Spok Reports 2018 Second Quarter Operating Results; First Half Software Revenue up 11 Percent from Prior Year, Company Maintains Full Year Guidance Levels

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--()--Spok Holdings, Inc. (NASDAQ: SPOK), the global leader in healthcare communications, today announced operating results for the second quarter and year-to-date period ended June 30, 2018. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2018 to stockholders of record on August 17, 2018.

2018 Second-Quarter Results:

Consolidated revenue for the second quarter of 2018 under Generally Accepted Accounting Principles (“GAAP”) was $40.6 million compared to $42.3 million in the second 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 second quarter of 2018 was $41.8 million compared to the $42.3 million in the second quarter of 2017.

   
Three months ended
(Dollars in thousands)

June 30,
2018

   

June 30,
2018(1)

   

June 30,
2017

   

Change(2)
(%)

Wireless revenue
Paging revenue $ 22,824 $ 22,824 $ 24,572 (7.1 ) %
Product and other revenue   834       834       1,067 (21.8 ) %
Total wireless revenue $ 23,658     $ 23,658     $ 25,639 (7.7 ) %
 
Software revenue
Operations revenue $ 7,463 $ 8,021 $ 7,041 13.9 %
Maintenance revenue   9,507       10,115       9,645 4.9 %
Total software revenue   16,970       18,136       16,686 8.7 %
Total revenue $ 40,628     $ 41,794     $ 42,325 (1.3 ) %

(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 second quarter of 2018 was $1.0 million, or $0.05 per share, compared to net income of $1.5 million, or $0.07 per share, in the second quarter of 2017.

   
Three months ended
(Dollars in thousands)

June 30,
2018

   

June 30,
2018(1)

   

June 30,
2017

Net (loss) income $ (976 ) $ 36 $ 1,498
Diluted net (loss) income per share $ (0.05 ) $ 0.00 $ 0.07
EBITDA $ 519 $ 1,559 $ 5,261

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

 

Other key results and highlights for the second quarter included:

  • Net paging unit losses were approximately 6,000 in the second quarter of 2018, down from approximately 19,000 in the first quarter of 2018 and consistent with second quarter 2017 levels.
  • The quarterly rate of wireless revenue erosion was 2.5 percent in the second quarter of 2018 versus 1.3 percent in the first quarter of 2018.
  • Total paging ARPU (average revenue per unit) was $7.41 in the second quarter of 2018, compared to $7.47 in the first quarter of 2018.
  • Software bookings for the 2018 second quarter were $18.5 million, an increase of 2.0 percent from the first quarter of 2018. Second quarter bookings included $9.4 million of operations bookings and $9.1 million of maintenance renewals.
  • Software backlog totaled $36.3 million at June 30, 2018, compared to $35.9 million in the first quarter of 2018.
  • The revenue renewal rate for software maintenance in the second quarter of 2018 continued at greater than 99 percent.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $40.1 million in the second quarter of 2018, up slightly from $39.7 million in the first quarter of 2018.
  • Capital expenses were $2.3 million in the second quarter of 2018, compared to $1.2 million in the first quarter of 2018.
  • The number of full-time equivalent employees at June 30, 2018 totaled 607, compared to 604 at June 30, 2017.
  • Capital returned to stockholders in the second quarter of 2018 totaled $10.0 million, in the form of $2.5 million from dividends and $7.5 million from share repurchases.
  • The Company’s cash balance at June 30, 2018 was $94.1 million, down from $107.2 million at December 31, 2017.

2018 Year-To-Date Results:

Consolidated revenue for the first six months of 2018 was $83.7 million compared to $83.8 million in the first six 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 six months of 2018 was $84.3 million compared to the $83.8 million in the first six months of 2017.

   
Six months ended
(Dollars in thousands)

June 30,
2018

   

June 30,
2018(1)

   

June 30,
2017

   

Change(2)
(%)

Wireless revenue
Paging revenue $ 46,132 $ 46,132 $ 49,544 (6.9 ) %
Product and other revenue   1,795       1,795       1,955 (8.2 ) %
Total wireless revenue $ 47,927     $ 47,927     $ 51,499 (6.9 ) %
 
Software revenue
Operations revenue $ 16,934 $ 16,210 $ 13,082 23.9 %
Maintenance revenue   18,881       20,114       19,188 4.8 %
Total software revenue   35,815       36,324       32,270 12.6 %
Total revenue $ 83,742     $ 84,251     $ 83,769 0.6 %

(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 six months of 2018 was $0.5 million, or $0.02 per share, compared to net income of $2.4 million, or $0.11 per share, in the first six months of 2017.

