Business Wire | Nov 3, 2021 04:10PM EDT

Spok Reports 2021 Third Quarter Results

Nov. 03, 2021

ALEXANDRIA, Va.--(BUSINESS WIRE)--Nov. 03, 2021--Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the third quarter ended September 30, 2021. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on December 10, 2021, to stockholders of record on November 16, 2021.

Third Quarter 2021 Highlights:

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

Management Commentary

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

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

2021 Third Quarter and Year-to-Date Results:

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

For the Three Months Ended For the Nine Months Ended September 30, September 30,

(Dollars in 2021 2020 Change 2021 2020 Changethousands) (%) (%)

Wireless revenue

Paging $ 18,844 $ 19,961 (5.6) % $ 57,332 $ 60,403 (5.1) %revenue

Product andother 800 867 (7.7) % 2,291 2,890 (20.7) %revenue

Totalwireless $ 19,644 $ 20,828 (5.7) % $ 59,623 $ 63,293 (5.8) %revenue



Software revenue

License $ 1,674 $ 1,988 (15.8) % $ 3,999 $ 3,692 8.3 %

Services $ 4,159 $ 4,772 (12.8) % $ 13,378 $ 13,132 1.9 %

Equipment $ 596 $ 554 7.6 % $ 1,694 $ 1,880 (9.9) %

Subscription $ 133 $ 24 454.2 % $ 268 $ 24 1,016.7 %

Maintenance 9,645 9,527 1.2 % 28,648 28,678 (0.1) %

Totalsoftware 16,207 16,865 (3.9) % 47,987 47,406 1.2 %revenue

Total $ 35,851 $ 37,693 (4.9) % $ 107,610 $ 110,699 (2.8) %revenue

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

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

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

For the Three Months Ended For the Nine Months Ended September 30, September 30,

(Dollars Change^ Change^in 2021 2020 (%) 2021 2020 (%)thousands)

Net (loss) $ (2,494) $ 3,165 178.8 % $ (5,510) $ 2,384 331.1 %income

Basic net(loss)income per $ (0.13) $ 0.17 176.5 % $ (0.28) $ 0.13 315.4 %commonshare

Dilutednet income $ (0.13) $ 0.16 181.3 % $ (0.28) $ 0.12 333.3 %(loss) pershare

Adjusted $ (1,594) $ 3,777 142.2 % $ (1,357) $ 4,291 131.6 %EBITDA

Financial Outlook:

The Company is affirming the financial outlook previously provided for full year 2021 as follows:

(Unaudited and in millions) Current Guidance Full Year 2021

Revenue

Wireless $ 77.0 to $ 81.0

Software $ 61.0 $ 70.0

Total Revenue $ 138.0 $ 151.0



Adjusted Operating Expenses $ 151.0 $ 157.0



Capital Expenditures $ 3.5 $ 5.5

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

2021 Third Quarter Call:

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

About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on the Spok Go(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 and stock-based compensation expense and includes capitalized software development costs.

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

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

Safe Harbor Statement under the Private Securities Litigation Reform Act

Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok's future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, our ability to effectively develop, introduce and deploy our integrated communications platform and collaboration platform, Spok Go, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok's strategic alternatives review, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

Tables to Follow

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

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



For the three months ended For the nine months ended

9/30/2021 9/30/2020 9/30/2021 9/30/2020

Revenue:

Wireless $ 19,644 $ 20,828 $ 59,623 $ 63,293

Software 16,207 16,865 47,987 47,406

Total revenue 35,851 37,693 107,610 110,699

Operating expenses:

Cost of revenue 7,520 6,544 21,734 20,709

Research and 4,178 3,459 12,962 11,662 development

Technology 7,439 7,357 21,778 22,472 operations

Selling and 5,165 4,272 15,045 14,463 marketing

General and 12,538 10,994 35,245 33,056 administrative

Depreciation,amortization and 2,568 2,335 7,752 6,553 accretion

Total operating 39,408 34,961 114,516 108,915 expenses

% of total revenue 109.9 % 92.8 % 106.4 % 98.4 %

Operating (loss) (3,557) 2,732 (6,906) 1,784 income

% of total revenue (9.9) % 7.2 % (6.4) % 1.6 %

Interest income 141 127 263 636

Other income 10 151 13 113

(Loss) income (3,406) 3,010 (6,630) 2,533 before income taxes

Benefit from(provision for) 912 155 1,120 (149) income taxes

Net (loss) income $ (2,494) $ 3,165 $ (5,510) $ 2,384

Basic net (loss)income per common $ (0.13) $ 0.17 $ (0.28) $ 0.13 share

Diluted net (loss)income per common (0.13) 0.16 (0.28) 0.12 share

Basic weightedaverage common 19,464,893 19,051,502 19,378,543 19,008,969 shares outstanding

