Group 1 - Stork Research focuses on micro-cap and small-cap equities that exhibit strong growth at reasonable valuations, emphasizing a GARP (Growth at a Reasonable Price) strategy [2] - The analysis covers sectors such as industrials and technology, which are historically rich in multi-bagger potential [2] - The geographic scope of Stork Research includes the U.S., Canada, and select European markets, specifically Poland and Germany [2] Group 2 - Stork Research aims to uncover inefficiencies in the market and identify unique, high-conviction investment ideas that are often overlooked [2] - The firm typically avoids highly cyclical industries but may target recovery-phase opportunities or contrarian plays in overvalued names [2]

[PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Condensed Consolidated Financial Statements](index=4&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Q1 2025, detailing financial position, operational performance, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet reflects a decrease in total assets to $204.5 million, driven by reduced cash and cash equivalents Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $19,873 | $29,145 | | Total current assets | $50,405 | $61,297 | | Goodwill | $99,175 | $99,175 | | Total assets | $204,476 | $217,103 | | **Liabilities & Equity** | | | | Total current liabilities | $40,767 | $48,774 | | Total liabilities | $52,738 | $62,357 | | Total stockholders' equity | $151,738 | $154,746 | | Total liabilities and stockholders' equity | $204,476 | $217,103 | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenue increased to $36.3 million in Q1 2025, driven by software growth, leading to a net income of $5.2 million Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Total revenue** | **$36,294** | **$34,909** | | Wireless revenue | $18,474 | $18,595 | | Software revenue | $17,820 | $16,314 | | Total operating expenses | $30,276 | $30,018 | | **Operating income** | **$6,018** | **$4,891** | | **Net income** | **$5,196** | **$4,236** | | Diluted net income per common share | $0.25 | $0.21 | | Cash dividends declared per common share | $0.3125 | $0.3125 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating activities generated $2.3 million in Q1 2025, with a net decrease in cash and cash equivalents of $9.3 million Cash Flow Summary for the Three Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,253 | $1,998 | | Net cash used in investing activities | ($745) | ($875) | | Net cash used in financing activities | ($10,790) | ($9,814) | | **Net decrease in cash and cash equivalents** | **($9,272)** | **($8,649)** | | Cash and cash equivalents, end of period | $19,873 | $23,340 | [Unaudited Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Unaudited%20Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, business operations, and financial statement components, including revenue disaggregation and dividends - Spok is a global leader in healthcare communications, delivering clinical information to care teams through wireless messaging and enterprise-wide systems for contact centers, clinical alerting, and mobile communications[19](index=19&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) Revenue Disaggregation by Type (in thousands) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | **Wireless Revenue** | **$18,474** | **$18,595** | | Paging revenue | $17,607 | $17,970 | | Product and other revenue | $867 | $625 | | **Software Revenue** | **$17,820** | **$16,314** | | License | $2,631 | $2,626 | | Professional services - projects | $4,471 | $3,561 | | Professional services - managed services | $1,315 | $464 | | Hardware | $321 | $384 | | Maintenance | $9,082 | $9,279 | | **Total Revenue** | **$36,294** | **$34,909** | - The balance of remaining performance obligations was **$63.2 million** as of March 31, 2025. The company expects to recognize approximately **$36.5 million** of this amount over the next 12 months[45](index=45&type=chunk) - The company declared a quarterly cash dividend of **$0.3125 per share** on February 26, 2025, totaling **$6.6 million**. A subsequent dividend of the same amount was declared on April 30, 2025[58](index=58&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, highlighting revenue growth, operating income increase, and liquidity position Q1 2025 vs Q1 2024 Results Summary (in thousands) | Metric | Q1 2025 | Q1 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenue | $36,294 | $34,909 | 4.0% | | Wireless Revenue | $18,474 | $18,595 | (0.7)% | | Software Revenue | $17,820 | $16,314 | 9.2% | | Operating Income | $6,018 | $4,891 | 23.0% | | Net Income | $5,196 | $4,236 | 22.7% | [Results of Operations](index=21&type=section&id=Results%20of%20Operations) Total revenue increased by 4.0% year-over-year, driven by software growth, while