News Release

Spok Reports 2021 Second Quarter Results

Alexandria, Va. (July 28, 2021) – Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the second quarter ended June 30, 2021. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2021, to stockholders of record on August 17, 2021.

Key Second Quarter 2021 Operating Highlights:

  • Second quarter 2021 software revenue of $15.9 million included $9.6 million of maintenance revenue and $6.3 million of operations revenue. This was up from the second quarter 2020 software revenue of $14.7 million, which included $9.5 million of maintenance revenue and $5.2 million of operations revenue.
  • Software bookings in the second quarter of 2021 totaled $13.0 million, compared to $15.4 million in the prior year quarter. Second quarter software bookings included two Spok Go® deals from existing customers transitioning to the new platform with an aggregate total contract value of approximately $1.3 million. Second quarter software bookings also included $3.0 million of legacy operations bookings and $8.7 million of maintenance renewals. As of June 30, 2021, the software revenue backlog totaled $45.6 million, compared to the backlog of $48.4 million at June 30, 2020.
  • The quarterly rate of paging unit erosion was 0.6% in the second quarter of 2021, compared to paging unit erosion of 1.2% in the second quarter of 2020.
  • Total paging ARPU (average revenue per unit) in the second quarter of 2021 totaled $7.32, up from ARPU of $7.24 in the second quarter of 2020, primarily due to the recovery of Telecommunications Relay Service Charges (TRS) that began in early 2021, and general increases of Universal Service Fees (USF). USF and TRS fees are effectively pass-through items that have corresponding costs associated with them. Excluding these pass-through items, ARPU would have been in-line with historical trends.
  • Operating expenses in the second quarter of 2021 totaled $37.3 million, up from $32.6 million in the second quarter of 2020. Adjusted operating expenses (which excludes depreciation, amortization and accretion charges, and includes capitalized software development costs) totaled $37.6 million in the second quarter of 2021, compared to adjusted operating expenses of $34.1 million in the second quarter of 2020.
  • Capital expenses were $1.5 million in the second quarter of 2021, compared to $0.8 million in the second quarter of 2020.
  • The number of full-time equivalent employees as of June 30, 2021 totaled 590, compared to 610 at June 30, 2020.
  • Capital paid to stockholders in the second quarter of 2021 totaled $2.5 million. This came in the form of the Company’s regular quarterly dividend.
  • The Company’s cash, cash equivalents and short-term investments balance as of June 30, 2021 was $68.1 million, compared to $78.7 million at December 31, 2020.

Management Commentary:

“We made progress in several key performance areas with software revenue up more than 8% from prior year levels, continued improvement in wireless trends, and continued expense management that resulted in declines in many expense categories,” said Vincent D. Kelly, president and chief executive officer.  “However, our second quarter results demonstrate the continuation of the very challenging selling environment we are operating in as a result of the COVID-19 pandemic and the related impact on our customers budgets and their ability to focus on new projects. While we were not satisfied with the level of software revenue bookings in the second quarter, given the slow recovery in the healthcare industry, we believe that seasonality and timing had a large impact on performance. We remain encouraged by the size and quality of the pipeline of software deals for the second half of 2021 and believe that we will exit the year on very firm footing.

“We launched Spok Go, our software-as-a-service, cloud-native platform just over a year ago, at the onset of the pandemic. In the second quarter, we added two more Spok Go wins, bringing the aggregate contract value for that product to $3.1 million. Spok is a company with a strong operational foundation built on three pillars. First is our paging network, the largest in the United States, generating strong margins. Next is our Spok Care Connect® suite of products with a valuable maintenance revenue stream that contributed $38.6 million in 2020. Last is our new subscription-based, cloud-native Spok Go platform that we believe has strong potential.

“Finally, Spok continues to demonstrate its stable revenue base, with over 82 percent of second quarter 2021 revenues recurring in nature, coming from either our legacy wireless business or software maintenance contracts. This, combined with disciplined expense control, gives us confidence as we enter the second half of the year. Spok Go provides a critical function that we believe will become even more important in this environment. Our clinical communications platform provides hospitals with a system of action, not just of record, delivering reliable communications and clinical information, including clinical test results, to care teams when and where it matters most to improve patient outcomes,” concluded Kelly.

2021 Second Quarter and Year-to-Date Results:

Consolidated revenue for the second quarter of 2021 under Generally Accepted Accounting Principles (“GAAP”) was $35.7 million, compared to $35.7 million in the second quarter of 2020. For the first six months of 2021, consolidated revenue totaled $71.8 million, compared to $73.0 million in the prior year period.

