Spok(SPOK) - 2025 Q2 - Quarterly Results

Executive Summary & Recent Highlights Q2 2025 Performance Overview Spok Holdings reported strong Q2 2025 results with significant year-over-year growth in net income and adjusted EBITDA, driven by robust software operations bookings and an increase in wireless ARPU. The company also declared a regular quarterly dividend and raised its full-year 2025 financial guidance - Net Income and Adjusted EBITDA for Q2 2025 increased by 33% and 6%, respectively, from the prior year period[3] - Software operations bookings totaled $11.7 million in Q2 2025, up 34% from Q2 2024, including 23 six-figure and 1 seven-figure customer contracts[3] - Software backlog reached $65.2 million at June 30, 2025, an increase of nearly 19% from the prior year[3] - Wireless average revenue per unit (ARPU) was $8.20 in Q2 2025, up nearly 5% year-over-year[3] - Capital returned to stockholders in Q2 2025 totaled $6.5 million[3] - Cash and cash equivalents balance was $20.2 million at June 30, 2025, with no debt[3] - A regular quarterly dividend of $0.3125 per share was declared, payable on September 9, 2025[1] CEO's Commentary CEO Vincent D. Kelly highlighted the company's strong execution in generating cash flow, returning capital to stockholders, and investing for future growth. He emphasized significant progress in net income, cash generation, software revenue growth (especially managed services), wireless ARPU trends, and software bookings, leading to increased 2025 financial guidance - Spok continues to focus on generating cash flow and returning capital to stockholders while investing for future growth[4] - Software revenue increased by 10% year-over-year in Q2 2025, driven by double-digit growth in license revenue and triple-digit growth in managed services revenue[4] - The company is increasing its full-year 2025 guidance estimates for revenue and adjusted EBITDA, anticipating consolidated revenue growth and over 11% growth potential for adjusted EBITDA at the high-end[6] Financial Performance Consolidated Revenue Breakdown Total revenue for Q2 2025 increased by 5.0% year-over-year, reaching $35.686 million, primarily driven by a 10.0% increase in software revenue. Wireless revenue saw a slight increase of 0.8%, with strong growth in product and other revenue offsetting a decline in paging Consolidated Revenue Breakdown (in thousands) | Revenue (in thousands) | Q2 2025 | Q2 2024 | Change (%) | H1 2025 | H1 2024 | Change (%) | | :--------------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Wireless revenue | $18,440 | $18,297 | 0.8% | $36,914 | $36,892 | 0.1% | | Paging revenue | $17,192 | $17,633 | (2.5)% | $34,799 | $35,603 | (2.3)% | | Product and other revenue | $1,248 | $664 | 88.0% | $2,115 | $1,289 | 64.1% | | Software revenue | $17,246 | $15,685 | 10.0% | $35,066 | $31,999 | 9.6% | | License | $2,394 | $1,697 | 41.1% | $5,025 | $4,323 | 16.2% | | Professional services - projects | $3,831 | $3,682 | 4.0% | $8,302 | $7,243 | 14.6% | | Professional services - managed services | $1,520 | $604 | 151.7% | $2,835 | $1,068 | 165.4% | | Hardware | $376 | $334 | 12.6% | $697 | $718 | (2.9)% | | Maintenance and subscription | $9,125 | $9,368 | (2.6)% | $18,207 | $18,647 | (2.4)% | | Total revenue | $35,686 | $33,982 | 5.0% | $71,980 | $68,891 | 4.5% | Operating Expenses and Profitability Operating expenses increased modestly, while net income and adjusted EBITDA showed strong year-over-year growth for both the second quarter and first half of 2025, reflecting improved profitability. Cash and cash equivalents decreased, but capital returned to stockholders increased Operating Expenses and Profitability (in thousands) | Financial Metric (in thousands) | Q2 2025 | Q2 2024 | Change (%) | H1 2025 | H1 2024 | Change (%) | | :------------------------------ | :------ | :------ | :--------- | :------ | :------ | :--------- | | Operating expenses (GAAP) | $30,294 | $29,508 | 