wireless revenue saw a slight decline - The decrease in wireless revenue was driven by a secular decline in wireless units in service (from **753k** to **705k** YoY), which was partially offset by an increase in ARPU from **$7.89** to **$8.24** due to price increases initiated in September 2024[101](index=101&type=chunk) - Software revenue growth was primarily due to increased professional services revenue, resulting from higher sales and hiring efforts to align staffing with a growing backlog[106](index=106&type=chunk) - Selling and marketing expenses increased by **$0.7 million (16.8%)** due to additional headcount, higher advertising and event expenses, and increased commissions related to software bookings[110](index=110&type=chunk) - Technology operations expenses decreased by **$0.4 million (7.1%)** due to network rationalization efforts, which reduced the number of active transmitters by **6.3%** year-over-year[109](index=109&type=chunk) [Liquidity and Capital Resources](index=24&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity is supported by cash from operations and its cash balance, deemed sufficient for future needs - As of March 31, 2025, the company held cash and cash equivalents of **$19.9 million**[113](index=113&type=chunk) Cash Flow Summary for the Three Months Ended March 31 (in thousands) | Activity | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | $2,253 | $1,998 | $255 | | Net cash used in investing activities | ($745) | ($875) | $130 | | Net cash used in financing activities | ($10,790) | ($9,814) | ($976) | - The Board of Directors authorized a share repurchase program for up to **$10 million** of the company's common stock in February 2022[118](index=118&type=chunk) [Commitments and Contingencies](index=26&type=section&id=Commitments%20and%20Contingencies) Total contractual obligations as of March 31, 2025, amounted to $14.35 million, including operating leases and purchase obligations Contractual Obligations as of March 31, 2025 (in thousands) | Obligation Type | Total | 1 year or less | 1 to 3 years | 3 to 5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Operating lease obligations | $9,761 | $3,201 | $4,065 | $1,515 | $980 | | Unconditional purchase obligations | $4,589 | $2,218 | $2,371 | $— | $— | | **Total contractual obligations** | **$14,350** | **$5,419** | **$6,436** | **$1,515** | **$980** | [Quantitative and Qualitative Disclosures about Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company reports minimal exposure to market risk, with no outstanding debt and immaterial foreign currency exchange risk - As of March 31, 2025, the company had no outstanding debt and therefore no material exposure to interest rate risk[135](index=135&type=chunk) - The financial impact of transactions in foreign currencies is immaterial, resulting in no material exposure to foreign currency exchange rate risk[136](index=136&type=chunk) [Controls and Procedures](index=27&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal controls - Management, including the principal executive officer and principal financial officer, concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[137](index=137&type=chunk) - No changes were made to the company's internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[138](index=138&type=chunk) [PART II. OTHER INFORMATION](index=27&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=27&type=section&id=Item%201.%20Legal%20Proceedings) No material changes to legal proceedings were reported during Q1 2025, consistent with the 2024 Annual Report - There have been no material changes during the three months ended March 31, 2025, to the commitments and contingencies previously reported in the 2024 Annual Report[83](index=83&type=chunk)[139](index=139&type=chunk) [Risk Factors](index=27&type=section&id=Item%201A.%20Risk%20Factors) The risk factors disclosed in the 2024 Annual Report on Form 10-K have not materially changed during Q1 2025 - The risk factors included in the 2024 Annual Report have not materially changed during the three months ended March 31, 2025[140](index=140&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=28&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any shares of its common stock during the three months ended March 31, 2025 - The Company did not repurchase any shares of its common stock during the three months ended March 31, 2025[141](index=141&type=chunk) [Other Information](index=28&type=section&id=Item%205.%20Other%20Information) No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement in Q1 2025 - During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a 'Rule 10b5-1 trading arrangement' or 'non-Rule 10b5-1 trading arrangement'[142](index=142&type=chunk) [Exhibits](index=29&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed with this report include certifications from the Chief Executive Officer and Chief Financial Officer, as well as Inline XBRL documents[143](index=143&type=chunk)[145](index=145&type=chunk)