Diluted weightedaverage common 19,464,893 19,208,452 19,378,543 19,273,243 shares outstanding

Cash dividendsdeclared per common 0.125 0.125 0.375 0.375 share

Key statistics:

Units in service 853 898 853 898

Average revenue per $ 7.29 $ 7.34 $ 7.33 $ 7.31 unit (ARPU)

Bookings $ 17,116 $ 21,414 $ 44,750 $ 52,465

Backlog $ 45,584 $ 51,708 $ 45,584 $ 51,708



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

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

For the three months ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

Revenue:

Wireless

$

19,644

$

19,859

$

20,120

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

Software

16,207

15,864

15,916

17,180

16,865

14,661

15,881

17,933

Total revenue

35,851

35,723

36,036

37,480

37,693

35,739

37,267

39,548

Operating expenses:

Cost of revenue

7,520

6,973

7,241

7,833

6,544

5,901

8,264

8,051

Research and development

4,178

4,278

4,506

4,166

3,459

2,754

5,449

7,132

Technology operations

7,439

7,087

7,252

7,371

7,357

7,212

7,904

8,083

Selling and marketing

5,165

4,980

4,900

5,004

4,272

3,831

6,361

5,891

General and administrative

12,538

11,557

11,150

10,046

10,994

10,810

11,251

11,531

Depreciation, amortization and accretion

2,568

2,457

2,727

2,503

2,335

2,072

2,146

2,250

Goodwill impairment

-

-

-

25,007

-

-

-

8,849

Total operating expenses

39,408

37,332

37,776

61,930

34,961

32,580

41,375

51,787

% of total revenue

109.9

%

104.5

%

104.8

%

165.2

%

92.8

%

91.2

%

111.0

%

130.9

%

Operating (loss) income

(3,557)

(1,609)

(1,740)

(24,450)

2,732

3,159

(4,108)

(12,239)

% of total revenue

(9.9)

%

(4.5)

%

(4.8)

%

(65.2)

%

7.2

%

8.8

%

(11.0)

%

(30.9)

%

Interest income

141

61

61

51

127

146

363

350

Other income (expense)

10

29

(27)

95

151

101

(137)

206

(Loss) income before income taxes

(3,406)

(1,519)

(1,706)

(24,304)

3,010

3,406

(3,882)

(11,683)

Benefit from (provision for) income taxes

912

800

(591)

(22,306)

155

353

(657)

2,172

Net (loss) income

$

(2,494)

$

(719)

$

(2,297)

$

(46,610)

$

3,165

$

3,759

$

(4,539)

$

(9,511)

Basic net (loss) income per common share

$

(0.13)

$

(0.04)

$

(0.12)

$

(2.44)

$

0.17

$

0.20

$

(0.24)

$

(0.50)

Diluted net (loss) income per common share

(0.13)

(0.04)

(0.12)

(2.44)

0.16

0.20

(0.24)

(0.50)

Basic weighted average common shares outstanding

19,464,893

19,395,364

19,272,786

19,088,329

19,051,502

19,016,853

18,958,716

18,860,020

Diluted weighted average common shares outstanding

19,464,893

19,395,364

19,272,786

19,088,329

19,208,452

19,115,148

18,958,716

18,860,020

Key statistics:

Units in service

853

869

874

885

898

915

926

938

Average revenue per unit (ARPU)

$

7.29

$

7.32

$

7.34

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

Bookings

$

17,116

$

13,037

$

14,597

$

16,528

$

21,414

$

15,411

$

15,639

$

21,932

Backlog

$

45,584

$

45,632

$

48,849

$

50,504

$

51,708

$

48,441

$

49,052

$

50,553

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

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



For the three months ended

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

Revenue:

Wireless $ 19,644 $ 19,859 $ 20,120 $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615

Software 16,207 15,864 15,916 17,180 16,865 14,661 15,881 17,933

Total revenue 35,851 35,723 36,036 37,480 37,693 35,739 37,267 39,548

Operating expenses:

Cost of revenue 7,520 6,973 7,241 7,833 6,544 5,901 8,264 8,051

Research and 4,178 4,278 4,506 4,166 3,459 2,754 5,449 7,132 development

Technology 7,439 7,087 7,252 7,371 7,357 7,212 7,904 8,083 operations

Selling and 5,165 4,980 4,900 5,004 4,272 3,831 6,361 5,891 marketing

General and 12,538 11,557 11,150 10,046 10,994 10,810 11,251 11,531 administrative

Depreciation,amortization 2,568 2,457 2,727 2,503 2,335 2,072 2,146 2,250 and accretion

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

Total operating 39,408 37,332 37,776 61,930 34,961 32,580 41,375 51,787 expenses

% of total 109.9 % 104.5 % 104.8 % 165.2 % 92.8 % 91.2 % 111.0 % 130.9 %revenue

Operating (3,557) (1,609) (1,740) (24,450) 2,732 3,159 (4,108) (12,239) (loss) income

% of total (9.9) % (4.5) % (4.8) % (65.2) % 7.2 % 8.8 % (11.0) % (30.9) %revenue

Interest income 141 61 61 51 127 146 363 350

Other income 10 29 (27) 95 151 101 (137) 206 (expense)

(Loss) incomebefore income (3,406) (1,519) (1,706) (24,304) 3,010 3,406 (3,882) (11,683) taxes

Benefit from(provision for) 912 800 (591) (22,306) 155 353 (657) 2,172 income taxes

Net (loss) $ (2,494) $ (719) $ (2,297) $ (46,610) $ 3,165 $ 3,759 $ (4,539) $ (9,511) income

Basic net(loss) income $ (0.13) $ (0.04) $ (0.12) $ (2.44) $ 0.17 $ 0.20 $ (0.24) $ (0.50) per commonshare

Diluted net(loss) income (0.13) (0.04) (0.12) (2.44) 0.16 0.20 (0.24) (0.50) per commonshare

Basic weightedaverage common 19,464,893 19,395,364 19,272,786 19,088,329 19,051,502 19,016,853 18,958,716 18,860,020 sharesoutstanding

Dilutedweightedaverage common 19,464,893 19,395,364 19,272,786 19,088,329 19,208,452 19,115,148 18,958,716 18,860,020 sharesoutstanding

Key statistics:

Units in 853 869 874 885 898 915 926 938 service

Average revenue $ 7.29 $ 7.32 $ 7.34 $ 7.30 $ 7.34 $ 7.24 $ 7.31 $ 7.33 per unit (ARPU)

Bookings $ 17,116 $ 13,037 $ 14,597 $ 16,528 $ 21,414 $ 15,411 $ 15,639 $ 21,932

Backlog $ 45,584 $ 45,632 $ 48,849 $ 50,504 $ 51,708 $ 48,441 $ 49,052 $ 50,553



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

9/30/2021

12/31/2020

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$

37,461

$

48,729

Short term investments

29,998

29,995

Accounts receivable, net

26,979

29,934

Prepaid expenses

9,169

8,958

Other current assets

896

1,269

Total current assets

104,503

118,885

Non-current assets:

Property and equipment, net

7,834

7,815

Operating lease right-of-use assets

16,113

14,016

Capitalized software development, net

14,638

10,179

Goodwill

99,175

99,175

Intangible assets, net

-

417

Deferred income tax assets, net

26,739

25,826

Other non-current assets

750

978

Total non-current assets

165,249

158,406

Total assets

$

269,752

$

277,291

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

4,521

$

6,685

Accrued compensation and benefits

15,190

14,103

Deferred revenue

26,767

27,686

Operating lease liabilities

5,643

5,264

Other current liabilities

5,239

3,702

Total current liabilities

57,360

57,440

Non-current liabilities:

Asset retirement obligations

7,450

7,289

Operating lease liabilities

11,951

9,456

Other non-current liabilities

1,377

2,493

Total non-current liabilities

20,778

19,238

Total liabilities

78,138

76,678

Commitments and contingencies

Stockholders' equity:

Preferred stock

$

-

$

-

Common stock

2

2

Additional paid-in capital

96,088

91,780

Accumulated other comprehensive loss

(1,598)

(1,452)

Retained earnings

97,122

110,283

Total stockholders' equity

191,614

200,613

Total liabilities and stockholders' equity

$

269,752

$

277,291

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)



9/30/2021 12/31/2020



ASSETS (Unaudited)



Current assets:

Cash and cash equivalents $ 37,461 $ 48,729

Short term investments 29,998 29,995

Accounts receivable, net 26,979 29,934

Prepaid expenses 9,169 8,958

Other current assets 896 1,269

Total current assets 104,503 118,885

Non-current assets:

Property and equipment, net 7,834 7,815

Operating lease right-of-use assets 16,113 14,016

Capitalized software development, net 14,638 10,179

Goodwill 99,175 99,175

Intangible assets, net - 417

Deferred income tax assets, net 26,739 25,826

Other non-current assets 750 978

Total non-current assets 165,249 158,406

Total assets $ 269,752 $ 277,291



LIABILITIES AND STOCKHOLDERS' EQUITY



Current liabilities:

Accounts payable $ 4,521 $ 6,685

Accrued compensation and benefits 15,190 14,103

Deferred revenue 26,767 27,686

Operating lease liabilities 5,643 5,264

Other current liabilities 5,239 3,702

Total current liabilities 57,360 57,440

Non-current liabilities:

Asset retirement obligations 7,450 7,289

Operating lease liabilities 11,951 9,456

Other non-current liabilities 1,377 2,493

Total non-current liabilities 20,778 19,238

Total liabilities 78,138 76,678

Commitments and contingencies

Stockholders' equity:

Preferred stock $ - $ -

Common stock 2 2

Additional paid-in capital 96,088 91,780

Accumulated other comprehensive loss (1,598) (1,452)

Retained earnings 97,122 110,283

Total stockholders' equity 191,614 200,613

Total liabilities and stockholders' equity $ 269,752 $ 277,291



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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)

For the nine months ended

9/30/2021

9/30/2020

Operating activities:

Net (loss) income

$

(5,510)

$

2,384

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

Depreciation, amortization and accretion

7,752

6,553

Deferred income tax (benefit) expense

(907)

15

Stock-based compensation

6,036

4,160

Provisions for doubtful accounts, service credits and other

765

914

Changes in assets and liabilities:

Accounts receivable

2,165

(1,019)

Prepaid expenses and other assets

202

1,726

Net operating lease liabilities

778

(50)

Accounts payable, accrued liabilities and other

300

3,591

Deferred revenue

(2,053)

2,680

Net cash provided by operating activities

9,528

20,954

Investing activities:

Purchases of property and equipment

(3,103)

(2,824)

Capitalized software development

(8,239)

(8,206)

Purchase of short-term investments

(44,990)

(44,870)

Maturity of short-term investments

45,000

45,000

Net cash used in investing activities

(11,332)

(10,900)

Financing activities:

Cash distributions to stockholders

(7,590)

(7,388)

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

132

166

Purchase of common stock for tax withholding on vested equity awards

(1,860)

(903)

Net cash used in financing activities

(9,318)

(8,125)

Effect of exchange rate on cash and cash equivalents

(146)

(55)

Net (decrease) increase in cash and cash equivalents

(11,268)

1,874

Cash and cash equivalents, beginning of period

48,729

47,361

Cash and cash equivalents, end of period

$

37,461

$

49,235

Supplemental disclosure:

Income taxes (refunds received) paid

$

(165)

$

148

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)



For the nine months ended

9/30/2021 9/30/2020

Operating activities:

Net (loss) income $ (5,510) $ 2,384

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

Depreciation, amortization and accretion 7,752 6,553

Deferred income tax (benefit) expense (907) 15

Stock-based compensation 6,036 4,160

Provisions for doubtful accounts, service credits and 765 914 other

Changes in assets and liabilities:

Accounts receivable 2,165 (1,019)

Prepaid expenses and other assets 202 1,726

Net operating lease liabilities 778 (50)

Accounts payable, accrued liabilities and other 300 3,591

Deferred revenue (2,053) 2,680

Net cash provided by operating activities 9,528 20,954

Investing activities:

Purchases of property and equipment (3,103) (2,824)

Capitalized software development (8,239) (8,206)

Purchase of short-term investments (44,990) (44,870)

Maturity of short-term investments 45,000 45,000

Net cash used in investing activities (11,332) (10,900)

Financing activities:

Cash distributions to stockholders (7,590) (7,388)

Proceeds from issuance of common stock under the 132 166 Employee Stock Purchase Plan

Purchase of common stock for tax withholding on vested (1,860) (903) equity awards

Net cash used in financing activities (9,318) (8,125)

Effect of exchange rate on cash and cash equivalents (146) (55)

Net (decrease) increase in cash and cash equivalents (11,268) 1,874

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

Cash and cash equivalents, end of period $ 37,461 $ 49,235

Supplemental disclosure:

Income taxes (refunds received) paid $ (165) $ 148



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

SPOK HOLDINGS, INC.

