Business Wire | Apr 28, 2021 04:10PM EDT

Spok Reports 2021 First Quarter Results

Apr. 28, 2021

ALEXANDRIA, Va.--(BUSINESS WIRE)--Apr. 28, 2021--Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the first quarter ended March 31, 2021. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on June 24, 2021, to stockholders of record on May 25, 2021.

Key First Quarter 2021 Operating Highlights:

* First quarter 2021 software revenue of $15.9 million included $9.4 million of maintenance revenue and $6.5 million of operations revenue. This was consistent with first quarter 2020 software revenue of $15.9 million, which included $9.7 million of maintenance revenue and $6.2 million of operations revenue. * Software bookings in the first quarter of 2021 totaled $14.6 million, compared to $15.6 million in the prior year quarter. First quarter software bookings included Spok Go(r) deals with an aggregate total contract value of approximately $0.7 million. First quarter software bookings also included $5.9 million of legacy operations bookings and $8.0 million of maintenance renewals. As of March 31, 2021, the software revenue backlog totaled $48.8 million, compared to the backlog of $49.1 million at March 31, 2020. * The quarterly rate of paging unit erosion was 1.2% in the first quarter of 2021, compared to paging unit erosion of 1.3% in the first quarter of 2020. Gross disconnects were down on a year-over-year basis. * Total paging ARPU (average revenue per unit) in the first quarter of 2021 totaled $7.34, up from ARPU of $7.31 in the first quarter of 2020, primarily due to the recovery of Telecommunications Service Charges (TRS) that began in early 2021, and general increases of Universal Service Fees (USF). USF and TRS fees are effectively pass-through items that have corresponding costs associated with them. Excluding these pass-through items, ARPU would have declined in-line with historical trends. * Operating expenses in the first quarter of 2021 totaled $37.8 million, down from $41.4 million in the first quarter of 2020. Adjusted operating expenses (which excludes depreciation, amortization and accretion charges, and includes capitalized software development costs) totaled $38.0 million in the first quarter of 2021, down more than 7% from adjusted operating expenses of $40.9 million in the first quarter of 2020. * Capital expenses were $0.7 million in the first quarter of 2021, compared to $1.0 million in the first quarter of 2020. * The number of full-time equivalent employees as of March 31, 2021 totaled 603, compared to 620 at March 31, 2020. * Capital paid to stockholders in the first quarter of 2021 aggregated $2.7 million. This came in the form of the Company's regular quarterly dividend. * The Company's cash, cash equivalents and short-term investments balance as of March 31, 2021, was $71.6 million, compared to $78.7 million at December 31, 2020.

2021 First Quarter Results:

Consolidated revenue for the first quarter of 2021 under Generally Accepted Accounting Principles ("GAAP") was $36.0 million, compared to $37.3 million in the first quarter of 2020.

For the three months ended

(Dollars in thousands) March 31, 2021 March 31, 2020 Change^ (%)

Wireless revenue

Paging revenue $ 19,353 $ 20,451 (5.4) %

Product and other revenue 767 935 (18.0) %

Total wireless revenue $ 20,120 $ 21,386 (5.9) %



Software revenue

License $ 1,507 $ 955 57.8 %

Services $ 4,354 $ 4,549 (4.3) %

Equipment $ 616 $ 725 (15.0) %

Subscription $ 45 $ - - %

Maintenance 9,394 9,652 (2.7) %

Total software revenue 15,916 15,881 0.2 %

Total revenue $ 36,036 $ 37,267 (3.3) %

GAAP net loss for the first quarter of 2021 was $2.3 million, or a loss of $0.12 per basic and diluted share, compared to a net loss of $4.5 million, or a loss of $0.24 per basic and diluted share, in the first quarter of 2020. In the first quarter of 2021, adjusted EBITDA totaled $0.3 million compared to an adjusted EBITDA loss of $2.5 million in the first quarter of 2020.

For the three months ended

(Dollars in thousands) March 31, March 31, Change^ 2021 2020 (%)

Net loss $ (2,297) $ (4,539) 49.4 %

Basic and diluted net loss per common $ (0.12) $ (0.24) 50.0 %share

Adjusted EBITDA $ 306 $ (2,485) 112.3 %

Management Commentary

"We are encouraged by our performance in the first quarter and believe it sets a solid foundation for the remainder of 2021, as we continue our transition from a traditional communications company to an integrated clinical software-based business," said Vincent D. Kelly, president and chief executive officer. "While we are still operating in a very challenging environment, we are making tangible progress executing against our strategy, and we are beginning to see benefits to our business as a result of the increasing prevalence of COVID-19 vaccines. Notably, our sales and services teams are resuming more normalized travel schedules and visiting customer sites in-person that they had been prevented from visiting since early last year.

