: depreciation, amortization and accretion2,3352,0722,1462,2502,3052,3352,3592,601
Less: goodwill impairment8,849— — — — 
Add: capitalized software development costs2,9063,5961,705— — — — 
Adjusted operating expenses$35,532 $34,104 $40,934 $40,688 $39,840 $39,182 $38,290 $40,506 
(a) Slight variations in totals are due to rounding.
(b) An adjustment to cost of revenue identified in the fourth quarter of 2018 of $771 has been reflected in this table as a reduction of Net (loss) income of $166, $196, $359, and $771 in the first, second, third, and fourth quarters respectively.

About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Virginia, 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 Go® and Spok Care Connect® platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count and patients’ lives are at stake, Spok enables smarter, faster clinical communication. For more information, visit spok.com or follow @spoktweets on Twitter.

Spok is a trademark of Spok Holdings, Inc. Spok Go 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 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, adverse economic, political or market conditions in the U.S. and international markets and other factors such as natural disasters, pandemics and outbreaks of contagious diseases and other adverse public health developments, such as coronavirus disease 2019 (COVID-19), 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) 567-0295
al.galgano@spok.com