Spok(SPOK) - 2021 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q1 2021 was $36 million, down from$37.3 million in Q1 2020, with the decline attributed to expected erosion in the wireless revenue portfolio [44] - Software revenue was $15.9 million, consistent with Q1 2020, while professional services revenue was$4.4 million, slightly lower than $4.5 million in the previous year [45][46] - Adjusted operating expenses in Q1 2021 totaled$38 million, down more than 7% from $40.9 million in the prior year [52] Business Line Data and Key Metrics Changes - Wireless revenue trends remained solid, declining by only 0.9$7.34 [50] - The company signed seven Spok Go customers and three clinical innovation partners, expanding its pipeline [14] - The wireless business and maintenance component of the legacy software business represented approximately 82% of total revenue in Q1 [51] Market Data and Key Metrics Changes - The company reported a strong brand perception among hospital CIOs and CMOs, indicating growth despite the impacts of COVID-19 [25] - The marketing campaign in Q1 included various press releases and advertising efforts, resulting in high-quality earned media [26] Company Strategy and Development Direction - The company is transitioning from a traditional communications company to an integrated clinical software business, focusing on the Spok Go platform [13] - The strategy includes minimizing customer attrition in the wireless product line and supporting the Spok Care Connect suite [65] - The company aims to maintain a strong recurring revenue source while enhancing its paging platform and user devices [69] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about customer recovery and operational improvements as the economy reopens [8][12] - The company anticipates a return to normalcy for customers, although financial impacts remain uncertain [31] - The company remains debt-free with a strong cash position of $71.6 million as of March 31, 2021 [42] Other Important Information - The company plans to end its furlough program by the end of Q2 2021, which will increase expenses by approximately$2.5 million [60] - The company has committed to a quarterly dividend of 0.125 per share while evaluating its capital allocation strategy [68] Q&A Session Summary Question: Expectations for Spok Go revenue - Management confirmed expectations of around 3 million in revenue from Spok Go this year, indicating a potential exit rate of $8 million to$10 million in annual recurring revenue [76][77] Question: Value of Spok Go investment - Management expressed confidence that the investment of $85 million in Spok Go will yield a good rate of return, with the CEO indicating personal investment in the company's stock [78]