Spok (NasdaqGS:SPOK) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsAl Galgano - Head of Investor RelationsCalvin Rice - CFODavid Wright - President and Managing MemberMike Wallace - COOVince Kelly - CEOConference Call ParticipantsAnderson Schock - MedTech Equity Research AnalystOperatorGreetings, welcome to the Spok Holdings, Inc. Q4 2025 earnings results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal ...

Spok (NasdaqGS:SPOK) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsAl Galgano - Head of Investor RelationsCalvin Rice - CFODavid Wright - President and Managing MemberMike Wallace - COOVince Kelly - CEOConference Call ParticipantsAnderson Schock - MedTech Equity Research AnalystOperatorGreetings, welcome to the Spok Holdings, Inc. Q4 2025 earnings results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal ...

Financial Data and Key Metrics Changes - In 2025, GAAP net income totaled $15.9 million, or $0.75 per diluted share, up from $15 million, or $0.73 per diluted share in 2024 [21] - Total GAAP revenue was $139.7 million, an increase from $137.7 million in 2024 [21] - Adjusted EBITDA was $29 million in 2025, maintaining a nearly 21% margin [29] Business Line Data and Key Metrics Changes - Wireless revenue for the year was $72.5 million, down from $73.5 million in the prior year, while software revenue grew to $67.2 million, driven by a nearly 24% increase in professional services revenue [22] - Professional services revenue reached $22.1 million in 2025, up 23.7% from $17.9 million in 2024 [25] - Managed services revenue totaled $6.6 million, nearly 30% of professional services revenue, up from $3.3 million, or 18% in 2024 [26] Market Data and Key Metrics Changes - In the fourth quarter of 2025, software operations bookings increased by 14% year-over-year and 83% sequentially [7] - Average revenue per unit (ARPU) grew by $0.23 year-over-year, driven by pricing actions [23] - Net unit churn improved to 1.3% in the fourth quarter, a decrease of 12 basis points from the prior quarter [23] Company Strategy and Development Direction - The company aims to grow software revenue, generate cash, and return capital to stockholders, having returned $27.3 million to stockholders in 2025 [4][11] - The strategic focus includes continued investment in wireless and software solutions, growing the revenue base, disciplined expense management, and a stockholder-friendly capital allocation plan [13] - The company plans to pay dividends exceeding $27 million in 2026, continuing its commitment to returning capital to stockholders [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in regaining momentum and achieving growth in total bookings in 2026, with a focus on accelerating license sales and maintaining growth in professional services [7][11] - The company anticipates that software revenue will surpass wireless revenue for the first time in its history, with guidance for software revenue ranging from $68 million to $72 million in 2026 [30][31] - Management highlighted the importance of maintaining a balance between generating cash flow and investing in future growth [54] Other Important Information - The company invested over $12 million in product research and development in 2025, a nearly 5% increase from 2024 [8] - The company has returned nearly $730 million to stockholders since its inception in 2004 [12] Q&A Session Summary Question: What is driving the shift in the cancelable portion of the software backlog? - Management indicated that the growth in deal size and the need to negotiate terms with customers are driving the increase in cancelable contracts, which have nearly tripled year-over-year [36][37] Question: How should the market view the recovery of software operations bookings? - Management believes that total bookings will grow in 2026 over 2025 levels, although quarterly results may vary due to the nature of large contracts [38][39] Question: How does the company view AI in relation to its business? - Management sees opportunities in using AI to improve internal efficiency and enhance customer functionalities, particularly in training new staff and supporting operator functions [44][46]

Fourth Quarter 2025 Earnings 2/25/2026 Fourth Quarter Earnings| 02.23.23 Safe Harbor Statement 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 diff ...

Financial Data and Key Metrics Changes - In Q3 2025, GAAP net income was $3.2 million or $0.15 per diluted share, down from $3.7 million or $0.18 per diluted share in Q3 2024 [17] - Total GAAP revenue in Q3 2025 was $33.9 million, a decrease from $34.9 million in the prior year [17] - Adjusted EBITDA for Q3 2025 totaled $6.6 million, compared to $7.5 million in the prior year [21] Business Line Data and Key Metrics Changes - Wireless revenue in Q3 2025 was $17.8 million, down from $18.3 million in Q3 2024, while software revenue was $16.1 million, slightly down from $16.6 million [17] - Professional services revenue increased to $5.5 million in Q3 2025, up nearly 13% year-over-year [20] - Managed services revenue experienced triple-digit growth year-over-year, contributing to the overall performance in professional services [20] Market Data and Key Metrics Changes - The company reported a 20 basis point sequential improvement in quarterly net unit churn, which decreased to 1.4% from 1.6% in the prior quarter [18] - Wireless average revenue per unit (RPU) increased by $0.24 or 3% from the prior year, driven by pricing actions and sales of the Gen A pager [18] Company Strategy and Development Direction - The company aims to generate cash and return capital to stockholders while investing in and growing its business [5] - The strategic focus includes continued investment in wireless and software solutions, disciplined expense management, and a stockholder-friendly capital allocation plan [9] - The company maintains a strong product platform, including Spok Console, Spok Messenger, and Spok Mobile, which are expected to drive future growth [14][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance despite seasonal headwinds and reaffirmed guidance for the year [3][22] - The company anticipates a strong fourth quarter, supported by a robust sales pipeline and large deals in progress [28][29] - Management highlighted the importance of recurring revenue from wireless services and the integration of paging with software operations [23] Other Important Information - The company has returned over $720 million to stockholders over the last 20 years, with nearly $100 million returned since the strategic pivot in early 2022 [8] - The company ended Q3 2025 with $21.4 million in cash and cash equivalents, with expectations for continued growth in cash balances [21] Q&A Session Summary Question: What drove the 55% year-over-year decline in license revenue? - Management indicated that license revenue is lumpy and directly related to sales, with variability expected from quarter to quarter [26][27] Question: What led to the weaker third quarter and how should the fourth quarter be viewed? - Management noted that while Q3 bookings were impacted, they remain bullish on the fourth quarter due to a strong pipeline and large deals [28][29] Question: Anticipated increase in R&D for 2026? - Management confirmed R&D investment will increase to over $13 million in 2026, focusing on enhancing the Spok Care Connect suite [30]

