SPOK - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to Spok's First Quarter Investor Call. Today's call is being recorded. On line today, we have Vince Kelly, President and Chief Executive Officer; Mike Wallace, Chief Financial Officer; and Hemant Goel, President of Spok's Operating Company. At this time, for opening comments, I will turn the call over to Mr. Wallace. sir. ahead, go Please

Mike Wallace

you year us end Thank quarter our and XXXX investor for morning. for joining first Good update.

conditions. as statements are call Before These dependent I only we assurance are to plans, forward-looking to and results. or results differ statements include Spok's future company's of conference future performance. and uncertainties or revenue, expenses may want Spok's give actual results, subject represent well upon estimates forward-looking these could may statements Such statements. events to remind future materially on this income which the conference risks discuss not everyone any other date that those relating our and statements the from that to in are operating include actual call predictive business of as to financial and intended today's as estimates anticipated

contained beginning on January statements Xst, results Xst, revenue or be Please present otherwise subject modified under XXXX the and not customers, statements which Securities past compete that and Please calls. applied that quarter as using company are for today; after these January with business we the any of filings related environment were Risk from are ASC on Xst, XX-K, later stated, retrospective XXX. presented adopted our those to with review XXXX to Spok contracts we Spok risks Form based to to Factors forward-looking assumes Unless section Accounting January update in ASC believes contracts methods our obligation Although the relating no are conference reporting periods Also, operations assumptions Standards to from XXXX. to completed and XXX, Commission. and Codification, XX-Q, they which our reasonable, which XXXX XXXXX expect filed documents and and file in Exchange the Form first note uncertainties.

to and adjusted and press in contain the under over have company's both in results formats While XXX XXX under with to not the accounting prior I'll continue tables share been historic revenue, earnings accordance refer turn reported that, yesterday's to period With call and per EBITDA amounts the Please provided be Vince. income, XXX. net ASC release ASC

Vince Kelly

Thank pleased you you, to morning. Mike, regarding good what believe operating speak is first We're a with results, and quarter XXXX. today to we start good our and

year-over-year achieved size, First were quarter line including performance our a and our results as as continue results with We these of as operating seasonal and software and invest tools, number team as strong well sales we well retention. as to enhancing we as in our management. deal upgrading average in and expectations, infrastructure key measures, saw in subscriber product wireless business revenue our by development

by investments in In performance last This nearly of quarter than from believe the Care levels well continuing continue growth software grow company, revenue make stockholders Connect, outlined, strategy bookings previously supported our and were our offerings. against in enhanced have Overall, dividends significant more form communications our improved team. integrated debt-free XX% profitably our to to quarter sales future the returning these as our we as as a future We the strategic in we the share and benefits we form our X% capital a executed and revenue product to As pleased was of while to by particularly key business, we during driven total yield of primarily will cash on while repurchases. see by year-over-year operate of basis. enhancing platform, Spok first investments year. upgraded first higher allocation the quarter,

largely recurring revenue base. Additionally, on renewal software with to wireless revenue that contracts. the revenue maintenance and our stream, rate XX% than revenue Similar is more provides stable to we continue a software see company a more maintenance

on additional for turn provide the I performance over Hemant quarter. our and activity, to results call before Mike to to Now the and financial review key want operating briefly details some I

software operations revenue in at up software prior revenue record our $XX.X million backlog highs quarter. included first than XXst of X% for First, more related year and the quarter from our the March was

sales activity laser remainder be team year. Our generating the the will on continue focused to throughout of

their with encouraged bookings communication solutions. current and customers to applications customers We to sales as products existing both new expand are portfolio and adding included of

XX,XXX disconnect with quarter. the and for continue subscriber to for were improve. quarter. year wireless wireless page and the posted revenue products results Gross XX,XXX trends gross earlier of solid in Spok first Second, thousand replacement services line and in

unchanged In As Unit. to performing segment, slower prior than averaged base. Wireless it in $X.XX, to anticipated quarter, the a result first top decline. first results. decline year subscriber quarter positive were first X.X%, up We of prior earlier healthcare nearly from pleased the from the X.X% quarter slightly ARPU losses stable of were the revenue the half Contributing more see now in revenue was XX% comprises with in the year a continuation approximately especially paging quarter. or our that decline the Revenue our in quarter Per which pager these Average trends of wireless

capital record dividends stockholders again and of the Third, track of to in we share our repurchases. continue form returning

share. dividends cash totaling the million, to $X.X paid $X.XXX per During company the quarter, stockholders

$X.X $XX also last We million repurchased common million stock quarter. our that authorization announced of our we under

development, to performance, in key partnership and several progress including in other was product strategic made agreements. our areas Finally, financial sales strategy addition