2.7% | $60,570 | $59,526 | 1.8% | | Net income (GAAP) | $4,552 | $3,425 | 32.9% | $9,748 | $7,661 | 27.2% | | Cash and cash equivalents (period end) | $20,242 | $23,875 | (15.2)% | $20,242 | $23,875 | (15.2)% | | Capital returned to stockholders | $6,477 | $6,329 | 2.3% | $14,424 | $13,715 | 5.2% | | Adjusted operating expenses (Non-GAAP) | $29,420 | $28,093 | 4.7% | $58,780 | $56,615 | 3.8% | | Adjusted EBITDA (Non-GAAP) | $7,489 | $7,048 | 6.3% | $15,693 | $14,583 | 7.6% | Key Operational Statistics Software operations bookings surged by 34.1% in Q2 2025, contributing to an 18.5% increase in software backlog. Wireless ARPU also grew by 4.6%, despite a 7.1% decline in wireless units in service Key Operational Statistics | Key Statistic | Q2 2025 | Q2 2024 | Change (%) | H1 2025 | H1 2024 | Change (%) | | :-------------------------- | :------ | :------ | :--------- | :------ | :------ | :--------- | | Wireless units in service (000's) | 694 | 747 | (7.1)% | 694 | 747 | (7.1)% | | Wireless average revenue per unit (ARPU) | $8.20 | $7.84 | 4.6% | $8.21 | $7.85 | 4.6% | | Software operations bookings | $11,661 | $8,695 | 34.1% | $19,998 | $16,580 | 20.6% | | Software backlog (period end) | $65,187 | $55,006 | 18.5% | $65,187 | $55,006 | 18.5% | Financial Outlook Updated 2025 Guidance Spok increased its full-year 2025 financial guidance, raising the lower end of the total revenue range and maintaining the upper end, while also increasing the lower end of the Adjusted EBITDA guidance Revised Full Year 2025 Guidance (in millions) | (Unaudited and in millions) | Current Guidance Full Year 2025 | Prior Guidance Full Year 2025 | | :-------------------------- | :------------------------------ | :---------------------------- | | | From | To | From | To | | Revenue | | | | | | Wireless | $71.5 | $73.5 | $69.0 | $72.0 | | Software | $66.5 | $70.0 | $65.0 | $70.0 | | Total Revenue | $138.0 | $143.5 | $134.0 | $142.0 | | Adjusted EBITDA | $28.5 | $32.5 | $27.5 | $32.5 | Company Information 2025 Second Quarter Call Details Management will host a conference call and webcast on July 30, 2025, at 5:00 p.m. ET to discuss the financial results, with details provided for accessing the live event and an OnDemand version - A conference call and webcast to discuss financial results will be held on Wednesday, July 30, 2025, at 5:00 p.m. Eastern Time[13][14] - Access details include a webcast link (https://www.webcast-eqs.com/register/Spok_2Q_2025/en) and U.S. toll-free (877-407-0890) and international (1-201-389-0918) dial-in numbers[14] About Spok Spok Holdings, Inc., headquartered in Plano, Texas, is a global leader in healthcare communications. The company delivers clinical information to care teams through its Spok Care Connect® platform to improve patient outcomes and enhance workflows - Spok Holdings, Inc. is a global leader in healthcare communications, headquartered in Plano, Texas[16] - The company's core offering is the Spok Care Connect® platform, which enhances workflows for clinicians and supports administrative compliance to improve patient outcomes[16] - Customers send over 70 million messages each month through Spok® solutions[16] Non-GAAP Financial Measures This section defines non-GAAP financial measures such as adjusted operating expenses and adjusted EBITDA, explaining their exclusion criteria and rationale for use by management and investors. It also highlights the inherent limitations of these measures and advises against relying on them in isolation from GAAP results - Adjusted operating expenses exclude depreciation and accretion expense, impairment of intangible assets, and severance and restructuring costs[18] - Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax benefit/expense, depreciation and accretion expense, stock-based compensation expense, impairment of intangible assets, and severance and restructuring[18] - These non-GAAP measures provide useful information for management and