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Spok Reports Fourth Quarter and Full Year 2021 Results

Dividend Increases by 150%, from $0.125 per quarter to $0.3125 per quarter in Connection with Announcement of New Strategic Business Plan

Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the fourth quarter and full year ended December 31, 2021. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on March 30, 2022, to stockholders of record on March 16, 2022.

2021 Fourth Quarter and Full Year Highlights:

  • Achieved full year 2021 financial guidance for revenue, adjusted operating expenses and capital expenditures
  • Cash, cash equivalents and short-term investments balance of $59.6 million at December 31, 2021, and no debt
  • Wireless ARPU (average revenue per unit) in 2021 totaled $7.30, equivalent to 2020
  • Launched the Next Generation of Paging with the Launch of its new GenATM Pager
  • Subsequent to the end of the fourth quarter 2021, was voted top-rated secure communications platform by healthcare industry clients in Black Box Industry 2022 survey

2021 Fourth Quarter and Full Year Results:

Consolidated revenue for the fourth quarter of 2021 under Generally Accepted Accounting Principles (“GAAP”) was $34.5 million, compared to $37.5 million in the fourth quarter of 2020. For the year ended December 31, 2021, consolidated revenue totaled $142.2 million, compared to $148.2 million in the prior year.

 

For the Three Months Ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)

 

2021

 

2020

 

Change (%)

Wireless revenue

 

 

 

 

 

 

 

 

 

 

 

Paging revenue

$

18,513

 

$

19,513

 

(5.1

) %

 

$

75,845

 

$

79,916

 

(5.1

) %

Product and other revenue

 

690

 

 

787

 

(12.3

) %

 

 

2,981

 

 

3,677

 

(18.9

) %

Total wireless revenue

$

19,203

 

$

20,300

 

(5.4

) %

 

$

78,826

 

$

83,593

 

(5.7

) %

 

 

 

 

 

 

 

 

 

 

 

 

Software revenue

 

 

 

 

 

 

 

 

 

 

 

License

$

1,495

 

$

1,487

 

0.5

%

 

$

5,494

 

$

5,179

 

6.1

%

Professional services

 

3,783

 

 

4,777

 

(20.8

) %

 

 

17,161

 

 

17,910

 

(4.2

) %

Hardware

 

573

 

 

961

 

(40.4

) %

 

 

2,267

 

 

2,841

 

(20.2

) %

Subscription

 

155

 

 

42

 

269.0

%

 

 

423

 

 

66

 

540.9

%

Maintenance

 

9,335

 

 

9,913

 

(5.8

) %

 

 

37,982

 

 

38,591

 

(1.6

) %

Total software revenue

 

15,341

 

 

17,180

 

(10.7

) %

 

 

63,327

 

 

64,587

 

(2.0

) %

Total revenue

$

34,544

 

$

37,480

 

(7.8

) %

 

$

142,153

 

$

148,180

 

(4.1

) %

Operating expenses in the fourth quarter of 2021 totaled $55.4 million and included $15.7 million in noncash impairment charges for capitalized software development, and $1.1 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020. Operating expenses for the full year 2021 totaled $169.9 million and included $15.7 million in noncash impairment charges for capitalized software development, and $3.8 million in additional payroll and related costs from less time on furlough for employees in 2021 compared to 2020.

Adjusted operating expenses (which excludes depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs) totaled $39.5 million in the fourth quarter of 2021. Adjusted operating expenses for the full year 2021 totaled $154.3 million.

 

For the three months ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)

 

2021

 

2020

 

Change (%)

Operating expenses

$

55,355

 

$

61,930

 

10.6

%

 

$

169,871

 

$

170,845

 

0.6

%

Adjusted operating expenses

$

39,535

 

$

37,109

 

(6.5

) %

 

$

154,284

 

$

147,342

 

(4.7

) %

GAAP net loss for the fourth quarter of 2021 was $16.7 million, or a loss of $0.86 per diluted share, compared to net loss of $46.6 million, or $2.44 per diluted share, in the fourth quarter of 2020. GAAP net loss for the year ended December 31, 2021, was $22.2 million, or a loss of $1.14 per diluted share, compared to net loss of $44.2 million, or $2.32 per diluted share, in the prior year period.

For the fourth quarter of 2021, adjusted EBITDA loss totaled $3.8 million compared to adjusted EBITDA of $1.7 million in the fourth quarter of 2020. For the year ended December 31, 2021, adjusted EBITDA loss totaled $4.9 million, compared to adjusted EBITDA of $6.3 million in the prior year period. Based on the Company's fourth quarter assessment of its capitalized software development costs, the 2021 fourth quarter and full year net loss included a non-cash impairment charge of $15.7 million, which increased the 2021 fourth quarter and full year net loss per basic share by $0.81.