For the three months ended

For the six months ended

(Dollars in thousands)

June 30, 2021

June 30, 2020

Change (%)

June 30, 2021

June 30, 2020

Change (%)

Wireless revenue

Paging revenue

$

19,135 

$

19,990 

(4.3)

%

$

38,488 

$

40,441 

(4.8)

%

Product and other revenue

724 

1,088 

(33.5)

%

1,491 

2,024 

(26.3)

%

Total wireless revenue

$

19,859 

$

21,078 

(5.8)

%

$

39,979 

$

42,465 

(5.9)

%

Software revenue

License

$

818 

$

749 

9.2 

%

$

2,325 

$

1,704 

36.4 

%

Services

$

4,865 

$

3,812 

27.6 

%

$

9,219 

$

8,359 

10.3 

%

Equipment

$

482 

$

601 

(19.8)

%

$

1,098 

$

1,327 

(17.3)

%

Subscription

$

90 

$

— 

— 

%

$

135 

$

— 

— 

%

Maintenance

9,609 

9,499 

1.2 

%

19,003 

19,151 

(0.8)

%

Total software revenue

15,864 

14,661 

8.2 

%

31,780 

30,541 

4.1 

%

Total revenue

$

35,723 

$

35,739 

— 

%

$

71,759 

$

73,006 

(1.7)

%

GAAP net loss for the second quarter of 2021 was $0.7 million, or a loss of $0.04 per diluted share, compared to a net income of $3.8 million, or $0.20 per basic and diluted share, in the second quarter of 2020. GAAP net loss for the first six months of 2021 was $3.0 million, or a loss of $0.16 per diluted share, compared to a net loss of $0.8 million, or $0.04 per diluted share, in the prior year period.

In the second quarter of 2021, adjusted EBITDA loss totaled $0.1 million compared to adjusted EBITDA of $3.0 million in the second quarter of 2020. In the first six months of 2021, the Company generated $0.2 million of adjusted EBITDA, compared to adjusted EBITDA of $0.5 million in the prior year period.

For the three months ended

For the six months ended

(Dollars in thousands)

June 30, 2021

June 30, 2020

Change (%)

June 30, 2021

June 30, 2020

Change (%)

Net (loss) income

$

(719)

$

3,759 

119.1 

%

$

(3,016)

$

(780)

(286.7)

%

Basic and diluted net (loss) income per common share

$

(0.04)

$

0.20 

120.0 

%

$

(0.16)

$

(0.04)

(300.0)

%

Adjusted EBITDA

$

(69)

$

2,997 

102.3 

%

$

237 

$

514 

53.9 

%

Financial Outlook:

The Company is reiterating the guidance for fiscal 2021 as provided when it reported its first quarter 2021 results as follows:

(Unaudited and in millions)

Current Guidance

Full Year 2021

Revenue

Wireless

$

77.0 

to

$

81.0 

Software

$

61.0 

$

70.0 

Total Revenue

$

138.0 

$

151.0 

Adjusted Operating Expenses

$

151.0 

$

157.0 

Capital Expenditures

$

3.5 

$

5.5 

 

“We are confident in our performance for the second half of 2021, which is reinforced by the fact that we are reiterating the guidance we provided last quarter,” said Michael W. Wallace, chief operating officer and chief financial officer. “Disciplined expense management continues to be a key focus, as we further align expense levels with market demand for our products. In the second quarter of 2021, both operating expenses and adjusted operating expenses were down sequentially, with improvements in many expense categories over that period.  Spok’s balance sheet remains strong, as the cash, cash equivalents and short-term investments balance was $68.1 million at June 30, 2021, and we are still operating with no debt.”

2021 Annual Stockholders Meeting:

The Company had previously announced the results of its 2021 Annual Meeting of Stockholders. At that meeting, each of the 10 nominees to the Company’s board of directors were elected for one-year terms, and the stockholders ratified the appointment of Grant Thornton LLP as the Company’s independent auditor for the year ending December 31, 2021 and approved, in an advisory vote, the compensation of Spok’s named executive officers, as described in the 2021 proxy statement.

Final voting results are disclosed in a current report on Form 8-K filed with the SEC.