CONSOLIDATED REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

For the three months ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

Revenue

Paging

$

18,844

$

19,135

$

19,353

$

19,513

$

19,961

$

19,990

$

20,451

$

20,826

Non-paging

$

800

$

724

$

767

$

787

$

867

$

1,088

$

935

$

789

Total wireless revenue

$

19,644

$

19,859

$

20,120

$

20,300

$

20,828

$

21,078

$

21,386

$

21,615

License

$

1,674

$

818

$

1,507

$

1,486

$

1,988

$

749

$

955

$

1,711

Services

$

4,159

$

4,865

$

4,354

$

4,778

$

4,772

$

3,812

$

4,549

$

4,947

Equipment

$

596

$

482

$

616

$

961

$

554

$

601

$

725

$

1,125

Subscription

$

133

$

90

$

45

$

42

$

24

$

-

$

-

$

-

Operations revenue

$

6,562

$

6,255

$

6,522

$

7,267

$

7,338

$

5,162

$

6,229

$

7,783

Maintenance revenue

$

9,645

$

9,609

$

9,394

$

9,913

$

9,527

$

9,499

$

9,652

$

10,150

Total software revenue

$

16,207

$

15,864

$

15,916

$

17,180

$

16,865

$

14,661

$

15,881

$

17,933

Total revenue

$

35,851

$

35,723

$

36,036

$

37,480

$

37,693

$

35,739

$

37,267

$

39,548

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

SPOK HOLDINGS, INC.

CONSOLIDATED REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)



For the three months ended

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

Revenue

Paging $ 18,844 $ 19,135 $ 19,353 $ 19,513 $ 19,961 $ 19,990 $ 20,451 $ 20,826

Non-paging $ 800 $ 724 $ 767 $ 787 $ 867 $ 1,088 $ 935 $ 789

Total wireless $ 19,644 $ 19,859 $ 20,120 $ 20,300 $ 20,828 $ 21,078 $ 21,386 $ 21,615 revenue



License $ 1,674 $ 818 $ 1,507 $ 1,486 $ 1,988 $ 749 $ 955 $ 1,711

Services $ 4,159 $ 4,865 $ 4,354 $ 4,778 $ 4,772 $ 3,812 $ 4,549 $ 4,947

Equipment $ 596 $ 482 $ 616 $ 961 $ 554 $ 601 $ 725 $ 1,125

Subscription $ 133 $ 90 $ 45 $ 42 $ 24 $ - $ - $ -

Operations revenue $ 6,562 $ 6,255 $ 6,522 $ 7,267 $ 7,338 $ 5,162 $ 6,229 $ 7,783



Maintenance revenue $ 9,645 $ 9,609 $ 9,394 $ 9,913 $ 9,527 $ 9,499 $ 9,652 $ 10,150

Total software $ 16,207 $ 15,864 $ 15,916 $ 17,180 $ 16,865 $ 14,661 $ 15,881 $ 17,933 revenue



Total revenue $ 35,851 $ 35,723 $ 36,036 $ 37,480 $ 37,693 $ 35,739 $ 37,267 $ 39,548



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

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

For the three months ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

Cost of revenue

Payroll and related

$

5,435

$

4,920

$

5,369

$

5,447

$

4,941

$

4,350

$

5,785

$

5,222

Cost of sales

1,414

1,427

1,251

1,740

1,064

1,098

1,940

2,278

Stock-based compensation

250

285

322

136

148

134

119

42

Other

421

341

299

510

391

319

420

509

Total cost of revenue

7,520

6,973

7,241

7,833

6,544

5,901

8,264

8,051

Research and development

Payroll and related

4,291

4,333

4,475

4,358

4,147

4,115

4,761

5,056

Outside services

1,759

2,060

2,277

2,358

2,113

1,803

1,584

1,742

Capitalized software development

(2,621)

(2,698)

(2,920)

(3,046)

(2,906)

(3,596)

(1,705)

-

Stock-based compensation

435

305

475

246

240

243

236

113

Other

314

278

199

250

(135)

