Business Wire | Feb 17, 2021 04:10PM EST

Spok Reports 2020 Fourth Quarter and Full Year Operating Results

Feb. 17, 2021

SPRINGFIELD, Va.--(BUSINESS WIRE)--Feb. 17, 2021--Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced operating results for the fourth quarter ended December 31, 2020. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on March 30, 2021, to stockholders of record on March 16, 2021.

Key Fourth Quarter and Full Year Operating Highlights:

* Fourth quarter 2020 software revenue of $17.2 million included $9.9 million of maintenance revenue and $7.3 million of operations revenue. This compares to third quarter software revenue of $16.9 million, which included $9.5 million of maintenance revenue and $7.4 million of operations revenue. * Software bookings in the fourth quarter totaled $16.5 million, compared to $21.4 million in the prior quarter and $21.9 million in the fourth quarter of 2019. Fourth quarter bookings included Spok Go(r) deals with an aggregate total contract value of $255,000. Fourth quarter software bookings included $7.2 million of operations bookings and $9.3 million of maintenance renewals. At December 31, 2020, the software revenue backlog totaled $50.5 million, compared to the backlog of $50.6 million at December 31, 2019. * The quarterly rate of paging unit erosion was 1.4% in the fourth quarter of 2020, down from paging unit erosion of 1.9% in the prior quarter. Gross disconnects were down on both a sequential and year-over-year basis. * The rate of wireless revenue erosion in the fourth quarter was 2.5%, compared to a revenue erosion rate of 1.2% in the prior quarter. For the full year 2020, the wireless revenue erosion rate was 5.2%, down 130 basis points from the revenue erosion rate of 6.5% in 2019. * Total paging ARPU (average revenue per unit) in 2020 totaled $7.30, down slightly from ARPU of $7.34 in 2019. * Operating expenses in 2020 totaled $170.8 million, down from $176.1 million in 2019. Adjusted operating expenses (which excludes goodwill impairment, depreciation, amortization and accretion charges, and includes capitalized software development costs) totaled $148.0 million in 2020, down more than 6% from adjusted operating expenses of $158.0 million in 2019. * Capital expenses were $3.5 million in 2020, compared to $4.8 million 2019. * The number of full-time equivalent employees at December 31, 2020 totaled 602, compared to 638 at December 31, 2019. * Capital paid to stockholders in 2020 aggregated $9.8 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 December 31, 2020, was $78.7 million, up from $77.3 million at December 31, 2019.

2020 Fourth Quarter and Full Year Results:

Consolidated revenue for the fourth quarter of 2020 under Generally Accepted Accounting Principles ("GAAP") was $37.5 million compared to $39.5 million in the fourth quarter of 2019. For the year ended December 31, 2020, consolidated revenue totaled $148.2 million, compared to $160.3 million in the prior year.

For the three months ended For the year ended

(Dollars in December December Change December December Changethousands) 31, 31, (%) 31, 31, (%) 2020 2019 2020 2019

Wireless revenue

Paging $ 19,513 $ 20,826 (6.3 ) % $ 79,916 $ 85,067 (6.1 ) %revenue

Product andother 787 789 (0.3 ) % 3,677 3,100 18.6 %revenue

Totalwireless $ 20,300 $ 21,615 (6.1 ) % $ 83,593 $ 88,167 (5.2 ) %revenue



Software revenue

Operations $ 7,268 $ 7,783 (6.6 ) % $ 25,996 $ 31,757 (18.1 ) %revenue

Maintenance 9,913 10,150 (2.3 ) % 38,591 40,365 (4.4 ) %revenue

Totalsoftware 17,181 17,933 (4.2 ) % 64,587 72,122 (10.4 ) %revenue

Total $ 37,481 $ 39,548 (5.2 ) % $ 148,180 $ 160,289 (7.6 ) %revenue

GAAP net loss for the fourth quarter of 2020 was $46.6 million, or a loss of $2.44 per basic share, compared to a net loss of $9.5 million, or a loss of $0.50 per basic share, in the fourth quarter of 2019. Based on the Company's annual assessment of goodwill, largely driven by the Company's stock price in October when the assessment was completed, the 2020 fourth quarter net loss included a non-cash goodwill impairment charge of $25.0 million, which increased the fourth quarter net loss per basic share by $1.31. Additionally, in the fourth quarter, the Company completed a review to assess the recoverability of its deferred income tax assets, which represent tax benefits of future tax deductions. Based on uncertainty created by COVID-19 to project future profitability and growth and the cumulative loss incurred by the Company over the three-year period ended December 31, 2020, Spok recorded a $22.1 million valuation allowance to reduce net deferred income tax assets, which increased the fourth quarter net loss per basic share by $1.16.

GAAP net loss for the for the year ended December 31, 2020, was $44.2 million, or a loss of $2.32 per basic share, compared to a net loss of $10.8 million, or a loss of $0.56 per basic share, in the prior year. As discussed above, the 2020 full year net loss included a non-cash goodwill impairment charge of $25.0 million, which increased the full year net loss per basic share by $1.31, and the valuation allowance for the recoverability of the Company's deferred income tax assets, which increased the full year net loss per basic share by an additional $1.16. The Company remains confident in the ultimate market demand for Spok Go despite the non-cash goodwill impairment charge and the valuation allowance on the recoverability of the Company's deferred income tax assets.

In the fourth quarter of 2020, the Company generated $1.4 million of adjusted EBITDA compared to no adjusted EBITDA in the fourth quarter of 2019. For the year ended December 31, 2020, the Company generated $5.7 million of adjusted EBITDA, compared to $5.9 million in the prior year.