2021 Investor Day Program:

As previously disclosed, Spok also announced that it plans to host an investor day on October 11, 2021.  The investor day program will feature presentations by management and will be run concurrently with Spok’s annual user conference, Connect 21.  Due to the recent uptick in COVID-19 cases across the nation related to the Delta variant, this year’s investor day and Connect 21 conference will be held virtually.  The Company will provide more details in the future.

* * * * * * * * *

2021 Second Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2021 second quarter results on Thursday, July 29, 2021 at 10:00 a.m. ET.  Dial-in numbers for the call are 1 334-323-0501 or 800-353-6461.  The confirmation code for the call is 1286071.  A replay of the call will be available from 1:00 p.m. ET on July 29, 2021 until 1:00 p.m. ET on Thursday, August 12, 2021. To listen to the replay, please register at http://tinyurl.com/Spok2021Q2earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

* * * * * * * * *

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

 

For the six months ended

   

6/30/2021

 

6/30/2020

 

6/30/2021

 

6/30/2020

Revenue:

               

Wireless

 

$

19,859 

   

$

21,078 

   

$

39,979 

   

$

42,465 

 

Software

 

15,864 

   

14,661 

   

31,780 

   

30,541 

 

Total revenue

 

35,723 

   

35,739 

   

71,759 

   

73,006 

 

Operating expenses:

               

Cost of revenue

 

6,973 

   

5,901 

   

14,214 

   

14,165 

 

Research and development

 

4,278 

   

2,754 

   

8,784 

   

8,203 

 

Technology operations

 

7,087 

   

7,212 

   

14,339 

   

15,115 

 

Selling and marketing

 

4,980 

   

3,831 

   

9,880 

   

10,192 

 

General and administrative

 

11,557 

   

10,810 

   

22,707 

   

22,061 

 

Depreciation, amortization and accretion

 

2,457 

   

2,072 

   

5,184 

   

4,218 

 

Total operating expenses

 

37,332 

   

32,580 

   

75,108 

   

73,954 

 

% of total revenue

 

104.5 

%

 

91.2 

%

 

104.7 

%

 

101.3 

%

Operating (loss) income

 

(1,609)

   

3,159 

   

(3,349)

   

(948)

 

% of total revenue

 

(4.5)

%

 

8.8 

%

 

(4.7)

%

 

(1.3)

%

Interest income

 

61 

   

146 

   

122 

   

509 

 

Other income (expense)

 

29 

   

101 

   

   

(37)

 

(Loss) income before income taxes

 

(1,519)

   

3,406 

   

(3,225)

   

(476)

 

Benefit from (provision for) income taxes

 

800 

   

353 

   

209 

   

(304)

 

Net (loss) income

 

$

(719)

   

$

3,759 

   

$

(3,016)

   

$

(780)

 

Basic and diluted net (loss) income per common share

 

$

(0.04)

   

$

0.20 

   

$

(0.16)

   

$

(0.04)

 

Basic weighted average common shares outstanding

 

19,395,364 

   

19,016,853 

   

19,335,081 

   

18,987,469 

 

Diluted weighted average common shares outstanding

 

19,395,364 

   

19,115,148 

   

19,335,081 

   

18,987,469 

 

Cash dividends declared per common share

 

0.125 

   

0.125 

   

0.25 

   

0.25 

 

Key statistics:

               

Units in service

 

869 

   

915 

   

869 

   

915 

 

Average revenue per unit (ARPU)

 

$

7.32 

   

$

7.24 

   

$

7.31 

   

$

7.27 

 

Bookings

 

$

13,037 

   

$

15,411 

   

$

27,634 

   

$

31,050 

 

Backlog

 

$

45,632 

   

$

48,441 

   

$

45,632 

   

$

48,441 

 
                 

(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

   

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

Revenue:

                               

Wireless

 

$

19,859 

   

$

20,120 

   

$

20,300 

   

$

20,828 

   

$

21,078 

   

$

21,386 

   

$

21,615 

   

$

21,814 

 

Software

 

15,864 

   

15,916 

   

17,180 

   

16,865 

   

14,661 

   

15,881 

   

17,933 

   

17,639 

 

Total revenue

 

35,723 

   

36,036 

   

37,480 

   

37,693 

   

35,739 

   

37,267 

   

39,548 

   

39,453 

 

Operating expenses:

                               

Cost of revenue

 

6,973 

   

7,241 

   

7,833 

   

6,544 

   

5,901 

   

8,264 

   

8,051 

   

7,190 

 

Research and development

 

4,278 

   

4,506 

   

4,166 

   

3,459 

   

2,754 

   

5,449 

   

7,132 

   

