Exhibit 99.1
NEWS RELEASE
 
spoklogoa09.jpg


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

Spok Reports 2018 Third Quarter Operating Results;
Software Revenue and Bookings Up on Both a Year-Over-Year and Sequential Basis

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va. (October 24, 2018) - Spok Holdings, Inc. (NASDAQ: SPOK), the global leader in healthcare communications, today announced operating results for the third quarter and year-to-date period ended September 30, 2018. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on December 10, 2018 to stockholders of record on November 16, 2018.

2018 Third-Quarter Results:
Consolidated revenue for the third quarter of 2018 under Generally Accepted Accounting Principles (“GAAP”) was $42.5 million compared to $43.6 million in the third quarter of 2017. On January 1, 2018, Spok adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Unless otherwise stated, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted, and continue to be reported in accordance with the Company’s historic accounting under ASC 605. As such, adjusted to exclude the adoption of ASC 606, consolidated revenue for the third quarter of 2018 was $41.0 million compared to the $43.6 million in the third quarter of 2017.

Spok.com
 
spoktweeta08.jpg
1


spoklogoasecondheadera08.jpg

 
For the three months ended
(Dollars in thousands)
September 30, 2018
September 30, 2018(1)
September 30, 2017
Change (2) 
(%)
Wireless revenue
 
 
 
 
Paging revenue
$
22,442

$
22,442

$
24,128

(7.0
)%
Product and other revenue
817

817

982

(16.8
)%
Total wireless revenue
$
23,259

$
23,259

$
25,110

(7.4
)%
 
 
 
 
 
Software revenue
 
 
 
 
Operations revenue
$
9,026

$
7,852

$
8,863

(11.4
)%
Maintenance revenue
10,191

9,924

9,663

2.7
 %
Total software revenue
19,217

17,776

18,526

(4.0
)%
Total revenue
$
42,476

$
41,035

$
43,636

(6.0
)%
(1) Adjusted to exclude the adoption of ASC 606.
(2) As compared against results adjusted to exclude the adoption of ASC 606.
GAAP net loss for the third quarter of 2018 was $0.5 million, or $0.02 per diluted share, compared to net income of $3.7 million, or $0.19 per diluted share, in the third quarter of 2017. In the third quarter of 2018, the Company generated $1.6 million of EBITDA (earnings before interest, taxes, depreciation and amortization), compared to EBITDA of $6.1 million in the prior year quarter.
 
For the three months ended
(Dollars in thousands)
September 30, 2018
September 30, 2018(1)
September 30, 2017
Net (loss) income
$
(481
)
$
(2,142
)
$
3,727

Diluted net (loss) income per share
$
(0.02
)
$
(0.11
)
$
0.19

EBITDA
$
1,584

$
(77
)
$
6,100

(1) Adjusted to exclude the adoption of ASC 606.

Other key results and highlights for the third quarter included:
Net paging unit losses were approximately 25,000 in the third quarter of 2018, consistent with third quarter 2017 levels.
The quarterly rate of wireless revenue erosion was 1.7 percent in the third quarter of 2018 down from 2.1 percent in the third quarter of 2017.
Total paging ARPU (average revenue per unit) was $7.40 in the third quarter of 2018, compared to $7.41 in the second quarter of 2018.

Spok.com
 
spoktweeta08.jpg
2


spoklogoasecondheadera08.jpg

Software bookings for the 2018 third quarter were $21.6 million, an increase of 16.7 percent and 17.7 percent, respectively, from the second quarter of 2018 and prior year quarter. Third quarter bookings included $10.8 million of operations bookings and $10.8 million of maintenance renewals.
Software backlog totaled $36.4 million at September 30, 2018, compared to $36.3 million at June 30, 2018.
The revenue renewal rate for software maintenance in the third quarter of 2018 continued at greater than 99 percent.
Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $40.9 million in the third quarter of 2018, up slightly from $40.1 million in the second quarter of 2018.
Capital expenses were $1.6 million in the third quarter of 2018, compared to $2.3 million in the second quarter of 2018.
The number of full-time equivalent employees at September 30, 2018 totaled 603, compared to 599 at September 30, 2017.
Capital returned to stockholders in the third quarter of 2018 totaled $3.1 million, in the form of $2.5 million from dividends and $0.6 million from share repurchases.
The Company’s cash balance at September 30, 2018 was $95.2 million, down from $107.2 million at December 31, 2017.