For the three months ended For the year ended

(Dollars in December 31, December 31, December 31, December 31,thousands) 2020 2019 2020 2019

Net loss $ (46,610 ) $ (9,511 ) $ (44,225 ) $ (10,765 )

Basic and dilutednet loss per $ (2.44 ) $ (0.50 ) $ (2.32 ) $ (0.56 ) common share

Adjusted EBITDA $ 1,362 $ (19 ) $ 5,654 $ 5,932

Management Commentary

"In most respects, 2020 was the most challenging year in our history from both a management and operational perspective," said Vincent D. Kelly, president and chief executive officer. "However, in the face of a 100-year global pandemic our team was able to accomplish a lot. Though the spread of the virus impeded the many customer meetings we had set up early in the year to introduce Spok Go, our new cloud-native platform, our team was able to stay focused, delivering five new customer relationships for our new platform in the second half of the year, while building the pipeline into 2021. In the fourth quarter we added three of these Spok Go wins; two with existing customers and one new customer joining the Spok family. We also made significant progress in clinical innovation partner development, while adding hundreds of new features to our platform. And that progress continues into 2021. We continue to believe Spok Go is set to meet significant need in the healthcare marketplace and will create significant value for our shareholders in the coming years. Once again Spok Customers received Top rankings from U.S. News & World report's annual honor roll. In August Spok solutions achieved SOC 2 Type II Compliance. In September our team completed our tenth annual survey on the State of Healthcare Communications. In October we hosted our very well attended user conference, Connect, highlighting the importance of care team communication amidst COVID-19. And in November for the fourth consecutive year Spok was rated as the #1 Secure Healthcare Communications Platform for the fourth consecutive year by Black Book Research. I am particularly proud of our Spok team and their ability to adapt and change under challenging circumstances. We broke a five-year record on selling console licenses last year and also provided over 360 remote license seats at no charge so our customer's operators could be reconfigured to work from home. Our team has already begun converting these to paid seats and we expect that to continue throughout 2021. This momentum gives us confidence as we enter the new year and an eventual resolution to the global pandemic. We expect as the year progresses that our business will continue to pick up each quarter, building momentum and ending the year on a very positive footing.

"In the second half of 2020 we saw a more than 22% increase in software bookings from the first half of the year, as well as continued solid trends in our wireless business. Sustained expense management drove a sharp reduction in full year 2020 operating expenses and adjusted operating expenses from the prior year, even after adding back capitalized software development costs. A big part of those expense savings came from the commitment, support and sacrifices of our employees, who along with the entire leadership team including me, accepted furloughs to contribute to our savings goals. Our software revenue backlog continues at record levels, and we generated nearly $5.7 million of adjusted EBITDA in 2020. We were also able to grow our cash, cash equivalents and short-term investments balance from the prior year-end level, even after capital expenditures and paying our quarterly dividend. We are focused on driving positive free cash flow for 2021, 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.

"Finally, continuing our promise to add clinical talent to our team in order to support our customers and facilitate our transition, in late November we announced the appointment of our new Chief Product Officer, Kristen Lalowski. Kristen brings over 20 years of experience in healthcare and healthcare IT, specifically in the areas of nursing, product management and marketing, operations, sales and client services. We believe that Spok provides a critical function that has become even more important in this environment, and the addition of leaders like Kristen to our management team is key to our success. 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 are proud to be leaders in this mission," 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 was especially the case throughout 2020. During the year, operating expenses were down nearly 3% and adjusted operating expenses were down more than 6% from prior year levels, with improvements in all expense categories over that period. Spok's balance sheet remains strong, as the cash, cash equivalents and short-term investment balance grew to $78.7 million at December 31, 2020."

Regarding financial guidance for 2021, Wallace said that the Company expects total revenue to range from $132.2 million to $147.2 million. Included in that total, Spok expects software revenue to comprise $58.2 million to $67.2 million. Also, the Company expects adjusted operating expenses to range from $142.7 million to $150.7 million, and capital expenses to range from $2.7 million to $6.7 million.

2020 Fourth Quarter and Full Year Call and Replay:

Spok plans to host a conference call for investors to discuss its 2020 fourth quarter and full year results at 10:00 a.m. ET on Thursday, February 18, 2021. Dial-in numbers for the call are 1 929-477-0577 or 866-248-8441. The confirmation code for the call is 6764724. A replay of the call will be available from 1:00 p.m. ET on February 18, 2021 until 1:00 p.m. ET on Thursday, March 4, 2021. To listen to the replay, please register at http://tinyurl.com/Spok2020Q4earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

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, goodwill impairment, 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, 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, and future impairments of our long-lived assets, amortizable intangible assets and goodwill, 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 year ended

12/31/2020 12/31/2019 12/31/2020 12/31/2019

Revenue:

Wireless $ 20,300 $ 21,615 $ 83,593 $ 88,167

Software 17,180 17,933 64,587 72,122

Total revenue 37,480 39,548 148,180 160,289

Operating expenses:

Cost of 7,833 8,051 28,542 30,072 revenue

Research and 4,166 7,132 15,828 27,543 development

Technology 7,371 8,083 29,843 31,428 operations

Selling and 5,004 5,891 19,467 23,170 marketing

General and 10,046 11,531 43,102 45,787 administrative

Depreciation,amortization 2,503 2,250 9,056 9,249 and accretion

Goodwill 25,007 8,849 25,007 8,849 impairment

Totaloperating 61,930 51,787 170,845 176,098 expenses

% of total 165.2 % 130.9 % 115.3 % 109.9 %revenue

Operating loss (24,450 ) (12,239 ) (22,665 ) (15,809 )

% of total (65.2 ) % (30.9 ) % (15.3 ) % (9.9 ) %revenue

Interest 51 350 687 1,651 income

Other income 95 206 208 735

Loss before (24,304 ) (11,683 ) (21,770 ) (13,423 ) income taxes

(Provisionfor) benefit (22,306 ) 2,172 (22,455 ) 2,658 from incometaxes

Net loss $ (46,610 ) $ (9,511 ) $ (44,225 ) $ (10,765 )