 

For the three months ended December 31,

 

For the year ended December 31,

(Dollars in thousands)

2021

 

2020

 

Change (%)

 

2021

 

2020

 

Change (%)

Net loss

$

(16,669

)

 

$

(46,610

)

 

64.2

%

 

$

(22,180

)

 

$

(44,225

)

 

49.8

%

Basic and diluted net loss per common share

$

(0.86

)

 

$

(2.44

)

 

64.8

%

 

$

(1.14

)

 

$

(2.32

)

 

50.9

%

Adjusted EBITDA

$

(3,788

)

 

$

1,719

 

 

(320.4

) %

 

$

(4,892

)

 

$

6,346

 

 

(177.1

) %

Financial Outlook:

Regarding financial guidance, the Company expects the following for 2022:

(Unaudited and in millions)

 

Current Guidance

Full Year 2022

 

 

From

 

To

Revenue

 

 

 

 

Wireless

 

$

71.6

 

$

77.0

Software

 

$

54.4

 

$

62.2

Total Revenue

 

$

126.0

 

$

139.2

 

 

 

 

 

Adjusted Operating Expenses

 

$

118.8

 

$

128.6

 

 

 

 

 

Capital Expenditures

 

$

3.4

 

$

4.2

2021 Fourth Quarter Call:

A conference call will be held today, February 17, 2022, at 8:30 a.m. Eastern Time to discuss fourth quarter and full year 2021 results and Spok's new strategic business plan that was announced today.

Telephone Conference Dial-Ins:

 

Participant / Guest (Toll-Free):

877-407-0890

 

Participant / Guest (International):

201-389-0918

Webcast Links:

Live-Link (after the event the OnDemand version will be available under this URL as well):

https://www.webcast-eqs.com/spok02172022_en/en

About Spok

Spok, Inc., a wholly owned subsidiary of Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Alexandria, Virginia, is proud to be a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok Care Connect® platforms to enhance workflows for clinicians and support administrative compliance. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count and patients' lives are at stake, Spok enables smarter, faster clinical communication. For more information, visit spok.com or follow @spoktweets on Twitter.

Spok is a trademark of Spok Holdings, Inc. Spok Go and Spok Care Connect are trademarks of Spok, Inc.

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: adjusted operating expenses and adjusted EBITDA. Adjusted operating expenses excludes depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense, goodwill and capitalized software development impairment costs, severance and restructuring costs, and stock-based compensation expense and includes capitalized software development costs.

We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to Spok's financial condition and results of operations. We use these non-GAAP measures for financial, operational, and budgetary decision-making purposes, to understand and evaluate our core operating performance and trends, and to generate future operating plans. We believe that these non-GAAP financial measures permit us to more thoroughly analyze key financial metrics used to make operational decisions and allow us to assess our core operating results. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies who present similar non-GAAP financial measures. We adjust for certain items because we do not regard these costs as reflective of normal costs related to the ongoing operation of the business in the ordinary course. In general, these items possess one or more of the following characteristics: non-cash expenses, factors outside of our control, items that are non-operational in nature, and unusual items not expected to occur in the normal course of business.

We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release, and not to rely on any single financial measure to evaluate our business.

Safe Harbor Statement under the Private Securities Litigation Reform Act

Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s 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 Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, risks related to Spok's new strategic business plan, including its ability to maximize revenue and cash generation from its established businesses and return capital to shareholders, risks related to the COVID-19 pandemic and its effect on our business and the economy, other economic conditions such as recessionary economic cycles, higher interest rates, inflation and higher levels of unemployment, declining demand for paging products and services, continued demand for our software products and services, our dependence on the U.S. healthcare industry, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, particularly third-party consulting services and research and development costs, future capital needs, competitive pricing pressures, competition from traditional paging services, other wireless communications services and other software providers, many of which are substantially larger and have much greater financial and human capital resources, changes in customer purchasing priorities or capital expenditures, government regulation of our products and services and the healthcare and health insurance industries, reliance upon third-party providers for certain equipment and services, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products and services, the effects of changes in accounting policies or practices, our ability to realize the benefits associated with our deferred tax assets, future impairments of our long-lived assets, amortizable intangible assets and goodwill, the effects of our limited-duration shareholder rights plan, and the outcome of Spok's strategic alternatives review, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

Tables to Follow

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

(Unaudited and in thousands except share, per share amounts and ARPU)

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the year ended

 

 

12/31/2021

 

12/31/2020

 

12/31/2021

 

12/31/2020

Revenue:

 

 

 

 

 

 

 

 

Wireless

 

$

19,203

 

 

$

20,300

 

 

$

78,826

 

 

$

83,593

 

Software

 

 

15,341

 

 

 

17,180

 

 

 

63,327

 

 

 

64,587

 

Total revenue

 

 

34,544

 

 

 

37,480

 

 

 

142,153

 

 

 

148,180

 

Operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of items shown separately below)(b)

 

 

8,278

 

 

 

8,631

 

 

 

32,574

 

 

 

31,355

 

Research and development

 

 

4,958

 

 

 

4,166

 

 

 

17,920

 

 

 

15,828

 

Technology operations

 

 

7,469

 

 

 

7,371

 

 

 

29,247

 

 

 

29,843

 

Selling and marketing

 

 

5,123

 

 

 

5,004

 

 

 

20,168

 

 

 

19,467

 

General and administrative(b)

 

 

11,170

 

 

 

9,248

 

 

 

43,853

 

 

 

40,289

 

Depreciation, amortization and accretion

 

 

2,694

 

 

 

2,503

 

 

 

10,446

 

 

 

9,056

 

Goodwill and capitalized software development impairment

 

