Spok(SPOK) - 2024 Q1 - Quarterly Report

Revenue Performance - Total revenue for the three months ended March 31, 2024, was $34,909 thousand, an increase of 5.2$33,180 thousand in the same period of 2023[93] - Wireless revenue decreased by 2.3% to $18,595 thousand for the three months ended March 31, 2024, down from$19,028 thousand in 2023[93] - Software revenue increased by 15.3% to $16,314 thousand for the three months ended March 31, 2024, compared to$14,152 thousand in 2023[93] - Average Revenue Per User (ARPU) increased to $7.89 for the three months ended March 31, 2024, compared to$7.59 in the same period of 2023[99] Net Income and Expenses - Net income for the three months ended March 31, 2024, was $4,236 thousand, representing a 35.9$3,117 thousand in the same period of 2023[93] - For the three months ended March 31, 2024, total cost of revenue increased by 9.2% to $7.139 million compared to$6.536 million in the same period of 2023, primarily driven by a 14.8% increase in payroll and related expenses[110] - Research and development expenses rose by 18.4% to $2.951 million in Q1 2024 from$2.493 million in Q1 2023, mainly due to a 49.6% increase in outside services[111] - Technology operations expenses decreased by 4.4% to $6.299 million in Q1 2024 from$6.587 million in Q1 2023, attributed to a reduction in payroll and related expenses and site rent[113] - Selling and marketing expenses increased by 6.4% to $4.149 million in Q1 2024 compared to$3.901 million in Q1 2023, driven by higher payroll and advertising costs[115] - General and administrative expenses rose by 3.7% to $7.984 million in Q1 2024 from$7.700 million in Q1 2023, primarily due to increases in bad debt and payroll expenses[118] - The provision for income taxes decreased to $0.9 million in Q1 2024 from$1.9 million in Q1 2023, reflecting changes in the anticipated annual effective tax rate[123] Employee and Operational Metrics - The number of full-time equivalent employees increased by 3.2% to 392 as of March 31, 2024, compared to 380 in 2023[93] - Active transmitters decreased by 4.1% to 3,165 as of March 31, 2024, down from 3,300 in 2023[93] - Operations revenue increased due to higher license and professional services revenue, driven by improved bookings compared to the same period in 2023[106] - Maintenance revenue increased due to improved gross revenue churn and net new maintenance driven by operational bookings performance[107] Cash Flow and Financial Position - As of March 31, 2024, the company held cash and cash equivalents of $23.3 million, with a majority maintained in accounts exceeding insured limits[125] - Net cash provided by operating activities was$1.998 million for the three months ended March 31, 2024, down from $2.611 million in the same period of 2023, a decrease of$613,000[130] - The company incurred severance and restructuring expenses of $0.4 million in Q1 2024, primarily related to the early termination of the corporate headquarters lease[122] - The company anticipates positive cash flow generation to continue in future operating periods following the successful completion of its restructuring plan[128] - Net cash used in investing activities for the three months ended March 31, 2024, was$0.9 million, compared to $0.6 million in 2023, reflecting purchases of property and equipment[134] - Net cash used in financing activities for the three months ended March 31, 2024, was$9.8 million, an increase from $8.2 million in 2023, primarily due to cash distributions to stockholders[135] Dividends and Obligations - The Board of Directors declared a quarterly cash dividend of$0.3125 per share, amounting to approximately $6.3 million, payable on June 24, 2024[136] - Total contractual obligations as of March 31, 2024, amounted to$18.5 million, with operating lease obligations of $12.65 million and unconditional purchase obligations of$5.85 million[142] Debt and Currency Exposure - The company had no outstanding debt and no revolving credit facility as of March 31, 2024, indicating a low interest rate risk[146] - The company conducts limited business outside the United States, resulting in immaterial exposure to foreign currency exchange rate fluctuations[147] Product Development - The GenA pager, launched in late 2021, is expected to provide a competitive advantage and may help slow wireless revenue attrition[103]