Basic anddiluted net $ (2.44 ) $ (0.50 ) $ (2.32 ) $ (0.56 ) loss percommon share

Basic anddilutedweighted 19,088,329 18,860,020 19,028,918 19,089,402 average commonsharesoutstanding

Cash dividendsdeclared per 0.125 0.125 0.50 0.50 common share

Key statistics:

Units in 885 938 885 938 service

Averagerevenue per $ 7.30 $ 7.33 $ 7.30 $ 7.34 unit (ARPU)

Bookings $ 16,528 $ 21,932 $ 68,994 $ 78,341

Backlog $ 50,504 $ 50,553 $ 50,504 $ 50,553



(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

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Revenue:

Wireless

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

$

22,610

Software

17,180

16,865

14,661

15,881

17,933

17,639

17,398

19,154

Total revenue

37,480

37,693

35,739

37,267

39,548

39,453

39,525

41,764

Operating expenses:

Cost of revenue

7,833

6,544

5,901

8,264

8,051

7,190

7,239

7,592

Research and development

4,166

3,459

2,754

5,449

7,132

7,437

6,807

6,167

Technology operations

7,371

7,357

7,212

7,904

8,083

7,805

7,866

7,674

Selling and marketing

5,004

4,272

3,831

6,361

5,891

5,595

5,574

6,110

General and administrative

10,046

10,994

10,810

11,251

11,531

11,813

11,696

10,747

Depreciation, amortization and accretion

2,503

2,335

2,072

2,146

2,250

2,305

2,335

2,359

Goodwill impairment

25,007

-

-

-

8,849

-

-

-

Total operating expenses

61,930

34,961

32,580

41,375

51,787

42,145

41,517

40,649

% of total revenue

165.2

%

92.8

%

91.2

%

111.0

%

130.9

%

106.8

%

105.0

%

97.3

%

Operating (loss) income

(24,450

)

2,732

3,159

(4,108

)

(12,239

)

(2,692

)

(1,992

)

1,115

% of total revenue

(65.2

)

%

7.2

%

8.8

%

(11.0

)

%

(30.9

)

%

(6.8

)

%

(5.0

)

%

2.7

%

Interest income

51

127

146

363

350

399

452

449

Other income (expense)

95

151

101

(137

)

206

163

602

(236

)

(Loss) income before income taxes

(24,304

)

3,010

3,406

(3,882

)

(11,683

)

(2,130

)

(938

)

1,328

(Provision for) benefit from income taxes

(22,306

)

155

353

(657

)

2,172

804

268

(586

)

Net (loss) income

$

(46,610

)

$

3,165

$

3,759

$

(4,539

)

$

(9,511

)

$

(1,326

)

$

(670

)

$

742

Basic net (loss) income per common share

$

(2.44

)

$

0.17

$

0.20

$

(0.24

)

$

(0.50

)

$

(0.07

)

$

(0.03

)

$

0.04

Diluted net (loss) income per common share

(2.44

)

0.16

0.20

(0.24

)

(0.50

)

(0.07

)

(0.03

)

0.04

Basic weighted average common shares outstanding

19,088,329

19,051,502

19,016,853

18,958,716

18,860,020

19,086,811

19,217,866

19,196,970

Diluted weighted average common shares outstanding

19,088,329

19,208,452

19,115,148

18,958,716

18,860,020

19,086,811

19,217,866

19,356,712

Key statistics:

Units in service

885

898

915

926

938

955

977

982

Average revenue per unit (ARPU)

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

$

7.32

$

7.26

$

7.32

Bookings

$

16,528

$

21,414

$

15,411

$

15,639

$

21,932

$

20,421

$

21,334

$

14,654

Backlog

$

50,504

$

51,708

$

48,441

$

49,052

$

50,553

$

42,604

$

39,718

$

37,392

(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

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

Revenue:

Wireless $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127 $ 22,610

Software 17,180 16,865 14,661 15,881 17,933 17,639 17,398 19,154

Total revenue 37,480 37,693 35,739 37,267 39,548 39,453 39,525 41,764

Operating expenses:

Cost of revenue 7,833 6,544 5,901 8,264 8,051 7,190 7,239 7,592

Research and 4,166 3,459 2,754 5,449 7,132 7,437 6,807 6,167 development

Technology 7,371 7,357 7,212 7,904 8,083 7,805 7,866 7,674 operations

Selling and 5,004 4,272 3,831 6,361 5,891 5,595 5,574 6,110 marketing

General and 10,046 10,994 10,810 11,251 11,531 11,813 11,696 10,747 administrative

Depreciation,amortization and 2,503 2,335 2,072 2,146 2,250 2,305 2,335 2,359 accretion

Goodwill impairment 25,007 - - - 8,849 - - -

Total operating 61,930 34,961 32,580 41,375 51,787 42,145 41,517 40,649 expenses

% of total revenue 165.2 % 92.8 % 91.2 % 111.0 % 130.9 % 106.8 % 105.0 % 97.3 %

Operating (loss) (24,450 ) 2,732 3,159 (4,108 ) (12,239 ) (2,692 ) (1,992 ) 1,115 income

% of total revenue (65.2 ) % 7.2 % 8.8 % (11.0 ) % (30.9 ) % (6.8 ) % (5.0 ) % 2.7 %

Interest income 51 127 146 363 350 399 452 449

Other income 95 151 101 (137 ) 206 163 602 (236 ) (expense)

(Loss) income (24,304 ) 3,010 3,406 (3,882 ) (11,683 ) (2,130 ) (938 ) 1,328 before income taxes

(Provision for)benefit from income (22,306 ) 155 353 (657 ) 2,172 804 268 (586 ) taxes