"We launched Spok Go, our software-as-a-service, cloud-native platform just over a year ago, at the onset of the pandemic. Despite unprecedented challenges, our team was able to generate initial sales of this platform in the second half of last year, and that momentum has carried into 2021. In the first quarter, we announced the international expansion of the Spok Go platform in Canada and Australia, with localized capabilities to meet compliance and language requirements. We also added two more Spok Go wins in these markets. We also made significant progress in clinical innovation partner development, collaborating with both Mayo Clinic and St. Joseph's Healthcare Hamilton to enhance the clinical optimization of the Spok Go platform. These partnerships are very valuable to us, as they are further evidence of the broad acceptance that our Spok Go platform is receiving and provide us insights from best-in-class organizations to enhance the capabilities of Spok Go.

"In the first quarter, we slightly grew software revenue, and our backlog was consistent with prior year levels. We believe these are significant milestones in our recovery to pre-pandemic operating performance, as it shows a comparison to the last quarter that was not materially impacted by COVID-19. Additionally, in the first quarter, we saw continued solid trends in our wireless business. We are focused on maintaining our cash, cash equivalents and short-term investments balances, and in the first quarter, we generated slightly positive cash flow from operations. We achieved these results while continuing to support our Spok Care Connect(r) platform and investing in Spok Go. Last year we implemented a furlough program designed to conserve cash, prevent layoffs and continue our investment while our healthcare customers struggled with the pandemic. We continued that plan into 2021 with across-the-board furloughs of one week in each of the 1st and 2nd quarters. We are ending furloughs after the second quarter and have no plans to continue them going forward," concluded Kelly.

Business Outlook

Michael W. Wallace, chief operating officer and chief financial officer, said, "Disciplined expense management continues to be a key focus, as we further align expense levels with market demand for our products. During the first quarter, operating expenses were down nearly 9% and adjusted operating expenses were down more than 7% from prior year levels, with improvements in most expense categories over that period. Spok's balance sheet remains strong, as the cash, cash equivalents and short-term investments balance was $71.6 million at March 31, 2021 and we are still operating with no debt."

Regarding financial guidance for 2021, based on the increased visibility the Company has into the operating environment through the end of the year, and the discontinuance of the furlough program after the second quarter, Spok revised its 2021 financial guidance ranges. Spok's revised expectations are summarized in the following table:

(Unaudited and in millions) Previous Guidance Current Guidance Full Year 2021 Full Year 2021

Revenue

Wireless $ 74.0 to $ 80.0 $ 77.0 to $ 81.0

Software $ 58.2 $ 67.2 $ 61.0 $ 70.0

Total Revenue $ 132.2 $ 147.2 $ 138.0 $ 151.0



Adjusted Operating Expenses $ 142.7 $ 150.7 $ 151.0 $ 157.0



Capital Expenditures $ 2.7 $ 6.7 $ 3.5 $ 5.5

On April 14, 2021, in support of the Company's Board of Directors' ongoing annual refreshment process, Brian O'Reilly informed the Company that he will not stand for re-election to the Board at the Company's 2021 annual meeting of stockholders. Mr. O'Reilly will remain a director and maintain his committee memberships through the 2021 annual meeting. Royce Yudkoff, chairman of the board of directors, said, "On behalf of my fellow directors, I would like to thank Brian for his many years of leadership on the Board and the significant contributions he has made to the Company."

In addition, on June 1, 2021, the Company will publish its inaugural Environmental, Social, and Governance (ESG) Report, reflecting a continued commitment to advancing the Company's ESG goals and sustainable business practices.

2021 Investor Day Program:

The Company also announced that it plans to host an investor day during the week of October 11th. The investor day program will feature presentations by management. The investor day will be run concurrently with Spok's Connect '21 customer conference in Dallas. Investors will be invited to attend the Connect '21 keynote address and opening sessions on the first day of the conference. Investors would then be invited to a breakout session for the management presentations. The investor day will conclude at the end of the first day of the Connect '21 conference. The Company will provide more details in future press releases.

2021 First Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2021 first quarter results at 10:00 a.m. ET on Thursday, April 29, 2021. Dial-in numbers for the call are 1 334-323-0501 or 800-353-6461. The confirmation code for the call is 4773192. A replay of the call will be available from 1:00 p.m. ET on April 29, 2021 until 1:00 p.m. ET on Thursday, May 13, 2021. To listen to the replay, please register at http://tinyurl.com/Spok2021Q1earningsreplay. 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 Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on the Spok Go(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, and includes capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense, stock based compensation expense, and includes capitalized software development costs.

We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to Spok's financial condition and results of operations. We use these non-GAAP measures for financial, operational and budgetary decision-making purposes, to understand and evaluate our core operating performance and trends, and to generate future operating plans. We believe that these non-GAAP financial measures permit us to more thoroughly analyze key financial metrics used to make operational decisions and allow us to assess our core operating results. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies who present similar non-GAAP financial measures. We adjust for certain items because we do not regard these costs as reflective of normal costs related to the ongoing operation of the business in the ordinary course. In general, these items possess one or more of the following characteristics; non-cash expenses, factors outside of our control, items that are non-operational in nature, and unusual items not expected to occur in the normal course of business.

We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release, and not to rely on any single financial measure to evaluate our business.