7,437 

 

Technology operations

 

7,087 

   

7,252 

   

7,371 

   

7,357 

   

7,212 

   

7,904 

   

8,083 

   

7,805 

 

Selling and marketing

 

4,980 

   

4,900 

   

5,004 

   

4,272 

   

3,831 

   

6,361 

   

5,891 

   

5,595 

 

General and administrative

 

11,557 

   

11,150 

   

10,046 

   

10,994 

   

10,810 

   

11,251 

   

11,531 

   

11,813 

 

Depreciation, amortization and accretion

 

2,457 

   

2,727 

   

2,503 

   

2,335 

   

2,072 

   

2,146 

   

2,250 

   

2,305 

 

Goodwill impairment

 

— 

   

— 

   

25,007 

   

— 

   

— 

   

— 

   

8,849 

   

— 

 

Total operating expenses

 

37,332 

   

37,776 

   

61,930 

   

34,961 

   

32,580 

   

41,375 

   

51,787 

   

42,145 

 

% of total revenue

 

104.5 

%

 

104.8 

%

 

165.2 

%

 

92.8 

%

 

91.2 

%

 

111.0 

%

 

130.9 

%

 

106.8 

%

Operating (loss) income

 

(1,609)

   

(1,740)

   

(24,450)

   

2,732 

   

3,159 

   

(4,108)

   

(12,239)

   

(2,692)

 

% of total revenue

 

(4.5)

%

 

(4.8)

%

 

(65.2)

%

 

7.2 

%

 

8.8 

%

 

(11.0)

%

 

(30.9)

%

 

(6.8)

%

Interest income

 

61 

   

61 

   

51 

   

127 

   

146 

   

363 

   

350 

   

399 

 

Other income (expense)

 

29 

   

(27)

   

95 

   

151 

   

101 

   

(137)

   

206 

   

163 

 

(Loss) income before income taxes

 

(1,519)

   

(1,706)

   

(24,304)

   

3,010 

   

3,406 

   

(3,882)

   

(11,683)

   

(2,130)

 

Benefit from (provision for) income taxes

 

800 

   

(591)

   

(22,306)

   

155 

   

353 

   

(657)

   

2,172 

   

804 

 

Net (loss) income

 

$

(719)

   

$

(2,297)

   

$

(46,610)

   

$

3,165 

   

$

3,759 

   

$

(4,539)

   

$

(9,511)

   

$

(1,326)

 

Basic net (loss) income per common share

 

$

(0.04)

   

$

(0.12)

   

$

(2.44)

   

$

0.17 

   

$

0.20 

   

$

(0.24)

   

$

(0.50)

   

$

(0.07)

 

Diluted net (loss) income per common share

 

(0.04)

   

(0.12)

   

(2.44)

   

0.16 

   

0.20 

   

(0.24)

   

(0.50)

   

(0.07)

 

Basic weighted average common shares outstanding

 

19,395,364 

   

19,272,786 

   

19,088,329 

   

19,051,502 

   

19,016,853 

   

18,958,716 

   

18,860,020 

   

19,086,811 

 

Diluted weighted average common shares outstanding

 

19,395,364 

   

19,272,786 

   

19,088,329 

   

19,208,452 

   

19,115,148 

   

18,958,716 

   

18,860,020 

   

19,086,811 

 

Key statistics:

                               

Units in service

 

869 

   

874 

   

885 

   

898 

   

915 

   

926 

   

938 

   

955 

 

Average revenue per unit (ARPU)

 

$

7.32 

   

$

7.34 

   

$

7.30 

   

$

7.34 

   

$

7.24 

   

$

7.31 

   

$

7.33 

   

$

7.32 

 

Bookings

 

$

13,037 

   

$

14,597 

   

$

16,528 

   

$

21,414 

   

$

15,411 

   

$

15,639 

   

$

21,932 

   

$

20,421 

 

Backlog

 

$

45,632 

   

$

48,849 

   

$

50,504 

   

$

51,708 

   

$

48,441 

   

$

49,052 

   

$

50,553 

   

$

42,604 

 
                                 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

         
   

6/30/2021

 

12/31/2020

         

ASSETS

 

Unaudited

   
         

Current assets:

       

Cash and cash equivalents

 

$

38,127 

   

$

48,729 

 

Short term investments

 

29,998 

   

29,995 

 

Accounts receivable, net

 

27,483 

   

29,934 

 

Prepaid expenses

 

8,369 

   

8,958 

 