Core Insights - Spok reported Q2 2025 GAAP revenue of $35.7 million, exceeding Wall Street expectations of $35.0 million, with diluted EPS at $0.22, above the $0.18 estimate, reflecting a positive business momentum [1][2][10] - The company raised its full-year guidance, indicating confidence in continued growth, particularly in the software segment [1][10] Financial Performance - Q2 2025 revenue increased by 5.0% year-over-year, driven mainly by the software segment, while operating expenses rose by 2.7% [5][6] - Net income for Q2 2025 was $4.6 million, a 35.3% increase from $3.4 million in Q2 2024 [2][5] - Adjusted EBITDA for Q2 2025 was reported at $7.5 million, up 7.1% from $7.0 million in Q2 2024 [2][5] Business Overview and Strategy - Spok focuses on healthcare communications software and wireless messaging, with its primary product, Spok Care Connect, enhancing clinical communications in hospitals [3][4] - The company is concentrating on growing its healthcare software segment while managing the decline in traditional wireless messaging [4] Segment Performance - Software revenue grew by 10.0% to $17.2 million, with bookings increasing by 34.1% to $11.7 million and a backlog of $65.2 million, up nearly 19% [6][10] - Wireless revenue remained stable at $18.4 million, with a slight decline in paging revenue by 2.5% and a 7.1% decrease in wireless units in service [7][8] Cash Generation and Returns - Spok ended the quarter with $20.2 million in cash and no debt, returning $6.5 million to shareholders, maintaining a quarterly dividend of $0.3125 per share [9][11] - Research and development spending was steady at $6.1 million for the first half of the year, supporting ongoing investments in software and wireless platforms [9] Management Outlook - Management raised full-year revenue guidance to $138.0–$143.5 million and adjusted EBITDA to $28.5–$32.5 million for 2025, anticipating software revenue growth while wireless revenue may remain flat or decline slightly [10][11]

Financial Data and Key Metrics Changes - In Q2 2025, GAAP net income was $4,600,000 or $0.22 per diluted share, up from $3,400,000 or $0.17 per diluted share in Q2 2024 [25] - Total GAAP revenue increased to $35,700,000 from $34,000,000 in the prior year [26] - Adjusted EBITDA for Q2 2025 was $7,500,000 compared to $7,000,000 in the prior year [30] Business Line Data and Key Metrics Changes - Software operations bookings grew by over 34% year-over-year, reaching $11,700,000 in Q2 2025 [11] - Software revenue increased by 10%, with license revenue showing double-digit growth and managed services revenue experiencing triple-digit growth [11] - Wireless revenue was $18,400,000, with a net unit churn improvement to 1.6% from 2.1% in the prior quarter [26] Market Data and Key Metrics Changes - The company maintains a blue-chip customer base of over 2,200 hospitals, with more than 80% of revenue being recurring [20] - The average revenue per unit (ARPU) increased by $0.36 or nearly 5% year-over-year, driven by pricing actions and new product sales [26] Company Strategy and Development Direction - The company aims for double-digit full-year software bookings growth relative to 2024, supported by ongoing investments in technology and sales [5] - The strategic focus remains on generating cash and returning capital to stockholders while investing in business growth [7] - The company is exploring opportunities to integrate AI into its products and operating platform [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the competitive positioning and long-term relationships with healthcare systems [6] - The outlook for the remainder of 2025 is optimistic, with increased guidance for revenue and adjusted EBITDA [12] - The company anticipates annual free cash flow in the range of $25,000,000 to $29,000,000 [33] Other Important Information - The company reported a one-time gain of approximately $700,000 from the sale of a legacy domain name [31] - Cash and cash equivalents at the end of Q2 2025 were $20,200,000, expected to grow through the remainder of the year [32] Q&A Session Summary Question: Impact of increased fees for unreturned pagers on net unit churn - Management indicated that the price increase for unreturned equipment would not impact unit churn as it applies after disconnection [42][44] Question: Progress of the business development team focused on new logos - The business development team has been successful in adding smaller accounts, with ongoing efforts to build the pipeline [49][50] Question: Breakdown of software bookings between new customer acquisitions and expansions - Approximately 15% of software bookings were related to new logos, with ongoing efforts to increase this percentage [51][52]

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 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]