Safe Harbor Statement under the Private Securities Litigation Reform Act

Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok's future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, our ability to effectively develop, introduce and deploy our integrated communications platform and collaboration platform, Spok Go, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, 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

3/31/2021 3/31/2020

Revenue:

Wireless $ 20,120 $ 21,386

Software 15,916 15,881

Total revenue 36,036 37,267

Operating expenses:

Cost of revenue 7,241 8,264

Research and development 4,506 5,449

Technology operations 7,252 7,904

Selling and marketing 4,900 6,361

General and administrative 11,150 11,251

Depreciation, amortization and accretion 2,727 2,146

Total operating expenses 37,776 41,375

% of total revenue 104.8 % 111.0 %

Operating loss (1,740 ) (4,108 )

% of total revenue (4.8 ) (11.0 ) % %

Interest income 61 363

Other expense (27 ) (137 )

Loss before income taxes (1,706 ) (3,882 )

Provision for income taxes (591 ) (657 )

Net loss $ (2,297 ) $ (4,539 )

Basic and diluted net loss per common share $ (0.12 ) $ (0.24 )

Basic and diluted weighted average common 19,272,786 18,958,716 shares outstanding

Cash dividends declared per common share 0.125 0.125

Key statistics:

Units in service 874 926

Average revenue per unit (ARPU) $ 7.34 $ 7.31

Bookings $ 14,597 $ 15,639

Backlog $ 48,849 $ 49,052



(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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

Revenue:

Wireless

$

20,120

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

Software

15,916

17,180

16,865

14,661

15,881

17,933

17,639

17,398

Total revenue

36,036

37,480

37,693

35,739

37,267

39,548

39,453

39,525

Operating expenses:

Cost of revenue

7,241

7,833

6,544

5,901

8,264

8,051

7,190

7,239

Research and development

4,506

4,166

3,459

2,754

5,449

7,132

7,437

6,807

Technology operations

7,252

7,371

7,357

7,212

7,904

8,083

7,805

7,866

Selling and marketing

4,900

5,004

4,272

3,831

6,361

5,891

5,595

5,574

General and administrative

11,150

10,046

10,994

10,810

11,251

11,531

11,813

11,696

Depreciation, amortization and accretion

2,727

2,503

2,335

2,072

2,146

2,250

2,305

2,335

Goodwill impairment

-

25,007

-

-

-

8,849

-

-

Total operating expenses

37,776

61,930

34,961

32,580

41,375

51,787

42,145

41,517

% of total revenue

104.8

%

165.2

%

92.8

%

91.2

%

111.0

%

130.9

%

106.8

%

105.0

%

Operating (loss) income

(1,740

)

(24,450

)

2,732

3,159

(4,108

)

(12,239

)

(2,692

)

(1,992

)

% of total revenue

(4.8

)%

(65.2

)%

7.2

%

8.8

%

(11.0

)%

(30.9

)%

(6.8

)%

(5.0

)%

Interest income

61

51

127

146

363

350

399

452

Other (expense) income

(27

)

95

151

101

(137

)

206

163

602

(Loss) income before income taxes

(1,706

)

(24,304

)

3,010

3,406

(3,882

)

(11,683

)

(2,130

)

(938

)

(Provision for) benefit from income taxes

(591

)

(22,306

)

155

353

(657

)

2,172

804

268

Net (loss) income

$

(2,297

)

$

(46,610

)

$

3,165

$

3,759

$

(4,539

)

$

(9,511

)

$

(1,326

)

$

(670

)

Basic net (loss) income per common share

$

(0.12

)

$

(2.44

)

$

0.17

$

0.20

$

(0.24

)

$

(0.50

)

$

(0.07

)

$

(0.03

)

Diluted net (loss) income per common share

(0.12

)

(2.44

)

0.16

0.20

(0.24

)

(0.50

)

(0.07

)

(0.03

)

Basic weighted average common shares outstanding

19,272,786

19,088,329

19,051,502

19,016,853

18,958,716

18,860,020

19,086,811

19,217,866

Diluted weighted average common shares outstanding

19,272,786

19,088,329

19,208,452

19,115,148

18,958,716

18,860,020

19,086,811

19,217,866

Key statistics:

Units in service

874

885

898

915

926

938

955

977

Average revenue per unit (ARPU)

$

7.34

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

$

7.32

$

7.26

Bookings

$

14,597

$

16,528

$

21,414

$

15,411

$

15,639

$

21,932

$

20,421

$

21,334

Backlog

$

48,849

$

50,504

$

51,708

$

48,441

$

49,052

$

50,553

$

42,604

$

39,718

(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

3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 6/30/2019

Revenue:

Wireless $ 20,120 $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127

Software 15,916 17,180 16,865 14,661 15,881 17,933 17,639 17,398

Total revenue 36,036 37,480 37,693 35,739 37,267 39,548 39,453 39,525

Operating expenses:

Cost of revenue 7,241 7,833 6,544 5,901 8,264 8,051 7,190 7,239

Research and 4,506 4,166 3,459 2,754 5,449 7,132 7,437 6,807 development

Technology 7,252 7,371 7,357 7,212 7,904 8,083 7,805 7,866 operations

Selling and 4,900 5,004 4,272 3,831 6,361 5,891 5,595 5,574 marketing

General and 11,150 10,046 10,994 10,810 11,251 11,531 11,813 11,696 administrative

Depreciation,amortization and 2,727 2,503 2,335 2,072 2,146 2,250 2,305 2,335 accretion

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

Total operating 37,776 61,930 34,961 32,580 41,375 51,787 42,145 41,517 expenses

% of total revenue 104.8 % 165.2 % 92.8 % 91.2 % 111.0 % 130.9 % 106.8 % 105.0 %

Operating (loss) (1,740 ) (24,450 ) 2,732 3,159 (4,108 ) (12,239 ) (2,692 ) (1,992 )income

% of total revenue (4.8 ) (65.2 ) 7.2 % 8.8 % (11.0 ) (30.9 ) (6.8 ) (5.0 ) % % % % % %

Interest income 61 51 127 146 363 350 399 452

Other (expense) (27 ) 95 151 101 (137 ) 206 163 602 income

(Loss) income (1,706 ) (24,304 ) 3,010 3,406 (3,882 ) (11,683 ) (2,130 ) (938 )before income taxes

(Provision for)benefit from income (591 ) (22,306 ) 155 353 (657 ) 2,172 804 268 taxes

Net (loss) income $ (2,297 ) $ (46,610 ) $ 3,165 $ 3,759 $ (4,539 ) $ (9,511 ) $ (1,326 ) $ (670 )

Basic net (loss)income per common $ (0.12 ) $ (2.44 ) $ 0.17 $ 0.20 $ (0.24 ) $ (0.50 ) $ (0.07 ) $ (0.03 )share

Diluted net (loss)income per common (0.12 ) (2.44 ) 0.16 0.20 (0.24 ) (0.50 ) (0.07 ) (0.03 )share

Basic weightedaverage common 19,272,786 19,088,329 19,051,502 19,016,853 18,958,716 18,860,020 19,086,811 19,217,866 shares outstanding

Diluted weightedaverage common 19,272,786 19,088,329 19,208,452 19,115,148 18,958,716 18,860,020 19,086,811 19,217,866 shares outstanding

Key statistics:

Units in service 874 885 898 915 926 938 955 977

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

Bookings $ 14,597 $ 16,528 $ 21,414 $ 15,411 $ 15,639 $ 21,932 $ 20,421 $ 21,334

Backlog $ 48,849 $ 50,504 $ 51,708 $ 48,441 $ 49,052 $ 50,553 $ 42,604 $ 39,718



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

3/31/2021

12/31/2020

ASSETS

Unaudited

Current assets:

Cash and cash equivalents

$

41,646

$

48,729

Short term investments

29,996

29,995

Accounts receivable, net

28,675

29,934

Prepaid expenses

8,284

8,958

Other current assets

1,681

1,269

Total current assets

110,282

118,885

Non-current assets:

Property and equipment, net

7,421

7,815

Operating lease right-of-use assets

17,636

14,016

Capitalized software development, net

12,064

10,179

Goodwill

99,175

99,175

Intangible assets, net

-

417

Deferred income tax assets, net

25,223

25,826

Other non-current assets

875

978

Total non-current assets

162,394

158,406

Total assets

$

272,676

$

277,291

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

4,451

$

6,685

Accrued compensation and benefits

13,084

14,103

Deferred revenue

26,743

27,686

Operating lease liabilities

6,037

5,264

Other current liabilities

3,923

3,702

Total current liabilities

54,238

57,440

Non-current liabilities:

Asset retirement obligations

7,402

7,289

Operating lease liabilities

12,640

9,456

Other non-current liabilities

1,824

2,493

Total non-current liabilities

21,866

19,238

Total liabilities

76,104

76,678

Commitments and contingencies

Stockholders' equity:

Preferred stock

$

-

$

-

Common stock

2

2

Additional paid-in capital

92,575

91,780

Accumulated other comprehensive loss

(1,438

)

(1,452

)

Retained earnings

105,433

110,283

Total stockholders' equity

196,572

200,613

Total liabilities and stockholders' equity

$

272,676

$

277,291

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)



3/31/2021 12/31/2020



ASSETS Unaudited



Current assets:

Cash and cash equivalents $ 41,646 $ 48,729

Short term investments 29,996 29,995

Accounts receivable, net 28,675 29,934

Prepaid expenses 8,284 8,958

Other current assets 1,681 1,269

Total current assets 110,282 118,885

Non-current assets:

Property and equipment, net 7,421 7,815

Operating lease right-of-use assets 17,636 14,016

Capitalized software development, net 12,064 10,179

Goodwill 99,175 99,175

Intangible assets, net - 417

Deferred income tax assets, net 25,223 25,826

Other non-current assets 875 978

Total non-current assets 162,394 158,406

Total assets $ 272,676 $ 277,291



LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:

Accounts payable $ 4,451 $ 6,685

Accrued compensation and benefits 13,084 14,103

Deferred revenue 26,743 27,686

Operating lease liabilities 6,037 5,264

Other current liabilities 3,923 3,702

Total current liabilities 54,238 57,440

Non-current liabilities:

Asset retirement obligations 7,402 7,289

Operating lease liabilities 12,640 9,456

Other non-current liabilities 1,824 2,493

Total non-current liabilities 21,866 19,238

Total liabilities 76,104 76,678

Commitments and contingencies

Stockholders' equity:

Preferred stock $ - $ -

Common stock 2 2

Additional paid-in capital 92,575 91,780

Accumulated other comprehensive loss (1,438 ) (1,452 )

Retained earnings 105,433 110,283

Total stockholders' equity 196,572 200,613

Total liabilities and stockholders' equity $ 272,676 $ 277,291



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)

For the three months ended

3/31/2021

3/31/2020

Operating activities:

Net loss

$

(2,297

)

$

(4,539

)

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

Depreciation, amortization and accretion

2,727

2,146

Deferred income tax expense

510

790

Stock-based compensation

2,239

1,182

Provisions for doubtful accounts, service credits and other

215

18

Changes in assets and liabilities:

Accounts receivable

1,039

2,441

Prepaid expenses and other assets

457

238

Net operating lease liabilities

338

(77

)

Accounts payable, accrued liabilities and other

(3,038

)

(340

)

Deferred revenue

(1,471

)

(542

)

Net cash provided by operating activities

719

1,317

Investing activities:

Purchases of property and equipment

(727

)

(1,049

)

Capitalized software development

(2,920

)

(1,705

)

Purchase of short-term investments

(14,995

)

(14,888

)

Maturity of short-term investments

15,000

15,000

Net cash used in investing activities

(3,642

)

(2,642

)

Financing activities:

Cash distributions to stockholders

(2,730

)

(2,629

)

Purchase of common stock for tax withholding on vested equity awards

(1,444

)

(903

)

Net cash used in financing activities

(4,174

)

(3,532

)

Effect of exchange rate on cash

14

(220

)

Net decrease in cash and cash equivalents

(7,083

)

(5,077

)

Cash and cash equivalents, beginning of period

48,729

47,361

Cash and cash equivalents, end of period

$

41,646

$

42,284

Supplemental disclosure:

Income taxes paid

$

(118

)

$

-

(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 three months ended

3/31/2021 3/31/2020

Operating activities:

Net loss $ (2,297 ) $ (4,539 )

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

Depreciation, amortization and accretion 2,727 2,146

Deferred income tax expense 510 790

Stock-based compensation 2,239 1,182

Provisions for doubtful accounts, service credits 215 18 and other

Changes in assets and liabilities:

Accounts receivable 1,039 2,441

Prepaid expenses and other assets 457 238

Net operating lease liabilities 338 (77 )

Accounts payable, accrued liabilities and other (3,038 ) (340 )

Deferred revenue (1,471 ) (542 )

Net cash provided by operating activities 719 1,317

Investing activities:

Purchases of property and equipment (727 ) (1,049 )

Capitalized software development (2,920 ) (1,705 )

Purchase of short-term investments (14,995 ) (14,888 )

Maturity of short-term investments 15,000 15,000

Net cash used in investing activities (3,642 ) (2,642 )

Financing activities:

Cash distributions to stockholders (2,730 ) (2,629 )

Purchase of common stock for tax withholding on (1,444 ) (903 )vested equity awards

Net cash used in financing activities (4,174 ) (3,532 )

Effect of exchange rate on cash 14 (220 )

Net decrease in cash and cash equivalents (7,083 ) (5,077 )

Cash and cash equivalents, beginning of period 48,729 47,361

Cash and cash equivalents, end of period $ 41,646 $ 42,284

Supplemental disclosure:

Income taxes paid $ (118 ) $ -



(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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

Revenue

Paging

$

19,353

$

19,513

$

19,961

$

19,990

$

20,451

$

20,826

$

21,212

$

21,342

Non-paging

$

767

$

787

$

867

$

1,088

$

935

$

789

$

602

$

785

Total wireless revenue

$

20,120

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

$

21,814

$

22,127

License

$

1,507

$

1,486

$

1,988

$

749

$

955

$

1,711

$

2,723

$

1,676

Services

$

4,354

$

4,778

$

4,772

$

3,812

$

4,549

$

4,947

$

4,202

$

4,835

Equipment

$

616

$

961

$

554

$

601

$

725

$

1,125

$

689

$

842

Subscription

$

45

$

42

$

24

$

-

$

-

$

-

$

-

$

-

Operations revenue

$

6,522

$

7,267

$

7,338

$

5,162

$

6,229

$

7,783

$

7,614

$

7,353

Maintenance revenue

$

9,394

$

9,913

$

9,527

$

9,499

$

9,652

$

10,150

$

10,025

$

10,045

Total software revenue

$

15,916

$

17,180

$

16,865

$

14,661

$

15,881

$

17,933

$

17,639

$

17,398

Total revenue

$

36,036

$

37,480

$

37,693

$

35,739

$

37,267

$

39,548

$

39,453

$

39,525

(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

3/31/ 12/31/ 9/30/ 6/30/ 3/31/ 12/31/ 9/30/ 6/30/ 2021 2020 2020 2020 2020 2019 2019 2019