2018 Year-To-Date Results:
Consolidated revenue for the first nine months of 2018 was $126.2 million compared to $127.4 million in the first nine months of 2017. As discussed above, unless otherwise stated, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted, and continue to be reported in accordance with the Company’s historic accounting under ASC 605. As such, adjusted to exclude the adoption of ASC 606, consolidated revenue for the first nine months of 2018 was $125.3 million compared to the $127.4 million in the first nine months of 2017.

Spok.com
 
spoktweeta08.jpg
3


spoklogoasecondheadera08.jpg

 
For the nine months ended
(Dollars in thousands)
September 30, 2018
September 30, 2018(1)
September 30, 2017
Change (2) 
(%)
Wireless revenue
 
 
 
 
Paging revenue
$
68,574

$
68,574

$
73,672

(6.9
)%
Product and other revenue
2,612

2,612

2,937

(11.1
)%
Total wireless revenue
$
71,186

$
71,186

$
76,609

(7.1
)%
 
 
 
 
 
Software revenue
 
 
 
 
Operations revenue
$
25,961

$
24,063

$
21,945

9.7
 %
Maintenance revenue
29,071

30,037

28,851

4.1
 %
Total software revenue
55,032

54,100

50,796

6.5
 %
Total revenue
$
126,218

$
125,286

$
127,405

(1.7
)%
(1) Adjusted to exclude the adoption of ASC 606.
(2) As compared against results adjusted to exclude the adoption of ASC 606.
GAAP net loss for the first nine months of 2018 was $0.9 million, or $0.05 per diluted share, compared to net income of $6.1 million, or $0.30 per diluted share, in the first nine months of 2017. In the first nine months of 2018, the Company generated $5.6 million of EBITDA (earnings before interest, taxes, depreciation and amortization), compared to EBITDA of $16.0 million in the prior year period.

 
For the nine months ended
(Dollars in thousands)
September 30, 2018
September 30, 2018(1)
September 30, 2017
Net (loss) income
$
(946
)
$
(1,768
)
$
6,078

Diluted net (loss) income per share
$
(0.05
)
$
(0.09
)
$
0.30

EBITDA
$
5,568

$
4,761

$
15,967

(1) Adjusted to exclude the adoption of ASC 606.

Management Commentary:
“We are pleased with our performance in the third quarter of 2018 and believe that it provides Spok with momentum as we complete 2018 and position ourselves for next year” said Vincent D. Kelly, president and chief executive officer. “Software bookings and revenue levels grew by double-digits on a sequential basis. Coupled with continued strong maintenance renewals and low levels of wireless revenue attrition, total revenue grew by nearly 5 percent from the second quarter of 2018. Third quarter revenue performance and sustained expense management allowed us to return $3.1 million of capital to our stockholders in the form of dividends and share repurchases, while we continued to enhance our product offerings through our continued investments in our integrated communication platform, Spok Care Connect®.”

Spok.com
 
spoktweeta08.jpg
4


spoklogoasecondheadera08.jpg

Kelly also noted that in addition to the Company’s quarterly financial performance, Spok made progress in several other areas, including product development, sales strategy and key strategic partnership agreements. “Earlier in October, we were excited to welcome more than 150 attendees to Connect 18, Spok’s annual conference for healthcare professionals. There, we brought together some of the industry’s leading innovators who are pushing the boundaries to advance and improve healthcare communications. We were particularly pleased to showcase what we believe is a game-changer in healthcare communication technology; the next generation of the Spok Care Connect platform. Our collaboration with hospital leaders at these conferences—and throughout the year—has helped us create an enterprise platform that positions healthcare providers for success today and supports them with faster, smarter clinical communications for the next decade.”

