Business Wire | Oct 28, 2020 04:10PM EDT

Spok Reports 2020 Third Quarter Operating Results

Oct. 28, 2020

SPRINGFIELD, Va.--(BUSINESS WIRE)--Oct. 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(r) 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 ended For the nine months ended

(Dollars in September September Change September September Changethousands) 30, 30, (%) 30, 30, (%) 2020 2019 2020 2019

Wireless revenue

Paging revenue $ 19,961 $ 21,212 (5.9 ) $ 60,403 $ 64,241 (6.0 ) % %

Product and 867 602 44.0 % 2,890 2,311 25.1 %other revenue

Total wireless $ 20,828 $ 21,814 (4.5 ) $ 63,293 $ 66,552 (4.9 )revenue % %



Software revenue

Operations $ 7,338 $ 7,614 (3.6 ) $ 18,728 $ 23,974 (21.9 )revenue % %

Maintenance 9,527 10,025 (5.0 ) 28,678 30,215 (5.1 )revenue % %

Total software 16,865 17,639 (4.4 ) 47,406 54,189 (12.5 )revenue % %

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 For the nine months ended ended

September September September September(Dollars in thousands) 30, 30, 30, 30, 2020 2019 2020 2019

Net income (loss) $ 3,165 $ (1,326 ) $ 2,384 $ (1,255 )

Basic net income (loss) $ 0.17 $ (0.07 ) $ 0.13 $ (0.07 ) per share

Diluted net income (loss) $ 0.16 $ (0.07 ) $ 0.12 $ (0.07 ) per share

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(r) platform and in the near term, investing in innovation and the evolution of our cloud-native and integrated communication platform, Spok Go(r).

"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.

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(r) and Spok Care Connect(r) platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok(r) 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, 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.

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.

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

9/30/2020 9/30/2019 9/30/2020 9/30/2019

Revenue:

Wireless $ 20,828 $ 21,814 $ 63,293 $ 66,552

Software 16,865 17,639 47,406 54,189

Total revenue 37,693 39,453 110,699 120,741

Operating expenses:

Cost of 6,544 7,190 20,709 22,021 revenue

Research and 3,459 7,437 11,662 20,411 development

Technology 7,357 7,805 22,472 23,345 operations

Selling and 4,272 5,595 14,463 17,279 marketing

General and 10,994 11,813 33,056 34,255 administrative

Depreciation,amortization 2,335 2,305 6,553 6,999 and accretion

Totaloperating 34,961 42,145 108,915 124,310 expenses

% of total 92.8 % 106.8 % 98.4 % 103.0 %revenue

Operating 2,732 (2,692 ) 1,784 (3,569 ) income (loss)

% of total 7.2 % (6.8 ) 1.6 % (3.0 )revenue % %

Interest 127 399 636 1,300 income

Other income 151 163 113 528

Income (loss)before income 3,010 (2,130 ) 2,533 (1,741 ) taxes

Benefit from(provision 155 804 (149 ) 486 for) incometaxes

Net income $ 3,165 $ (1,326 ) $ 2,384 $ (1,255 ) (loss)

Basic netincome (loss) $ 0.17 $ (0.07 ) $ 0.13 $ (0.07 ) per commonshare

Diluted netincome (loss) 0.16 (0.07 ) 0.12 (0.07 ) per commonshare

Basic weightedaverage common 19,051,502 19,086,811 19,008,969 19,166,812 sharesoutstanding

Dilutedweightedaverage common 19,208,452 19,086,811 19,273,243 19,166,812 sharesoutstanding

Cash dividendsdeclared per 0.125 0.125 0.375 0.375 common share

Key statistics:

Units in 898 955 898 955 service

Averagerevenue per $ 7.34 $ 7.32 $ 7.31 $ 7.33 unit (ARPU)

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

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

Revenue:

Wireless

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

$

22,610

$

23,091

Software

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

Operating expenses:

Cost of revenue (b)