Other current assets

 

1,197 

   

1,269 

 

Total current assets

 

105,174 

   

118,885 

 

Non-current assets:

       

Property and equipment, net

 

7,861 

   

7,815 

 

Operating lease right-of-use assets

 

16,769 

   

14,016 

 

Capitalized software development, net

 

13,499 

   

10,179 

 

Goodwill

 

99,175 

   

99,175 

 

Intangible assets, net

 

— 

   

417 

 

Deferred income tax assets, net

 

25,969 

   

25,826 

 

Other non-current assets

 

792 

   

978 

 

Total non-current assets

 

164,065 

   

158,406 

 

Total assets

 

$

269,239 

   

$

277,291 

 
         

LIABILITIES AND STOCKHOLDERS’ EQUITY

       
         

Current liabilities:

       

Accounts payable

 

$

4,166 

   

$

6,685 

 

Accrued compensation and benefits

 

12,621 

   

14,103 

 

Deferred revenue

 

25,598 

   

27,686 

 

Operating lease liabilities

 

5,825 

   

5,264 

 

Other current liabilities

 

4,305 

   

3,702 

 

Total current liabilities

 

52,515 

   

57,440 

 

Non-current liabilities:

       

Asset retirement obligations

 

7,465 

   

7,289 

 

Operating lease liabilities

 

12,211 

   

9,456 

 

Other non-current liabilities

 

2,044 

   

2,493 

 

Total non-current liabilities

 

21,720 

   

19,238 

 

Total liabilities

 

74,235 

   

76,678 

 

Commitments and contingencies

       

Stockholders’ equity:

       

Preferred stock

 

$

— 

   

$

— 

 

Common stock

 

   

 

Additional paid-in capital

 

94,276 

   

91,780 

 

Accumulated other comprehensive loss

 

(1,435)

   

(1,452)

 

Retained earnings

 

102,161 

   

110,283 

 

Total stockholders’ equity

 

195,004 

   

200,613 

 

Total liabilities and stockholders’ equity

 

$

269,239 

   

$

277,291 

 
         

(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 six months ended

 

6/30/2021

 

6/30/2020

Operating activities:

     

Net loss

$

(3,016)

   

$

(780)

 

Adjustments to reconcile net loss to net cash provided by operating activities:

     

Depreciation, amortization and accretion

5,184 

   

4,218 

 

Deferred income tax (benefit) expense

(291)

   

290 

 

Stock-based compensation

4,020 

   

2,544 

 

Provisions for doubtful accounts, service credits and other

657 

   

673 

 

Changes in assets and liabilities:

     

Accounts receivable

1,775 

   

(670)

 

Prepaid expenses and other assets

994 

   

475 

 

Net operating lease liabilities

563 

   

(60)

 

Accounts payable, accrued liabilities and other

(3,538)

   

1,142 

 

Deferred revenue

(2,482)

   

(1,373)

 

Net cash provided by operating activities

3,866 

   

6,459 

 

Investing activities:

     

Purchases of property and equipment

(2,198)

   

(1,895)

 

Capitalized software development

(5,618)

   

(5,300)

 

Purchase of short-term investments

(29,993)

   

(29,877)

 

Maturity of short-term investments

30,000 

   

30,000 

 

Net cash used in investing activities

(7,809)

   

(7,072)

 

Financing activities:

     

Cash distributions to stockholders

(5,152)

   

(5,008)

 

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

132 

   

166 

 

Purchase of common stock for tax withholding on vested equity awards

(1,656)

   

(903)

 

Net cash used in financing activities

(6,676)

   

(5,745)

 

Effect of exchange rate on cash

17 

   

(117)

 

Net decrease in cash and cash equivalents

(10,602)

   

(6,475)

 

Cash and cash equivalents, beginning of period

48,729 

   

47,361 

 

Cash and cash equivalents, end of period

$

38,127 

   

$

40,886 

 

Supplemental disclosure:

     

Income taxes (refunds received) paid

$

(42)

   

$

148 

 
       

(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

   

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

Revenue

                               

Paging

 

$

19,135 

   

$

19,353 

   

$

19,513 

   

$

19,961 

   

$

19,990 

   

$

20,451 

   

$

20,826 

   

$

21,212 

 

Non-paging

 

$

724 

   

$

767 

   

$

787 

   

$

867 

   

$

1,088 

   

$

935 

   

$

789 

   

$

602 

 

Total wireless revenue

 

$

19,859 

   

$

20,120 

   