   
Six months ended
(Dollars in thousands)

June 30,
2018

   

June 30,
2018(1)

   

June 30,
2017

Net (loss) income $ (465 ) $ 368 $ 2,352
Diluted net (loss) income per share $ (0.02 ) $ 0.02 $ 0.11
EBITDA $ 3,983 $ 4,831 $ 9,866

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

 

Management Commentary:

“Our performance in the second quarter of 2018 was in line with our seasonal expectations. We believe our year-to-date results provide a solid base as we enter the typically more robust second half of the year” said Vincent D. Kelly, president and chief executive officer. “We saw strong performance in a number of key operating measures and sequential improvements in subscriber retention, sales bookings, backlog levels, and operating expense management. These improvements allowed us to return $10.0 million of capital to our stockholders in the form of dividends and share repurchases and enhance our product offerings through our continued investments in our integrated communication platform, Spok Care Connect®.”

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. “During the quarter, we announced partnerships with industry-leading organizations, including Bernoulli® Health, to enhance our clinical alarm management offering, and our participation in Zebra Technologies’ PartnerConnect channel partner program, to offer Zebra’s enterprise-class mobile devices to hospitals and health systems throughout North America. Last month, we strengthened our position as an industry thought leader with the release of the results of our eighth consecutive survey of mobile strategies in healthcare. Also, during the quarter we started working with 13 new customers. Finally, we continue to make significant progress in enhancing our Care Connect platform offering, adding experienced product and development leadership, staff and consulting resources.”

Michael W. Wallace, chief financial officer, said: “Continued expense management and strong financial discipline have allowed us to invest in our business for long-term growth. Our ability to align our expense base with the market demand we are seeing helped Spok to partially offset the additional expenses related to our investments in our sales and product platforms.”

Business Outlook:

For the full-year 2018, adjusted to exclude the adoption of ASC 606, the Company continues to expect 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 Second-Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2018 second quarter results at 10:00 a.m. ET on Thursday, July 26, 2018. Dial-in numbers for the call are 334-323-0522 or 877-260-1479. The pass code for the call is 8594119. A replay of the call will be available from 1:00 p.m. ET on July 26, 2018 until 1:00 p.m. ET on Thursday, August 9, 2018. To listen to the replay, please register at http://tinyurl.com/Spok2018Q2earningsreplay. 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 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.

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.

 
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 six months ended
6/30/2018 6/30/2017 6/30/2018 6/30/2017
Revenue:
Wireless $ 23,658 $ 25,639 $ 47,927 $ 51,499
Software   16,970     16,686     35,815     32,270  
Total revenue   40,628     42,325     83,742     83,769  
Operating expenses:
Cost of revenue 7,400 7,190 15,133 14,226
Research and development 6,177 4,662 11,912 8,767
Service, rental and maintenance 7,698 7,944 15,448 16,010
Selling and marketing 6,093 5,329 12,562 11,251
General and administrative 12,741 11,939 24,704 23,649
Depreciation, amortization and accretion   2,669     2,851     5,382     6,074  
Total operating expenses   42,778     39,915     85,141     79,977  
% of total revenue 105.3 % 94.3 % 101.7 % 95.5 %
Operating (loss) income (2,150 ) 2,410 (1,399 ) 3,792
% of total revenue (5.3 )% 5.7 % (1.7 )% 4.5 %
Interest income 342 154 625 276
Other income   102     89     54     58  
(Loss) income before income taxes (1,706 ) 2,653 (720 ) 4,126
Benefit from (provision for) income taxes   730     (1,155 )   255     (1,774 )
Net (loss) income $ (976 ) $ 1,498   $ (465 ) $ 2,352  
Basic net (loss) income per common share $ (0.05 ) $ 0.07 $ (0.02 ) $ 0.12
Diluted net (loss) income per common share $ (0.05 ) $ 0.07 $ (0.02 ) $ 0.11
Basic weighted average common shares outstanding 19,750,941 20,353,801 19,888,606 20,441,781
Diluted weighted average common shares outstanding 19,750,941 20,366,102 19,888,606 20,508,473
Cash dividends declared per common share $ 0.125 $ 0.125 $ 0.250 $ 0.250
Key statistics:
Units in service 1,024 1,086 1,024 1,086
Average revenue per unit (ARPU) $ 7.41 $ 7.52 $ 7.42 $ 7.58
Bookings $ 18,488 $ 20,405 $ 36,612 $ 40,193
Backlog $ 36,295 $ 43,455 $ 36,295 $ 43,455
 