Revenue

Paging $ 19,353 $ 19,513 $ 19,961 $ 19,990 $ 20,451 $ 20,826 $ 21,212 $ 21,342

Non-paging $ 767 $ 787 $ 867 $ 1,088 $ 935 $ 789 $ 602 $ 785

Total wireless $ 20,120 $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615 $ 21,814 $ 22,127revenue



License $ 1,507 $ 1,486 $ 1,988 $ 749 $ 955 $ 1,711 $ 2,723 $ 1,676

Services $ 4,354 $ 4,778 $ 4,772 $ 3,812 $ 4,549 $ 4,947 $ 4,202 $ 4,835

Equipment $ 616 $ 961 $ 554 $ 601 $ 725 $ 1,125 $ 689 $ 842

Subscription $ 45 $ 42 $ 24 $ - $ - $ - $ - $ -

Operations $ 6,522 $ 7,267 $ 7,338 $ 5,162 $ 6,229 $ 7,783 $ 7,614 $ 7,353revenue



Maintenance $ 9,394 $ 9,913 $ 9,527 $ 9,499 $ 9,652 $ 10,150 $ 10,025 $ 10,045revenue

Total software $ 15,916 $ 17,180 $ 16,865 $ 14,661 $ 15,881 $ 17,933 $ 17,639 $ 17,398revenue



Total revenue $ 36,036 $ 37,480 $ 37,693 $ 35,739 $ 37,267 $ 39,548 $ 39,453 $ 39,525



(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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

Cost of revenue

Payroll and related

$

5,369

$

5,447

$

4,941

$

4,350

$

5,785

$

5,222

$

5,099

$

4,749

Cost of sales

1,251

1,740

1,064

1,098

1,940

2,278

1,567

1,900

Stock-based compensation

322

136

148

134

119

42

21

97

Other

299

510

391

319

420

509

503

493

Total cost of revenue

7,241

7,833

6,544

5,901

8,264

8,051

7,190

7,239

Research and development

Payroll and related

4,475

4,358

4,147

4,115

4,761

5,056

5,083

4,639

Outside services

2,277

2,358

2,113

1,803

1,584

1,742

2,027

1,912

Capitalized software development

(2,920

)

(3,046

)

(2,906

)

(3,596

)

(1,705

)

-

-

-

Stock-based compensation

475

246

240

243

236

113

102

84

Other

199

250

(135

)

189

573

221

225

172

Total research and development

4,506

4,166

3,459

2,754

5,449

7,132

7,437

6,807

Technology operations

Payroll and related

2,467

2,467

2,246

2,213

2,712

2,656

2,823

2,662

Site rent

3,196

3,313

3,467

3,399

3,398

3,669

3,269

3,480

Telecommunications

837

857

949

961

1,001

1,026

1,016

1,019

Stock-based compensation

137

48

52

47

43

32

30

30

Other

615

686

643

592

750

700

667

675

Total technology operations

7,252

7,371

7,357

7,212

7,904

8,083

7,805

7,866

Selling and marketing

Payroll and related

3,135

2,912

2,773

2,538

3,583

3,382

3,524

3,329

Commissions

1,105

1,178

1,059

852

1,212

1,158

1,114

1,298

Stock-based compensation

319

192

208

194

172

164

137

128

Advertising and events

161

539

151

160

784

1,034

703

656

Other

180

183

81

87

610

153

117

163

Total selling and marketing

4,900

5,004

4,272

3,831

6,361

5,891

5,595

5,574

General and administrative

Payroll and related

3,818

3,373

3,476

3,355

4,134

3,974

4,220

4,136

Stock-based compensation

986

726

968

744

612

770

674

690

Facility rent, office, and technology costs

2,480

2,412

178

628

43

56

402

(96

)

Outside services

1,825

1,584

2,259

2,276

2,068

1,952

2,369

2,485

Taxes, licenses and permits

1,081

484

2,148

2,043

2,036

2,350

2,004

2,306

Bad debt

106

202

994

804

859

1,000

888

863

Other

854

1,265

971

960

1,499

1,429

1,256

1,312

Total general and administrative

11,150

10,046

10,994

10,810

11,251

11,531

11,813

11,696

Depreciation, amortization and accretion

2,727

2,503

2,335

2,072

2,146

2,250

2,305

2,335

Goodwill impairment

-

25,007

-

-

-

8,849

-

-

Operating expenses

$

37,776

$

61,930

$

34,961

$

32,580

$

41,375

$

51,787

$

42,145

$

41,517

Capital expenditures

$

727

$

638

$

934

$

846

$

1,063

$

679

$

1,378

$

1,495

(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

3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 12/31/ 9/30/ 6/30/2019 2019 2019