Group 1: Earnings Performance - Spok Holdings reported quarterly earnings of $0.25 per share, exceeding the Zacks Consensus Estimate of $0.18 per share, and up from $0.21 per share a year ago, representing an earnings surprise of 38.89% [1] - The company posted revenues of $36.29 million for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 6.75%, compared to year-ago revenues of $34.91 million [2] Group 2: Stock Performance and Outlook - Spok shares have declined approximately 10.2% since the beginning of the year, while the S&P 500 has decreased by 5.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.20 on revenues of $34.3 million, and for the current fiscal year, it is $0.79 on revenues of $138 million [7] Group 3: Industry Context - The Wireless National industry, to which Spok belongs, is currently ranked in the top 31% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Cambium (CMBM), another company in the same industry, is expected to report a quarterly loss of $0.11 per share, reflecting a year-over-year change of +76.1%, with revenues anticipated to be $45.53 million, up 7.5% from the previous year [9]

Financial Data and Key Metrics Changes - In Q1 2025, total GAAP revenue was $36.3 million, up more than 7% from $33.9 million in the prior quarter and nearly 4% from $34.9 million in Q1 2024 [24] - GAAP net income totaled $5.2 million or $0.25 per diluted share, an increase from $4.2 million or $0.21 per diluted share in 2024 [23] - Adjusted EBITDA reached $8.2 million, reflecting a nearly 9% increase from the same quarter in 2024 [29] Business Line Data and Key Metrics Changes - Software revenue was $17.8 million, up 9.2% from the prior year quarter, while wireless revenue was $18.5 million, nearly flat compared to Q1 2024 [24] - Professional services revenue increased by nearly 44% year over year, totaling $5.8 million, with managed services revenue accounting for $1.3 million, up more than 180% from $500,000 in Q1 2024 [27] - Software backlog increased by more than 15% year over year, indicating strong future revenue potential [9] Market Data and Key Metrics Changes - The average revenue per unit (ARPU) for wireless services increased by 4.4% year over year to $824, driven by prior pricing actions and sales of new products [24] - Net unit churn improved to 6.4% from 7.2% in the prior year, reflecting better customer retention [24] Company Strategy and Development Direction - The company aims to generate cash and return capital to shareholders while investing in growth, maintaining a disciplined expense management approach [5][12] - The strategic focus includes continued investment in wireless and software solutions, growing the revenue base, and a stockholder-friendly capital allocation plan [12] - The company has transformed into a leading healthcare communications provider, emphasizing its commitment to enhancing patient care and safety through technology [13][15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite macroeconomic uncertainties, reiterating guidance for 2025 [16][31] - The company anticipates annual free cash flow in the range of $24 to $28 million and expects to exit 2025 with cash balances between $23 million and $27 million [30] - Management highlighted a strong start to 2025, with expectations for continued growth driven by software solutions and a solid customer base [33] Other Important Information - The company has maintained a strong reputation in the healthcare communications industry, recognized as a top clinical communications platform for eight of the past ten years [15] - The HIMSS conference experience was positive, with a focus on prequalifying meetings leading to better engagement and interest in new products [48][50] Q&A Session Summary Question: Is there any seasonality with the larger 7 figure contracts? - Management noted no seasonality observed, with a positive trend in contract signings [38] Question: What drove the strong wireless product revenue? - The increase was primarily due to a pricing initiative for unreturned pagers, expected to yield an annualized benefit of about $1 million [40] Question: What drove the improvement in gross margin? - Gross margin improved due to strong revenue performance, though fluctuations may occur based on quarterly results [41][42] Question: What is the conversion timeline for the software backlog? - Approximately half of the backlog is services, with maintenance revenue typically recognized over a year and services over nine to fifteen months [43][44] Question: How was the experience at the HIMSS conference? - The conference was better than the previous year, with a focused approach leading to successful customer engagements [48][50] Question: What is the strategy for managed services? - Managed services provide fixed costs for customers, aiding in revenue recognition and reducing churn [52][53] Question: Are the new logos significant customers? - Both new logos are meaningful wins, with the company having pursued them for some time [56][59]