investors to evaluate core operating performance and trends, but they are not a substitute for GAAP measures and have inherent limitations[19][21] Safe Harbor Statement The Safe Harbor Statement clarifies that forward-looking statements involve risks and uncertainties that may cause actual results to differ materially. It lists various factors, including operational challenges, economic conditions, market competition, product defects, and cybersecurity threats - Statements regarding future operating and financial performance are forward-looking and subject to risks and uncertainties[22] - Key risk factors include managing wireless network rationalization, retaining key personnel, economic conditions (e.g., recession, inflation), competition from new technologies, declining paging units, and undetected product defects or security vulnerabilities[22][24] - Other risks involve reliance on third-party IT systems, cyberattacks, data breaches, and regulatory changes affecting the healthcare industry[24] Financial Statements Condensed Consolidated Statements of Operations The condensed consolidated statements of operations show total revenue of $35.686 million for Q2 2025, with net income of $4.552 million, resulting in basic net income per common share of $0.22. Operating income improved to 15.1% of total revenue Condensed Consolidated Statements of Operations (Unaudited and in thousands) | | | For the three months ended | | | | For the six months ended | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | 6/30/2025 | | 6/30/2024 | | 6/30/2025 | | 6/30/2024 | | Revenue: | | | | | | | | | | Wireless | $ | 18,440 | $ | 18,297 | $ | 36,914 | $ | 36,892 | | Software | | 17,246 | | 15,685 | | 35,066 | | 31,999 | | Total revenue | | 35,686 | | 33,982 | | 71,980 | | 68,891 | | Operating expenses: | | | | | | | | | | Cost of revenue (exclusive of items shown separately | | | | | | | | | | below) | | 7,331 | | 7,163 | | 14,543 | | 14,302 | | Research and development | | 3,024 | | 3,176 | | 6,079 | | 6,127 | | Technology operations | | 5,895 | | 6,181 | | 11,745 | | 12,480 | | Selling and marketing | | 4,267 | | 3,506 | | 9,112 | | 7,655 | | General and administrative | | 8,903 | | 8,067 | | 17,301 | | 16,051 | | Depreciation and accretion | | 854 | | 1,067 | | 1,713 | | 2,135 | | Severance and restructuring | | 20 | | 348 | | 77 | | 776 | | Total operating expenses | | 30,294 | | 29,508 | | 60,570 | | 59,526 | | % of total revenue | | 84.9 % | | 86.8 % | | 84.1 % | | 86.4 % | | Operating income | | 5,392 | | 4,474 | | 11,410 | | 9,365 | | % of total revenue | | 15.1 % | | 13.2 % | | 15.9 % | | 13.6 % | | Interest income | | 256 | | 391 | | 475 | | 645 | | Other income (expense) | | 734 | | (14) | | 756 | | (16) | | Income before income taxes | | 6,382 | | 4,851 | | 12,641 | | 9,994 | | Provision for income taxes | | (1,830) | | (1,426) | | (2,893) | | (2,333) | | Net income | $ | 4,552 | $ | 3,425 | $ | 9,748 | $ | 7,661 | | Basic net income per common share | $ | 0.22 | $ | 0.17 | $ | 0.48 | $ | 0.38 | | Diluted net income per common share | $ | 0.22 | $ | 0.17 | $ | 0.47 | $ | 0.37 | | Basic weighted average common shares outstanding | | 20,580,044 | | 20,252,452 | | 20,510,561 | | 20,211,500 | | Diluted weighted average common shares outstanding | | 20,750,971 | | 20,473,751 | | 20,746,786 | | 20,500,335 | | Cash dividends declared per common share | | 0.3125 | | 0.3125 | | 0.6250 | | 0.6250 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets were $208.670 million, with cash and cash equivalents at $20.242 million. Total liabilities stood at $57.734 million, and total stockholders' equity was $150.936 million Condensed Consolidated Balance Sheets (in thousands) | | | 6/30/2025 | | 12/31/2024 | | | :--- | :--- | :--- | :--- | :--- | :--- | | ASSETS | | (Unaudited) | | | | | Current assets: | | | | | | | Cash and cash equivalents | $ | 20,242 | $ | 29,145 | | | Accounts receivable, net | | 25,819 | | 21,950 | | | Prepaid expenses | | 9,620 | | 9,362 | | | Other current assets | | 794 | | 840 | | | Total current assets | | 56,475 | | 61,297 | | | Non-current assets: | | | | | | | Property and equipment, net | | 6,083 | | 5,952 | | | Operating lease right-of-use assets | | 7,317 | | 8,249 | | | Goodwill | | 99,175 | | 99,175 | | | Deferred income tax assets, net | | 39,088 | | 41,686 | | | Other non-current assets | | 532 | | 744 | | | Total non-current assets | | 152,195 | | 155,806 | | | Total assets | $ | 208,670 | $ | 217,103 | | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | | Current liabilities: | | | | | | | Accounts payable | $ | 3,836 | $ | 5,630 | | | Accrued compensation and benefits | | 5,877 | | 7,363 | | | Deferred revenue | | 28,541 | | 28,366 | | | Operating lease liabilities | | 2,779 | | 2,904 | | | Other current liabilities | | 4,411 | | 4,511 | | | Total current liabilities | | 45,444 | | 48,774 | | | Non-current liabilities: | | | | | | | Asset retirement obligations | | 5,760 | | 5,945 | | | Operating lease liabilities | | 5,056 | | 5,869 | | | Other non-current liabilities | | 1,474 | | 1,769 | | | Total non-current liabilities | | 12,290 | | 13,583 | | | Total liabilities | | 57,734 | | 62,357 | | | Commitments and contingencies | | | | | | | Stockholders' equity: | | | | | | | Preferred stock | $ | — | $ | — | | | Common stock | | 2 | | 2 | | | Additional paid-in capital | | 105,528 | | 105,736 | | | Accumulated other comprehensive loss | | (1,762) | | (1,784) | | | Retained earnings | | 47,168 | | 50,792 | | | Total stockholders' equity | | 150,936 | | 154,746 | | | Total liabilities and stockholders' equity | $ | 208,670 | $ | 217,103 | | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities was $9.290 million, while net cash used in investing and financing activities was $1.090 million and $17.125 million, respectively, leading to a net decrease in cash and cash equivalents Condensed Consolidated Statements of Cash Flows (Unaudited and in thousands) | (Unaudited and in thousands) | | :--- | | | | | For the six months ended | | | :--- | :--- | :--- | :--- | :--- | | | | 6/30/2025 | | 6/30/2024 | | Operating activities: | | | | | | Net income | $ | 9,748 | $ | 7,661 | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | Depreciation and accretion | | 1,713 | | 2,135 | | Deferred income tax expense | | 2,615 | | 2,313 | | Stock-based compensation | | 2,493 | | 2,307 | | Gain on sale of domain name | | (701) | | — | | Provisions for credit losses, service credits and other | | 539 | | 262 | | Changes in assets and liabilities: | | | | | | Accounts receivable | | (4,415) | | 223 | | Prepaid expenses and other assets | | (18) | | (1,232) | | Net operating lease liabilities | | (6) | | (11) | | Accounts payable and other liabilities | | (3,201) | | (3,046) | | Deferred revenue | | 523 | | (1,192) | | Net cash provided by operating activities | | 9,290 | | 9,420 | | Investing activities: | | | | | | Purchases of property and equipment | | (1,791) | | (1,516) | | Proceeds from sale of domain name | | 701 | | — | | Net cash used in investing activities | | (1,090) | | (1,516) | | Financing activities: | | | | | | Cash distributions to stockholders | | (14,424) | | (13,715) | | Proceeds from issuance of common stock under the Employee Stock Purchase Plan | | 142 | | 131 | | Purchase of common stock for tax withholding on vested equity awards | | (2,843) | | (2,428) | | Net cash used in financing activities | | (17,125) | | (16,012) | | Effect of exchange rate on cash and cash equivalents | | 22 | | (6) | | Net decrease in cash and cash equivalents | | (8,903) | | (8,114) | | Cash and cash equivalents, beginning of period | | 29,145 | | 31,989 | | Cash and cash equivalents, end of period | $ | 20,242 | $ | 23,875 | | Supplemental disclosure: | | | | | | Income taxes paid | $ | 114 | $ | 241 | Wireless Units in Service and ARPU As of June 30, 2025, total