Business Outlook:
Michael W. Wallace, chief financial officer, said: “In 2018, continued expense management and strong financial discipline have allowed us to invest in our business for long-term growth and we are seeing the benefits from those investments. Based on our ability to align Spok's expense base with the market demand we are seeing, we are maintaining the 2018 guidance ranges that we outlined at the beginning of the year.” For the full-year 2018, adjusted for the adoption of ASC 606, the Company still expects total revenue to range from $161 million to $177 million, operating expenses (excluding depreciation, amortization and accretion) to range from $158 million to $165 million, and capital expenditures to range from $4 million to $8 million.
                             
* * * * * * * * *

2018 Third-Quarter Call and Replay:
Spok plans to host a conference call for investors to discuss its 2018 third quarter results at 10:00 a.m. ET on Thursday, October 25, 2018. Dial-in numbers for the call are 323-994-2093 or 888-254-3590. The pass code for the call is 1552099. A replay of the call will be available from 1:00 p.m. ET on October 25, 2018 until 1:00 p.m. ET on Thursday, November 8, 2018. To listen to the replay, please register at http://tinyurl.com/Spok2018Q3earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

Spok.com
 
spoktweeta08.jpg
5


spoklogoasecondheadera08.jpg




* * * * * * * * *

About Spok
Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., is proud to be the 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 Care Connect® platform to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count, count on Spok. For more information, visit spok.com or follow @spoktweets on Twitter.
Spok is a trademark of Spok Holdings, Inc. Spok Care Connect and Spok Mobile are trademarks of Spok, Inc.

Spok.com
 
spoktweeta08.jpg
6


spoklogoasecondheadera08.jpg

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, 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, 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.com
 
spoktweeta08.jpg
7




SPOK HOLDINGS, INC.
 
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
 
(Unaudited and in thousands except share, per share amounts and ARPU)
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
For the nine months ended
 
 
 
9/30/2018
 
9/30/2017
 
9/30/2018
 
9/30/2017
 
Revenue:
 
 
 
 
 

 

 
Wireless
 
$
23,259

 
$
25,110

 
$
71,186

 
$
76,609

 
Software
 
19,217

 
18,526

 
55,032

 
50,796

 
Total revenue
 
42,476

 
43,636

 
126,218

 
127,405

 
Operating expenses:
 
 
 
 
 

 

 
Cost of revenue
 
7,782

 
7,069

 
22,914

 
21,295

 
Research and development
 
5,934

 
5,001

 
17,845

 
13,768

 
Service, rental and maintenance
 
7,787

 
7,875

 
23,235

 
23,885

 
Selling and marketing
 
5,716

 
5,533

 
18,279

 
16,784

 
General and administrative
 
13,673

 
12,058

 
38,377

 
35,706

 
Depreciation, amortization and accretion
 
2,785

 
2,775

 
8,168

 
8,849

 
Total operating expenses
 
43,677

 
40,311

 
128,818

 
120,287

 
% of total revenue
 
102.8
 %
 
92.4
%
 
102.1
 %
 
94.4
%
 
Operating (loss) income
 
(1,201
)
 
3,325

 
(2,600
)
 
7,118

 
% of total revenue
 
(2.8
)%
 
7.6
%
 
(2.1
)%
 
5.6
%
 
Interest income
 
384

 
214

 
1,009

 
490

 
Other (expense) income
 
(110
)
 
359

 
(56
)
 
415

 
(Loss) income before income taxes
 
(927
)
 
3,898

 
(1,647
)
 
8,023

 
Benefit from (provision for) income taxes
 
446

 
(171
)
 
701

 
(1,945
)
 
Net (loss) income
 
$
(481
)
 
$
3,727

 
$
(946
)
 
$
6,078

 
Basic and diluted net (loss) income per common share
 
$
(0.02
)
 
