Spok Reports 2021 Third Quarter Results

Rhea-AI Summary

Spok Holdings, a leader in healthcare communications, reported a GAAP net loss of $2.5 million for Q3 2021, compared to a net income of $3.2 million for Q3 2020. Consolidated revenue decreased by 4.9% year-over-year to $35.9 million. Despite challenges, the company affirmed its full-year revenue guidance of $138 million to $151 million and highlighted record maintenance renewals of $12.1 million. A quarterly dividend of $0.125 per share was declared, payable on December 10, 2021. The company maintained a strong financial position with $67.5 million in cash and no debt.

Positive

• Achieved record software maintenance renewal bookings of $12.1 million.
• Affirmed full-year revenue guidance of $138 million to $151 million.
• Introduced new product enhancements, including ReadyCall® Text pager.

Negative

• GAAP net loss of $2.5 million, a significant decline from previous year.
• Consolidated revenue down 4.9% year-over-year to $35.9 million.

Company affirms its financial outlook for full year 2021

ALEXANDRIA, Va.--(BUSINESS WIRE)-- Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the third quarter ended September 30, 2021. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on December 10, 2021, to stockholders of record on November 16, 2021.

Third Quarter 2021 Highlights:

• Received record-level software maintenance renewal bookings of $12.1 million
• Continued improvement in year-over-year pager unit erosion on a trailing twelve-month basis
• Added further development enhancements to the Spok Go®platform
• Introduced the ReadyCall® Text pager
• For nine consecutive years, has partnered with all of the adult Best Hospitals, and in eight of the past nine years, provided solutions to all of the children’s Best Hospitals named to U.S. News & World Report’s 2021-22 Best Hospitals Honor Roll
• Completed Eleventh Annual State of Healthcare Communications Survey
• Subsequent to the end of the third quarter 2021, hosted annual Connect 21 Conference for customers in a virtual format

Management Commentary:

“We welcomed four new customers to the Spok family during the quarter of which three were software and one was wireless," said Vincent D. Kelly, president and chief executive officer. “Additionally, we successfully closed 12 six-figure deals from our pipeline. Software bookings were driven by strength in maintenance renewals, supporting our strong recurring revenue base. We added an additional Spok Go win during the quarter and remain encouraged by the size and quality of our pipeline, with the signing of three more Spok Go deals so far in the fourth quarter. We had continued improvement in year-over-year pager unit erosion on a trailing twelve-month basis, and software revenue was up in the third quarter of 2021 compared to the second quarter of 2021.

“During the third quarter 2021, we made several key product announcements, such as the newest version of Spok Go and the ReadyCall® Text pager to improve the patient experience. We also received recognition as a solutions provider to all 20 adult hospitals named to U.S. News & World Report’s 2021-22 Best Hospitals Honor Roll and conducted our eleventh annual survey on the state of healthcare communications to more thoroughly understand the unique challenges facing clinicians, particularly in the current environment. Finally, subsequent to the end of the third quarter 2021, the Company held its annual Connect 21 Conference for customers on October 11-12, 2021, in a virtual format, which was well received by both current and prospective customers. Tim Tindle, Spok’s Chief Information Officer, led a session on implementing a secure HIPAA-compliant messaging solution, using our new GenA™ pager, resulting in several new leads and orders. The success of the conference should create additional opportunities for 2022 and beyond," concluded Kelly.

2021 Third Quarter and Year-to-Date Results:

Consolidated revenue for the third quarter of 2021 under Generally Accepted Accounting Principles (“GAAP”) was $35.9 million, compared to $37.7 million in the third quarter of 2020. For the first nine months of 2021, consolidated revenue totaled $107.6 million, compared to $110.7 million in the prior year period.

