Spok(US:SPOK)2023-02-25 19:02Financial Data and Key Metrics Changes - In Q4 2022, GAAP net income was $24.2 million, or $1.21 per diluted share, compared to a net loss of $16.7 million, or $0.86 per diluted share in Q4 2021, largely due to a $21.9 million noncash gain related to tax credits [34][35] - Total GAAP revenue for Q4 2022 was $33.3 million, down from $34.5 million in Q4 2021, with wireless revenue at $19 million and software revenue at $14.3 million, reflecting declines of less than 1% and 7.2% respectively [36] - Adjusted EBITDA for Q4 2022 was $5.6 million, compared to a negative $3.8 million in Q4 2021, indicating significant progress in the strategic pivot [40] Business Line Data and Key Metrics Changes - Wireless revenue for the full year 2022 declined by 4.1%, with monthly paging revenue down only 3.3% year-over-year, showing a slowing rate of erosion [36] - Software operations bookings increased nearly 17% year-over-year in Q4 2022, with a software backlog of $44 million at year-end [28] - Professional services revenue decreased to $3.1 million in Q4 2022 from $3.8 million in Q4 2021, reflecting a planned reduction in personnel [37] Market Data and Key Metrics Changes - The company has over 2,200 healthcare facilities as customers, including 18 of the top 20 adult hospitals, indicating strong market presence [26] - Approximately 83% of the company's revenue is recurring, providing financial stability [26] Company Strategy and Development Direction - The company has shifted its focus to maximizing cash flow and returning capital to shareholders, having returned $25 million in cumulative capital since the strategic pivot [26][32] - Future investments will focus on enhancing the Spok Care Connect software solutions and wireless products, with R&D spending expected to increase to approximately $11.3 million in 2023 [27][42] - The company aims to stabilize software revenue and position it for growth in future years following the discontinuation of Spok Go [42] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in generating adjusted EBITDA in the range of $24 million to $26 million for 2023, based on cautious optimism and performance in 2022 [42] - The company anticipates moderate growth in software operations bookings while minimizing unit churn and maximizing average revenue per unit in wireless products [32] Other Important Information - The company plans to host an Investor Day on May 4, 2023, in Dallas, providing an opportunity for investors to engage with management [17] Q&A Session Summary Question: What is the expectation for wireless revenue in 2023? - Management expects unit churn to remain consistent with 2022, with an uptick in ARPU due to pricing actions and new GenA pagers [10] Question: What is the outlook for license revenue? - Management indicated that the decline in license revenue is a function of mix and expects overall bookings to grow, leading to an increase in license revenue over time [11] Question: How is the morale within the company? - Morale is reported to be high, with a significant reduction in regrettable turnover to less than 1% [5] Question: What is the company's dividend commitment? - The company is committed to paying an annual dividend of $1.25 in 2023, with sufficient cash generation expected to support this [7] Question: Are there opportunities outside of healthcare for the communications console? - Management views opportunities in other market segments as a longer-term priority, with current focus on generating adjusted EBITDA [8]