Net (loss) income $ (46,610 ) $ 3,165 $ 3,759 $ (4,539 ) $ (9,511 ) $ (1,326 ) $ (670 ) $ 742

Basic net (loss)income per common $ (2.44 ) $ 0.17 $ 0.20 $ (0.24 ) $ (0.50 ) $ (0.07 ) $ (0.03 ) $ 0.04 share

Diluted net (loss)income per common (2.44 ) 0.16 0.20 (0.24 ) (0.50 ) (0.07 ) (0.03 ) 0.04 share

Basic weightedaverage common 19,088,329 19,051,502 19,016,853 18,958,716 18,860,020 19,086,811 19,217,866 19,196,970 shares outstanding

Diluted weightedaverage common 19,088,329 19,208,452 19,115,148 18,958,716 18,860,020 19,086,811 19,217,866 19,356,712 shares outstanding

Key statistics:

Units in service 885 898 915 926 938 955 977 982

Average revenue per $ 7.30 $ 7.34 $ 7.24 $ 7.31 $ 7.33 $ 7.32 $ 7.26 $ 7.32 unit (ARPU)

Bookings $ 16,528 $ 21,414 $ 15,411 $ 15,639 $ 21,932 $ 20,421 $ 21,334 $ 14,654

Backlog $ 50,504 $ 51,708 $ 48,441 $ 49,052 $ 50,553 $ 42,604 $ 39,718 $ 37,392



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

12/31/2020

12/31/2019

ASSETS

Current assets:

Cash and cash equivalents

$

48,729

$

47,361

Short term investments

29,995

29,899

Accounts receivable, net

29,934

30,174

Prepaid expenses

8,958

7,517

Other current assets

1,269

2,714

Total current assets

118,885

117,665

Non-current assets:

Property and equipment, net

7,815

8,000

Operating lease right-of-use assets

14,016

16,317

Capitalized software development, net

10,179

-

Goodwill

99,175

124,182

Intangible assets, net

417

2,917

Deferred income tax assets, net

25,826

48,983

Other non-current assets

978

1,808

Total non-current assets

158,406

202,207

Total assets

$

277,291

$

319,872

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

6,685

$

3,615

Accrued compensation and benefits

14,103

11,680

Deferred revenue

27,686

25,944

Operating lease liabilities

5,264

5,437

Other current liabilities

3,702

4,507

Total current liabilities

57,440

51,183

Non-current liabilities:

Asset retirement obligations

7,289

6,061

Operating lease liabilities

9,456

11,575

Other non-current liabilities

2,493

959

Total non-current liabilities

19,238

18,595

Total liabilities

76,678

69,778

Commitments and contingencies

Stockholders' equity:

Preferred stock

$

-

$

-

Common stock

2

2

Additional paid-in capital

91,780

86,874

Accumulated other comprehensive loss

(1,452

)

(1,601

)

Retained earnings

110,283

164,819

Total stockholders' equity

200,613

250,094

Total liabilities and stockholders' equity

$

277,291

$

319,872

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)



12/31/2020 12/31/2019

ASSETS

Current assets:

Cash and cash equivalents $ 48,729 $ 47,361

Short term investments 29,995 29,899

Accounts receivable, net 29,934 30,174

Prepaid expenses 8,958 7,517

Other current assets 1,269 2,714

Total current assets 118,885 117,665

Non-current assets:

Property and equipment, net 7,815 8,000

Operating lease right-of-use assets 14,016 16,317

Capitalized software development, net 10,179 -

Goodwill 99,175 124,182

Intangible assets, net 417 2,917

Deferred income tax assets, net 25,826 48,983

Other non-current assets 978 1,808

Total non-current assets 158,406 202,207

Total assets $ 277,291 $ 319,872



LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 6,685 $ 3,615

Accrued compensation and benefits 14,103 11,680

Deferred revenue 27,686 25,944

Operating lease liabilities 5,264 5,437

Other current liabilities 3,702 4,507

Total current liabilities 57,440 51,183

Non-current liabilities:

Asset retirement obligations 7,289 6,061

Operating lease liabilities 9,456 11,575

Other non-current liabilities 2,493 959

Total non-current liabilities 19,238 18,595

Total liabilities 76,678 69,778

Commitments and contingencies

Stockholders' equity:

Preferred stock $ - $ -

Common stock 2 2

Additional paid-in capital 91,780 86,874

Accumulated other comprehensive loss (1,452 ) (1,601 )

Retained earnings 110,283 164,819

Total stockholders' equity 200,613 250,094

Total liabilities and stockholders' equity $ 277,291 $ 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 year ended

12/31/2020

12/31/2019

Operating activities:

Net loss

$

(44,225

)

$

(10,765

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization and accretion

9,056

9,249

Goodwill impairment

25,007

8,849

Valuation allowance

22,108

-

Deferred income tax expense (benefit)

438

(3,253

)

Stock based compensation

5,508

3,643

Provisions for doubtful accounts, service credits, and other

1,212

694

Changes in assets and liabilities:

Accounts receivable

(1,588

)

964

Prepaid expenses, inventory and other assets

1,445

2,913

Accounts payable, accrued liabilities and other liabilities

4,027

(643

)

Deferred revenue

3,175

42

Net cash provided by operating activities

26,163

11,693

Investing activities:

Purchases of property and equipment

(3,455

)

(4,837

)

Capitalized software development

(11,252

)

-

Purchase of short-term investments

(59,864

)

(59,385

)

Maturity of short-term investments

60,000

34,000

Net cash used in investing activities

(14,571

)

(30,222

)

Financing activities:

Cash distributions to stockholders

(9,771

)

(9,819

)

Purchase of common stock (including commissions)

-

(6,575

)

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

301

258

Purchase of common stock for tax withholding on vested equity awards

(903

)