$

20,300 

   

$

20,828 

   

$

21,078 

   

$

21,386 

   

$

21,615 

   

$

21,814 

 
                                 

License

 

$

818 

   

$

1,507 

   

$

1,486 

   

$

1,988 

   

$

749 

   

$

955 

   

$

1,711 

   

$

2,723 

 

Services

 

$

4,865 

   

$

4,354 

   

$

4,778 

   

$

4,772 

   

$

3,812 

   

$

4,549 

   

$

4,947 

   

$

4,202 

 

Equipment

 

$

482 

   

$

616 

   

$

961 

   

$

554 

   

$

601 

   

$

725 

   

$

1,125 

   

$

689 

 

Subscription

 

$

90 

   

$

45 

   

$

42 

   

$

24 

   

$

— 

   

$

— 

   

$

— 

   

$

— 

 

Operations revenue

 

$

6,255 

   

$

6,522 

   

$

7,267 

   

$

7,338 

   

$

5,162 

   

$

6,229 

   

$

7,783 

   

$

7,614 

 
                                 

Maintenance revenue

 

$

9,609 

   

$

9,394 

   

$

9,913 

   

$

9,527 

   

$

9,499 

   

$

9,652 

   

$

10,150 

   

$

10,025 

 

Total software revenue

 

$

15,864 

   

$

15,916 

   

$

17,180 

   

$

16,865 

   

$

14,661 

   

$

15,881 

   

$

17,933 

   

$

17,639 

 
                                 

Total revenue

 

$

35,723 

   

$

36,036 

   

$

37,480 

   

$

37,693 

   

$

35,739 

   

$

37,267 

   

$

39,548 

   

$

39,453 

 
                                 

(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

   

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

Cost of revenue

                               

Payroll and related

 

$

4,920 

   

$

5,369 

   

$

5,447 

   

$

4,941 

   

$

4,350 

   

$

5,785 

   

$

5,222 

   

$

5,099 

 

Cost of sales

 

1,427 

   

1,251 

   

1,740 

   

1,064 

   

1,098 

   

1,940 

   

2,278 

   

1,567 

 

Stock-based compensation

 

285 

   

322 

   

136 

   

148 

   

134 

   

119 

   

42 

   

21 

 

Other

 

341 

   

299 

   

510 

   

391 

   

319 

   

420 

   

509 

   

503 

 

Total cost of revenue

 

6,973 

   

7,241 

   

7,833 

   

6,544 

   

5,901 

   

8,264 

   

8,051 

   

7,190 

 

Research and development

                               

Payroll and related

 

4,333 

   

4,475 

   

4,358 

   

4,147 

   

4,115 

   

4,761 

   

5,056 

   

5,083 

 

Outside services

 

2,060 

   

2,277 

   

2,358 

   

2,113 

   

1,803 

   

1,584 

   

1,742 

   

2,027 

 

Capitalized software development

 

(2,698)

   

(2,920)

   

(3,046)

   

(2,906)

   

(3,596)

   

(1,705)

   

— 

   

— 

 

Stock-based compensation

 

305 

   

475 

   

246 

   

240 

   

243 

   

236 

   

113 

   

102 

 

Other

 

278 

   

199 

   

250 

   

(135)

   

189 

   

573 

   

221 

   

225 

 

Total research and development

 

4,278 

   

4,506 

   

4,166 

   

3,459 

   

2,754 

   

5,449 

   

7,132 

   

7,437 

 

Technology operations

                               

Payroll and related

 

2,323 

   

2,467 

   

2,467 

   

2,246 

   

2,213 

   

2,712 

   

2,656 

   

2,823 

 

Site rent

 

3,143 

   

3,196 

   

3,313 

   

3,467 

   

3,399 

   

3,398 

   

3,669 

   

3,269 

 

Telecommunications

 

825 

   

837 

   

857 

   

949 

   

961 

   

1,001 

   

1,026 

   

1,016 

 

Stock-based compensation

 

131 

   

137 

   

48 

   

52 

   

47 

   

43 

   

32 

   

30 

 

Other

 

665 

   

615 

   

686 

   

643 

   

592 

   

750 

   

700 

   

667 

 

Total technology operations

 

7,087 

   

7,252 

   

7,371 

   

7,357 

   

7,212 

   

7,904 

   

8,083 

   

7,805 

 

Selling and marketing

                               

Payroll and related

 

3,161 

   

3,135 

   

2,912 

   

2,773 

   

2,538 

   

