Spok(US:SPOK)2025-05-01 20:00PART I. FINANCIAL INFORMATION Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements for Q1 2025, detailing financial position, operational performance, and cash flows Condensed Consolidated Balance Sheets 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 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 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 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 communications192021 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 months45 - 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, 202558 Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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 2024101 - Software revenue growth was primarily due to increased professional services revenue, resulting from higher sales and hiring efforts to align staffing with a growing backlog106 - 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 bookings110 - 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-year109 Liquidity and Capital Resources 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 million113 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 2022118 Commitments and Contingencies 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 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 risk135 - The financial impact of transactions in foreign currencies is immaterial, resulting in no material exposure to foreign currency exchange rate risk136 Controls and Procedures 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, 2025137 - 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 controls138 PART II. OTHER INFORMATION Legal Proceedings 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 Report83139 Risk Factors 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, 2025140 Unregistered Sales of Equity Securities and Use of Proceeds 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, 2025141 Other Information 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 Exhibits 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 documents143145