	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
(Dollars in thousands)	2021				2020				Change (%)			2021				2020				Change (%)
Wireless revenue
Paging revenue	$	18,844			$	19,961			(5.6)	%		$	57,332			$	60,403			(5.1)	%
Product and other revenue	800				867				(7.7)	%		2,291				2,890				(20.7)	%
Total wireless revenue	$	19,644			$	20,828			(5.7)	%		$	59,623			$	63,293			(5.8)	%
Software revenue
License	$	1,674			$	1,988			(15.8)	%		$	3,999			$	3,692			8.3	%
Services	$	4,159			$	4,772			(12.8)	%		$	13,378			$	13,132			1.9	%
Equipment	$	596			$	554			7.6	%		$	1,694			$	1,880			(9.9)	%
Subscription	$	133			$	24			454.2	%		$	268			$	24			1,016.7	%
Maintenance	9,645				9,527				1.2	%		28,648				28,678				(0.1)	%
Total software revenue	16,207				16,865				(3.9)	%		47,987				47,406				1.2	%
Total revenue	$	35,851			$	37,693			(4.9)	%		$	107,610			$	110,699			(2.8)	%

Operating expenses in the third quarter of 2021 totaled $39.4 million and included approximately $0.9 million of costs related to the Company's previously announced strategic alternatives review process and $2.0 million in additional payroll and related costs as the Company-wide plan that reduced work schedules was terminated at the end of the second quarter of 2021. Adjusted operating expenses (which excludes depreciation, amortization and accretion charges, and includes capitalized software development costs) totaled $39.5 million in the third quarter of 2021, driven by the items noted above.

GAAP net loss for the third quarter of 2021 was $2.5 million, or a loss of $0.13 per diluted share, compared to net income of $3.2 million, or $0.16 per diluted share, in the third quarter of 2020. GAAP net loss for the first nine months of 2021 was $5.5 million, or a loss of $0.28 per diluted share, compared to net income of $2.4 million, or $0.12 per diluted share, in the prior year period.

In the third quarter of 2021, adjusted EBITDA loss totaled $1.6 million compared to adjusted EBITDA of $3.8 million in the third quarter of 2020. In the first nine months of 2021, adjusted EBITDA loss totaled $1.4 million, compared to adjusted EBITDA of $4.3 million in the prior year period.

	For the Three Months Ended September 30,											For the Nine Months Ended September 30,
(Dollars in thousands)	2021				2020				Change (%)			2021				2020				Change (%)
Net (loss) income	$	(2,494)			$	3,165			178.8	%		$	(5,510)			$	2,384			331.1	%
Basic net (loss) income per common share	$	(0.13)			$	0.17			176.5	%		$	(0.28)			$	0.13			315.4	%
Diluted net income (loss) per share	$	(0.13)			$	0.16			181.3	%		$	(0.28)			$	0.12			333.3	%
Adjusted EBITDA	$	(1,594)			$	3,777			142.2	%		$	(1,357)			$	4,291			131.6	%

Financial Outlook:

The Company is affirming the financial outlook previously provided for full year 2021 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 on track to achieve our financial targets for 2021, supported by our performance in the first nine months of the year," said Michael W. Wallace, chief operating officer and chief financial officer. “Spok's balance sheet remains strong, with a cash, cash equivalents and short-term investments balance of $67.5 million on September 30, 2021, and no debt.”

2021 Third Quarter Call:

Due to the Company’s strategic alternatives review process, which was announced on September 3, 2021, Spok will not be hosting a conference call to discuss the third quarter 2021 results. The Company will keep all stakeholders apprised of the status of the process as and when it is appropriate.

About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, 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.

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.

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, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, our ability to effectively develop, introduce and deploy our integrated communications platform and collaboration platform, Spok Go, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, 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, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok’s strategic alternatives review, 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.