$
0.19

 
$
(0.05
)
 
$
0.30

 
Basic weighted average common shares outstanding
 
19,456,149

 
19,977,263

 
19,742,869

 
20,285,240

 
Diluted weighted average common shares outstanding
 
19,456,149

 
20,008,321

 
19,742,869

 
20,362,774

 
Cash dividends declared per common share
 
0.125

 
0.125

 
0.375

 
0.375

 
Key statistics:
 
 
 
 
 
 
 
 
 
Units in service
 
999

 
1,063

 
999

 
1,063

 
Average revenue per unit (ARPU)
 
$
7.40

 
$
7.48

 
$
7.44

 
$
7.53

 
Bookings
 
$
21,580

 
$
18,327

 
$
58,192

 
$
58,519

 
Backlog
 
$
36,366

 
$
46,900

 
$
36,366

 
$
46,900

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



SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Revenue:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Wireless
 
$
23,259

 
$
23,658

 
$
24,269

 
$
24,579

 
$
25,110

 
$
25,639

 
$
25,860

 
$
26,535

Software
 
19,217

 
16,970

 
18,845

 
19,191

 
18,526

 
16,686

 
15,584

 
17,649

Total revenue
 
42,476

 
40,628

 
43,114

 
43,770

 
43,636

 
42,325

 
41,444

 
44,184

Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of revenue
 
7,782

 
7,400

 
7,712

 
7,122

 
7,069

 
7,190

 
7,036

 
7,482

Research and development
 
5,934

 
6,177

 
5,735

 
4,934

 
5,001

 
4,662

 
4,105

 
3,702

Service, rental and maintenance
 
7,787

 
7,698

 
7,750

 
7,617

 
7,875

 
7,944

 
8,066

 
7,989

Selling and marketing
 
5,716

 
6,093

 
6,490

 
6,039

 
5,533

 
5,329

 
5,922

 
5,855

General and administrative
 
13,673

 
12,741

 
11,964

 
11,695

 
12,058

 
11,939

 
11,710

 
11,277

Depreciation, amortization and accretion
 
2,785

 
2,669

 
2,713

 
2,774

 
2,775

 
2,851

 
3,223

 
3,176

Total operating expenses
 
43,677

 
42,778

 
42,364

 
40,181

 
40,311

 
39,915

 
40,062

 
39,481

% of total revenue
 
102.8
 %
 
105.3
 %
 
98.3
%
 
91.8
%
 
92.4
%
 
94.3
%
 
96.7
%
 
89.4
%
Operating (loss) income
 
(1,201
)
 
(2,150
)
 
750

 
3,589

 
3,325

 
2,410

 
1,382

 
4,703

% of total revenue
 
(2.8
)%
 
(5.3
)%
 
1.7
%
 
8.2
%
 
7.6
%
 
5.7
%
 
3.3
%
 
10.6
%
Interest income
 
384

 
342

 
283

 
229

 
214

 
154

 
122

 
99

Other (expense) income
 
(110
)
 
102

 
(47
)
 
(282
)
 
359

 
89

 
(30
)
 
100

(Loss) income before income taxes
 
(927
)
 
(1,706
)
 
986

 
3,536

 
3,898

 
2,653

 
1,474

 
4,902

Benefit from (provision for) income taxes
 
446

 
730

 
(475
)
 
(24,920
)
 
(171
)
 
(1,155
)
 
(620
)
 
(1,876
)
Net (loss) income
 
$
(481
)
 
$
(976
)
 
$
511

 
$
(21,384
)
 
$
3,727

 
$
1,498

 
$
854

 
$
3,026

Basic and diluted net (loss) income per common share
 
$
(0.02
)
 
$
(0.05
)
 
$
0.03

 
$
(1.07
)
 