 

15,663

 

 

 

25,007

 

 

 

15,663

 

 

 

25,007

 

Total operating expenses

 

 

55,355

 

 

 

61,930

 

 

 

169,871

 

 

 

170,845

 

% of total revenue

 

 

160.2

%

 

 

165.2

%

 

 

119.5

%

 

 

115.3

%

Operating loss

 

 

(20,811

)

 

 

(24,450

)

 

 

(27,718

)

 

 

(22,665

)

% of total revenue

 

 

(60.2

)%

 

 

(65.2

)%

 

 

(19.5

)%

 

 

(15.3

)%

Interest income

 

 

56

 

 

 

51

 

 

 

320

 

 

 

687

 

Other income

 

 

54

 

 

 

95

 

 

 

66

 

 

 

208

 

Loss before income taxes

 

 

(20,701

)

 

 

(24,304

)

 

 

(27,332

)

 

 

(21,770

)

Benefit from (provision for) income taxes

 

 

4,032

 

 

 

(22,306

)

 

 

5,152

 

 

 

(22,455

)

Net loss

 

$

(16,669

)

 

$

(46,610

)

 

$

(22,180

)

 

$

(44,225

)

Basic and diluted net loss per common share

 

$

(0.86

)

 

$

(2.44

)

 

$

(1.14

)

 

$

(2.32

)

Basic weighted average common shares outstanding

 

 

19,483,004

 

 

 

19,088,329

 

 

 

19,404,477

 

 

 

19,028,918

 

Cash dividends declared per common share

 

 

0.125

 

 

 

0.125

 

 

 

0.500

 

 

 

0.500

 

Key statistics:

 

 

 

 

 

 

 

 

Units in service

 

 

847

 

 

 

885

 

 

 

847

 

 

 

885

 

Average revenue per unit (ARPU)

 

$

7.26

 

 

$

7.30

 

 

$

7.30

 

 

$

7.30

 

Bookings

 

$

14,793

 

 

$

16,528

 

 

$

59,543

 

 

$

68,994

 

Backlog

 

$

43,361

 

 

$

50,504

 

 

$

43,361

 

 

$

50,504

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

 

 

 

 

(b) The Company made reclassifications of $3.3 million and $2.8 million from General and administrative expense to the Cost of revenue expense category for the years ended December 31, 2021, and 2020, respectively.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)

(Unaudited and in thousands except share, per share amounts and ARPU)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wireless

 

$

19,203

 

 

$

19,644

 

 

$

19,859

 

 

$

20,120

 

 

$

20,300

 

 

$

20,828

 

 

$

21,078

 

 

$

21,386

 

Software

 

 

15,341

 

 

 

16,207

 

 

 

15,864

 

 

 

15,916

 

 

 

17,180

 

 

 

16,865

 

 

 

14,661

 

 

 

15,881

 

Total revenue

 

 

34,544

 

 

 

35,851

 

 

 

35,723

 

 

 

36,036

 

 

 

37,480

 

 

 

37,693

 

 

 

35,739

 

 

 

37,267

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue (exclusive of items shown separately below) (b)

 

 

8,278

 

 

 

8,312

 

 

 

7,876

 

 

 

8,108

 

 

 

8,631

 

 

 

7,347

 

 

 

6,492

 

 

 

8,884

 

Research and development

 

 

4,958

 

 

 

4,178

 

 

 

4,278

 

 

 

4,506

 

 

 

4,166

 

 

 

3,459

 

 

 

2,754

 

 

 

5,449

 

Technology operations

 

 

7,469

 

 

 

7,439

 

 

 

7,087

 

 

 

7,252

 

 

 

7,371

 

 

 

7,357

 

 

 

7,212

 

 

 

7,904

 

Selling and marketing

 

 

5,123

 

 

 

5,165

 

 

 

4,980

 

 

 

4,900

 

 

 

5,004

 

 

 

4,272

 

 

 

3,831

 

 

 

6,361

 

General and administrative (b)

 

 

11,170

 

 

 

11,746

 

 

 

10,654

 

 

 

10,283

 

 

 

9,248

 

 

 

10,191

 

 

 

10,219

 

 

 

10,631

 

Depreciation, amortization and accretion

 

 

2,694

 

 

 

2,568

 

 

 

2,457

 

 

 

2,727

 

 

 

2,503

 

 

 

2,335

 

 

 

2,072

 

 

 

2,146

 

Goodwill and capitalized software development impairment

 

 

15,663

 

 

 

 

 

 

 

 

 

 

 

 

25,007

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

55,355

 

 

 

39,408

 

 

 

37,332

 

 

 

37,776

 

 

 

61,930

 

 

 

34,961

 

 

 

32,580

 

 

 

41,375

 

% of total revenue

 

 

160.2

%

 

 

109.9

%

 

 

104.5

%

 

 

104.8

%

 

 

165.2

%

 

 

92.8

%

 

 

91.2

%

 

 

111.0

%

Operating (loss) income

 

 

(20,811

)

 

 

(3,557

)

 

 

(1,609

)

 

 

(1,740

)

 

 

(24,450

)

 

 

2,732

 

 

 

3,159

 

 

 

(4,108

)

% of total revenue

 

 