Cost of revenue

Payroll and $ 5,369 $ 5,447 $ 4,941 $ 4,350 $ 5,785 $ 5,222 $ 5,099 $ 4,749 related

Cost of sales 1,251 1,740 1,064 1,098 1,940 2,278 1,567 1,900

Stock-based 322 136 148 134 119 42 21 97 compensation

Other 299 510 391 319 420 509 503 493

Total cost of 7,241 7,833 6,544 5,901 8,264 8,051 7,190 7,239 revenue

Research and development

Payroll and 4,475 4,358 4,147 4,115 4,761 5,056 5,083 4,639 related

Outside services 2,277 2,358 2,113 1,803 1,584 1,742 2,027 1,912

Capitalizedsoftware (2,920 ) (3,046 ) (2,906 ) (3,596 ) (1,705 ) - - - development

Stock-based 475 246 240 243 236 113 102 84 compensation

Other 199 250 (135 ) 189 573 221 225 172

Total research and 4,506 4,166 3,459 2,754 5,449 7,132 7,437 6,807 development

Technology operations

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

Site rent 3,196 3,313 3,467 3,399 3,398 3,669 3,269 3,480

Telecommunications 837 857 949 961 1,001 1,026 1,016 1,019

Stock-based 137 48 52 47 43 32 30 30 compensation

Other 615 686 643 592 750 700 667 675

Total technology 7,252 7,371 7,357 7,212 7,904 8,083 7,805 7,866 operations

Selling and marketing

Payroll and 3,135 2,912 2,773 2,538 3,583 3,382 3,524 3,329 related

Commissions 1,105 1,178 1,059 852 1,212 1,158 1,114 1,298

Stock-based 319 192 208 194 172 164 137 128 compensation

Advertising and 161 539 151 160 784 1,034 703 656 events

Other 180 183 81 87 610 153 117 163

Total selling and 4,900 5,004 4,272 3,831 6,361 5,891 5,595 5,574 marketing

General and administrative

Payroll and 3,818 3,373 3,476 3,355 4,134 3,974 4,220 4,136 related

Stock-based 986 726 968 744 612 770 674 690 compensation

Facility rent,office, and 2,480 2,412 178 628 43 56 402 (96 )technology costs

Outside services 1,825 1,584 2,259 2,276 2,068 1,952 2,369 2,485

Taxes, licenses 1,081 484 2,148 2,043 2,036 2,350 2,004 2,306 and permits

Bad debt 106 202 994 804 859 1,000 888 863

Other 854 1,265 971 960 1,499 1,429 1,256 1,312

Total general and 11,150 10,046 10,994 10,810 11,251 11,531 11,813 11,696 administrative

Depreciation,amortization and 2,727 2,503 2,335 2,072 2,146 2,250 2,305 2,335 accretion

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

Operating expenses $ 37,776 $ 61,930 $ 34,961 $ 32,580 $ 41,375 $ 51,787 $ 42,145 $ 41,517

Capital $ 727 $ 638 $ 934 $ 846 $ 1,063 $ 679 $ 1,378 $ 1,495 expenditures



(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

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

9/30/2019

6/30/2019

Paging units in service

Beginning units in service (000's)

885

898

915

926

938

955

977

982

Gross placements

20

20

25

35

24

22

28

35

Gross disconnects

(31

)

(33

)

(42

)

(46

)

(36

)

(39

)

(50

)

(40

)

Net change

(11

)

(13

)

(17

)

(11

)

(12

)

(17

)

(22

)

(5

)

Ending units in service

874

885

898

915

926

938

955

977

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

Healthcare

84.1

%

83.6

%

83.7

%

83.6

%

82.6

%

82.4

%

81.7

%

81.7

%

Government

4.8

%

5.3

%

5.3

%

5.5

%

5.4

%

5.4

%

5.5

%

5.6

%

Large enterprise

4.3

%

4.3

%

4.3

%

4.4

%

5.5

%

5.5

%

6.1

%

5.9

%

Other(b)

6.8

%

6.8

%

6.6

%

6.6

%

6.5

%

6.6

%

6.7

%

6.8

%

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

59

61

63

65

67

69

72

74

101 to 1,000 units

163

167

167

165

171

173

175

179

>1,000 units

652

657

668

685

688

696

708

724

Total

874

885

898

915

926

938

955

977

Account size net loss rate(c)