$
0.19

 
$
0.07

 
$
0.04

 
$
0.15

Basic weighted average common shares outstanding
 
19,456,149

 
19,750,941

 
20,027,800

 
19,987,763

 
19,977,263

 
20,353,801

 
20,530,739

 
20,529,958

Diluted weighted average common shares outstanding
 
19,456,149

 
19,750,941

 
20,153,291

 
19,987,763

 
20,008,321

 
20,366,102

 
20,585,542

 
20,529,958

Key statistics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Units in service
 
999

 
1,024

 
1,030

 
1,049

 
1,063

 
1,086

 
1,091

 
1,111

Average revenue per unit (ARPU)
 
$
7.40

 
$
7.41

 
$
7.47

 
$
7.46

 
$
7.48

 
$
7.52

 
$
7.56

 
$
7.59

Bookings
 
$
21,580

 
$
18,488

 
$
18,124

 
$
19,190

 
$
18,327

 
$
20,405

 
$
19,788

 
$
20,025

Backlog
 
$
36,366

 
$
36,295

 
$
35,930

 
$
42,305

 
$
46,900

 
$
43,455

 
$
40,555

 
$
38,295

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




SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
 
 
 
 
 
 
 
9/30/2018
 
12/31/2017
 
 
(Unaudited)
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
95,233

 
$
107,157

Accounts receivable, net
 
34,440

 
32,279

Prepaid expenses and other
 
7,928

 
5,752

Inventory
 
1,663

 
1,672

Total current assets
 
139,264

 
146,860

Non-current assets:
 
 
 
 
Property and equipment, net
 
12,655

 
13,399

Goodwill
 
133,031

 
133,031

Intangible assets, net
 
6,042

 
7,917

Deferred income tax assets
 
46,970

 
47,679

Other non-current assets
 
1,401

 
1,675

Total non-current assets
 
200,099

 
203,701

Total assets
 
$
339,363

 
$
350,561

Liabilities and stockholders' equity
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
1,070

 
$
1,305

Accrued compensation and benefits
 
11,584

 
11,018

Accrued taxes
 
2,587

 
2,547

Deferred revenue
 
32,299

 
31,414

Other current liabilities
 
3,464

 
4,610

Total current liabilities
 
51,004

 
50,894

Non-current liabilities:
 
 
 
 
Deferred revenue
 
705

 
1,063

Other long-term liabilities
 
8,545

 
8,075

Total non-current liabilities
 
9,250

 
9,138

Total liabilities
 
60,254

 
60,032

Commitments and contingencies
 
 
 
 
Stockholders' equity:
 
 
 
 
Preferred stock
 
$

 
$

Common stock
 
2

 
2

Additional paid-in capital
 
92,880

 
99,819

Accumulated other comprehensive loss
 
(2,217
)
 
(1,088
)
Retained earnings
 
188,444

 
191,796

Total stockholders' equity
 
279,109

 
290,529

Total liabilities and stockholders' equity
 
$
339,363

 
$
350,561

 
 
 
 
 
(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
 
 
9/30/2018
 
9/30/2017
Cash flows provided by operating activities:
 
 
 
 
Net (loss) income
 
$
(946
)
 
$
6,078

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
 
Depreciation, amortization and accretion
 
8,168

 
8,849

Deferred income tax (benefit) expense
 
(1,000
)
 
1,118

Stock based compensation
 
3,922

 
2,815

Provisions for doubtful accounts, service credits and other
 
1,681

 
767

Adjustments of non-cash transaction taxes
 
(156
)
 
(754
)
Changes in assets and liabilities:
 
 
 
 
Accounts receivable
 
(2,534
)
 
(4,156
)
Prepaid expenses, inventory and other assets
 
(1,160
)
 
(1,726
)
Accounts payable, accrued liabilities and other
 
(546
)
 
(230
)
Deferred revenue
 
5,198

 
1,313

Net cash provided by operating activities
 
12,627

 
14,074

Cash flows from investing activities:
 
 
 
 
Purchases of property and equipment
 
(5,094
)
 
(7,034
)
Net cash used in investing activities
 
(5,094
)
 
(7,034
)
Cash flows from financing activities:
 
 
 