(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
6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Revenue:
Wireless $ 23,658 $ 24,269 $ 24,579 $ 25,110 $ 25,639 $ 25,860 $ 26,535 $ 27,024
Software   16,970     18,845     19,191     18,526     16,686     15,584     17,649     18,331  
Total revenue   40,628     43,114     43,770     43,636     42,325     41,444     44,184     45,355  
Operating expenses:
Cost of revenue 7,400 7,712 7,122 7,069 7,190 7,036 7,482 7,639
Research and development 6,177 5,735 4,934 5,001 4,662 4,105 3,702 3,645
Service, rental and maintenance 7,698 7,750 7,617 7,875 7,944 8,066 7,989 8,253
Selling and marketing 6,093 6,490 6,039 5,533 5,329 5,922 5,855 5,955
General and administrative 12,741 11,964 11,695 12,058 11,939 11,710 11,277 10,605
Depreciation, amortization and accretion   2,669     2,713     2,774     2,775     2,851     3,223     3,176     3,229  
Total operating expenses   42,778     42,364     40,181     40,311     39,915     40,062     39,481     39,326  
% of total revenue 105.3 % 98.3 % 91.8 % 92.4 % 94.3 % 96.7 % 89.4 % 86.7 %
Operating (loss) income (2,150 ) 750 3,589 3,325 2,410 1,382 4,703 6,029
% of total revenue (5.3 )% 1.7 % 8.2 % 7.6 % 5.7 % 3.3 % 10.6 % 13.3 %
Interest income 342 283 229 214 154 122 99 67
Other income (expense)   102     (47 )   (282 )   359     89     (30 )   100     85  
(Loss) income before income taxes (1,706 ) 986 3,536 3,898 2,653 1,474 4,902 6,181
Benefit from (provision for) income taxes   730     (475 )   (24,920 )   (171 )   (1,155 )   (620 )   (1,876 )   (2,123 )
Net (loss) income $ (976 ) $ 511   $ (21,384 ) $ 3,727   $ 1,498   $ 854   $ 3,026   $ 4,058  
Basic and diluted net (loss) income per common share $ (0.05 ) $ 0.03   $ (1.07 ) $ 0.19   $ 0.07   $ 0.04   $ 0.15   $ 0.20  
Basic weighted average common shares outstanding   19,750,941     20,027,800     19,987,763     19,977,263     20,353,801     20,530,739     20,529,958     20,541,275  
Diluted weighted average common shares outstanding   19,750,941     20,153,291     19,987,763     20,008,321     20,366,102     20,585,542     20,529,958     20,541,275  
Key statistics:
Units in service 1,024 1,030 1,049 1,063 1,086 1,091 1,111 1,124
Average revenue per unit (ARPU) $ 7.41 $ 7.47 $ 7.46 $ 7.48 $ 7.52 $ 7.56 $ 7.59 $ 7.63
Bookings $ 18,488 $ 18,124 $ 19,190 $ 18,327 $ 20,405 $ 19,788 $ 20,025 $ 18,659
Backlog $ 36,295 $ 35,930 $ 42,305 $ 46,900 $ 43,455 $ 40,555 $ 38,295 $ 38,812
 
(a) Slight variations in totals are due to rounding.
 