(60.2

)%

 

 

(9.9

)%

 

 

(4.5

)%

 

 

(4.8

)%

 

 

(65.2

)%

 

 

7.2

%

 

 

8.8

%

 

 

(11.0

)%

Interest income

 

 

56

 

 

 

141

 

 

 

61

 

 

 

61

 

 

 

51

 

 

 

127

 

 

 

146

 

 

 

363

 

Other income (expense)

 

 

54

 

 

 

10

 

 

 

29

 

 

 

(27

)

 

 

95

 

 

 

151

 

 

 

101

 

 

 

(137

)

(Loss) income before income taxes

 

 

(20,701

)

 

 

(3,406

)

 

 

(1,519

)

 

 

(1,706

)

 

 

(24,304

)

 

 

3,010

 

 

 

3,406

 

 

 

(3,882

)

Benefit from (provision for) income taxes

 

 

4,032

 

 

 

912

 

 

 

800

 

 

 

(591

)

 

 

(22,306

)

 

 

155

 

 

 

353

 

 

 

(657

)

Net (loss) income

 

$

(16,669

)

 

$

(2,494

)

 

$

(719

)

 

$

(2,297

)

 

$

(46,610

)

 

$

3,165

 

 

$

3,759

 

 

$

(4,539

)

Basic net (loss) income per common share

 

$

(0.86

)

 

$

(0.13

)

 

$

(0.04

)

 

$

(0.12

)

 

$

(2.44

)

 

$

0.17

 

 

$

0.20

 

 

$

(0.24

)

Diluted net (loss) income per common share

 

 

(0.86

)

 

 

(0.13

)

 

 

(0.04

)

 

 

(0.12

)

 

 

(2.44

)

 

 

0.16

 

 

 

0.20

 

 

 

(0.24

)

Basic weighted average common shares outstanding

 

 

19,483,004

 

 

 

19,464,893

 

 

 

19,395,364

 

 

 

19,272,786

 

 

 

19,088,329

 

 

 

19,051,502

 

 

 

19,016,853

 

 

 

18,958,716

 

Diluted weighted average common shares outstanding

 

 

19,483,004

 

 

 

19,464,893

 

 

 

19,395,364

 

 

 

19,272,786

 

 

 

19,088,329

 

 

 

19,208,452

 

 

 

19,115,148

 

 

 

18,958,716

 

Key statistics:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units in service

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

 

 

926

 

Average revenue per unit (ARPU)

 

$

7.26

 

 

$

7.29

 

 

$

7.32

 

 

$

7.34

 

 

$

7.30

 

 

$

7.34

 

 

$

7.24

 

 

$

7.31

 

Bookings

 

$

14,793

 

 

$

17,116

 

 

$

13,037

 

 

$

14,597

 

 

$

16,528

 

 

$

21,414

 

 

$

15,411

 

 

$

15,639

 

Backlog

 

$

43,361

 

 

$

45,584

 

 

$

45,632

 

 

$

48,849

 

 

$

50,504

 

 

$

51,708

 

 

$

48,441

 

 

$

49,052

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) The Company made reclassifications from General and administrative expense to the Cost of revenue expense category of $0.8 million for the first and second quarters of 2021, $0.9 million for the third and fourth quarters of 2021, $0.6 million for the first and second quarters of 2020, and $0.8 million for the third and fourth quarters of 2020.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

 

 

 

 

 

 

 

12/31/2021

 

12/31/2020

 

 

 

 

 

ASSETS

 

(Unaudited)

 

 

 

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

44,583

 

 

$

48,729

 

Short-term investments

 

 

14,999

 

 

 

29,995

 

Accounts receivable, net

 

 

26,908

 

 

 

29,934

 

Prepaid expenses

 

 

6,641

 

 

 

8,958

 

Other current assets

 

 

922

 

 

 

1,269

 

Total current assets

 

 

94,053

 

 

 

118,885

 

Non-current assets:

 

 

 

 

Property and equipment, net

 

 

6,746

 

 

 

7,815

 

Operating lease right-of-use assets

 

 

15,821

 

 

 

14,016

 

Capitalized software development, net

 

 

 

 

 

10,179

 

Goodwill

 

 

99,175

 

 

 

99,175

 

Intangible assets, net

 

 

 

 

 

417

 

Deferred income tax assets, net

 

 

31,653

 

 

 

25,826

 

Other non-current assets

 

 

706

 

 

 

978

 

Total non-current assets

 

 

154,101

 

 

 

158,406

 

Total assets

 

$

248,154

 

 

$

277,291

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

5,292

 

 

$

6,685

 

Accrued compensation and benefits

 

 

13,948

 

 

 

14,103

 

Deferred revenue

 

 

25,608

 

 

 

27,686

 

Operating lease liabilities

 

 

5,405

 

 

 

5,264

 

Other current liabilities

 

 

4,745

 

 

 

3,702

 

Total current liabilities

 

 

54,998

 

 

 

57,440

 

Non-current liabilities:

 

 

 

 

Asset retirement obligations

 

 

6,355

 

 

 

7,289

 

Operating lease liabilities

 

 

11,883

 

 

 

9,456

 

Other non-current liabilities

 

 

1,227

 

 

 

2,493

 