6,544

5,901

8,264

8,051

7,190

7,239

7,592

8,772

Research and development

3,459

2,754

5,449

7,132

7,437

6,807

6,167

6,618

Technology operations

7,357

7,212

7,904

8,083

7,805

7,866

7,674

8,120

Selling and marketing

4,272

3,831

6,361

5,891

5,595

5,574

6,110

6,275

General and administrative

10,994

10,810

11,251

11,531

11,813

11,696

10,747

10,721

Depreciation, amortization and accretion

2,335

2,072

2,146

2,250

2,305

2,335

2,359

2,601

Goodwill impairment

-

-

-

8,849

-

-

-

-

Total operating expenses

34,961

32,580

41,375

51,787

42,145

41,517

40,649

43,107

% of total revenue

92.8

%

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 revenue

7.2

%

8.8

%

(11.0

)%

(30.9

)%

(6.8

)%

(5.0

)%

2.7

%

0.3

%

Interest income

127

146

363

350

399

452

449

628

Other income (expense)

151

101

(137

)

206

163

602

(236

)

(593

)

Income (loss) before income taxes

3,010

3,406

(3,882

)

(11,683

)

(2,130

)

(938

)

1,328

184

Benefit from (provision for) income taxes

155

353

(657

)

2,172

804

268

(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 share

0.16

0.20

(0.24

)

(0.50

)

(0.07

)

(0.03

)

0.04

0.01

Basic weighted average common shares outstanding

19,051,502

19,016,853

18,958,716

18,860,020

19,086,811

19,217,866

19,196,970

19,445,401

Diluted weighted average common shares outstanding

19,208,452

19,115,148

18,958,716

18,860,020

19,086,811

19,217,866

19,356,712

19,445,401

Key statistics:

Units in service

898

915

926

938

955

977

982

992

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 STATEMENTS OF OPERATIONS (a)

(Unaudited and in thousands except share, per share amounts and ARPU)



For the three months ended

9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018

Revenue:

Wireless $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127 $ 22,610 $ 23,091

Software 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

Operating expenses:

Cost of revenue ^ 6,544 5,901 8,264 8,051 7,190 7,239 7,592 8,772 (b)

Research and 3,459 2,754 5,449 7,132 7,437 6,807 6,167 6,618 development

Technology 7,357 7,212 7,904 8,083 7,805 7,866 7,674 8,120 operations

Selling and 4,272 3,831 6,361 5,891 5,595 5,574 6,110 6,275 marketing

General and 10,994 10,810 11,251 11,531 11,813 11,696 10,747 10,721 administrative

Depreciation,amortization and 2,335 2,072 2,146 2,250 2,305 2,335 2,359 2,601 accretion

Goodwill impairment - - - 8,849 - - - -

Total operating 34,961 32,580 41,375 51,787 42,145 41,517 40,649 43,107 expenses

% of total revenue 92.8 % 91.2 % 111.0 % 130.9 % 106.8 % 105.0 % 97.3 % 99.7 %

Operating income 2,732 3,159 (4,108 ) (12,239 ) (2,692 ) (1,992 ) 1,115 149 (loss)

% of total revenue 7.2 % 8.8 % (11.0 ) (30.9 ) (6.8 ) (5.0 ) 2.7 % 0.3 % % % % %

Interest income 127 146 363 350 399 452 449 628

Other income 151 101 (137 ) 206 163 602 (236 ) (593 ) (expense)

Income (loss) 3,010 3,406 (3,882 ) (11,683 ) (2,130 ) (938 ) 1,328 184 before income taxes

Benefit from(provision for) 155 353 (657 ) 2,172 804 268 (586 ) 5 income taxes

Net income (loss) $ 3,165 $ 3,759 $ (4,539 ) $ (9,511 ) $ (1,326 ) $ (670 ) $ 742 $ 189

Basic net income(loss) per common $ 0.17 $ 0.20 $ (0.24 ) $ (0.50 ) $ (0.07 ) $ (0.03 ) $ 0.04 $ 0.01 share

Diluted net income(loss)\ per common 0.16 0.20 (0.24 ) (0.50 ) (0.07 ) (0.03 ) 0.04 0.01 share