1 to 100 units

(3.3

)%

(3.2

)%

(2.9

)%

(3.1

)%

(3.0

)%

(3.8

)%

(2.1

)%

(3.2

)%

101 to 1,000 units

(2.4

)%

-

%

1.5

%

(4.2

)%

(1.0

)%

(1.0

)%

(2.4

)%

(3.9

)%

>1,000 units

(0.8

)%

(1.6

)%

(2.5

)%

(0.4

)%

(1.2

)%

(1.8

)%

(2.2

)%

0.7

%

Total

(1.2

)%

(1.4

)%

(1.9

)%

(1.3

)%

(1.3

)%

(1.8

)%

(2.2

)%

(0.5

)%

Account size ARPU

1 to 100 units

$

11.72

$

11.62

$

11.80

$

11.65

$

12.01

$

11.99

$

11.84

$

12.00

101 to 1,000 units

8.33

8.35

8.37

8.24

8.34

8.31

8.41

8.47

>1,000 units

6.68

6.62

6.67

6.57

6.59

6.62

6.59

6.47

Total

$

7.34

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

$

7.32

$

7.26

(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

3/31/2021 12/31/ 9/30/2020 6/30/2020 3/31/2020 12/31/ 9/30/2019 6/30/2019 2020 2019

Paging units in service

Beginning unitsin service 885 898 915 926 938 955 977 982 (000's)

Gross 20 20 25 35 24 22 28 35 placements

Gross (31 ) (33 ) (42 ) (46 ) (36 ) (39 ) (50 ) (40 )disconnects

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

Ending units in 874 885 898 915 926 938 955 977 service

End of periodunits in service % oftotal (b)

Healthcare 84.1 % 83.6 % 83.7 % 83.6 % 82.6 % 82.4 % 81.7 % 81.7 %

Government 4.8 % 5.3 % 5.3 % 5.5 % 5.4 % 5.4 % 5.5 % 5.6 %

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

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

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

Account sizeending units in service (000's)

1 to 100 units 59 61 63 65 67 69 72 74

101 to 1,000 163 167 167 165 171 173 175 179 units

>1,000 units 652 657 668 685 688 696 708 724

Total 874 885 898 915 926 938 955 977

Account sizenet loss rate (c)

1 to 100 units (3.3 ) (3.2 ) (2.9 ) (3.1 ) (3.0 ) (3.8 ) (2.1 ) (3.2 ) % % % % % % % %

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

>1,000 units (0.8 ) (1.6 ) (2.5 ) (0.4 ) (1.2 ) (1.8 ) (2.2 ) 0.7 % % % % % % % %

Total (1.2 ) (1.4 ) (1.9 ) (1.3 ) (1.3 ) (1.8 ) (2.2 ) (0.5 ) % % % % % % % %

Account size ARPU

1 to 100 units $ 11.72 $ 11.62 $ 11.80 $ 11.65 $ 12.01 $ 11.99 $ 11.84 $ 12.00

101 to 1,000 8.33 8.35 8.37 8.24 8.34 8.31 8.41 8.47 units

>1,000 units 6.68 6.62 6.67 6.57 6.59 6.62 6.59 6.47

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



(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 TO EBITDA (a)

(Unaudited and in thousands)

For the three months ended

3/31/2021

3/31/2020

Net loss

$

(2,297

)

$

(4,539

)

Add back:

Provision for income taxes

591

657

Other expenses

27

137

Interest income

(61

)

(363

)

Operating loss

(1,740

)

(4,108

)

Depreciation, amortization and accretion

2,727

2,146

EBITDA

$

987

$

(1,962

)

Capitalized software development costs

(2,920

)

(1,705

)

Stock-based compensation

2,239

1,182

Adjusted EBITDA

$

306

$

(2,485

)

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

SPOK HOLDINGS, INC.

RECONCILIATION OF NET LOSS TO EBITDA (a)

(Unaudited and in thousands)



For the three months ended

3/31/2021 3/31/2020

Net loss $ (2,297 ) $ (4,539 )

Add back:

Provision for income taxes 591 657

Other expenses 27 137

Interest income (61 ) (363 )

Operating loss (1,740 ) (4,108 )

Depreciation, amortization and accretion 2,727 2,146

EBITDA $ 987 $ (1,962 )

Capitalized software development costs (2,920 ) (1,705 )

Stock-based compensation 2,239 1,182

Adjusted EBITDA $ 306 $ (2,485 )



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

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

For the three months ended

3/31/2021

3/31/2020

Operating expenses

$

37,776

$

41,375

Add back:

Depreciation, amortization and accretion

(2,727

)

(2,146

)

Capitalized software development costs

2,920

1,705

Adjusted operating expenses

$

37,969

$

40,934

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

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)



For the three months ended

3/31/2021 3/31/2020

Operating expenses $ 37,776 $ 41,375

Add back:

Depreciation, amortization and accretion (2,727 ) (2,146 )

Capitalized software development costs 2,920 1,705

Adjusted operating expenses $ 37,969 $ 40,934



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

(Unaudited and in millions)

Previous Guidance Full Year 2021

Current Guidance Full Year 2021

Operating expenses

$

141.4

to

$

149.4

$

149.7

to

$

155.7

Add back:

Depreciation, amortization and accretion

(10.2

)

(10.2

)

(10.2

)

(10.2

)

Capitalized software development costs

11.5

11.5

11.5

11.5

Adjusted operating expenses

$

142.7

$

150.7

$

151.0

$

157.0

View source version on businesswire.com: https://www.businesswire.com/news/home/20210428005826/en/

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