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 nine months ended
		9/30/2021				9/30/2020				9/30/2021				9/30/2020
Revenue:
Wireless		$	19,644			$	20,828			$	59,623			$	63,293
Software		16,207				16,865				47,987				47,406
Total revenue		35,851				37,693				107,610				110,699
Operating expenses:
Cost of revenue		7,520				6,544				21,734				20,709
Research and development		4,178				3,459				12,962				11,662
Technology operations		7,439				7,357				21,778				22,472
Selling and marketing		5,165				4,272				15,045				14,463
General and administrative		12,538				10,994				35,245				33,056
Depreciation, amortization and accretion		2,568				2,335				7,752				6,553
Total operating expenses		39,408				34,961				114,516				108,915
% of total revenue		109.9		%		92.8		%		106.4		%		98.4		%
Operating (loss) income		(3,557)				2,732				(6,906)				1,784
% of total revenue		(9.9)		%		7.2		%		(6.4)		%		1.6		%
Interest income		141				127				263				636
Other income		10				151				13				113
(Loss) income before income taxes		(3,406)				3,010				(6,630)				2,533
Benefit from (provision for) income taxes		912				155				1,120				(149)
Net (loss) income		$	(2,494)			$	3,165			$	(5,510)			$	2,384
Basic net (loss) income per common share		$	(0.13)			$	0.17			$	(0.28)			$	0.13
Diluted net (loss) income per common share		(0.13)				0.16				(0.28)				0.12
Basic weighted average common shares outstanding		19,464,893				19,051,502				19,378,543				19,008,969
Diluted weighted average common shares outstanding		19,464,893				19,208,452				19,378,543				19,273,243
Cash dividends declared per common share		0.125				0.125				0.375				0.375
Key statistics:
Units in service		853				898				853				898
Average revenue per unit (ARPU)		$	7.29			$	7.34			$	7.33			$	7.31
Bookings		$	17,116			$	21,414			$	44,750			$	52,465
Backlog		$	45,584			$	51,708			$	45,584			$	51,708
(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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Revenue:
Wireless		$	19,644			$	19,859			$	20,120			$	20,300			$	20,828			$	21,078			$	21,386			$	21,615
Software		16,207				15,864				15,916				17,180				16,865				14,661				15,881				17,933
Total revenue		35,851				35,723				36,036				37,480				37,693				35,739				37,267				39,548
Operating expenses:
Cost of revenue		7,520				6,973				7,241				7,833				6,544				5,901				8,264				8,051
Research and development		4,178				4,278				4,506				4,166				3,459				2,754				5,449				7,132
Technology operations		7,439				7,087				7,252				7,371				7,357				7,212				7,904				8,083
Selling and marketing		5,165				4,980				4,900				5,004				4,272				3,831				6,361				5,891
General and administrative		12,538				11,557				11,150				10,046				10,994				10,810				11,251				11,531
Depreciation, amortization and accretion		2,568				2,457				2,727				2,503				2,335				2,072				2,146				2,250
Goodwill impairment		—				—				—				25,007				—				—				—				8,849
Total operating expenses		39,408				37,332				37,776				61,930				34,961				32,580				41,375				51,787
% of total revenue		109.9		%		104.5		%		104.8		%		165.2		%		92.8		%		91.2		%		111.0		%		130.9		%
Operating (loss) income		(3,557)				(1,609)				(1,740)				(24,450)				2,732				3,159				(4,108)				(12,239)
% of total revenue		(9.9)		%		(4.5)		%		(4.8)		%		(65.2)		%		7.2		%		8.8		%		(11.0)		%		(30.9)		%
Interest income		141				61				61				51				127				146				363				350
Other income (expense)		10				29				(27)				95				151				101				(137)				206
(Loss) income before income taxes		(3,406)				(1,519)				(1,706)				(24,304)				3,010				3,406				(3,882)				(11,683)
Benefit from (provision for) income taxes		912				800				(591)				(22,306)				155				353				(657)				2,172
Net (loss) income		$	(2,494)			$	(719)			$	(2,297)			$	(46,610)			$	3,165			$	3,759			$	(4,539)			$	(9,511)
Basic net (loss) income per common share		$	(0.13)			$	(0.04)			$	(0.12)			$	(2.44)			$	0.17			$	0.20			$	(0.24)			$	(0.50)
Diluted net (loss) income per common share		(0.13)				(0.04)				(0.12)				(2.44)				0.16				0.20				(0.24)				(0.50)