(1,017

)

Net cash used in financing activities

(10,373

)

(17,153

)

Effect of exchange rate on cash

149

(300

)

Net increase (decrease) in cash and cash equivalents

1,368

(35,982

)

Cash and cash equivalents, beginning of period

47,361

83,343

Cash and cash equivalents, end of period

$

48,729

$

47,361

Supplemental disclosure:

Income taxes paid

$

1

$

901

(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 year ended

12/31/2020 12/31/2019

Operating activities:

Net loss $ (44,225 ) $ (10,765 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, amortization and accretion 9,056 9,249

Goodwill impairment 25,007 8,849

Valuation allowance 22,108 -

Deferred income tax expense (benefit) 438 (3,253 )

Stock based compensation 5,508 3,643

Provisions for doubtful accounts, service 1,212 694 credits, and other

Changes in assets and liabilities:

Accounts receivable (1,588 ) 964

Prepaid expenses, inventory and other assets 1,445 2,913

Accounts payable, accrued liabilities and other 4,027 (643 ) liabilities

Deferred revenue 3,175 42

Net cash provided by operating activities 26,163 11,693

Investing activities:

Purchases of property and equipment (3,455 ) (4,837 )

Capitalized software development (11,252 ) -

Purchase of short-term investments (59,864 ) (59,385 )

Maturity of short-term investments 60,000 34,000

Net cash used in investing activities (14,571 ) (30,222 )

Financing activities:

Cash distributions to stockholders (9,771 ) (9,819 )

Purchase of common stock (including - (6,575 ) commissions)

Proceeds from issuance of common stock under 301 258 the Employee Stock Purchase Plan

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

Net cash used in financing activities (10,373 ) (17,153 )

Effect of exchange rate on cash 149 (300 )

Net increase (decrease) in cash and cash 1,368 (35,982 ) equivalents

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

Cash and cash equivalents, end of period $ 48,729 $ 47,361

Supplemental disclosure:

Income taxes paid $ 1 $ 901



(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

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Revenue

Paging

$

19,513

$

19,961

$

19,990

$

20,451

$

20,826

$

21,212

$

21,342

$

21,687

Non-paging

$

787

$

867

$

1,088

$

935

$

789

$

602

$

785

$

923

Total wireless revenue

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

$

22,610

License

$

1,486

$

1,988

$

749

$

955

$

1,711

$

2,723

$

1,676

$

2,840

Services

$

4,778

$

4,772

$

3,812

$

4,549

$

4,947

$

4,202

$

4,835

$

5,206

Equipment

$

961

$

554

$

601

$

725

$

1,125

$

689

$

842

$

963

Subscription

$

42

$

24

$

-

$

-

$

-

$

-

$

-

$

-

Operations revenue

$

7,267

$

7,338

$

5,162

$

6,229

$

7,783

$

7,614

$

7,353

$

9,009

Maintenance revenue

$

9,913

$

9,527

$

9,499

$

9,652

$

10,150

$

10,025

$

10,045

$

10,145

Total software revenue

$

17,180

$

16,865

$

14,661

$

15,881

$

17,933

$

17,639

$

17,398

$

19,154

Total revenue

$

37,480

$

37,693

$

35,739

$

37,267

$

39,548

$

39,453

$

39,525

$

41,764

(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

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

Revenue

Paging $ 19,513 $ 19,961 $ 19,990 $ 20,451 $ 20,826 $ 21,212 $ 21,342 $ 21,687

Non-paging $ 787 $ 867 $ 1,088 $ 935 $ 789 $ 602 $ 785 $ 923

Total wireless $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127 $ 22,610 revenue



License $ 1,486 $ 1,988 $ 749 $ 955 $ 1,711 $ 2,723 $ 1,676 $ 2,840

Services $ 4,778 $ 4,772 $ 3,812 $ 4,549 $ 4,947 $ 4,202 $ 4,835 $ 5,206

Equipment $ 961 $ 554 $ 601 $ 725 $ 1,125 $ 689 $ 842 $ 963

Subscription $ 42 $ 24 $ - $ - $ - $ - $ - $ -

Operations revenue $ 7,267 $ 7,338 $ 5,162 $ 6,229 $ 7,783 $ 7,614 $ 7,353 $ 9,009



Maintenance revenue $ 9,913 $ 9,527 $ 9,499 $ 9,652 $ 10,150 $ 10,025 $ 10,045 $ 10,145

Total software $ 17,180 $ 16,865 $ 14,661 $ 15,881 $ 17,933 $ 17,639 $ 17,398 $ 19,154 revenue



Total revenue $ 37,480 $ 37,693 $ 35,739 $ 37,267 $ 39,548 $ 39,453 $ 39,525 $ 41,764



(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

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Cost of revenue

Payroll and related

$

5,447

$

4,941

$

4,350

$

5,785

$

5,222

$

5,099

$

4,749

$

4,931

Cost of sales

1,740

1,064

1,098

1,940

2,278

1,567

1,900

2,080

Stock-based compensation

136

148

134

119

42

21

97

107

Other

510

391

319

420

509

503

493

474

Total cost of revenue

7,833

6,544

5,901

8,264

8,051

7,190

7,239

7,592

Research and development

Payroll and related

4,358

4,147

4,115

4,761

5,056

5,083

4,639

4,263

Outside services

2,358

2,113

1,803

1,584

1,742

2,027

1,912

1,745

Capitalized software development

(3,046

)

(2,906

)

(3,596

)

(1,705

)

-

-

-

-

Stock-based compensation

246

240

243

236

113

102

84

11

Other

250

(135

)