 
Cash distributions to stockholders
 
(7,631
)
 
(12,733
)
Purchase of common stock for tax withholding on vested equity awards
 
(978
)
 

Purchase of common stock (including commissions)
 
(10,026
)
 
(10,024
)
Proceeds from issuance of common stock under the Employee Stock Purchase Plan
 
143

 
130

Net cash used in financing activities
 
(18,492
)
 
(22,627
)
Effect of exchange rate on cash
 
(965
)
 
(89
)
Net decrease in cash and cash equivalents
 
(11,924
)
 
(15,676
)
Cash and cash equivalents, beginning of period
 
107,157

 
125,816

Cash and cash equivalents, end of period
 
$
95,233

 
$
110,140

Supplemental disclosure:
 
 
 
 
Income taxes paid
 
$
726

 
$
2,300

 
 
 
 
 
(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
 
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Paging
 
$
22,442

 
$
22,824

 
$
23,308

 
$
23,624

 
$
24,128

 
$
24,572

 
$
24,972

 
$
25,441

 
Non-paging
 
817

 
834

 
961

 
955

 
982

 
1,067

 
888

 
1,094

 
Total wireless revenue
 
$
23,259

 
$
23,658

 
$
24,269

 
$
24,579

 
$
25,110

 
$
25,639

 
$
25,860

 
$
26,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Subscription
 
1,779

 
441

 
420

 
559

 
577

 
623

 
543

 
551

 
License
 
1,396

 
1,552

 
3,956

 
2,431

 
1,995

 
1,641

 
1,171

 
1,594

 
Services
 
4,555

 
4,363

 
4,071

 
5,437

 
5,189

 
3,650

 
3,354

 
4,500

 
Equipment
 
1,296

 
1,107

 
1,024

 
945

 
1,102

 
1,127

 
973

 
1,402

 
Operations revenue
 
$
9,026

 
$
7,463

 
$
9,471

 
$
9,372

 
$
8,863

 
$
7,041

 
$
6,041

 
$
8,047

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maintenance revenue
 
$
10,191

 
$
9,507

 
$
9,374

 
$
9,819

 
$
9,663

 
$
9,645

 
$
9,543

 
$
9,602

 
Total software revenue
 
$
19,217

 
$
16,970

 
$
18,845

 
$
19,191

 
$
18,526

 
$
16,686

 
$
15,584

 
$
17,649

 
 
 
Total revenue
 
$
42,476

 
$
40,628

 
$
43,114

 
$
43,770

 
$
43,636

 
$
42,325

 
$
41,444

 
$
44,184

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Cost of revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and related
 
$
4,923

 
$
4,853

 
$
4,874

 
$
4,374

 
$
4,330

 
$
4,613

 
$
4,490

 
$
4,611

Cost of sales
 
2,264

 
1,923

 
2,309

 
1,990

 
2,228

 
1,904

 
1,995

 
2,415

Stock based compensation
 
75

 
75

 
55

 
58

 
4

 
60

 
58

 
(108
)
Other
 
520

 
549

 
474

 
700

 
507

 
613

 
493

 
564

Total cost of revenue
 
7,782

 
7,400

 
7,712

 
7,122

 
7,069

 
7,190

 
7,036

 
7,482

Research and development
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and related
 
4,709

 
4,506

 
4,002

 
3,521

 
4,005

 
3,807

 
3,405

 
3,195

Outside services
 
1,040

 
1,481

 
1,513

 
1,361

 
849

 
659

 
516

 
511

Stock based compensation
 
71

 
90

 
71

 
(71
)
 
43

 
65

 
55

 
(82
)
Other
 
114

 
100

 
149

 
123

 
104

 
131

 
129

 
78

Total research and development
 
5,934

 
6,177

 
5,735

 
4,934

 
5,001

 
4,662

 
4,105

 
3,702

Service, rental and maintenance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and related
 