189

573

221

Total research and development

4,178

4,278

4,506

4,166

3,459

2,754

5,449

7,132

Technology operations

Payroll and related

2,585

2,323

2,467

2,467

2,246

2,213

2,712

2,656

Site rent

3,122

3,143

3,196

3,313

3,467

3,399

3,398

3,669

Telecommunications

828

825

837

857

949

961

1,001

1,026

Stock-based compensation

139

131

137

48

52

47

43

32

Other

765

665

615

686

643

592

750

700

Total technology operations

7,439

7,087

7,252

7,371

7,357

7,212

7,904

8,083

Selling and marketing

Payroll and related

3,365

3,161

3,135

2,912

2,773

2,538

3,583

3,382

Commissions

924

1,244

1,105

1,178

1,059

852

1,212

1,158

Stock-based compensation

234

254

319

192

208

194

172

164

Advertising and events

527

247

161

539

151

160

784

1,034

Other

115

74

180

183

81

87

610

153

Total selling and marketing

5,165

4,980

4,900

5,004

4,272

3,831

6,361

5,891

General and administrative

Payroll and related

3,911

3,564

3,818

3,373

3,476

3,355

4,134

3,974

Stock-based compensation

958

806

986

726

968

744

612

770

Facility rent, office, and technology costs

2,692

2,484

2,480

2,412

178

628

43

56

Outside services

3,078

2,219

1,825

1,584

2,259

2,276

2,068

1,952

Taxes, licenses and permits

1,003

1,117

1,081

484

2,148

2,043

2,036

2,350

Bad debt

(29)

328

106

202

994

804

859

1,000

Other

925

1,039

854

1,265

971

960

1,499

1,429

Total general and administrative

12,538

11,557

11,150

10,046

10,994

10,810

11,251

11,531

Depreciation, amortization and accretion

2,568

2,457

2,727

2,503

2,335

2,072

2,146

2,250

Goodwill impairment

-

-

-

25,007

-

-

-

8,849

Operating expenses

$

39,408

$

37,332

$

37,776

$

61,930

$

34,961

$

32,580

$

41,375

$

51,787

Capital expenditures

$

905

$

1,480

$

727

$

638

$

934

$

846

$

1,063

$

679

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

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)



For the three months ended

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

Cost of revenue

Payroll and related $ 5,435 $ 4,920 $ 5,369 $ 5,447 $ 4,941 $ 4,350 $ 5,785 $ 5,222

Cost of sales 1,414 1,427 1,251 1,740 1,064 1,098 1,940 2,278

Stock-based compensation 250 285 322 136 148 134 119 42

Other 421 341 299 510 391 319 420 509

Total cost of revenue 7,520 6,973 7,241 7,833 6,544 5,901 8,264 8,051

Research and development

Payroll and related 4,291 4,333 4,475 4,358 4,147 4,115 4,761 5,056

Outside services 1,759 2,060 2,277 2,358 2,113 1,803 1,584 1,742

Capitalized software development (2,621) (2,698) (2,920) (3,046) (2,906) (3,596) (1,705) -

Stock-based compensation 435 305 475 246 240 243 236 113

Other 314 278 199 250 (135) 189 573 221

Total research and development 4,178 4,278 4,506 4,166 3,459 2,754 5,449 7,132

Technology operations

Payroll and related 2,585 2,323 2,467 2,467 2,246 2,213 2,712 2,656

Site rent 3,122 3,143 3,196 3,313 3,467 3,399 3,398 3,669

Telecommunications 828 825 837 857 949 961 1,001 1,026

Stock-based compensation 139 131 137 48 52 47 43 32

Other 765 665 615 686 643 592 750 700

Total technology operations 7,439 7,087 7,252 7,371 7,357 7,212 7,904 8,083

Selling and marketing

Payroll and related 3,365 3,161 3,135 2,912 2,773 2,538 3,583 3,382

Commissions 924 1,244 1,105 1,178 1,059 852 1,212 1,158

Stock-based compensation 234 254 319 192 208 194 172 164

Advertising and events 527 247 161 539 151 160 784 1,034

Other 115 74 180 183 81 87 610 153

Total selling and marketing 5,165 4,980 4,900 5,004 4,272 3,831 6,361 5,891

General and administrative

Payroll and related 3,911 3,564 3,818 3,373 3,476 3,355 4,134 3,974

Stock-based compensation 958 806 986 726 968 744 612 770

Facility rent, office, and 2,692 2,484 2,480 2,412 178 628 43 56 technology costs