Basic weightedaverage common 19,051,502 19,016,853 18,958,716 18,860,020 19,086,811 19,217,866 19,196,970 19,445,401 shares outstanding

Diluted weightedaverage common 19,208,452 19,115,148 18,958,716 18,860,020 19,086,811 19,217,866 19,356,712 19,445,401 shares outstanding

Key statistics:

Units in service 898 915 926 938 955 977 982 992

Average revenue per $ 7.34 $ 7.24 $ 7.31 $ 7.33 $ 7.32 $ 7.26 $ 7.32 $ 7.36 unit (ARPU)

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 quarterof 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 havebeen adjusted accordingly to reflect these changes.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

9/30/2020

12/31/2019

Unaudited

Assets

Current assets:

Cash and cash equivalents

$

49,235

$

47,361

Short term investments

29,994

29,899

Accounts receivable, net

29,671

30,174

Prepaid expenses

8,056

7,517

Other current assets

1,645

2,714

Total current assets

118,601

117,665

Non-current assets:

Property and equipment, net

6,933

8,000

Operating lease right-of-use assets

14,342

16,317

Capitalized software development, net

7,784

-

Goodwill

124,182

124,182

Intangible assets, net

1,042

2,917

Deferred income tax assets, net

48,308

48,983

Other non-current assets

1,081

1,808

Total non-current assets

203,672

202,207

Total assets

$

322,273

$

319,872

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

5,112

$

3,615

Accrued compensation and benefits

13,845

11,680

Deferred revenue

27,174

25,944

Operating lease liabilities

5,220

5,437

Other current liabilities

4,565

4,507

Total current liabilities

55,916

51,183

Non-current liabilities:

Asset retirement obligations

6,123

6,061

Operating lease liabilities

9,766

11,575

Other non-current liabilities

2,446

959

Total non-current liabilities

18,335

18,595

Total liabilities

74,251

69,778

Commitments and contingencies

Stockholders' equity:

Preferred stock

$

-

$

-

Common stock

2

2

Additional paid-in capital

90,297

86,874

Accumulated other comprehensive loss

(1,656

)

(1,601

)

Retained earnings

159,379

164,819

Total stockholders' equity

248,022

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 BALANCE SHEETS (a)

(In thousands)



9/30/2020 12/31/2019

Unaudited

Assets

Current assets:

Cash and cash equivalents $ 49,235 $ 47,361

Short term investments 29,994 29,899

Accounts receivable, net 29,671 30,174

Prepaid expenses 8,056 7,517

Other current assets 1,645 2,714

Total current assets 118,601 117,665

Non-current assets:

Property and equipment, net 6,933 8,000

Operating lease right-of-use assets 14,342 16,317

Capitalized software development, net 7,784 -

Goodwill 124,182 124,182

Intangible assets, net 1,042 2,917

Deferred income tax assets, net 48,308 48,983

Other non-current assets 1,081 1,808

Total non-current assets 203,672 202,207

Total assets $ 322,273 $ 319,872

Liabilities and stockholders' equity

Current liabilities:

Accounts payable $ 5,112 $ 3,615

Accrued compensation and benefits 13,845 11,680

Deferred revenue 27,174 25,944

Operating lease liabilities 5,220 5,437

Other current liabilities 4,565 4,507

Total current liabilities 55,916 51,183

Non-current liabilities:

Asset retirement obligations 6,123 6,061

Operating lease liabilities 9,766 11,575

Other non-current liabilities 2,446 959

Total non-current liabilities 18,335 18,595

Total liabilities 74,251 69,778

Commitments and contingencies

Stockholders' equity:

Preferred stock $ - $ -

Common stock 2 2

Additional paid-in capital 90,297 86,874

Accumulated other comprehensive loss (1,656 ) (1,601 )

Retained earnings 159,379 164,819

Total stockholders' equity 248,022 250,094

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

9/30/2020

9/30/2019

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 accretion

6,553

6,999

Deferred income tax expense

15

(569

)

Stock based compensation

4,160

2,521

Provisions for doubtful accounts, service credits, and other

914

652

Changes in assets and liabilities:

Accounts receivable

(1,019

)

252

Prepaid expenses, inventory and other assets

3,701

2,131

Accounts payable, accrued liabilities and other liabilities

1,566

(1,366

)

Deferred revenue

2,680

1,383

Net cash provided by operating activities

20,954

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 investments

45,000

19,000

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 Plan

166

119

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 equivalents

1,874

(34,024

)

Cash and cash equivalents, beginning of period

47,361

83,343

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.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)



For the nine months ended

9/30/2020 9/30/2019

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 accretion 6,553 6,999

Deferred income tax expense 15 (569 )

Stock based compensation 4,160 2,521

Provisions for doubtful accounts, service 914 652 credits, and other

Changes in assets and liabilities:

Accounts receivable (1,019 ) 252

Prepaid expenses, inventory and other assets 3,701 2,131

Accounts payable, accrued liabilities and other 1,566 (1,366 ) liabilities

Deferred revenue 2,680 1,383

Net cash provided by operating activities 20,954 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 investments 45,000 19,000

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 166 119 Employee Stock Purchase Plan

Purchase of common stock for tax withholding on (903 ) (1,017 ) vested equity awards

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 1,874 (34,024 ) equivalents

Cash and cash equivalents, beginning of period 47,361 83,343

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

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

Revenue

Paging

$

19,961

$

19,990

$

20,451

$

20,826

$

21,212

$

21,342

$

21,687

$

21,997

Non-paging

867

1,088

935

789

602

785

923

1,094

Total wireless revenue

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

$

22,610

$

23,091

License

1,988

749

955

1,711

2,723

1,676

2,840

3,496

Services

4,772

3,812

4,549

4,947

4,202

4,835

5,206

5,103

Equipment

554

601

725

1,125

689

842

963

1,568

Subscription

24

-

-

-

-

-

-

-

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 REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)



For the three months ended

9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018

Revenue

Paging $ 19,961 $ 19,990 $ 20,451 $ 20,826 $ 21,212 $ 21,342 $ 21,687 $ 21,997

Non-paging 867 1,088 935 789 602 785 923 1,094

Total wireless $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127 $ 22,610 $ 23,091 revenue



License 1,988 749 955 1,711 2,723 1,676 2,840 3,496

Services 4,772 3,812 4,549 4,947 4,202 4,835 5,206 5,103

Equipment 554 601 725 1,125 689 842 963 1,568

Subscription 24 - - - - - - -

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 $ 16,865 $ 14,661 $ 15,881 $ 17,933 $ 17,639 $ 17,398 $ 19,154 $ 20,165 revenue



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

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

Cost of revenue

Payroll and related

$

4,941

$

4,350

$

5,785

$

5,222

$

5,099

$

4,749

$

4,931

$

4,868

Cost of sales

1,064

1,098

1,940

2,278

1,567

1,900

2,080

3,349

Stock-based compensation

148

134

119

42

21

97

107

44

Other

391

319

420

509

503

493

474

511

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 related

4,147

4,115

4,761

5,056

5,083

4,639

4,263

4,350

Outside services

2,113

1,803

1,584

1,742

2,027

1,912

1,745

2,115

Capitalized software development

(2,906

)

(3,596

)

(1,705

)

-

-

-

-

-

Stock-based compensation

240

243

236

113

102

84

11

5

Other

(135

)

