Safe Harbor Statement Second Quarter 2025 Financial Highlights Statements contained herein or in prior press releases which are not historical fact, such as statements regarding our 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 our actual results to be materially different from the future results ex ...

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 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]

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 [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 [30] - Software revenue increased to $64.1 million in 2024, driven by a nearly 22% increase in professional services revenue [30][33] 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 [20][29] - Professional services revenue reached $17.9 million, up 21.6% from $14.7 million in 2023, with managed services revenue totaling $3.3 million, representing 18.2% of professional services revenue [33][34] 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 6.4% in 2023, indicating improved customer retention [31] - The average revenue per unit (ARPU) saw growth of $0.26 year-over-year, primarily driven by previous pricing actions [30] Company Strategy and Development Direction - The strategic focus remains on growing software revenue, generating cash, and returning capital to stockholders, with a commitment to invest in product development and customer support [6][16] - The company aims to enhance its Care Connect suite and expand its software offerings, with a strong emphasis on maintaining profitability and cash flow generation [39][40] 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 show growth, particularly in software revenue [31][38] - The company highlighted its strong customer base and long-standing relationships, which are seen as valuable assets for future growth [21][40] Other Important Information - The company returned $26.4 million in cash to stockholders in 2024, continuing its legacy of returning capital since becoming public [6][17] - The company ended 2024 with $29.1 million in cash and cash equivalents, down from $32 million at the end of 2023 [37] Q&A Session Summary Question: Key attributes of software operations bookings growth - Management indicated that growth was driven by a mix of new customer contracts, renewals from existing customers, and incremental sales within existing accounts [44][46] 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, leading to higher margins [50][52] Question: Reason for headquarters relocation - The relocation to Plano was primarily a cost-saving measure, consolidating operations to drive efficiency [58][60] Question: Recurring revenue metrics - Approximately 80% of revenue is recurring, with a significant portion coming from wireless services and software maintenance [62][64] Question: Product roadmap and timelines - The company has made significant progress on its product roadmap, including updates to the operator console and Care Connect reporting package, with ongoing enhancements expected to drive future sales [73][75]