189

573

221

225

172

148

Total research and development

4,166

3,459

2,754

5,449

7,132

7,437

6,807

6,167

Technology operations

Payroll and related

2,467

2,246

2,213

2,712

2,656

2,823

2,662

2,647

Site rent

3,313

3,467

3,399

3,398

3,669

3,269

3,480

3,296

Telecommunications

857

949

961

1,001

1,026

1,016

1,019

996

Stock-based compensation

48

52

47

43

32

30

30

30

Other

686

643

592

750

700

667

675

705

Total technology operations

7,371

7,357

7,212

7,904

8,083

7,805

7,866

7,674

Selling and marketing

Payroll and related

2,912

2,773

2,538

3,583

3,382

3,524

3,329

3,273

Commissions

1,178

1,059

852

1,212

1,158

1,114

1,298

1,424

Stock-based compensation

192

208

194

172

164

137

128

161

Advertising and events

539

151

160

784

1,034

703

656

933

Other

183

81

87

610

153

117

163

319

Total selling and marketing

5,004

4,272

3,831

6,361

5,891

5,595

5,574

6,110

General and administrative

Payroll and related

3,373

3,476

3,355

4,134

3,974

4,220

4,136

4,041

Stock-based compensation

726

968

744

612

770

674

690

219

Facility rent, office, and technology costs

2,412

178

628

43

56

402

(96

)

308

Outside services

1,584

2,259

2,276

2,068

1,952

2,369

2,485

2,294

Taxes, licenses and permits

484

2,148

2,043

2,036

2,350

2,004

2,306

1,776

Bad debt

202

994

804

859

1,000

888

863

921

Other

1,265

971

960

1,499

1,429

1,256

1,312

1,188

Total general and administrative

10,046

10,994

10,810

11,251

11,531

11,813

11,696

10,747

Depreciation, amortization and accretion

2,503

2,335

2,072

2,146

2,250

2,305

2,335

2,359

Goodwill impairment

25,007

-

-

-

8,849

-

-

-

Operating expenses

$

61,930

$

34,961

$

32,580

$

41,375

$

51,787

$

42,145

$

41,517

$

40,649

Capital expenditures

$

638

$

934

$

846

$

1,063

$

679

$

1,378

$

1,495

$

1,287

(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

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

Cost of revenue

Payroll and related $ 5,447 $ 4,941 $ 4,350 $ 5,785 $ 5,222 $ 5,099 $ 4,749 $ 4,931

Cost of sales 1,740 1,064 1,098 1,940 2,278 1,567 1,900 2,080

Stock-based compensation 136 148 134 119 42 21 97 107

Other 510 391 319 420 509 503 493 474

Total cost of revenue 7,833 6,544 5,901 8,264 8,051 7,190 7,239 7,592

Research and development

Payroll and related 4,358 4,147 4,115 4,761 5,056 5,083 4,639 4,263

Outside services 2,358 2,113 1,803 1,584 1,742 2,027 1,912 1,745

Capitalized software development (3,046 ) (2,906 ) (3,596 ) (1,705 ) - - - -

Stock-based compensation 246 240 243 236 113 102 84 11

Other 250 (135 ) 189 573 221 225 172 148

Total research and development 4,166 3,459 2,754 5,449 7,132 7,437 6,807 6,167

Technology operations

Payroll and related 2,467 2,246 2,213 2,712 2,656 2,823 2,662 2,647

Site rent 3,313 3,467 3,399 3,398 3,669 3,269 3,480 3,296

Telecommunications 857 949 961 1,001 1,026 1,016 1,019 996

Stock-based compensation 48 52 47 43 32 30 30 30

Other 686 643 592 750 700 667 675 705

Total technology operations 7,371 7,357 7,212 7,904 8,083 7,805 7,866 7,674

Selling and marketing

Payroll and related 2,912 2,773 2,538 3,583 3,382 3,524 3,329 3,273

Commissions 1,178 1,059 852 1,212 1,158 1,114 1,298 1,424

Stock-based compensation 192 208 194 172 164 137 128 161

Advertising and events 539 151 160 784 1,034 703 656 933

Other 183 81 87 610 153 117 163 319

Total selling and marketing 5,004 4,272 3,831 6,361 5,891 5,595 5,574 6,110

General and administrative

Payroll and related 3,373 3,476 3,355 4,134 3,974 4,220 4,136 4,041

Stock-based compensation 726 968 744 612 770 674 690 219

Facility rent, office, and 2,412 178 628 43 56 402 (96 ) 308 technology costs

Outside services 1,584 2,259 2,276 2,068 1,952 2,369 2,485 2,294

Taxes, licenses and permits 484 2,148 2,043 2,036 2,350 2,004 2,306 1,776

Bad debt 202 994 804 859 1,000 888 863 921

Other 1,265 971 960 1,499 1,429 1,256 1,312 1,188

Total general and administrative 10,046 10,994 10,810 11,251 11,531 11,813 11,696 10,747

Depreciation, amortization and 2,503 2,335 2,072 2,146 2,250 2,305 2,335 2,359 accretion

Goodwill impairment 25,007 - - - 8,849 - - -

Operating expenses $ 61,930 $ 34,961 $ 32,580 $ 41,375 $ 51,787 $ 42,145 $ 41,517 $ 40,649

Capital expenditures $ 638 $ 934 $ 846 $ 1,063 $ 679 $ 1,378 $ 1,495 $ 1,287



(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

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Paging units in service

Beginning units in service (000's)

898

915

926

938

955

977

982

992

Gross placements

20

25

35

24

22

28

35

27

Gross disconnects

(33

)

(42

)

(46

)

(36

)

(39

)

(50

)

(40

)

(37

)

Net change

(13

)

(17

)

(11

)

(12

)

(17

)

(22

)

(5

)

(10

)