189

573

221

225

172

148

148

Total research and development

3,459

2,754

5,449

7,132

7,437

6,807

6,167

6,618

Technology operations

Payroll and related

2,246

2,213

2,712

2,656

2,823

2,662

2,647

2,616

Site rent

3,467

3,399

3,398

3,669

3,269

3,480

3,296

3,432

Telecommunications

949

961

1,001

1,026

1,016

1,019

996

1,021

Stock-based compensation

52

47

43

32

30

30

30

24

Other

643

592

750

700

667

675

705

1,027

Total technology operations

7,357

7,212

7,904

8,083

7,805

7,866

7,674

8,120

Selling and marketing

Payroll and related

2,773

2,538

3,583

3,382

3,524

3,329

3,273

3,047

Commissions

1,059

852

1,212

1,158

1,114

1,298

1,424

1,759

Stock-based compensation

208

194

172

164

137

128

161

99

Advertising and events

151

160

784

1,034

703

656

933

1,236

Other

81

87

610

153

117

163

319

134

Total selling and marketing

4,272

3,831

6,361

5,891

5,595

5,574

6,110

6,275

General and administrative

Payroll and related

3,476

3,355

4,134

3,974

4,220

4,136

4,041

4,087

Stock-based compensation

968

744

612

770

674

690

219

860

Bad debt

178

628

43

56

402

(96

)

308

303

Facility rent, office, and technology costs

2,259

2,276

2,068

1,952

2,369

2,485

2,294

2,072

Outside services

2,148

2,043

2,036

2,350

2,004

2,306

1,776

2,062

Taxes, licenses and permits

994

804

859

1,000

888

863

921

111

Other

971

960

1,499

1,429

1,256

1,312

1,188

1,226

Total general and administrative

10,994

10,810

11,251

11,531

11,813

11,696

10,747

10,721

Depreciation, amortization and accretion

2,335

2,072

2,146

2,250

2,305

2,335

2,359

2,601

Goodwill impairment

-

-

-

8,849

-

-

-

-

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.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)



For the three months ended

9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018

Cost of revenue

Payroll and related $ 4,941 $ 4,350 $ 5,785 $ 5,222 $ 5,099 $ 4,749 $ 4,931 $ 4,868

Cost of sales 1,064 1,098 1,940 2,278 1,567 1,900 2,080 3,349

Stock-based compensation 148 134 119 42 21 97 107 44

Other 391 319 420 509 503 493 474 511

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 related 4,147 4,115 4,761 5,056 5,083 4,639 4,263 4,350

Outside services 2,113 1,803 1,584 1,742 2,027 1,912 1,745 2,115

Capitalized software development (2,906 ) (3,596 ) (1,705 ) - - - - -

Stock-based compensation 240 243 236 113 102 84 11 5

Other (135 ) 189 573 221 225 172 148 148

Total research and development 3,459 2,754 5,449 7,132 7,437 6,807 6,167 6,618

Technology operations

Payroll and related 2,246 2,213 2,712 2,656 2,823 2,662 2,647 2,616

Site rent 3,467 3,399 3,398 3,669 3,269 3,480 3,296 3,432

Telecommunications 949 961 1,001 1,026 1,016 1,019 996 1,021

Stock-based compensation 52 47 43 32 30 30 30 24

Other 643 592 750 700 667 675 705 1,027

Total technology operations 7,357 7,212 7,904 8,083 7,805 7,866 7,674 8,120

Selling and marketing

Payroll and related 2,773 2,538 3,583 3,382 3,524 3,329 3,273 3,047

Commissions 1,059 852 1,212 1,158 1,114 1,298 1,424 1,759

Stock-based compensation 208 194 172 164 137 128 161 99

Advertising and events 151 160 784 1,034 703 656 933 1,236

Other 81 87 610 153 117 163 319 134

Total selling and marketing 4,272 3,831 6,361 5,891 5,595 5,574 6,110 6,275

General and administrative

Payroll and related 3,476 3,355 4,134 3,974 4,220 4,136 4,041 4,087

Stock-based compensation 968 744 612 770 674 690 219 860

Bad debt 178 628 43 56 402 (96 ) 308 303

Facility rent, office, and 2,259 2,276 2,068 1,952 2,369 2,485 2,294 2,072 technology costs

Outside services 2,148 2,043 2,036 2,350 2,004 2,306 1,776 2,062

Taxes, licenses and permits 994 804 859 1,000 888 863 921 111

Other 971 960 1,499 1,429 1,256 1,312 1,188 1,226

Total general and administrative 10,994 10,810 11,251 11,531 11,813 11,696 10,747 10,721

Depreciation, amortization and 2,335 2,072 2,146 2,250 2,305 2,335 2,359 2,601 accretion