wireless units in service decreased to 694,000, a 7.1% decline year-over-year, though the average revenue per unit (ARPU) increased by 4.6% to $8.20. Healthcare remains the dominant market segment, accounting for 85.7% of total units Wireless Units in Service, Market Segments, and ARPU (Unaudited and in thousands) | | | | | | | | | | For the three months ended | | | | | | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | | 6/30/2025 | | 3/31/2025 | | 12/31/2024 | | 9/30/2024 | | | 6/30/2024 | | 3/31/2024 | | 12/31/2023 | | 9/30/2023 | | Account size ending | | | | | | | | | | | | | | | | | | | units in service | | | | | | | | | | | | | | | | | | | (000's) | | | | | | | | | | | | | | | | | | | 1 to 100 units | | 38 | | 39 | | 40 | | 41 | | | 42 | | 43 | | 44 | | 46 | | 101 to 1,000 units | | 116 | | 121 | | 120 | | 125 | | | 128 | | 135 | | 142 | | 143 | | >1,000 units | | 540 | | 545 | | 560 | | 564 | | | 577 | | 575 | | 579 | | 596 | | Total | | 694 | | 705 | | 720 | | 730 | | | 747 | | 753 | | 765 | | 785 | | Market segment as a | | | | | | | | | | | | | | | | | | | percent of total ending units in | | | | | | | | | | | | | | | | | | | service | | | | | | | | | | | | | | | | | | | Healthcare | | 85.7 % | | 85.5 % | | 85.6 % | | 85.7 % | | | 85.8 % | | 86.1 % | | 85.9 % | | 86.0 % | | Government | | 4.0 % | | 4.0 % | | 4.0 % | | 4.1 % | | | 4.4 % | | 4.1 % | | 4.2 % | | 4.2 % | | Large enterprise | | 3.8 % | | 3.8 % | | 3.9 % | | 4.0 % | | | 4.0 % | | 3.9 % | | 4.1 % | | 4.1 % | | (1) Other | | 6.5 % | | 6.7 % | | 6.5 % | | 6.2 % | | | 5.8 % | | 5.9 % | | 5.8 % | | 5.7 % | | Total | | 100.0 % | | 100.0 % | | 100.0 % | | 100.0 % | | | 100.0 % | | 100.0 % | | 100.0 % | | 100.0 % | | Account size ARPU | | | | | | | | | | | | | | | | | | | 1 to 100 units | $ | 12.88 | $ | 13.04 | $ | 13.08 | $ | 12.70 | | $ | 12.51 | $ | 12.66 | $ | 12.57 | $ | 12.02 | | 101 to 1,000 units | | 9.72 | | 9.64 | | 9.60 | | 9.19 | | | 9.06 | | 9.14 | | 9.16 | | 8.75 | | >1,000 units | | 7.54 | | 7.59 | | 7.50 | | 7.33 | | | 7.21 | | 7.23 | | 7.15 | | 6.97 | | Total | $ | 8.20 | $ | 8.24 | $ | 8.16 | $ | 7.95 | | $ | 7.84 | $ | 7.89 | $ | 7.84 | $ | 7.59 | Reconciliation of Non-GAAP Measures This section provides detailed reconciliations of GAAP operating expenses to adjusted operating expenses and net income to adjusted EBITDA for both the three and six months ended June 30, 2025 and 2024, illustrating the adjustments made for non-cash and non-recurring items Adjusted Operating Expenses Reconciliation (Unaudited and in thousands) | | | For the three months ended | | | For the six months ended | | | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | 6/30/2025 | | 6/30/2024 | | 6/30/2025 | | | 6/30/2024 | | Operating expenses | $ | 30,294 | $ | 29,508 | $ | 60,570 | $ | 59,526 | | Add back: | | | | | | | | | | Depreciation and accretion | | (854) | | (1,067) | | (1,713) | | (2,135) | | Severance and restructuring | | (20) | | (348) | | (77) | | (776) | | Adjusted operating expenses | $ | 29,420 | $ | 28,093 | $ | 58,780 | $ | 56,615 | Adjusted EBITDA Reconciliation (Unaudited and in thousands) | | | For the three months ended | | | | | For the six months ended | | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | | 6/30/2025 | | 6/30/2024 | | 6/30/2025 | | | 6/30/2024 | | Net income | $ | 4,552 $ | | 3,425 $ | | 9,748 | $ | 7,661 | | Add back: | | | | | | | | | | Provision for income taxes | | 1,830 | | 1,426 | | 2,893 | | 2,333 | | Other income (expense) | | (734) | | 14 | | (756) | | 16 | | Interest income | | (256) | | (391) | | (475) | | (645) | | Depreciation and accretion | | 854 | | 1,067 | | 1,713 | | 2,135 | | EBITDA | $ | 6,246 $ | | 5,541 $ | | 13,123 | $ | 11,500 | | Adjustments: | | | | | | | | | | Stock-based compensation | | 1,223 | | 1,159 | | 2,493 | | 2,307 | | Severance and restructuring | | 20 | | 348 | | 77 | | 776 | | Adjusted EBITDA | $ | 7,489 $ | | 7,048 $ | | 15,693 | $ | 14,583 |