News Release

Spok Reports Fourth Quarter and Full Year 2021 Results

Dividend Increases by 150%, from $0.125 per quarter to $0.3125 per quarter
in Connection with Announcement of New Strategic Business Plan

Alexandria, Va. (February 17, 2022) – Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the fourth quarter and full year ended December 31, 2021. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022.

2021 Fourth Quarter and Full Year Highlights:

  • Achieved full year 2021 financial guidance for revenue, adjusted operating expenses and capital expenditures
  • Cash, cash equivalents and short-term investments balance of $59.6 million at December 31, 2021, and no debt
  • Wireless ARPU (average revenue per unit) in 2021 totaled $7.30, equivalent to 2020
  • Launched the Next Generation of Paging with the Launch of its new GenATM Pager
  • Subsequent to the end of the fourth quarter 2021, was voted top-rated secure communications platform by healthcare industry clients in Black Book Industry 2022 survey

2021 Fourth Quarter and Full Year Results:

Consolidated revenue for the fourth quarter of 2021 under Generally Accepted Accounting Principles (“GAAP”) was $34.5 million, compared to $37.5 million in the fourth quarter of 2020. For the year ended December 31, 2021, consolidated revenue totaled $142.2 million, compared to $148.2 million in the prior year.

 

For the Three Months Ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)

 

2021

 

2020

 

Change (%)

Wireless revenue

                     

Paging revenue

$           18,513

 

$           19,513

 

(5.1) %

 

$           75,845

 

$           79,916

 

(5.1) %

Product and other revenue

                   690

 

                   787

 

(12.3) %

 

                2,981

 

                3,677

 

(18.9) %

Total wireless revenue

$           19,203

 

$           20,300

 

(5.4) %

 

$           78,826

 

$           83,593

 

(5.7) %

                       

Software revenue

                     

License

$             1,495

 

$             1,487

 

0.5 %

 

$             5,494

 

$             5,179

 

6.1 %

Professional services

                3,783

 

                4,777

 

(20.8) %

 

             17,161

 

             17,910

 

(4.2) %

Hardware

                   573

 

                   961

 

(40.4) %

 

                2,267

 

                2,841

 

(20.2) %

Subscription

                   155

 

                     42

 

269.0 %

 

                   423

 

                     66

 

540.9 %

Maintenance

                9,335

 

                9,913

 

(5.8) %

 

             37,982

 

             38,591

 

(1.6) %

Total software revenue

             15,341

 

             17,180

 

(10.7) %

 

             63,327

 

             64,587

 

(2.0) %

Total revenue

$           34,544

 

$           37,480

 

(7.8) %

 

$         142,153

 

$         148,180

 

(4.1) %

Operating expenses in the fourth quarter of 2021 totaled $55.4 million and included $15.7 million in noncash impairment charges for capitalized software development, and $1.1 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020. Operating expenses for the full year 2021 totaled $169.9 million and included $15.7 million in noncash impairment charges for capitalized software development, and $3.8 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020.

Adjusted operating expenses (which excludes depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs) totaled $39.5 million in the fourth quarter of 2021. Adjusted operating expenses for the full year 2021 totaled $154.3 million.

 

For the three months ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)

 

2021

 

2020

 

Change (%)

Operating expenses

$           55,355

 

$           61,930

 

10.6 %

 

$         169,871

 

$         170,845

 

0.6 %

Adjusted operating expenses

$           39,535

 

$           37,109

 

(6.5) %

 

$         154,284

 

$         147,342

 

(4.7) %

GAAP net loss for the fourth quarter of 2021 was $16.7 million, or a loss of $0.86 per diluted share, compared to net loss of $46.6 million, or $2.44 per diluted share, in the fourth quarter of 2020. GAAP net loss for the year ended December 31, 2021, was $22.2 million, or a loss of $1.14 per diluted share, compared to net loss of $44.2 million, or $2.32 per diluted share, in the prior year period.

For the fourth quarter of 2021, adjusted EBITDA loss totaled $3.8 million compared to adjusted EBITDA of $1.7 million in the fourth quarter of 2020. For the year ended December 31, 2021, adjusted EBITDA loss totaled $4.9 million, compared to adjusted EBITDA of $6.3 million in the prior year period. Based on the Company’s fourth quarter assessment of its capitalized software development costs, the 2021 fourth quarter and full year net loss included a non-cash impairment charge of $15.7 million, which increased the 2021 fourth quarter and full year net loss per basic share by $0.81.

 

For the three months ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)            

 

2021

 

2020

 

Change (%)

Net loss

$ (16,669)

 

$ (46,610)

 

64.2 %

 

$ (22,180)

 

$(44,225)

 

49.8 %

Basic and diluted net loss per common share

$ (0.86)

 

$ (2.44)

 

64.8 %

 

$ (1.14)

 

$(2.32)

 

50.9 %

Adjusted EBITDA

$ (3,788)

 

$ 1,719

 

(320.4) %

 

$ (4,892)

 

$     6,346

 

(177.1) %

Financial Outlook:

Regarding financial guidance, the Company expects the following for 2022:

(Unaudited and in millions)

 

Current Guidance

Full Year 2022

   

From

 

To

Revenue

       

Wireless

 

$                               71.6

 

$                               77.0

Software

 

$                               54.4

 

$                               62.2

Total Revenue

 

$                             126.0

 

$                             139.2

         

Adjusted Operating Expenses

 

$                             118.8

 

$                             128.6

         

Capital Expenditures

 

$                                 3.4

 

$                                 4.2

2021 Fourth Quarter Call:

A conference call will be held today, February 17, 2022, at 8:30 a.m. Eastern Time to discuss fourth quarter and full year 2021 results and Spok’s new strategic business plan that was announced today.

Telephone Conference Dial-Ins:

 

Participant / Guest (Toll-Free):

877-407-0890

 

Participant / Guest (International):

201-389-0918

 

Webcast Links:
Live-Link (after the event the OnDemand version will be available under this URL as well):
https://www.webcast-eqs.com/spok02172022_en/en

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 and capitalized software development impairment costs, and severance and restructuring costs, 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, goodwill and capitalized software development impairment costs, severance and restructuring costs, 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.