Financial Data and Key Metrics Changes - In Q1 2025, GAAP net income was $5.2 million or $0.25 per diluted share, up from $4.2 million or $0.21 per diluted share in Q1 2024 [22] - Total GAAP revenue for Q1 2025 was $36.3 million, an increase of over 7% from $33.9 million in the prior quarter and nearly 4% from $34.9 million in Q1 2024 [23] - Adjusted EBITDA totaled $8.2 million, reflecting a nearly 9% increase from the same quarter in 2024 [28] Business Line Data and Key Metrics Changes - Software revenue reached $17.8 million, up 9.2% from the prior year quarter, while wireless revenue was $18.5 million, nearly flat compared to Q1 2024 [23] - Professional services revenue was $5.8 million, up nearly 44% from $4 million in Q1 2024, with managed services revenue totaling $1.3 million, representing over 22% of total professional services revenue [26] - Software backlog increased by more than 15% year over year, indicating strong future revenue potential [42] Market Data and Key Metrics Changes - The company maintains the largest paging network in the United States, serving over 2,200 hospitals [12] - Wireless average revenue per unit (ARPU) increased by 4.4% year over year to $824, driven by pricing actions and sales of new products [23] Company Strategy and Development Direction - The company aims to generate cash and return capital to shareholders while investing in business growth, focusing on four strategic tenets: investment in wireless and software solutions, revenue growth, disciplined expense management, and stockholder-friendly capital allocation [10][9] - The company is committed to maintaining a strong position in healthcare communications, leveraging its established solutions and customer base to create shareholder value [10][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and reiterated guidance for 2025, expecting total revenue to range from $134 million to $142 million [31] - The company believes that current macroeconomic uncertainties will not materially impact revenue or supply chain, maintaining a positive outlook for the healthcare industry [14] Other Important Information - The company plans to invest between $11 million and $12 million in product research and development in 2025 to fuel future software revenue growth [9] - The company has returned over $700 million to shareholders over the past 20 years through dividends and share repurchases [9] Q&A Session Summary Question: Is there any seasonality with the larger 7-figure contracts? - Management noted no seasonality observed, with a positive trend in contract signings [36][37] Question: What drove the strong wireless product revenue? - The increase was primarily due to a price increase for unreturned pagers, expected to yield an annualized benefit of about $1 million [38][39] Question: What drove the improvement in gross margin? - Gross margin improved due to strong revenue performance, but fluctuations are expected based on revenue dynamics [40][41] Question: What is the conversion timeline for the software backlog? - Approximately half of the backlog is services, which typically convert over a 9 to 15-month period [42][43] Question: What was the experience at the HIMSS conference? - The conference was better than the previous year, with a focused approach leading to successful customer engagements [48][49] Question: What is the strategy for professional services? - The focus is on managed services, providing fixed costs for customers and improving revenue recognition [51][52] Question: Are the two new logos significant customers? - Both new customers are meaningful wins that the company has pursued for some time [58][60]

Financial Performance - Q1 2025 - Spok generated $5.2 million of GAAP net income and $8.2 million of adjusted EBITDA[26] - Total revenue reached $36.3 million, compared to $34.9 million in the same period last year[27] - Wireless revenue was $18.5 million[27] - Software revenue increased to $17.8 million from $16.3 million[27] - The company returned $7.9 million to stockholders through dividends[29] - Cash and equivalents balance was $19.9 million with no debt[29] Strategic Focus & Capital Allocation - The company's strategic goal is to run the business profitably and generate cash, returning capital to stockholders[10] - Over $700 million has been returned to stockholders since 2004[12] - The company anticipates returning more than $27 million in capital to stockholders in 2025[12] Business Highlights - The company has approximately 705,000 wireless units in service as of March 31, 2025[19] - Over 2,200 hospitals use Spok Communications[19] - Software operations bookings increased nearly 6% year-over-year[24] - Software backlog is up more than 15% from the first quarter of 2024[24] 2025 Financial Outlook - Total revenue is projected to be between $134.0 million and $142.0 million[32] - Wireless revenue is expected to be between $69.0 million and $72.0 million[32] - Software revenue is projected to be between $65.0 million and $70.0 million[32] - Adjusted EBITDA is expected to be between $27.5 million and $32.5 million[32]