Ending units in service

885

898

915

926

938

955

977

982

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

Healthcare

83.6

%

83.7

%

83.6

%

82.6

%

82.4

%

81.7

%

81.7

%

81.6

%

Government

5.3

%

5.3

%

5.5

%

5.4

%

5.4

%

5.5

%

5.6

%

5.8

%

Large enterprise

4.3

%

4.3

%

4.4

%

5.5

%

5.5

%

6.1

%

5.9

%

5.9

%

Other (b)

6.8

%

6.6

%

6.6

%

6.5

%

6.6

%

6.7

%

6.8

%

6.7

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Account size ending units in service (000's)

1 to 100 units

61

63

65

67

69

72

74

77

101 to 1,000 units

167

167

165

171

173

175

179

186

>1,000 units

657

668

685

688

696

708

724

719

Total

885

898

915

926

938

955

977

982

Account size net loss rate (c)

1 to 100 units

(3.2

)

%

(2.9

)

%

(3.1

)

%

(3.0

)

%

(3.8

)

%

(2.1

)

%

(3.2

)

%

(2.3

)

%

101 to 1,000 units

-

%

1.5

%

(4.2

)

%

(1.0

)

%

(1.0

)

%

(2.4

)

%

(3.9

)

%

(2.3

)

%

>1,000 units

(1.6

)

%

(2.5

)

%

(0.4

)

%

(1.2

)

%

(1.8

)

%

(2.2

)

%

0.7

%

(1.1

)

%

Total

(1.4

)

%

(1.9

)

%

(1.3

)

%

(1.3

)

%

(1.8

)

%

(2.2

)

%

(0.5

)

%

(1.1

)

%

Account size ARPU

1 to 100 units

$

11.62

$

11.80

$

11.65

$

12.01

$

11.99

$

11.84

$

12.00

$

11.90

101 to 1,000 units

8.35

8.37

8.24

8.34

8.31

8.41

8.47

8.35

>1,000 units

6.62

6.67

6.57

6.59

6.62

6.59

6.47

6.57

Total

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

$

7.32

$

7.26

$

7.32

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

(b) Other includes hospitality, resort and indirect units

(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)



For the three months ended

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

Paging units in service

Beginning units in service 898 915 926 938 955 977 982 992 (000's)

Gross placements 20 25 35 24 22 28 35 27

Gross disconnects (33 ) (42 ) (46 ) (36 ) (39 ) (50 ) (40 ) (37 )

Net change (13 ) (17 ) (11 ) (12 ) (17 ) (22 ) (5 ) (10 )

Ending units in service 885 898 915 926 938 955 977 982

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

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

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

Large enterprise 4.3 % 4.3 % 4.4 % 5.5 % 5.5 % 6.1 % 5.9 % 5.9 %

Other (b) 6.8 % 6.6 % 6.6 % 6.5 % 6.6 % 6.7 % 6.8 % 6.7 %

Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Account size ending units in service (000's)

1 to 100 units 61 63 65 67 69 72 74 77

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

>1,000 units 657 668 685 688 696 708 724 719

Total 885 898 915 926 938 955 977 982

Account size net loss rate (c)

1 to 100 units (3.2 ) % (2.9 ) % (3.1 ) % (3.0 ) % (3.8 ) % (2.1 ) % (3.2 ) % (2.3 ) %

101 to 1,000 units - % 1.5 % (4.2 ) % (1.0 ) % (1.0 ) % (2.4 ) % (3.9 ) % (2.3 ) %

>1,000 units (1.6 ) % (2.5 ) % (0.4 ) % (1.2 ) % (1.8 ) % (2.2 ) % 0.7 % (1.1 ) %

Total (1.4 ) % (1.9 ) % (1.3 ) % (1.3 ) % (1.8 ) % (2.2 ) % (0.5 ) % (1.1 ) %

Account size ARPU

1 to 100 units $ 11.62 $ 11.80 $ 11.65 $ 12.01 $ 11.99 $ 11.84 $ 12.00 $ 11.90

101 to 1,000 units 8.35 8.37 8.24 8.34 8.31 8.41 8.47 8.35

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

Total $ 7.30 $ 7.34 $ 7.24 $ 7.31 $ 7.33 $ 7.32 $ 7.26 $ 7.32



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

(b) Other includes hospitality, resort and indirect units

(c) Net loss rate is net current period placements and disconnected units inservice 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

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

Reconciliation of net (loss) income to EBITDA:

Net (loss) income

$

(46,610

)

$

3,165

$

3,759

$

(4,539

)

$

(9,511

)

$

(1,326

)

$

(670

)

$

742

Add back:

(Benefit from) provision for income taxes

22,306

(155

)

(353

)

657

(2,172

)

(804

)

(268

)

586

Other expenses (income)

(95

)

(151

)

(101

)

137

(206

)

(163

)

(602

)

236

Interest (income) expenses

(51

)

(127

)

(146

)

(363

)

(350

)

(399

)

(452

)

(449

)

Operating (loss) income

(24,450

)

2,732

3,159

(4,108

)

(12,239

)

(2,692

)

(1,992

)

1,115

Depreciation, amortization and accretion

2,503

2,335

2,072

2,146

2,250

2,305

2,335

2,359

EBITDA

$

(21,947

)

$

5,067

$

5,231

$

(1,962

)

$

(9,989

)

$

(387

)

$

343

$

3,474

Capitalized software development costs

(3,046

)

(2,906

)

(3,596

)

(1,705

)

-

-

-

-

Stock-based compensation

1,348

1,616

1,362

1,182

1,121

964

1,029

528

Goodwill impairment

25,007

-

-

-

8,849

-

-

-

Adjusted EBITDA

$

1,362

$

3,777

$

2,997

$

(2,485

)

$

(19

)

$

577

$

1,372

$

4,002

For the year ended

Reconciliation of net loss to EBITDA:

12/31/2020

12/31/2019

Net loss

$

(44,225

)

$

(10,765

)

Add back:

Provision for (benefit from) income taxes

22,455

(2,658

)

Other income

(208

)

(735

)

Interest income

(687

)

(1,651

)

Operating loss

(22,665

)

(15,809

)

Depreciation, amortization and accretion

9,056

9,249

EBITDA

$

(13,609

)

$

(6,560

)

Capitalized software development costs

(11,252

)

-

Stock-based compensation

5,508

3,643

Goodwill impairment

25,007

8,849

Adjusted EBITDA

$

5,654

$

5,932

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

SPOK HOLDINGS, INC.