Basic weighted average common shares outstanding		19,464,893				19,395,364				19,272,786				19,088,329				19,051,502				19,016,853				18,958,716				18,860,020
Diluted weighted average common shares outstanding		19,464,893				19,395,364				19,272,786				19,088,329				19,208,452				19,115,148				18,958,716				18,860,020
Key statistics:
Units in service		853				869				874				885				898				915				926				938
Average revenue per unit (ARPU)		$	7.29			$	7.32			$	7.34			$	7.30			$	7.34			$	7.24			$	7.31			$	7.33
Bookings		$	17,116			$	13,037			$	14,597			$	16,528			$	21,414			$	15,411			$	15,639			$	21,932
Backlog		$	45,584			$	45,632			$	48,849			$	50,504			$	51,708			$	48,441			$	49,052			$	50,553
(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
		9/30/2021				12/31/2020
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents		$	37,461			$	48,729
Short term investments		29,998				29,995
Accounts receivable, net		26,979				29,934
Prepaid expenses		9,169				8,958
Other current assets		896				1,269
Total current assets		104,503				118,885
Non-current assets:
Property and equipment, net		7,834				7,815
Operating lease right-of-use assets		16,113				14,016
Capitalized software development, net		14,638				10,179
Goodwill		99,175				99,175
Intangible assets, net		—				417
Deferred income tax assets, net		26,739				25,826
Other non-current assets		750				978
Total non-current assets		165,249				158,406
Total assets		$	269,752			$	277,291
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	4,521			$	6,685
Accrued compensation and benefits		15,190				14,103
Deferred revenue		26,767				27,686
Operating lease liabilities		5,643				5,264
Other current liabilities		5,239				3,702
Total current liabilities		57,360				57,440
Non-current liabilities:
Asset retirement obligations		7,450				7,289
Operating lease liabilities		11,951				9,456
Other non-current liabilities		1,377				2,493
Total non-current liabilities		20,778				19,238
Total liabilities		78,138				76,678
Commitments and contingencies
Stockholders' equity:
Preferred stock		$	—			$	—
Common stock		2				2
Additional paid-in capital		96,088				91,780
Accumulated other comprehensive loss		(1,598)				(1,452)
Retained earnings		97,122				110,283
Total stockholders' equity		191,614				200,613
Total liabilities and stockholders' equity		$	269,752			$	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 nine months ended
	9/30/2021				9/30/2020
Operating activities:
Net (loss) income	$	(5,510)			$	2,384
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation, amortization and accretion	7,752				6,553
Deferred income tax (benefit) expense	(907)				15
Stock-based compensation	6,036				4,160
Provisions for doubtful accounts, service credits and other	765				914
Changes in assets and liabilities:
Accounts receivable	2,165				(1,019)
Prepaid expenses and other assets	202				1,726
Net operating lease liabilities	778				(50)
Accounts payable, accrued liabilities and other	300				3,591
Deferred revenue	(2,053)				2,680
Net cash provided by operating activities	9,528				20,954
Investing activities:
Purchases of property and equipment	(3,103)				(2,824)
Capitalized software development	(8,239)				(8,206)
Purchase of short-term investments	(44,990)				(44,870)
Maturity of short-term investments	45,000				45,000
Net cash used in investing activities	(11,332)				(10,900)
Financing activities:
Cash distributions to stockholders	(7,590)				(7,388)
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	(1,860)				(903)
Net cash used in financing activities	(9,318)				(8,125)
Effect of exchange rate on cash and cash equivalents	(146)				(55)
Net (decrease) increase in cash and cash equivalents	(11,268)				1,874
Cash and cash equivalents, beginning of period	48,729				47,361
Cash and cash equivalents, end of period	$	37,461			$	49,235
Supplemental disclosure:
Income taxes (refunds received) paid	$	(165)			$	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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Revenue
Paging		$	18,844			$	19,135			$	19,353			$	19,513			$	19,961			$	19,990			$	20,451			$	20,826