Financial Performance - First quarter 2025 net income increased by 22.7% to $5.2 million compared to the prior year[4] - Adjusted EBITDA for the first quarter 2025 rose by 8.9% to $8.2 million from $7.5 million in Q1 2024[4] - Total revenue for Q1 2025 was $36.3 million, a 4.0% increase from $34.9 million in Q1 2024[10] - Total revenue for the three months ended March 31, 2025, was $36,294 million, an increase of 3.95% from $34,909 million in the same period of 2024[27] - Operating income rose to $6,018 million, representing 16.6% of total revenue, compared to $4,891 million or 14.0% in the prior year[27] - Net income increased to $5,196 million, up 22.7% from $4,236 million year-over-year, with basic net income per share rising to $0.25 from $0.21[27] - Total operating expenses were $30,276 million, accounting for 83.4% of total revenue, down from 86.0% in the previous year[27] - Cash and cash equivalents decreased to $19,873 million from $29,145 million at the end of the previous quarter[29] - The company reported a net cash provided by operating activities of $2,253 million, compared to $1,998 million in the same quarter last year[31] - Adjusted EBITDA for the three months ended March 31, 2025, was $8,204 million, an increase from $7,535 million in the prior year[37] Revenue Sources - Software operations bookings reached $8.3 million, up 5.7% from Q1 2024, including 22 six-figure customer contracts[4][11] - Software backlog totaled $63.2 million at March 31, 2025, reflecting a more than 15% increase from the previous year[4][11] - Professional services revenue surged nearly 44% year-over-year, driven by strong software operations bookings[5] - Wireless average revenue per unit (ARPU) was $8.24, marking a year-over-year increase of over 4%[4][11] - The average revenue per unit (ARPU) for all account sizes increased to $8.24, compared to $7.84 in the same quarter of 2024[33] Future Outlook - The company reiterated its full-year 2025 revenue guidance, projecting total revenue between $134 million and $142 million[12] - Research and development costs for Q1 2025 were $3.1 million, supporting future growth initiatives[4] Operational Metrics - The total number of units in service as of March 31, 2025, was 705,000, a decrease from 753,000 units a year earlier[33] - Healthcare market segment accounted for 85.5% of total ending units in service, consistent with previous quarters[33] Shareholder Returns - Capital returned to stockholders in Q1 2025 amounted to $7.9 million, up 7.6% from the prior year[4][10]

Revenue Performance - Total revenue for 2024 was $137,653 thousand, a decrease of 1.0% compared to $139,025 thousand in 2023[185]. - Wireless revenue decreased to $73,523 thousand, down 3.2% from $75,968 thousand in 2023, reflecting a decline in units in service from approximately 765 thousand to 720 thousand[196]. - Software revenue increased to $64,130 thousand, up 1.7% from $63,057 thousand in 2023, driven by higher professional services revenue[200]. Income and Expenses - Operating income for 2024 was $18,965 thousand, a decrease of 10.7% compared to $21,228 thousand in 2023[185]. - Net income for 2024 was $14,965 thousand, down 4.5% from $15,666 thousand in 2023[185]. - Research and development expenses rose to $11,548 thousand, an increase of 9.5% from $10,549 thousand in 2023[185]. - Cost of revenue increased by $1.6 million, or 6.0%, for the year ended December 31, 2024, compared to 2023, primarily due to additional professional services personnel[207]. - Selling and marketing expenses decreased by $0.5 million, or 3.1%, for the year ended December 31, 2024, attributed to the amortization of commission expenses[210]. - General and administrative expenses increased by $0.1 million, or 0.4%, for the year ended December 31, 2024, remaining largely in line with 2023[211]. Employee and Operational Metrics - The number of full-time employees (FTEs) increased to 410, up 6.8% from 384 in 2023[185]. - Technology operations expenses decreased by $1.5 million, or 5.9%, for the year ended December 31, 2024, due to a 5.2% decline in the number of active transmitters[209]. Cash Flow and Dividends - Net cash provided by operating activities was $28.9 million for the year ended December 31, 2024, compared to $26.2 million in 2023[228]. - Cash and cash equivalents at December 31, 2024, totaled $29.1 million, with a majority held in accounts exceeding insured limits[218]. - The company intends to use cash on hand for working capital, operations, and potential acquisitions[220]. - A regular quarterly cash dividend of $0.3125 per share was declared, amounting to approximately $6.4 million, expected to be paid from available cash[223]. Obligations and Financial Health - Total contractual obligations as of December 31, 2024, amount to $15,444,000, with $10,548,000 due within one year[233]. - Operating lease obligations total $10,548,000, with $3,479,000 due in less than one year and $4,285,000 due in 1 to 3 years[233]. - The company maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses[244]. - There were no outstanding borrowings or associated debt service requirements as of December 31, 2024[250]. Impairment and Tax Considerations - The company recorded no impairment of goodwill for the years ended December 31, 2024, 2023, and 2022[246]. - The financial impact of transactions billed in foreign currencies is immaterial, indicating no significant exposure to foreign currency exchange rate fluctuations[251]. - Inflation has not materially affected operations, with system equipment and operating costs remaining stable[236]. - The assessment of deferred income tax assets requires significant judgment, with the company considering future taxable income projections[242]. New Products and Services - The company introduced the GenA pager, featuring advanced encryption and security capabilities, aimed at enhancing service offerings in the healthcare sector[198]. - Maintenance revenue is expected to remain flat or increase marginally, driven by enhancements in existing software solutions[203]. Restructuring and Severance - Severance and restructuring expenses increased to $1.1 million in 2024 from $0.6 million in 2023, primarily due to lease termination costs[213]. - No probable losses were identified for the year ended December 31, 2024[234]. - The company did not identify any triggering events for long-lived assets in 2024, with no impairment recorded[247].

Financial Data and Key Metrics Changes - In 2024, GAAP net income totaled $15 million or $0.73 per diluted share, compared to $15.7 million or $0.77 per diluted share in 2023 [45] - Total GAAP revenues were $137.7 million, down from $139 million in 2023 [45] - Adjusted EBITDA was $29.2 million in 2024, down from $30.3 million in 2023, reflecting lower consolidated revenue but maintaining a healthy margin of over 21% [56] Business Line Data and Key Metrics Changes - Software revenue increased to $64.1 million in 2024, driven by a nearly 22% increase in professional services revenue [46] - Professional services revenue reached $17.9 million, up 21.6% from $14.7 million in 2023 [51] - Wireless revenue was $73.5 million, down from $76 million in the prior year, with improvements in average revenue per unit (ARPU) [45][46] Market Data and Key Metrics Changes - Software operations bookings totaled $34.1 million, up more than 13% from the prior year, marking the highest levels in five years [31] - The company executed 82 six and seven-figure customer contracts, a 22% increase from 2023 [34] - Net unit churn improved to a decline of 5.9% in 2024, compared to a 6.4% decline in 2023 [47] Company Strategy and Development Direction - The strategic focus remains on growing software revenue, generating cash, and returning capital to stockholders [8][24] - The company aims to enhance its product offerings, particularly the Spok Care Connect suite, and has invested significantly in research and development [15][19] - The company has a strong commitment to maintaining a stockholder-friendly capital allocation plan, returning approximately $77 million to stockholders since the strategic pivot [24][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute in 2025, with expectations for total revenue to range from $134 million to $142 million [58] - The company anticipates a higher mix of software revenue and continued focus on expense management to drive profitability [58][59] - Management highlighted the importance of customer satisfaction and the company's strong reputation in the healthcare communication space [32][19] Other Important Information - The company returned $6.3 million in dividends in Q4 2024 and expects to pay dividends in excess of $27 million in 2025 [25][26] - The company has generated over $1 billion of free cash flow since its inception in 2004 [26] Q&A Session Summary Question: Can you talk about the key attributes of software operations bookings growth? - Management indicated that growth was driven by a mix of new contracts, existing customer