2,866

 
2,618

 
2,693

 
2,413

 
2,582

 
2,607

 
2,665

 
2,687

Site rent
 
3,482

 
3,538

 
3,496

 
3,471

 
3,534

 
3,604

 
3,620

 
3,618

Telecommunications
 
950

 
935

 
898

 
979

 
1,060

 
1,001

 
1,081

 
1,096

Stock based compensation
 
24

 
24

 
24

 
20

 
20

 
20

 
20

 
(29
)
Other
 
465

 
583

 
639

 
734

 
679

 
712

 
680

 
617

Total service, rental and maintenance
 
7,787

 
7,698

 
7,750

 
7,617

 
7,875

 
7,944

 
8,066

 
7,989

Selling and marketing
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and related
 
3,401

 
3,311

 
3,294

 
2,573

 
3,113

 
3,039

 
3,071

 
3,556

Commissions
 
1,225

 
1,397

 
1,774

 
1,634

 
1,234

 
1,121

 
1,202

 
1,248

Stock based compensation
 
135

 
135

 
135

 
93

 
84

 
99

 
101

 
(131
)
Advertising and events
 
857

 
996

 
1,158

 
1,481

 
952

 
840

 
1,281

 
889

Other
 
98

 
254

 
129

 
258

 
150

 
230

 
267

 
293

Total selling and marketing
 
5,716

 
6,093

 
6,490

 
6,039

 
5,533

 
5,329

 
5,922

 
5,855

General and administrative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payroll and related
 
4,834

 
4,340

 
4,416

 
3,649

 
4,569

 
4,420

 
4,439

 
4,426

Stock based compensation
 
1,118

 
943

 
949

 
774

 
711

 
755

 
722

 
(863
)
Bad debt
 
513

 
279

 
528

 
143

 
184

 
107

 
94

 
137

Facility rent and office costs
 
1,235

 
1,743

 
1,941

 
1,865

 
2,013

 
1,995

 
1,838

 
1,694

Outside services
 
3,554

 
3,023

 
2,122

 
2,924

 
2,351

 
2,507

 
2,627

 
2,430

Taxes, licenses and permits
 
1,081

 
1,024

 
1,080

 
1,120

 
1,077

 
1,034

 
989

 
976

Other
 
1,338

 
1,389

 
928

 
1,220

 
1,153

 
1,121

 
1,001

 
2,477

Total general and administrative
 
13,673

 
12,741

 
11,964

 
11,695

 
12,058

 
11,939

 
11,710

 
11,277

Depreciation, amortization and accretion
 
2,785

 
2,669

 
2,713

 
2,774

 
2,775

 
2,851

 
3,223

 
3,176

Operating expenses
 
$
43,677

 
$
42,778

 
$
42,364

 
$
40,181

 
$
40,311

 
$
39,915

 
$
40,062

 
$
39,481

Capital expenditures
 
$
1,630

 
$
2,299

 
$
1,164

 
$
2,179

 
$
1,816

 
$
2,353

 
$
2,851

 
$
1,878

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(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
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Paging units in service
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning units in service (000's)
 
1,024

 
1,030

 
1,049

 
1,063

 
1,086

 
1,091

 
1,111

 
1,124

Gross placements
 
31

 
35

 
25

 
26

 
30

 
42

 
28

 
36

Gross disconnects
 
(56
)
 
(41
)
 
(44
)
 
(40
)
 
(53
)
 
(47
)
 
(48
)
 
(49
)
Net change
 
(25
)
 
(6
)
 
(19
)
 
(14
)
 
(23
)
 
(5
)
 
(20
)
 
(13
)
Ending units in service
 
999

 
1,024

 
1,030

 
1,049

 
1,063

 
1,086

 
1,091

 
1,111

End of period units in service % of total (b)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Healthcare
 
81.7
 %
 
81.5
 %
 
81.1
 %
 
80.7
 %
 
80.4
 %
 
80.4
 %
 
79.7
 %
 
79.3
 %
Government
 
5.8
 %
 
5.7
 %
 
5.9
 %
 
6.0
 %
 
6.1
 %
 
6.3
 %
 
6.4
 %
 
6.5
 %
Large enterprise
 
6.0
 %
 
6.0
 %
 
6.0
 %
 
6.0
 %
 
6.0
 %
 
6.1
 %
 
6.1
 %
 
6.2
 %
Other(b)
 