 
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
       
6/30/2018 12/31/2017
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 94,068 $ 107,157
Accounts receivable, net 35,574 32,279
Prepaid expenses and other 7,050 5,752
Inventory   1,505     1,672  
Total current assets 138,197 146,860
Non-current assets:
Property and equipment, net 13,035 13,399
Goodwill 133,031 133,031
Intangible assets, net 6,667 7,917
Deferred income tax assets 46,344 47,679
Other non-current assets   1,431     1,675  
Total non-current assets   200,508     203,701  
Total assets $ 338,705   $ 350,561  
Liabilities and stockholders' equity
Current liabilities:
Accounts payable 310 1,305
Accrued compensation and benefits 9,261 11,018
Accrued taxes 2,055 2,547
Deferred revenue 32,449 31,414
Other current liabilities   4,010     4,610  
Total current liabilities 48,085 50,894
Non-current liabilities:
Deferred revenue 961 1,063
Other long-term liabilities   8,393     8,075  
Total non-current liabilities   9,354     9,138  
Total liabilities   57,439     60,032  
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock 2 2
Additional paid-in capital 92,102 99,819
Accumulated other comprehensive loss (1,850 ) (1,088 )
Retained earnings   191,012     191,796  
Total stockholders' equity   281,266     290,529  
Total liabilities and stockholders' equity $ 338,705   $ 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 six months ended
6/30/2018 6/30/2017
Cash flows provided by operating activities:
Net (loss) income $ (465 ) $ 2,352
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 5,382 6,074
Deferred income tax (benefit) expense (472 ) 1,069
Stock based compensation 2,501 1,953
Provisions for doubtful accounts, service credits and other 1,016 458
Adjustments of non-cash transaction taxes (104 ) (700 )
Changes in assets and liabilities:
Accounts receivable (2,986 ) (1,242 )
Prepaid expenses, inventory and other assets (277 ) (2,684 )
Accounts payable, accrued liabilities and other (3,394 ) (3,261 )
Deferred revenue   5,191     2,561  
Net cash provided by operating activities   6,392     6,580  
Cash flows from investing activities:
Purchases of property and equipment (3,464 ) (5,198 )
Net cash used in investing activities   (3,464 )   (5,198 )
Cash flows from financing activities:
Cash distributions to stockholders (5,201 ) (10,239 )
Purchase of common stock for tax withholding on vested equity awards (894 )
Purchase of common stock (including commissions) (9,467 ) (10,024 )
Proceeds from issuance of common stock under the Employee Stock Purchase Plan   143     130  
Net cash used in financing activities   (15,419 )   (20,133 )
Effect of exchange rate on cash   (598 )   86  
Net decrease in cash and cash equivalents (13,089 ) (18,665 )
Cash and cash equivalents, beginning of period   107,157     125,816  
Cash and cash equivalents, end of period $ 94,068   $ 107,151  
Supplemental disclosure:
Income taxes paid $ 457   $ 1,964  
 
(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

6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Revenue
Paging $ 22,824 $ 23,308 $ 23,624 $ 24,128 $ 24,572 $ 24,972 $ 25,441 $ 25,944
Non-paging   834   961   955   982   1,067   888   1,094   1,080
Total wireless revenue $ 23,658 $ 24,269 $ 24,579 $ 25,110 $ 25,639 $ 25,860 $ 26,535 $ 27,024
 
Subscription 441 420 559 577 623 543 551 560
License 1,552 3,956 2,431 1,995 1,641 1,171 1,594 1,842
Services 4,363 4,071 5,437 5,189 3,650 3,354 4,500 5,578
Equipment   1,107   1,024   945   1,102   1,127   973   1,402   1,091
Operations revenue $ 7,463 $ 9,471 $ 9,372 $ 8,863 $ 7,041 $ 6,041 $ 8,047 $ 9,071
 
Maintenance revenue $ 9,507 $ 9,374 $ 9,819 $ 9,663 $ 9,645 $ 9,543 $ 9,602 $ 9,260
Total software revenue $ 16,970 $ 18,845 $ 19,191 $ 18,526 $ 16,686 $ 15,584 $ 17,649 $ 18,331
 
Total revenue $ 40,628 $ 43,114 $ 43,770 $ 43,636 $ 42,325 $ 41,444 $ 44,184 $ 45,355
 