Spok officer this American month, to thought physicians using drive Nurse a attend. to discuss in innovation. have generated to mobile our as earlier shows sales industry-leading Spok at family. trade group in During Executives, the the chief At continues the its a and for momentum industry. conferences a we AONE, XXXX, focus dozen Thus added activity tremendous quarter, approximately generating to we nursing far we an from reputation hosted and customers new build the clinical our strategies conference leader Spok Organization

the from we at that generated benefit continue XXXX leads the conference annual in HIMSS also attended February. late We to

financial Our Spok's services combination our on in strong business our opportunity activities. the the capture conferences us quarter throughout these team, comments healthcare XXXX. Mike broad will Hemant positions and and to President Operating minutes, Mike? the momentum maintain review in additional sustainable a comment our the The for sales will stimulate of quarter. growth. I'll highlights of few sales financial some on generated sector, will first Company base make products solid and the marketing depth team and our outlook chief Goel, officer but our shows and at After that, first financial Wallace, trade

Mike Wallace

Thanks Vince.

financial file quarter. I a you the more you first first again to which encourage Form on our our performance give it XXXX in we between ASC specific detail little far to quarter me well expect XX-Q, operations ASC would our Let later Then and revenue contains business today, on financial more about XXX performance. as and we comparisons will information XXX. as call, as this cover review

first drivers performance As that Vince our noted, we're strong during quarter pleased software financial in year-over-year operations were with quarter. our performance Key overall of the operating revenue.

XX%, rates, in of Software renewal churn maintenance levels revenue. units exceed revenue wireless paging continue anticipated with lower than both coupled and which to

that impacting certain our quarter first we brief performance expense. one; our first items investments to Two; drive Continued our additional the to an to in review which four of Overall, a believe revenue. continue of start the absorb development XXXX. first we're Three; operating allowed expenses. XXXX. key management review expense areas product on include quarter off I sheet strong guidance and selected for financial a financial a planned which finally of in factors us research and has quarter influence will review balance update impacts

million you've of the ASC portion XXX, call. in XX%, increases previous or in was million, our as adjusted or revenue, pleased to respect as As quarter of of XXXX revenue, slower XXX, $XX.X happy to this X.X%. the business. erosion software total during mornings the revenue with or were million, ASC exclude well questions wireless any With if increases first software XXXX, Adjusted at first strong generate GAAP to of continued total reflecting to to exclude from usual adoption year-over-year our results, quarter up these to revenue the ability related compared respectively, the maintenance revenue continue revenue, $XX.X growing Q&A $XX.X operations about be specific when X% of our the we items I'll both quarterly particularly process software the of as million quarter our by them $XX.X as address for our XX% with solutions. and to specifically as enhance first implementation quarter well of We in financial to adoption by software refine and

the cash base rates noted, This from additions, continued remains flow revenue to the in revenue maintaining Vince only of a reflecting wireless as reliable increase, solution is and Wireless continues maintenance solid our declining excess with maintenance installed driven for Additionally, quarter performance our and reoccurring revenue quarter. on churn our pricing. by solid and renewal stable of minimization combination business and the existing of XX% customers first providing unit gross stream. from revenue X.X% software prior being

focus product expenses, in of efficiencies order base creating development in to research increases the operating category. Turning our and we on in expense to our maintain some our planned offset

our was first over cost, with year this million ago increase quarter, reflecting increase its anticipated of investment support two fourth development up $X.X of development of from our operations million; we These quarter and announced at employees and there XX%, by investments million, amortization Connect the strategic in quarter the consolidated Early in last a Spok over the expense. in earlier they quarter Spok cost unique we $XX.X XXXX. first the depreciation, year, and The the of XXXX continued of healthcare total XX excludes care. million platform In quarter. primarily the million than platform driven hospitals increase sales Spok in $X.X year is approximately The presence research which a years. enhance accretion planned increasing more increase marketing During would Spok's in be Connect transforming Minneapolis. next $XXX,XXX a by and reported research communications $XXX,XXX a and XX% $XX.X how and period Care year-over-year nearly expense, key from will total operating product, than represented first which Care had increase $X.X and addition higher the XXXX, reflects expansion the

were wireless infrastructure We the to expect and software requirements be as do significant to well not business. for for range capital customers, the of the Capital quarter our to within level were our expect first mainly XXXX in changes Our by with purchase expenses $X.X year end the we line of earning conference to approximately are XXXX infrastructure for during capital provided our million guidance for in network the the expenses support encouraged support expense of any as balance pagers, and our necessary call. the year. guidance

the primarily Turning hand quarter This company financial EBITDA of along a to cash December to the balance million $X.X $X.X the with cash XXXX. quarterly approximately on interest, of earnings and $X.X was fund XX, depreciation million, quarter million. a from the We with and approximately generated million, $X.X share of amortization capital ended taxes, million or $X.X items, of first sheet other expenses repurchases before million used during of dividend of and balance down XXXX. $XXX.X

$XXX we to operating we've respect projects of first from the revenue from I'll in activities. XXXX, to to Consolidated trends $XXX $X on update subject and Hemant that you our and change. guidance are total range our consolidated adjusted $XXX and million quarter marketing million capital million adoption quarter, sales to to to which projections $X amortization for depreciation, Goel, are provided expenditures will those with that, who our remind previously turn range you $XXX based on exclude based I million. are of trends always to on first financial excluding our XXX, the our over ASC call Finally, would and accretion current With million. and performance million, expenses Hemant? to that to the guidance the maintaining President,