3,583 

   

3,382 

   

3,524 

 

Commissions

 

1,244 

   

1,105 

   

1,178 

   

1,059 

   

852 

   

1,212 

   

1,158 

   

1,114 

 

Stock-based compensation

 

254 

   

319 

   

192 

   

208 

   

194 

   

172 

   

164 

   

137 

 

Advertising and events

 

247 

   

161 

   

539 

   

151 

   

160 

   

784 

   

1,034 

   

703 

 

Other

 

74 

   

180 

   

183 

   

81 

   

87 

   

610 

   

153 

   

117 

 

Total selling and marketing

 

4,980 

   

4,900 

   

5,004 

   

4,272 

   

3,831 

   

6,361 

   

5,891 

   

5,595 

 

General and administrative

                               

Payroll and related

 

3,564 

   

3,818 

   

3,373 

   

3,476 

   

3,355 

   

4,134 

   

3,974 

   

4,220 

 

Stock-based compensation

 

806 

   

986 

   

726 

   

968 

   

744 

   

612 

   

770 

   

674 

 

Facility rent, office, and technology costs

 

2,484 

   

2,480 

   

2,412 

   

178 

   

628 

   

43 

   

56 

   

402 

 

Outside services

 

2,219 

   

1,825 

   

1,584 

   

2,259 

   

2,276 

   

2,068 

   

1,952 

   

2,369 

 

Taxes, licenses and permits

 

1,117 

   

1,081 

   

484 

   

2,148 

   

2,043 

   

2,036 

   

2,350 

   

2,004 

 

Bad debt

 

328 

   

106 

   

202 

   

994 

   

804 

   

859 

   

1,000 

   

888 

 

Other

 

1,039 

   

854 

   

1,265 

   

971 

   

960 

   

1,499 

   

1,429 

   

1,256 

 

Total general and administrative

 

11,557 

   

11,150 

   

10,046 

   

10,994 

   

10,810 

   

11,251 

   

11,531 

   

11,813 

 

Depreciation, amortization and accretion

 

2,457 

   

2,727 

   

2,503 

   

2,335 

   

2,072 

   

2,146 

   

2,250 

   

2,305 

 

Goodwill impairment

 

— 

   

— 

   

25,007 

   

— 

   

— 

   

— 

   

8,849 

   

— 

 

Operating expenses

 

$

37,332 

   

$

37,776 

   

$

61,930 

   

$

34,961 

   

$

32,580 

   

$

41,375 

   

$

51,787 

   

$

42,145 

 

Capital expenditures

 

$

1,480 

   

$

727 

   

$

638 

   

$

934 

   

$

846 

   

$

1,063 

   

$

679 

   

$

1,378 

 
                                 

(a) Slight variations in totals are due to rounding.

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

   

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

 

12/31/2019

 

9/30/2019

Paging units in service

                               

Beginning units in service (000’s)

 

874 

   

885 

   

898 

   

915 

   

926 

   

938 

   

955 

   

977 

 

Gross placements

 

31 

   

20 

   

20 

   

25 

   

35 

   

24 

   

22 

   

28 

 

Gross disconnects

 

(36)

   

(31)

   

(33)

   

(42)

   

(46)

   

(36)

   

(39)

   

(50)

 

Net change

 

(5)

   

(11)

   

(13)

   

(17)

   

(11)

   

(12)

   

(17)

   

(22)

 

Ending units in service

 

869 

   

874 

   

885 

   

898 

   

915 

   

926 

   

938 

   

955 

 

End of period units in service % of total (b)

                               

Healthcare

 

84.5 

%

 

84.1 

%

 

83.6 

%

 

83.7 

%

 

83.6 

%

 

82.6 

%

 

82.4 

%

 

81.7 

%

Government

 

4.9 

%

 

4.8 

%

 

5.3 

%

 

5.3 

%

 

5.5 

%

 

5.4 

%

 

5.4 

%

 

5.5 

%

Large enterprise

 

4.1 

%

 

4.3 

%

 

4.3 

%

 

4.3 

%

 

4.4 

%

 

5.5 

%

 

5.5 

%

 

6.1 

%

Other(b)

 

6.4 

%

 

6.8 

%

 

6.8 

%

 

6.6 

%

 

6.6 

%

 

6.5 

%

 

6.6 

%

 

6.7 

%

Total

 

100.0 

%

 

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 units

 

58 

   

59 

   

61 

   

63 

   

65 

   

67 

   

69 

   