Goodwill impairment - - - 8,849 - - - -

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 of2018, 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 toreflect 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

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

Paging units in service

Beginning units in service (000's)

915

926

938

955

977

982

992

999

Gross placements

25

35

24

22

28

35

27

30

Gross disconnects

(42

)

(46

)

(36

)

(39

)

(50

)

(40

)

(37

)

(37

)

Net change

(17

)

(11

)

(12

)

(17

)

(22

)

(5

)

(10

)

(7

)

Ending units in service

898

915

926

938

955

977

982

992

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

Healthcare

83.7

%

83.6

%

82.6

%

82.4

%

81.7

%

81.7

%

81.6

%

81.4

%

Government

5.3

%

5.5

%

5.4

%

5.4

%

5.5

%

5.6

%

5.8

%

5.8

%

Large enterprise

4.3

%

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

%

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

63

65

67

69

72

74

77

78

101 to 1,000 units

167

165

171

173

175

179

186

190

>1,000 units

668

685

688

696

708

724

719

724

Total

898

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 units

1.5

%

(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 units

8.37

8.24

8.34

8.31

8.41

8.47

8.35

8.28

>1,000 units

6.67

6.57

6.59

6.62

6.59

6.47

6.57

6.69

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.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)



For the three months ended

9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019 3/31/2019 12/31/2018

Paging units in service

Beginning units in service 915 926 938 955 977 982 992 999 (000's)

Gross placements 25 35 24 22 28 35 27 30

Gross disconnects (42 ) (46 ) (36 ) (39 ) (50 ) (40 ) (37 ) (37 )

Net change (17 ) (11 ) (12 ) (17 ) (22 ) (5 ) (10 ) (7 )

Ending units in service 898 915 926 938 955 977 982 992

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

Healthcare 83.7 % 83.6 % 82.6 % 82.4 % 81.7 % 81.7 % 81.6 % 81.4 %

Government 5.3 % 5.5 % 5.4 % 5.4 % 5.5 % 5.6 % 5.8 % 5.8 %

Large enterprise 4.3 % 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 %

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 63 65 67 69 72 74 77 78

101 to 1,000 units 167 165 171 173 175 179 186 190

>1,000 units 668 685 688 696 708 724 719 724

Total 898 915 926 938 955 977 982 992

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 units 1.5 % (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 units 8.37 8.24 8.34 8.31 8.41 8.47 8.35 8.28

>1,000 units 6.67 6.57 6.59 6.62 6.59 6.47 6.57 6.69

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

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

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

)

236

593

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 accretion

2,335

2,072

2,146

2,250

2,305

2,335

2,359

2,601

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 compensation

1,616

1,362

1,182

1,121

964

1,029

528

1,032

Plus: goodwill impairment

-

-

-

8,849

-

-

-

-

Adjusted EBITDA

$

3,777

$

2,997

$

(2,485

)

$

(19

)

$

577

$

1,372

$

4,002

$

3,782

For the nine months ended

9/30/2020

9/30/2019

Reconciliation of net income (loss) to EBITDA:

Net (loss) income

$

2,384

$

(1,255

)

Plus (less): Benefit from (provision for) income taxes

149

(486

)

Less: Other (expense) income

(113

)

(528

)

Less: Interest income

(636

)

(1,300

)

Operating loss

1,784

(3,569

)

Plus: depreciation, amortization and accretion

6,553

6,999

EBITDA

$

8,337

$

3,430

Less: capitalized software development costs

(8,206

)

-

Plus: stock-based compensation

4,160

2,521

Adjusted EBITDA

$

4,291

$

5,951

RECONCILIATION FROM OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

For the three months ended

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

12/31/2018

(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 accretion

2,335

2,072

2,146

2,250

2,305

2,335

2,359

2,601

Less: goodwill impairment

-

-

-

8,849

-

-

-

-

Add: capitalized software development costs

2,906

3,596

1,705

-

-

-

-

-

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201028006015/en/

CONTACT: Al Galgano 952-567-0295 Al.Galgano@spok.com