6.5
 %
 
6.8
 %
 
7.0
 %
 
7.2
 %
 
7.4
 %
 
7.3
 %
 
7.7
 %
 
8.0
 %
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
 
81

 
85

 
88

 
92

 
95

 
98

 
102

 
106

101 to 1,000 units
 
192

 
197

 
198

 
198

 
201

 
204

 
214

 
217

>1,000 units
 
726

 
742

 
744

 
759

 
767

 
784

 
775

 
788

Total
 
999

 
1,024

 
1,030

 
1,049

 
1,063

 
1,086

 
1,091

 
1,111

Account size net loss rate(c)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 to 100 units
 
(4.3
)%
 
(3.8
)%
 
(4.7
)%
 
(3.6
)%
 
(2.8
)%
 
(3.7
)%
 
(3.4
)%
 
(3.9
)%
101 to 1,000 units
 
(2.7
)%
 
(0.6
)%
 
(10.0
)%
 
(1.1
)%
 
(1.8
)%
 
(4.5
)%
 
(1.3
)%
 
(2.3
)%
>1,000 units
 
(2.2
)%
 
(0.2
)%
 
(1.9
)%
 
(1.1
)%
 
(2.2
)%
 
1.1
 %
 
(1.7
)%
 
(0.5
)%
Total
 
(2.5
)%
 
(0.6
)%
 
(1.8
)%
 
(1.3
)%
 
(2.2
)%
 
(0.4
)%
 
(1.8
)%
 
(1.2
)%
Account size ARPU
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1 to 100 units
 
$
11.33

 
$
12.04

 
$
12.13

 
$
12.11

 
$
12.23

 
$
12.16

 
$
12.22

 
$
12.25

101 to 1,000 units
 
8.19

 
8.34

 
8.47

 
8.58

 
8.62

 
8.61

 
8.66

 
8.63

>1,000 units
 
6.74

 
6.62

 
6.65

 
6.59

 
6.59

 
6.64

 
6.64

 
6.67

Total
 
$
7.40

 
$
7.41

 
$
7.47

 
$
7.46

 
$
7.48

 
$
7.52

 
$
7.56

 
$
7.59

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(a) Slight variations in totals are due to rounding.
(b) Other includes hospitality, resort and indirect units
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.
 
 




SPOK HOLDINGS, INC.
RECONCILIATION FROM NET (LOSS) INCOME TO EBITDA (a)
(Unaudited and in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the three months ended
 
 
9/30/2018
 
6/30/2018
 
3/31/2018
 
12/31/2017
 
9/30/2017
 
6/30/2017
 
3/31/2017
 
12/31/2016
Reconciliation of net (loss) income to EBITDA (b):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
$
(481
)
 
$
(976
)
 
$
511

 
$
(21,384
)
 
$
3,727

 
$
1,498

 
$
854

 
$
3,026

Less (plus): Benefit from (provision for) income taxes
 
(446
)
 
(730
)
 
475

 
24,920

 
171

 
1,155

 
620

 
1,876

Plus (less): Other (expense) income
 
110

 
(102
)
 
47

 
282

 
(359
)
 
(89
)
 
30

 
(100
)
Less: Interest income
 
(384
)
 
(342
)
 
(283
)
 
(229
)
 
(214
)
 
(154
)
 
(122
)
 
(99
)
Operating (loss) income
 
(1,201
)
 
(2,150
)
 
750

 
3,589

 
3,325

 
2,410

 
1,382

 
4,703

Plus: depreciation, amortization and accretion
 
2,785

 
2,669

 
2,713

 
2,774

 
2,775

 
2,851

 
3,223

 
3,176

EBITDA (as defined by the Company)
 
$
1,584