72 

 

101 to 1,000 units

 

155 

   

163 

   

167 

   

167 

   

165 

   

171 

   

173 

   

175 

 

>1,000 units

 

656 

   

652 

   

657 

   

668 

   

685 

   

688 

   

696 

   

708 

 

Total

 

869 

   

874 

   

885 

   

898 

   

915 

   

926 

   

938 

   

955 

 

Account size net loss rate(c)

                               

1 to 100 units

 

(1.7)

%

 

(3.3)

%

 

(3.2)

%

 

(2.9)

%

 

(3.1)

%

 

(3.0)

%

 

(3.8)

%

 

(2.1)

%

101 to 1,000 units

 

(4.9)

%

 

(2.4)

%

 

— 

%

 

1.5 

%

 

(4.2)

%

 

(1.0)

%

 

(1.0)

%

 

(2.4)

%

>1,000 units

 

0.6 

%

 

(0.8)

%

 

(1.6)

%

 

(2.5)

%

 

(0.4)

%

 

(1.2)

%

 

(1.8)

%

 

(2.2)

%

Total

 

(0.6)

%

 

(1.2)

%

 

(1.4)

%

 

(1.9)

%

 

(1.3)

%

 

(1.3)

%

 

(1.8)

%

 

(2.2)

%

Account size ARPU

                               

1 to 100 units

 

$

11.69 

   

$

11.72 

   

$

11.62 

   

$

11.80 

   

$

11.65 

   

$

12.01 

   

$

11.99 

   

$

11.84 

 

101 to 1,000 units

 

8.35 

   

8.33 

   

8.35 

   

8.37 

   

8.24 

   

8.34 

   

8.31 

   

8.41 

 

>1,000 units

 

6.68 

   

6.68 

   

6.62 

   

6.67 

   

6.57 

   

6.59 

   

6.62 

   

6.59 

 

Total

 

$

7.32 

   

$

7.34 

   

$

7.30 

   

$

7.34 

   

$

7.24 

   

$

7.31 

   

$

7.33 

   

$

7.32 

 
                                 

(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 OF NET (LOSS) INCOME TO EBITDA (a)

(Unaudited and in thousands)

                 
   

For the three months ended

 

For the six months ended

   

6/30/2021

 

6/30/2020

 

6/30/2021

 

6/30/2020

Net (loss) income

 

$

(719)

   

$

3,759 

   

$

(3,016)

   

$

(780)

 

Add back:

               

(Benefit from) provision for income taxes

 

(800)

   

(353)

   

(209)

   

304 

 

Other (income) expenses

 

(29)

   

(101)

   

(2)

   

37 

 

Interest income

 

(61)

   

(146)

   

(122)

   

(509)

 

Operating (loss) income

 

(1,609)

   

3,159 

   

(3,349)

   

(948)

 

Depreciation, amortization and accretion

 

2,457 

   

2,072 

   

5,184 

   

4,218 

 

EBITDA

 

$

848 

   

$

5,231 

   

$

1,835 

   

$

3,270 

 

Capitalized software development costs

 

(2,698)

   

(3,596)

   

(5,618)

   

(5,300)

 

Stock-based compensation

 

1,781 

   

1,362 

   

4,020 

   

2,544 

 

Adjusted EBITDA

 

$

(69)

   

$

2,997 

   

$

237 

   

$

514 

 
 

(a) Slight variations in totals are due to rounding.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

                 
   

For the three months ended

 

For the six months ended

   

6/30/2021

 

6/30/2020

 

6/30/2021

 

6/30/2020

Operating expenses

 

$

37,332 

   

$

32,580 

   

$

75,108 

   

$

73,954 

 

Add back:

               

Depreciation, amortization and accretion

 

(2,457)

   

(2,072)

   

(5,184)

   

(4,218)

 

Capitalized software development costs

 

2,698 

   

3,596 

   

5,618 

   

5,300 

 

Adjusted operating expenses

 

$

37,573 

   

$

34,104 

   

$

75,542 

   

$

75,036 

 
 

(a) Slight variations in totals are due to rounding.

(Unaudited and in millions)

           
     

Current Guidance

     

Full Year 2021

Operating expenses

   

$

149.7 

 

to

$

155.7 

 

Add back:

         

Depreciation, amortization and accretion

   

(10.2)

   

(10.2)

 

Capitalized software development costs

   

11.5 

   

11.5 

 

Adjusted operating expenses

   

$

151.0 

   

$

157.0