Total non-current liabilities

 

 

19,465

 

 

 

19,238

 

Total liabilities

 

 

74,463

 

 

 

76,678

 

Commitments and contingencies

 

 

 

 

Stockholders' equity:

 

 

 

 

Preferred stock

 

$

 

 

$

 

Common stock

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

97,291

 

 

 

91,780

 

Accumulated other comprehensive loss

 

 

(1,588

)

 

 

(1,452

)

Retained earnings

 

 

77,986

 

 

 

110,283

 

Total stockholders' equity

 

 

173,691

 

 

 

200,613

 

Total liabilities and stockholders' equity

 

$

248,154

 

 

$

277,291

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)

 

 

 

 

 

For the year ended

 

12/31/2021

 

12/31/2020

Operating activities:

 

 

 

Net loss

$

(22,180

)

 

$

(44,225

)

Adjustments to reconcile net loss to net cash provided by operating activities:

 

 

 

Depreciation, amortization and accretion

 

10,446

 

 

 

9,056

 

Goodwill and capitalized software development impairment

 

15,663

 

 

 

25,007

 

Valuation allowance

 

 

 

 

22,108

 

Deferred income tax (benefit) expense

 

(5,483

)

 

 

438

 

Stock-based compensation

 

7,239

 

 

 

5,508

 

Provisions for credit losses, service credits and other

 

1,162

 

 

 

1,212

 

Changes in assets and liabilities:

 

 

 

Accounts receivable

 

1,833

 

 

 

(1,588

)

Prepaid expenses and other assets

 

2,594

 

 

 

1,445

 

Net operating lease liabilities

 

763

 

 

 

10

 

Accounts payable, accrued liabilities and other

 

(679

)

 

 

4,017

 

Deferred revenue

 

(3,390

)

 

 

3,175

 

Net cash provided by operating activities

 

7,968

 

 

 

26,163

 

Investing activities:

 

 

 

Purchases of property and equipment

 

(4,393

)

 

 

(3,455

)

Capitalized software development

 

(10,842

)

 

 

(11,252

)

Purchase of short-term investments

 

(44,990

)

 

 

(59,864

)

Maturity of short-term investments

 

60,000

 

 

 

60,000

 

Net cash used in investing activities

 

(225

)

 

 

(14,571

)

Financing activities:

 

 

 

Cash distributions to stockholders

 

(10,025

)

 

 

(9,771

)

Proceeds from issuance of common stock under the Employee Stock Purchase Plan

 

132

 

 

 

301

 

Purchase of common stock for tax withholding on vested equity awards

 

(1,860

)

 

 

(903

)

Net cash used in financing activities

 

(11,753

)

 

 

(10,373

)

Effect of exchange rate on cash and cash equivalents

 

(136

)

 

 

149

 

Net (decrease) increase in cash and cash equivalents

 

(4,146

)

 

 

1,368

 

Cash and cash equivalents, beginning of period

 

48,729

 

 

 

47,361

 

Cash and cash equivalents, end of period

$

44,583

 

 

$

48,729

 

Supplemental disclosure:

 

 

 

Income taxes (refunds received) paid

$

(126

)

 

$

1

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONSOLIDATED REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Paging

 

$

18,513

 

$

18,844

 

$

19,135

 

$

19,353

 

$

19,513

 

$

19,961

 

$

19,990

 

$

20,451

Non-paging

 

$

690

 

$

800

 

$

724

 

$

767

 

$

787

 

$

867

 

$

1,088

 

$

935

Total wireless revenue

 

$

19,203

 

$

19,644

 

$

19,859

 

$

20,120

 

$

20,300

 

$

20,828

 

$

21,078

 

$

21,386

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

License

 

$

1,495

 

$

1,674

 

$

818

 

$

1,507

 

$

1,486

 

$

1,988

 

$

749

 

$

955

Services

 

$

3,783

 

$

4,159

 

$

4,865

 

$

4,354

 

$

4,778

 

$

4,772

 

$

3,812

 

$

4,549

Equipment

 

$

573

 

$

596

 

$

482

 

$

616

 

$

961

 

$

554

 

$

601

 

$

725

Subscription

 

$

155

 

$

133

 

$

90

 

$

45

 

$

42

 

$

24

 

$

 

$

Operations revenue

 

$

6,006

 

$

6,562

 

$

6,255

 

$

6,522

 

$

7,267

 

$

7,338

 

$

5,162

 

$

6,229

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Maintenance revenue

 

$

9,335

 

$

9,645

 

$

9,609

 

$

9,394

 

$

9,913

 

$

9,527

 

$

9,499

 

$

9,652

Total software revenue

 

$

15,341

 

$

16,207

 

$

15,864

 

$

15,916

 

$

17,180

 

$

16,865

 

$

14,661

 

$

15,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total revenue

 

$

34,544

 

$

35,851

 

$

35,723

 

$

36,036

 

$

37,480

 

$

37,693

 

$

35,739

 

$

37,267

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

 

 

 

For the three months ended

 

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

Cost of revenue(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

$

5,500

 

 

$

5,435

 

 

$

4,920

 

 

$

5,369

 

 

$

5,447

 

 

$

4,941

 

 

$

4,350

 

 