Non-paging		$	800			$	724			$	767			$	787			$	867			$	1,088			$	935			$	789
Total wireless revenue		$	19,644			$	19,859			$	20,120			$	20,300			$	20,828			$	21,078			$	21,386			$	21,615
License		$	1,674			$	818			$	1,507			$	1,486			$	1,988			$	749			$	955			$	1,711
Services		$	4,159			$	4,865			$	4,354			$	4,778			$	4,772			$	3,812			$	4,549			$	4,947
Equipment		$	596			$	482			$	616			$	961			$	554			$	601			$	725			$	1,125
Subscription		$	133			$	90			$	45			$	42			$	24			$	—			$	—			$	—
Operations revenue		$	6,562			$	6,255			$	6,522			$	7,267			$	7,338			$	5,162			$	6,229			$	7,783
Maintenance revenue		$	9,645			$	9,609			$	9,394			$	9,913			$	9,527			$	9,499			$	9,652			$	10,150
Total software revenue		$	16,207			$	15,864			$	15,916			$	17,180			$	16,865			$	14,661			$	15,881			$	17,933
Total revenue		$	35,851			$	35,723			$	36,036			$	37,480			$	37,693			$	35,739			$	37,267			$	39,548
(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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Cost of revenue
Payroll and related		$	5,435			$	4,920			$	5,369			$	5,447			$	4,941			$	4,350			$	5,785			$	5,222
Cost of sales		1,414				1,427				1,251				1,740				1,064				1,098				1,940				2,278
Stock-based compensation		250				285				322				136				148				134				119				42
Other		421				341				299				510				391				319				420				509
Total cost of revenue		7,520				6,973				7,241				7,833				6,544				5,901				8,264				8,051
Research and development
Payroll and related		4,291				4,333				4,475				4,358				4,147				4,115				4,761				5,056
Outside services		1,759				2,060				2,277				2,358				2,113				1,803				1,584				1,742
Capitalized software development		(2,621)				(2,698)				(2,920)				(3,046)				(2,906)				(3,596)				(1,705)				—
Stock-based compensation		435				305				475				246				240				243				236				113
Other		314				278				199				250				(135)				189				573				221
Total research and development		4,178				4,278				4,506				4,166				3,459				2,754				5,449				7,132
Technology operations
Payroll and related		2,585				2,323				2,467				2,467				2,246				2,213				2,712				2,656
Site rent		3,122				3,143				3,196				3,313				3,467				3,399				3,398				3,669
Telecommunications		828				825				837				857				949				961				1,001				1,026
Stock-based compensation		139				131				137				48				52				47				43				32
Other		765				665				615				686				643				592				750				700
Total technology operations		7,439				7,087				7,252				7,371				7,357				7,212				7,904				8,083
Selling and marketing
Payroll and related		3,365				3,161				3,135				2,912				2,773				2,538				3,583				3,382
Commissions		924				1,244				1,105				1,178				1,059				852				1,212				1,158
Stock-based compensation		234				254				319				192				208				194				172				164
Advertising and events		527				247				161				539				151				160				784				1,034
Other		115				74				180				183				81				87				610				153
Total selling and marketing		5,165				4,980				4,900				5,004				4,272				3,831				6,361				5,891
General and administrative
Payroll and related		3,911				3,564				3,818				3,373				3,476				3,355				4,134				3,974
Stock-based compensation		958				806				986				726				968				744				612				770
Facility rent, office, and technology costs		2,692				2,484				2,480				2,412				178				628				43				56
Outside services		3,078				2,219				1,825				1,584				2,259				2,276				2,068				1,952
Taxes, licenses and permits		1,003				1,117				1,081				484				2,148				2,043				2,036				2,350
Bad debt		(29)				328				106				202				994				804				859				1,000
Other		925				1,039				854				1,265				971				960				1,499				1,429
Total general and administrative		12,538				11,557				11,150				10,046				10,994				10,810				11,251				11,531
Depreciation, amortization and accretion		2,568				2,457				2,727				2,503				2,335				2,072				2,146				2,250
Goodwill impairment		—				—				—				25,007				—				—				—				8,849
Operating expenses		$	39,408			$	37,332			$	37,776			$	61,930			$	34,961			$	32,580			$	41,375			$	51,787
Capital expenditures		$	905			$	1,480			$	727			$	638			$	934			$	846			$	1,063			$	679