Outside services 3,078 2,219 1,825 1,584 2,259 2,276 2,068 1,952

Taxes, licenses and permits 1,003 1,117 1,081 484 2,148 2,043 2,036 2,350

Bad debt (29) 328 106 202 994 804 859 1,000

Other 925 1,039 854 1,265 971 960 1,499 1,429

Total general and administrative 12,538 11,557 11,150 10,046 10,994 10,810 11,251 11,531

Depreciation, amortization and 2,568 2,457 2,727 2,503 2,335 2,072 2,146 2,250 accretion

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

Operating expenses $ 39,408 $ 37,332 $ 37,776 $ 61,930 $ 34,961 $ 32,580 $ 41,375 $ 51,787

Capital expenditures $ 905 $ 1,480 $ 727 $ 638 $ 934 $ 846 $ 1,063 $ 679



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



SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)

For the three months ended

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

3/31/2020

12/31/2019

Paging units in service

Beginning units in service (000's)

869

874

885

898

915

926

938

955

Gross placements

23

31

20

20

25

35

24

22

Gross disconnects

(39)

(36)

(31)

(33)

(42)

(46)

(36)

(39)

Net change

(16)

(5)

(11)

(13)

(17)

(11)

(12)

(17)

Ending units in service

853

869

874

885

898

915

926

938

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

Healthcare

84.6

%

84.5

%

84.1

%

83.6

%

83.7

%

83.6

%

82.6

%

82.4

%

Government

4.8

%

4.9

%

4.8

%

5.3

%

5.3

%

5.5

%

5.4

%

5.4

%

Large enterprise

4.1

%

4.1

%

4.3

%

4.3

%

4.3

%

4.4

%

5.5

%

5.5

%

Other(b)

6.4

%

6.4

%

6.8

%

6.8

%

6.6

%

6.6

%

6.5

%

6.6

%

Total

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

Account size ending units in service (000's)

1 to 100 units

57

58

59

61

63

65

67

69

101 to 1,000 units

154

155

163

167

167

165

171

173

>1,000 units

642

656

652

657

668

685

688

696

Total

853

869

874

885

898

915

926

938

Account size net loss rate(c)

1 to 100 units

(1.7)

%

(1.7)

%

(3.3)

%

(3.2)

%

(2.9)

%

(3.1)

%

(3.0)

%

(3.8)

%

101 to 1,000 units

(0.6)

%

(4.9)

%

(2.4)

%

-

%

1.5

%

(4.2)

%

(1.0)

%

(1.0)

%

>1,000 units

(2.1)

%

0.6

%

(0.8)

%

(1.6)

%

(2.5)

%

(0.4)

%

(1.2)

%

(1.8)

%

Total

(1.8)

%

(0.6)

%

(1.2)

%

(1.4)

%

(1.9)

%

(1.3)

%

(1.3)

%

(1.8)

%

Account size ARPU

1 to 100 units

$

11.67

$

11.69

$

11.72

$

11.62

$

11.80

$

11.65

$

12.01

$

11.99

101 to 1,000 units

8.38

8.35

8.33

8.35

8.37

8.24

8.34

8.31

>1,000 units

6.65

6.68

6.68

6.62

6.67

6.57

6.59

6.62

Total

$

7.29

$

7.32

$

7.34

$

7.30

$

7.34

$

7.24

$

7.31

$

7.33

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

(b) Other includes hospitality, resort and indirect units

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

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)



For the three months ended

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

Paging units in service

Beginning unitsin service 869 874 885 898 915 926 938 955 (000's)

Gross 23 31 20 20 25 35 24 22 placements

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

Net change (16) (5) (11) (13) (17) (11) (12) (17)

Ending units in 853 869 874 885 898 915 926 938 service

End of periodunits in service % oftotal (b)

Healthcare 84.6 % 84.5 % 84.1 % 83.6 % 83.7 % 83.6 % 82.6 % 82.4 %

Government 4.8 % 4.9 % 4.8 % 5.3 % 5.3 % 5.5 % 5.4 % 5.4 %

Large 4.1 % 4.1 % 4.3 % 4.3 % 4.3 % 4.4 % 5.5 % 5.5 %enterprise

Other(b) 6.4 % 6.4 % 6.8 % 6.8 % 6.6 % 6.6 % 6.5 % 6.6 %

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

Account sizeending units in service (000's)

1 to 100 units 57 58 59 61 63 65 67 69

101 to 1,000 154 155 163 167 167 165 171 173 units

>1,000 units 642 656 652 657 668 685 688 696

Total 853 869 874 885 898 915 926 938

Account sizenet loss rate (c)