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

(Unaudited and in thousands)



For the three months ended

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

Reconciliation of net (loss) income to EBITDA:

Net (loss) income $ (46,610 ) $ 3,165 $ 3,759 $ (4,539 ) $ (9,511 ) $ (1,326 ) $ (670 ) $ 742

Add back:

(Benefit from) provision for 22,306 (155 ) (353 ) 657 (2,172 ) (804 ) (268 ) 586 income taxes

Other expenses (income) (95 ) (151 ) (101 ) 137 (206 ) (163 ) (602 ) 236

Interest (income) expenses (51 ) (127 ) (146 ) (363 ) (350 ) (399 ) (452 ) (449 )

Operating (loss) income (24,450 ) 2,732 3,159 (4,108 ) (12,239 ) (2,692 ) (1,992 ) 1,115

Depreciation, amortization and 2,503 2,335 2,072 2,146 2,250 2,305 2,335 2,359 accretion

EBITDA $ (21,947 ) $ 5,067 $ 5,231 $ (1,962 ) $ (9,989 ) $ (387 ) $ 343 $ 3,474

Capitalized software (3,046 ) (2,906 ) (3,596 ) (1,705 ) - - - - development costs

Stock-based compensation 1,348 1,616 1,362 1,182 1,121 964 1,029 528

Goodwill impairment 25,007 - - - 8,849 - - -

Adjusted EBITDA $ 1,362 $ 3,777 $ 2,997 $ (2,485 ) $ (19 ) $ 577 $ 1,372 $ 4,002



For the year ended

Reconciliation of net loss to 12/31/2020 12/31/2019 EBITDA:

Net loss $ (44,225 ) $ (10,765 )

Add back:

Provision for (benefit from) 22,455 (2,658 ) income taxes

Other income (208 ) (735 )

Interest income (687 ) (1,651 )

Operating loss (22,665 ) (15,809 )

Depreciation, amortization and 9,056 9,249 accretion

EBITDA $ (13,609 ) $ (6,560 )

Capitalized software (11,252 ) - development costs

Stock-based compensation 5,508 3,643

Goodwill impairment 25,007 8,849

Adjusted EBITDA $ 5,654 $ 5,932

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

SPOK HOLDINGS, INC.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

For the three months ended

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

3/31/2019

(Dollars in thousands)

Operating expenses

$

61,930

$

34,961

$

32,580

$

41,375

$

51,787

$

42,145

$

41,517

$

40,649

Add back:

Depreciation, amortization and accretion

(2,503

)

(2,335

)

(2,072

)

(2,146

)

(2,250

)

(2,305

)

(2,335

)

(2,359

)

Goodwill impairment

(25,007

)

-

-

-

(8,849

)

-

-

-

Capitalized software development costs

3,046

2,906

3,596

1,705

-

-

-

-

Adjusted operating expenses

$

37,466

$

35,532

$

34,104

$

40,934

$

40,688

$

39,840

$

39,182

$

38,290

For the year ended

12/31/2020

12/31/2019

Operating expenses

$

170,845

$

176,098

Add back:

Depreciation, amortization and accretion

(9,056

)

(9,249

)

Goodwill impairment

(25,007

)

(8,849

)

Capitalized software development costs

11,252

-

Adjusted operating expenses

$

148,034

$

158,000

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

SPOK HOLDINGS, INC.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)



For the three months ended

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

(Dollars in thousands)

Operating expenses $ 61,930 $ 34,961 $ 32,580 $ 41,375 $ 51,787 $ 42,145 $ 41,517 $ 40,649

Add back:

Depreciation, amortization (2,503 ) (2,335 ) (2,072 ) (2,146 ) (2,250 ) (2,305 ) (2,335 ) (2,359 ) and accretion

Goodwill impairment (25,007 ) - - - (8,849 ) - - -

Capitalized software 3,046 2,906 3,596 1,705 - - - - development costs

Adjusted operating expenses $ 37,466 $ 35,532 $ 34,104 $ 40,934 $ 40,688 $ 39,840 $ 39,182 $ 38,290



For the year ended

12/31/2020 12/31/2019

Operating expenses $ 170,845 $ 176,098

Add back:

Depreciation, amortization (9,056 ) (9,249 ) and accretion

Goodwill impairment (25,007 ) (8,849 )

Capitalized software 11,252 - development costs

Adjusted operating expenses $ 148,034 $ 158,000

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

SPOK HOLDINGS, INC.

2021 FINANCIAL GUIDANCE

(Unaudited and in millions)

Guidance Range

From

To

Revenues

Wireless

$

74.0

$

80.0

Software

58.2

67.2

Total Revenues

$

132.2

$

147.2

Adjusted Operating Expenses (a)

$

142.7

$

150.7

Capital Expenditures

$

2.7

$

6.7

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in millions)

Guidance Range

From

To

Operating expenses

$

141.4

$

149.4

Add back:

Depreciation, amortization and accretion

(10.2

)

(10.2

)

Goodwill impairment

-

-

Capitalized software development costs

11.5

11.5

Adjusted operating expenses

$

142.7

$

150.7

(a) Adjusted operating expenses exclude depreciation, amortization and accretion, goodwill impairment and capitalized software development costs.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210217005910/en/

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