$

5,785

 

Cost of sales(b)

 

 

2,227

 

 

 

2,206

 

 

 

2,330

 

 

 

2,118

 

 

 

2,538

 

 

 

1,867

 

 

 

1,689

 

 

 

2,560

 

Stock-based compensation

 

 

150

 

 

 

250

 

 

 

285

 

 

 

322

 

 

 

136

 

 

 

148

 

 

 

134

 

 

 

119

 

Other

 

 

401

 

 

 

421

 

 

 

341

 

 

 

299

 

 

 

510

 

 

 

391

 

 

 

319

 

 

 

420

 

Total cost of revenue(b)

 

 

8,278

 

 

 

8,312

 

 

 

7,876

 

 

 

8,108

 

 

 

8,631

 

 

 

7,347

 

 

 

6,492

 

 

 

8,884

 

Research and development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

4,329

 

 

 

4,291

 

 

 

4,333

 

 

 

4,475

 

 

 

4,358

 

 

 

4,147

 

 

 

4,115

 

 

 

4,761

 

Outside services

 

 

1,760

 

 

 

1,759

 

 

 

2,060

 

 

 

2,277

 

 

 

2,358

 

 

 

2,113

 

 

 

1,803

 

 

 

1,584

 

Capitalized software development

 

 

(2,603

)

 

 

(2,621

)

 

 

(2,698

)

 

 

(2,920

)

 

 

(3,046

)

 

 

(2,906

)

 

 

(3,596

)

 

 

(1,705

)

Stock-based compensation

 

 

234

 

 

 

435

 

 

 

305

 

 

 

475

 

 

 

246

 

 

 

240

 

 

 

243

 

 

 

236

 

Other

 

 

1,238

 

 

 

314

 

 

 

278

 

 

 

199

 

 

 

250

 

 

 

(135

)

 

 

189

 

 

 

573

 

Total research and development

 

 

4,958

 

 

 

4,178

 

 

 

4,278

 

 

 

4,506

 

 

 

4,166

 

 

 

3,459

 

 

 

2,754

 

 

 

5,449

 

Technology operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

2,584

 

 

 

2,585

 

 

 

2,323

 

 

 

2,467

 

 

 

2,467

 

 

 

2,246

 

 

 

2,213

 

 

 

2,712

 

Site rent

 

 

3,104

 

 

 

3,122

 

 

 

3,143

 

 

 

3,196

 

 

 

3,313

 

 

 

3,467

 

 

 

3,399

 

 

 

3,398

 

Telecommunications

 

 

826

 

 

 

828

 

 

 

825

 

 

 

837

 

 

 

857

 

 

 

949

 

 

 

961

 

 

 

1,001

 

Stock-based compensation

 

 

53

 

 

 

139

 

 

 

131

 

 

 

137

 

 

 

48

 

 

 

52

 

 

 

47

 

 

 

43

 

Other

 

 

902

 

 

 

765

 

 

 

665

 

 

 

615

 

 

 

686

 

 

 

643

 

 

 

592

 

 

 

750

 

Total technology operations

 

 

7,469

 

 

 

7,439

 

 

 

7,087

 

 

 

7,252

 

 

 

7,371

 

 

 

7,357

 

 

 

7,212

 

 

 

7,904

 

Selling and marketing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

3,151

 

 

 

3,365

 

 

 

3,161

 

 

 

3,135

 

 

 

2,912

 

 

 

2,773

 

 

 

2,538

 

 

 

3,583

 

Commissions

 

 

1,153

 

 

 

924

 

 

 

1,244

 

 

 

1,105

 

 

 

1,178

 

 

 

1,059

 

 

 

852

 

 

 

1,212

 

Stock-based compensation

 

 

91

 

 

 

234

 

 

 

254

 

 

 

319

 

 

 

192

 

 

 

208

 

 

 

194

 

 

 

172

 

Advertising and events

 

 

630

 

 

 

527

 

 

 

247

 

 

 

161

 

 

 

539

 

 

 

151

 

 

 

160

 

 

 

784

 

Other

 

 

98

 

 

 

115

 

 

 

74

 

 

 

180

 

 

 

183

 

 

 

81

 

 

 

87

 

 

 

610

 

Total selling and marketing

 

 

5,123

 

 

 

5,165

 

 

 

4,980

 

 

 

4,900

 

 

 

5,004

 

 

 

4,272

 

 

 

3,831

 

 

 

6,361

 

General and administrative(b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payroll and related

 

 

4,040

 

 

 

3,911

 

 

 

3,564

 

 

 

3,818

 

 

 

3,373

 

 

 

3,476

 

 

 

3,355

 

 

 

4,134

 

Stock-based compensation

 

 

675

 

 

 

958

 

 

 

806

 

 

 

986

 

 

 

726

 

 

 

968

 

 

 

744

 

 

 

612

 

Facility rent, office, and technology costs

 

 

2,579

 

 

 

2,692

 

 

 

2,484

 

 

 

2,480

 

 

 

2,412

 

 

 

2,260

 

 

 

2,276

 

 

 

2,068

 

Outside services

 

 

2,392

 

 

 

3,078

 

 

 

2,219

 

 

 

1,825

 

 

 

1,584

 

 