1 to 100 units (1.7) % (1.7) % (3.3) % (3.2) % (2.9) % (3.1) % (3.0) % (3.8) %

101 to 1,000 (0.6) % (4.9) % (2.4) % - % 1.5 % (4.2) % (1.0) % (1.0) %units

>1,000 units (2.1) % 0.6 % (0.8) % (1.6) % (2.5) % (0.4) % (1.2) % (1.8) %

Total (1.8) % (0.6) % (1.2) % (1.4) % (1.9) % (1.3) % (1.3) % (1.8) %

Account size ARPU

1 to 100 units $ 11.67 $ 11.69 $ 11.72 $ 11.62 $ 11.80 $ 11.65 $ 12.01 $ 11.99

101 to 1,000 8.38 8.35 8.33 8.35 8.37 8.24 8.34 8.31 units

>1,000 units 6.65 6.68 6.68 6.62 6.67 6.57 6.59 6.62

Total $ 7.29 $ 7.32 $ 7.34 $ 7.30 $ 7.34 $ 7.24 $ 7.31 $ 7.33



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

(b) Other includes hospitality, resort and indirect units

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

SPOK HOLDINGS, INC.

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

(Unaudited and in thousands)

For the three months ended

For the nine months ended

9/30/2021

9/30/2020

9/30/2021

9/30/2020

Net (loss) income

$

(2,494)

$

3,165

$

(5,510)

$

2,384

Add back:

(Benefit from) provision for income taxes

(912)

(155)

(1,120)

149

Other income

(10)

(151)

(13)

(113)

Interest income

(141)

(127)

(263)

(636)

Operating (loss) income

(3,557)

2,732

(6,906)

1,784

Depreciation, amortization and accretion

2,568

2,335

7,752

6,553

EBITDA

$

(989)

$

5,067

$

846

$

8,337

Capitalized software development costs

(2,621)

(2,906)

(8,239)

(8,206)

Stock-based compensation

2,016

1,616

6,036

4,160

Adjusted EBITDA

$

(1,594)

$

3,777

$

(1,357)

$

4,291

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

SPOK HOLDINGS, INC.

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

(Unaudited and in thousands)



For the three months For the nine months ended ended

9/30/2021 9/30/2020 9/30/2021 9/30/2020

Net (loss) income $ (2,494) $ 3,165 $ (5,510) $ 2,384

Add back:

(Benefit from) provision (912) (155) (1,120) 149 for income taxes

Other income (10) (151) (13) (113)

Interest income (141) (127) (263) (636)

Operating (loss) income (3,557) 2,732 (6,906) 1,784

Depreciation, amortization 2,568 2,335 7,752 6,553 and accretion

EBITDA $ (989) $ 5,067 $ 846 $ 8,337

Capitalized software (2,621) (2,906) (8,239) (8,206) development costs

Stock-based compensation 2,016 1,616 6,036 4,160

Adjusted EBITDA $ (1,594) $ 3,777 $ (1,357) $ 4,291



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

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

For the three months ended

For the nine months ended

9/30/2021

9/30/2020

9/30/2021

9/30/2020

Operating expenses

$

39,408

$

34,961

$

114,516

$

108,915

Add back:

Depreciation, amortization and accretion

(2,568)

(2,335)

(7,752)

(6,553)

Capitalized software development costs

2,621

2,906

8,239

8,206

Adjusted operating expenses

$

39,461

$

35,532

$

115,003

$

110,568

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

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)



For the three months For the nine months ended ended

9/30/2021 9/30/2020 9/30/2021 9/30/2020

Operating expenses $ 39,408 $ 34,961 $ 114,516 $ 108,915

Add back:

Depreciation, amortization (2,568) (2,335) (7,752) (6,553) and accretion

Capitalized software 2,621 2,906 8,239 8,206 development costs

Adjusted operating expenses $ 39,461 $ 35,532 $ 115,003 $ 110,568



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

(Unaudited and in millions)

Current Guidance

Full Year 2021

Operating expenses

$

149.7

to

$

155.7

Add back:

Depreciation, amortization and accretion

(10.2)

(10.2)

Capitalized software development costs

11.5

11.5

Adjusted operating expenses

$

151.0

$

157.0

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

CONTACT: Lisa Fortuna or Mike Cummings 312-445-2866 spok@alpha-ir.com