(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
6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Cost of revenue
Payroll and related $ 4,853 $ 4,874 $ 4,374 $ 4,330 $ 4,613 $ 4,490 $ 4,611 $ 4,469
Cost of sales 1,923 2,309 1,990 2,228 1,904 1,995 2,415 2,587
Stock based compensation 75 55 58 4 60 58 (108 ) 57
Other   549   474   700     507   613   493   564     526
Total cost of revenue   7,400   7,712   7,122     7,069   7,190   7,036   7,482     7,639
Research and development
Payroll and related 4,506 4,002 3,521 4,005 3,807 3,405 3,195 2,939
Outside services 1,481 1,513 1,361 849 659 516 511 569
Stock based compensation 90 71 (71 ) 43 65 55 (82 ) 46
Other   100   149   123     104   131   129   78     91
Total research and development   6,177   5,735   4,934     5,001   4,662   4,105   3,702     3,645
Service, rental and maintenance
Payroll and related 2,618 2,693 2,413 2,582 2,607 2,665 2,687 2,638
Site rent 3,538 3,496 3,471 3,534 3,604 3,620 3,618 3,626
Telecommunications 935 898 979 1,060 1,001 1,081 1,096 1,162
Stock based compensation 24 24 20 20 20 20 (29 ) 15
Other   583   639   734     679   712   680   617     812
Total service, rental and maintenance   7,698   7,750   7,617     7,875   7,944   8,066   7,989     8,253
Selling and marketing
Payroll and related 3,311 3,294 2,573 3,113 3,039 3,071 3,556 3,467
Commissions 1,397 1,774 1,634 1,234 1,121 1,202 1,248 1,317
Stock based compensation 135 135 93 84 99 101 (131 ) 75
Advertising and events 996 1,158 1,481 952 840 1,281 889 866
Other   254   129   258     150   230   267   293     230
Total selling and marketing   6,093   6,490   6,039     5,533   5,329   5,922   5,855     5,955
General and administrative
Payroll and related 4,340 4,416 3,649 4,569 4,420 4,439 4,426 4,076
Stock based compensation 943 949 774 711 755 722 (863 ) 507
Bad debt 279 528 143 184 107 94 137 97
Facility rent and related costs 1,743 1,941 1,865 2,013 1,995 1,838 1,694 1,673
Outside services 3,023 2,122 2,924 2,351 2,507 2,627 2,430 2,247
Taxes, licenses and permits 1,024 1,080 1,120 1,077 1,034 989 976 1,164
Other   1,389   928   1,220     1,153   1,121   1,001   2,477     841
Total general and administrative   12,741   11,964   11,695     12,058   11,939   11,710   11,277     10,605
Depreciation, amortization and accretion   2,669   2,713   2,774     2,775   2,851   3,223   3,176     3,229
Operating expenses $ 42,778 $ 42,364 $ 40,181   $ 40,311 $ 39,915 $ 40,062 $ 39,481   $ 39,326
Capital expenditures $ 2,299 $ 1,164 $ 2,179 $ 1,816 $ 2,353 $ 2,851 $ 1,878 $ 1,396
 