 

2,148

 

 

 

2,043

 

 

 

2,036

 

Taxes, licenses and permits(b)

 

 

408

 

 

 

211

 

 

 

214

 

 

 

214

 

 

 

(314

)

 

 

190

 

 

 

213

 

 

 

239

 

Bad debt

 

 

255

 

 

 

(29

)

 

 

328

 

 

 

106

 

 

 

202

 

 

 

178

 

 

 

628

 

 

 

43

 

Other

 

 

821

 

 

 

925

 

 

 

1,039

 

 

 

854

 

 

 

1,265

 

 

 

971

 

 

 

960

 

 

 

1,499

 

Total general and administrative(b)

 

 

11,170

 

 

 

11,746

 

 

 

10,654

 

 

 

10,283

 

 

 

9,248

 

 

 

10,191

 

 

 

10,219

 

 

 

10,631

 

Depreciation, amortization and accretion

 

 

2,694

 

 

 

2,568

 

 

 

2,457

 

 

 

2,727

 

 

 

2,503

 

 

 

2,335

 

 

 

2,072

 

 

 

2,146

 

Goodwill and capitalized software development impairment

 

 

15,663

 

 

 

 

 

 

 

 

 

 

 

 

25,007

 

 

 

 

 

 

 

 

 

 

Operating expenses

 

$

55,355

 

 

$

39,408

 

 

$

37,332

 

 

$

37,776

 

 

$

61,930

 

 

$

34,961

 

 

$

32,580

 

 

$

41,375

 

Capital expenditures

 

$

1,295

 

 

$

905

 

 

$

1,480

 

 

$

727

 

 

$

638

 

 

$

934

 

 

$

846

 

 

$

1,063

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) The Company made reclassifications from General and administrative expense to the Cost of revenue expense category of $0.8 million for the first and second quarters of 2021, $0.9 million for the third and fourth quarters of 2021, $0.6 million for the first and second quarters of 2020, and, $0.8 million for the third and fourth quarters of 2020.

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

 

12/31/2021

 

9/30/2021

 

6/30/2021

 

3/31/2021

 

12/31/2020

 

9/30/2020

 

6/30/2020

 

3/31/2020

Paging units in service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning units in service (000's)

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

 

 

926

 

 

 

938

 

Gross placements

 

 

19

 

 

 

23

 

 

 

31

 

 

 

20

 

 

 

20

 

 

 

25

 

 

 

35

 

 

 

24

 

Gross disconnects

 

 

(25

)

 

 

(39

)

 

 

(36

)

 

 

(31

)

 

 

(33

)

 

 

(42

)

 

 

(46

)

 

 

(36

)

Net change

 

 

(6

)

 

 

(16

)

 

 

(5

)

 

 

(11

)

 

 

(13

)

 

 

(17

)

 

 

(11

)

 

 

(12

)

Ending units in service

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

 

 

926

 

End of period units in service % of total (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare

 

 

84.7

%

 

 

84.6

%

 

 

84.5

%

 

 

84.1

%

 

 

83.6

%

 

 

83.7

%

 

 

83.6

%

 

 

82.6

%

Government

 

 

4.8

%

 

 

4.8

%

 

 

4.9

%

 

 

4.8

%

 

 

5.3

%

 

 

5.3

%

 

 

5.5

%

 

 

5.4

%

Large enterprise

 

 

3.9

%

 

 

4.1

%

 

 

4.1

%

 

 

4.3

%

 

 

4.3

%

 

 

4.3

%

 

 

4.4

%

 

 

5.5

%

Other(b)

 

 

6.6

%

 

 

6.4

%

 

 

6.4

%

 

 

6.8

%

 

 

6.8

%

 

 

6.6

%

 

 

6.6

%

 

 

6.5

%

Total

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

 

 

100.0

%

Account size ending units in service (000's)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

 

55

 

 

 

57

 

 

 

58

 

 

 

59

 

 

 

61

 

 

 

63

 

 

 

65

 

 

 

67

 

101 to 1,000 units

 

 

154

 

 

 

154

 

 

 

155

 

 

 

163

 

 

 

167

 

 

 

167

 

 

 

165

 

 

 

171

 

>1,000 units

 

 

638

 

 

 

642

 

 

 

656

 

 

 

652

 

 

 

657

 

 

 

668

 

 

 

685

 

 

 

688

 

Total

 

 

847

 

 

 

853

 

 

 

869

 

 

 

874

 

 

 

885

 

 

 

898

 

 

 

915

 

 

 

926

 

Account size net loss rate(c)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

 

(3.5

) %

 

 

(1.7

) %

 

 

(1.7

) %

 

 

(3.3

) %

 

 

(3.2

) %

 

 

(2.9

) %

 

 

(3.1

) %

 

 

(3.0

) %

101 to 1,000 units

 

 

%

 

 

(0.6

) %

 

 

(4.9

) %

 

 

(2.4

) %

 

 

%

 

 

1.5

%

 

 

(4.2

) %

 

 

(1.0

) %

>1,000 units

 

 

(0.6

) %

 

 

(2.1

) %

 

 

0.6

%

 

 

(0.8

) %

 

 

(1.6

) %

 

 

(2.5

) %

 

 

