Spok(SPOK)2019-03-01 00:12Financial Data and Key Metrics Changes - Consolidated revenue for 2018 was 43.3 million, consistent with the prior year quarter and up from 23.1 million [19][47] - Annual software bookings increased nearly 5% from prior year levels [19] - Wireless subscriber erosion totaled 57,000 units, down 8% from the prior year, with wireless revenue erosion at 6.8%, a 90 basis point improvement from the prior year [24][25] Market Data and Key Metrics Changes - Demand for software solutions remained strong in North American markets, particularly among hospitals and healthcare organizations [23] - The healthcare segment was the best performing market segment in the fourth quarter, with the highest rate of gross placements and lowest unit disconnects [25] Company Strategy and Development Direction - The company is transitioning from a telecommunications provider to a software solutions provider, focusing on the North American healthcare market [11][12] - The introduction of the next evolution of the Spok Care Connect platform was well received at industry conferences, indicating positive market reception [12][30] - The company aims to capture a significant portion of the multi-billion dollar healthcare IT communications market through its integrated platform [73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and strategic direction, highlighting the importance of software revenue growth and the stability of wireless revenue [8][11] - The company plans to maintain its capital allocation strategy, returning value to shareholders while investing in long-term growth [80][81] - Management anticipates that the new Care Connect platform will begin generating revenue in the latter half of 2019, with more significant contributions expected in 2020 and beyond [85][89] Other Important Information - The company returned over 161 million, reflecting a 9% increase from the prior year, primarily due to investments in the Spok Care Connect platform [39][40] - The company operates with a strong balance sheet, maintaining cash and short-term investments of $87.3 million as of December 31, 2018 [34] Q&A Session Summary Question: What is the success criteria for the investment in Spok Care Connect 2.0 in 2019 and beyond? - The success criteria are embedded in the revenue and operating expenses guidance, with expectations for more significant benefits in 2020 and 2021 [84] Question: What is the embedded annual recurring revenue from the Spok 2.0 platform in the 2019 guidance? - The majority of 2019 revenue will be driven by the existing platform, with the new Care Connect platform expected to begin generating revenue in the latter half of the year [89] Question: Why did the service, rental, and maintenance expenses increase as a percentage of paging revenue? - The increase is due to a reclassification of expenses rather than a fundamental uptick in costs [92] Question: What is the trend regarding the allowance for doubtful accounts? - The increase in the allowance for doubtful accounts is primarily a one-time event related to software receivables, with no significant ongoing trend expected [94] Question: How is the Professional Services Group expected to perform next year? - The Professional Services Group is transitioning to improve utilization and is expected to achieve margins of 30% to 40% as the company evolves its service delivery [96][98] Question: How are bookings distributed across various revenue line items? - Current bookings are heavily focused on services, but the company is working to increase license revenue, which is more profitable [99]