renewals, and incremental sales to current clients [67][70] Question: Can you elaborate on the EBITDA guidance and key contributors for earnings leverage? - Management noted that the expected leverage is primarily due to a greater mix of software sales and improved efficiency in professional services [76][79] Question: Why did the company move its headquarters to Plano? - The move was made to consolidate operations and reduce costs, as many employees were already working remotely [87][90] Question: Is it accurate to assume that about 80% of bookings come from recurring customers? - Management confirmed that approximately 80% of bookings are from existing customers, with a significant portion being recurring revenue [93][96] Question: Can you provide an update on the product roadmap and timelines? - Management detailed several updates to the product offerings, including a new user interface and enhancements to the Care Connect suite, with ongoing developments expected throughout 2025 [107][110]

Financial Data and Key Metrics Changes - In 2024, GAAP net income totaled $15 million or $0.73 per diluted share, compared to $15.7 million or $0.77 per diluted share in 2023 [45][29] - Total GAAP revenues were $137.7 million, down from $139 million in 2023, with wireless revenue at $73.5 million, down from $76 million [45][46] - Software revenue increased to $64.1 million in 2024, driven by a nearly 22% increase in professional services revenue [46][51] - Adjusted EBITDA was $29.2 million in 2024, down from $30.3 million in 2023, reflecting lower consolidated revenue but maintaining a healthy margin of over 21% [56] Business Line Data and Key Metrics Changes - Software operations bookings totaled $34.1 million, up more than 13% from the prior year, with significant growth in professional services and maintenance backlog levels exceeding $62 million [30][31] - Professional services revenue reached $17.9 million, up 21.6% from $14.7 million in 2023, indicating improved resource utilization and higher margins [51][52] - Managed services revenue totaled $3.3 million, representing 18.2% of professional services revenue, up from 1.4 million or less than 10% in 2023 [53] Market Data and Key Metrics Changes - The company reported a reduction in net unit churn, with a decline of approximately 5.9% in 2024 compared to a 6.4% decline in 2023 [47] - Wireless revenue performance was primarily driven by an improvement in average revenue per unit (ARPU), which increased by $0.26 year-over-year [46] Company Strategy and Development Direction - The strategic focus remains on growing software revenue, generating cash, and returning capital to stockholders, with a commitment to maintaining a disciplined expense management approach [8][24] - The company aims to enhance its product offerings, particularly through the Spok Care Connect suite, and has invested significantly in research and development [15][19] - The company has a strong recurring revenue model, with approximately 80% of revenue coming from recurring sources, including wireless services and software maintenance [96][97] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute in 2025, with expectations for revenue and adjusted EBITDA to remain stable or grow slightly [58][59] - The company anticipates continued demand for its wireless services, despite a secular decline in pager units, and is focused on pricing strategies to offset revenue loss [48][49] - Management highlighted the importance of ongoing product development and customer satisfaction as key drivers for future growth [110][125] Other Important Information - The company returned $26.4 million in cash to stockholders in 2024, continuing its legacy of returning capital since becoming public [8][25] - The company has generated over $1 billion in free cash flow since its inception in 2004, supporting its dividend policy and capital allocation strategy [26] Q&A Session Summary Question: Key attributes of software operations bookings growth - Management indicated that growth was driven by a mix of new contracts, renewals from existing customers, and enhancements to the Care Connect suite [67][70] Question: Contributors to EBITDA guidance - The increase in EBITDA is expected to come from a greater mix of software sales and improved efficiency in professional services [76][78] Question: Reason for headquarters relocation - The relocation to Plano was primarily a cost-saving measure, consolidating operations to improve efficiency [87][89] Question: Recurring revenue metrics - Approximately 80% of bookings come from existing customers, with a significant portion of revenue being recurring [93][96] Question: Product roadmap and timelines - Management provided insights into ongoing product updates and enhancements, which are expected to drive future license sales [107][110]