(0.4

) %

 

 

(1.2

) %

Total

 

 

(0.7

) %

 

 

(1.8

) %

 

 

(0.6

) %

 

 

(1.2

) %

 

 

(1.4

) %

 

 

(1.9

) %

 

 

(1.3

) %

 

 

(1.3

) %

Account size ARPU

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 to 100 units

 

$

11.58

 

 

$

11.67

 

 

$

11.69

 

 

$

11.72

 

 

$

11.62

 

 

$

11.80

 

 

$

11.65

 

 

$

12.01

 

101 to 1,000 units

 

 

8.30

 

 

 

8.38

 

 

 

8.35

 

 

 

8.33

 

 

 

8.35

 

 

 

8.37

 

 

 

8.24

 

 

 

8.34

 

>1,000 units

 

 

6.63

 

 

 

6.65

 

 

 

6.68

 

 

 

6.68

 

 

 

6.62

 

 

 

6.67

 

 

 

6.57

 

 

 

6.59

 

Total

 

$

7.26

 

 

$

7.29

 

 

$

7.32

 

 

$

7.34

 

 

$

7.30

 

 

$

7.34

 

 

$

7.24

 

 

$

7.31

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a) Slight variations in totals are due to rounding.

(b) Other includes hospitality, resort and indirect units

(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

 

 

SPOK HOLDINGS, INC.

RECONCILIATION OF NET LOSS TO EBITDA (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the year ended

 

 

12/31/2021

 

12/31/2020

 

12/31/2021

 

12/31/2020

Net loss

 

$

(16,669

)

 

$

(46,610

)

 

$

(22,180

)

 

$

(44,225

)

Add back:

 

 

 

 

 

 

 

 

(Benefit from) provision for income taxes

 

 

(4,032

)

 

 

22,306

 

 

 

(5,152

)

 

 

22,455

 

Other income

 

 

(54

)

 

 

(95

)

 

 

(66

)

 

 

(208

)

Interest income

 

 

(56

)

 

 

(51

)

 

 

(320

)

 

 

(687

)

Operating loss

 

 

(20,811

)

 

 

(24,450

)

 

 

(27,718

)

 

 

(22,665

)

Depreciation, amortization and accretion

 

 

2,694

 

 

 

2,503

 

 

 

10,446

 

 

 

9,056

 

EBITDA

 

$

(18,117

)

 

$

(21,947

)

 

$

(17,272

)

 

$

(13,609

)

Capitalized software development costs

 

 

(2,603

)

 

 

(3,046

)

 

 

(10,842

)

 

 

(11,252

)

Stock-based compensation

 

 

1,203

 

 

 

1,348

 

 

 

7,239

 

 

 

5,508

 

Goodwill and capitalized software development impairment

 

 

15,663

 

 

 

25,007

 

 

 

15,663

 

 

 

25,007

 

Severance and restructuring

 

 

66

 

 

 

357

 

 

 

320

 

 

 

692

 

Adjusted EBITDA

 

$

(3,788

)

 

$

1,719

 

 

$

(4,892

)

 

$

6,346

 

 

(a) Slight variations in totals are due to rounding.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

 

 

 

 

 

 

 

 

 

 

 

For the three months ended

 

For the year ended

 

 

12/31/2021

 

12/31/2020

 

12/31/2021

 

12/31/2020

Operating expenses

 

$

55,355

 

 

$

61,930

 

 

$

169,871

 

 

$

170,845

 

Add back:

 

 

 

 

 

 

 

 

Depreciation, amortization and accretion

 

 

(2,694

)

 

 

(2,503

)

 

 

(10,446

)

 

 

(9,056

)

Goodwill and capitalized software development impairment

 

 

(15,663

)

 

 

(25,007

)

 

 

(15,663

)

 

 

(25,007

)

Capitalized software development costs

 

 

2,603

 

 

 

3,046

 

 

 

10,842

 

 

 

11,252

 

Severance and restructuring

 

 

(66

)

 

 

(357

)

 

 

(320

)

 

 

(692

)

Adjusted operating expenses

 

$

39,535

 

 

$

37,109

 

 

$

154,284

 

 

$

147,342

 

 

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

2022 FINANCIAL OUTLOOK

(Unaudited and in millions)

 

 

 

Guidance Range

 

 

From

 

To

Revenues

 

 

 

 

Wireless

 

$

71.6

 

 

$

77.0

 

Software

 

 

54.4

 

 

 

62.2

 

Total Revenues

 

$

126.0

 

 

$

139.2

 

 

 

 

 

 

Adjusted Operating Expenses (a)

 

$

118.8

 

 

$

128.6

 

 

 

 

 

 

Capital Expenditures

 

$

3.4

 

 

$

4.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in millions)

 

 

 

Guidance Range

 

 

From

 

To

Operating expenses

 

$

128.7

 

 

$

142.3

 

Add back:

 

 

 

 

Depreciation, amortization and accretion

 

 

(3.5

)

 

 

(3.5

)

Severance and restructuring costs

 

$

(6.4

)

 

$

(10.2

)

Adjusted operating expenses

 

$

118.8

 

 

$

128.6

 

 

 

 

 

 

(a) Adjusted operating expenses exclude depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs.

 

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