(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
		9/30/2021				6/30/2021				3/31/2021				12/31/2020				9/30/2020				6/30/2020				3/31/2020				12/31/2019
Paging units in service
Beginning units in service (000's)		869				874				885				898				915				926				938				955
Gross placements		23				31				20				20				25				35				24				22
Gross disconnects		(39)				(36)				(31)				(33)				(42)				(46)				(36)				(39)
Net change		(16)				(5)				(11)				(13)				(17)				(11)				(12)				(17)
Ending units in service		853				869				874				885				898				915				926				938
End of period units in service % of total (b)
Healthcare		84.6		%		84.5		%		84.1		%		83.6		%		83.7		%		83.6		%		82.6		%		82.4		%
Government		4.8		%		4.9		%		4.8		%		5.3		%		5.3		%		5.5		%		5.4		%		5.4		%
Large enterprise		4.1		%		4.1		%		4.3		%		4.3		%		4.3		%		4.4		%		5.5		%		5.5		%
Other(b)		6.4		%		6.4		%		6.8		%		6.8		%		6.6		%		6.6		%		6.5		%		6.6		%
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		57				58				59				61				63				65				67				69
101 to 1,000 units		154				155				163				167				167				165				171				173
>1,000 units		642				656				652				657				668				685				688				696
Total		853				869				874				885				898				915				926				938
Account size net loss rate(c)
1 to 100 units		(1.7)		%		(1.7)		%		(3.3)		%		(3.2)		%		(2.9)		%		(3.1)		%		(3.0)		%		(3.8)		%
101 to 1,000 units		(0.6)		%		(4.9)		%		(2.4)		%		—		%		1.5		%		(4.2)		%		(1.0)		%		(1.0)		%
>1,000 units		(2.1)		%		0.6		%		(0.8)		%		(1.6)		%		(2.5)		%		(0.4)		%		(1.2)		%		(1.8)		%
Total		(1.8)		%		(0.6)		%		(1.2)		%		(1.4)		%		(1.9)		%		(1.3)		%		(1.3)		%		(1.8)		%
Account size ARPU
1 to 100 units		$	11.67			$	11.69			$	11.72			$	11.62			$	11.80			$	11.65			$	12.01			$	11.99
101 to 1,000 units		8.38				8.35				8.33				8.35				8.37				8.24				8.34				8.31
>1,000 units		6.65				6.68				6.68				6.62				6.67				6.57				6.59				6.62
Total		$	7.29			$	7.32			$	7.34			$	7.30			$	7.34			$	7.24			$	7.31			$	7.33
(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 nine months ended
		9/30/2021				9/30/2020				9/30/2021				9/30/2020
Net (loss) income		$	(2,494)			$	3,165			$	(5,510)			$	2,384
Add back:
(Benefit from) provision for income taxes		(912)				(155)				(1,120)				149
Other income		(10)				(151)				(13)				(113)
Interest income		(141)				(127)				(263)				(636)
Operating (loss) income		(3,557)				2,732				(6,906)				1,784
Depreciation, amortization and accretion		2,568				2,335				7,752				6,553
EBITDA		$	(989)			$	5,067			$	846			$	8,337
Capitalized software development costs		(2,621)				(2,906)				(8,239)				(8,206)
Stock-based compensation		2,016				1,616				6,036				4,160
Adjusted EBITDA		$	(1,594)			$	3,777			$	(1,357)			$	4,291
(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 nine months ended
		9/30/2021				9/30/2020				9/30/2021				9/30/2020
Operating expenses		$	39,408			$	34,961			$	114,516			$	108,915
Add back:
Depreciation, amortization and accretion		(2,568)				(2,335)				(7,752)				(6,553)
Capitalized software development costs		2,621				2,906				8,239				8,206
Adjusted operating expenses		$	39,461			$	35,532			$	115,003			$	110,568
(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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006096/en/

Lisa Fortuna or Mike Cummings

312-445-2866

spok@alpha-ir.com

Source: Spok Holdings, Inc.

FAQ

What were Spok's financial results for Q3 2021?

Spok reported a GAAP net loss of $2.5 million for Q3 2021, with consolidated revenue of $35.9 million, down 4.9% from Q3 2020.

What is Spok's full-year revenue guidance for 2021?

Spok affirmed its full-year revenue guidance of $138 million to $151 million.

What dividend was declared by Spok?

Spok declared a quarterly dividend of $0.125 per share, payable on December 10, 2021.

How did Spok's software revenue perform in Q3 2021?

Spok's total software revenue for Q3 2021 was $16.2 million, a decrease of 3.9% compared to Q3 2020.

What was Spok's cash position at the end of Q3 2021?

Spok reported a cash and cash equivalents balance of $67.5 million with no debt as of September 30, 2021.