(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

6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016

Paging units in service

Beginning units in service (000's) 1,030 1,049 1,063 1,086 1,091 1,111 1,124 1,144
Gross placements 35 25 26 30 42 28 36 34
Gross disconnects   (41 )   (44 )   (40 )   (53 )   (47 )   (48 )   (49 )   (54 )
Net change   (6 )   (19 )   (14 )   (23 )   (5 )   (20 )   (13 )   (20 )
Ending units in service   1,024     1,030     1,049     1,063     1,086     1,091     1,111     1,124  
End of period units in service % of total (b)
Healthcare 81.5 % 81.1 % 80.7 % 80.4 % 80.4 % 79.7 % 79.3 % 78.6 %
Government 5.7 % 5.9 % 6.0 % 6.1 % 6.3 % 6.4 % 6.5 % 6.7 %
Large enterprise 6.0 % 6.0 % 6.0 % 6.0 % 6.1 % 6.1 % 6.2 % 6.5 %
Other(b)   6.8 %   7.0 %   7.2 %   7.4 %   7.3 %   7.7 %   8.0 %   8.2 %
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 85 88 92 95 98 102 106 110
101 to 1,000 units 197 198 198 201 204 214 217 222
>1,000 units   742     744     759     767     784     775     788     792  
Total   1,024     1,030     1,049     1,063     1,086     1,091     1,111     1,124  
Account size net loss rate(c)
1 to 100 units (3.8 )% (4.7 )% (3.6 )% (2.8 )% (3.7 )% (3.4 )% (3.9 )% (3.5 )%
101 to 1,000 units (0.6 )% (10.0 )% (1.1 )% (1.8 )% (4.5 )% (1.3 )% (2.3 )% (2.6 )%
>1,000 units   (0.2 )%   (1.9 )%   (1.1 )%   (2.2 )%   1.1 %   (1.7 )%   (0.5 )%   (1.2 )%
Total   (0.6 )%   (1.8 )%   (1.3 )%   (2.2 )%   (0.4 )%   (1.8 )%   (1.2 )%   (1.7 )%
Account size ARPU
1 to 100 units $ 12.04 $ 12.13 $ 12.11 $ 12.23 $ 12.16 $ 12.22 $ 12.25 $ 12.34
101 to 1,000 units 8.34 8.47 8.58 8.62 8.61 8.66 8.63 8.64
>1,000 units   6.62     6.65     6.59     6.59     6.64     6.64     6.67     6.68  
Total $ 7.41   $ 7.47   $ 7.46   $ 7.48   $ 7.52   $ 7.56   $ 7.59   $ 7.63  
 
(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
6/30/2018 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016
Reconciliation of net (loss) income to EBITDA (b):
Net (loss) income $ (976 ) $ 511 $ (21,384 ) $ 3,727 $ 1,498 $ 854 $ 3,026 $ 4,058
Less (plus): Benefit from (provision for) income taxes (730 ) 475 24,920 171 1,155 620 1,876 2,123
Plus (less): Other income (expense) (102 ) 47 282 (359 ) (89 ) 30 (100 ) (85 )
Less: Interest income   (342 )   (283 )   (229 )   (214 )   (154 )   (122 )   (99 )   (67 )
Operating (loss) income (2,150 ) 750 3,589 3,325 2,410 1,382 4,703 6,029
Plus: depreciation, amortization and accretion   2,669     2,713     2,774     2,775     2,851     3,223     3,176     3,229  
EBITDA (as defined by the Company) $ 519   $ 3,463   $ 6,363   $ 6,100   $ 5,261   $ 4,605   $ 7,879   $ 9,258  
 
For the six months ended
6/30/2018 6/30/2017
Reconciliation of net (loss) income to EBITDA (b):
Net (loss) income $ (465 ) $ 2,352
Less (plus): Benefit from (provision for) income taxes (255 ) 1,774
Less: Other income (54 ) (58 )
Less: Interest income   (625 )   (276 )
Operating (loss) income (1,399 ) 3,792
Plus: depreciation, amortization and accretion   5,382       6,074  
EBITDA (as defined by the Company) $ 3,983     $ 9,866  
 
For the three months ended For the six months ended
6/30/2018 6/30/2018
Reconciliation of EBITDA to EBITDA adjusted to exclude the adoption of ASC 606 (b):
EBITDA (as defined by the Company) $ 519 $ 3,983
Plus: Software revenue 1,166 509
(Less) plus: Cost of revenue (21 ) 5
(Less) plus: Selling and marketing   (105 )   334  
Adjusted EBITDA (c) $ 1,559   $ 4,831  
 
(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only. Management and the Board of Directors rely on EBITDA for purposes of determining the Company’s capital allocation policies. EBITDA is also the starting point for the calculation of operating cash flow for purposes of determining whether management has achieved certain performance objectives in the Company’s short term and long term incentive plans.
(c) Adjusted EBITDA represents EBITDA adjusted to exclude the adoption of ASC 606. Adjusted EBITDA is used by the Company for purposes of comparison to prior period results during its year of transition (2018) under the modified retrospective approach.
 

Contacts

Spok Holdings, Inc.
Al Galgano, 952-567-0295
Al.Galgano@spok.com

Contacts

Spok Holdings, Inc.
Al Galgano, 952-567-0295
Al.Galgano@spok.com