Hemant Goel

morning. you, and Thank good Michael,

our bookings in sales XXXX, and quarter you maintenance software first than of delivered $XX more million. heard, totaling the team As

growth from X.X% lower quarter the line focus, down prior and is totals. First remains primary with our but seasonal key part typically in quarter was a Healthcare first came strong. expectation two-thirds fourth robust making of as period, our the performance of with in the quarter more our bookings collaboration before. us communication confidence hospitals in Nearly United for Customer worked from that the quarter. overall have up that business remain States and platform clinical never first of XX% than

Roll on added health we seven Hospitals by organizations use hospitals all quarter, the U.S. more the Spok to than children's and customers healthcare During Those Solutions. XX adult customers Best that the Honor current include X,XXX

News and World Report.

flows Connect across no healthcare they They get digit multiple preferences and an other will East different during work replace out platform their and six During close throughout people services A sign over departments in seven the XX,XXX added to cited deals to integrated that onboard to the customer support the one because of and perfectly. at areas to one solve its of the the challenges secure to hospitals two saw decision. providing contract that schedules, newly first rollout quarter, our unique System. vendor of Spok as the provider They on health our of the vendor a Mobile database to solution quarter groups order The The We another and subscriber They key Care push contact to a directly factor provide messaging. rollout time expanded we history. another largest details choose a technology. to Health processes, close and Canadian communications, Spok leverage health large system province. recently in staff our acquire consolidated could figure notification employees Spok is console large the ability Coast deal can in large call system. unify provider

a The first solid wireless in retention. goals sales, for and was all also defined quarter XXXX factor, exceeding revenue the quarter

Throughout to account our March stable professional the smart gets success. chose to for a we encrypted to most skilled mobile pagers we exceptional our in setting mid-sized a new seen which and hospital, for notable delivering as of base, in secured customers Our remain organization based a experience with services customers Spok Opting well our work choice Coast as the by quarter, Spok network, addition messaging. both added as paging West and are encrypted growing phone continues have an paging secured several base group, being been highly and interest the solution. Solutions

to President As and we this for discussed working conversion. increase is accelerate last quarter, our team our new Senior backlog Vice efficiencies

large During professional laying are best proof for of installation for work across efforts help increased the quarter, sales major of efficiencies concept Perhaps, streamlining timeline the organization. this for process contract. all, upgrades ground XX and this sites new the -- reduced our the to The for government customer of a dramatically first tighter secure the client. for success services had processes is time this installation

update us I the we Perhaps to health last C-Suite increased establish quality We Before turning leads want things back attended of over a HIMSSXX, conversation talk significantly. marketing important important one leads be more and more our XX% asking the by the recent to health of opportunity people the as of also activities prospects a it to meeting over to the from an Vince, most by drive our shift of and Spok the to help provides today. to design conversations successful shows healthcare what said increased visits booth in our was We brief sales gatherings largest showcase provide us hospitals leaders with HIMSS systems an brand, does had year, to a who on March, fill and This hear pipeline. everyone our technology and one you. depth who saw their I'll and story. leaders to we stop capabilities. In to is year country. to SPOK for was from demonstrate solutions for in information event

and media continue our also We following. in traffic social increases our to see to website in

strong indication brand see is our IT we're the we fact, work Twitter. these We XX,XXX marketplace followers that to doing healthcare, in surpassed In working. on recently the as solidify

platform. healthcare enterprise and potential customers to strategy Our our communication in believe deliver customers an

brand our gaining in we Our the bookings continue and marketplace will expect grow. traction to is

we clinical to continued forward, for that, over Vince. market Looking anticipate healthcare. to our in and I With demand will communication collaboration it platform back pass

Vince Kelly

Hemant. you, Thank

our Before goals strategy, I maximizing update outlook you we couple values. allocation questions, while to growth on like to strategy, key of for business sustainable I'd goals capital to your open our to want our briefly want stockholder achieve for I the on business long-term call our With comment review first. and items current capital XXXX. a overall current profitable and to allocation respect

remains strategic Towards well key the that evaluation diligence potential repurchases, for conduct reviewed, discussed M&A development, satisfied the product, opportunities and been faceted most share even and acquisitions target with though multi A of includes as as primary operating include a due end, expectations in capital we the we have the our dividends infrastructure. as allocation allocation business to includes continue investments of not the focus. we've but augmenting appropriate. past, platform we from and also capital strategy as that It explore

As quarterly year dividend stated, we previously $X.XXX to make this paying and share remain continue our appropriate. we've committed per as repurchases share

future investments to continue long-term aggressively also company our to in and benefit a value. increase our We create the stockholder

company over believes Board serving remain a success balance long-term our and striking financial our and in reasonable we're the on allocation are to strategy. of the basis review capital We the our of term We is transition, that and important long of cost with interest stakeholders. management the our comfortable a quarterly flexibility

We potential with allocation evaluate other our capital to earnings. we uses and plans report our to capital strategy when each share of you repurchases continue quarter will dividends, respect and communicate to

open while goal We of growth this accelerating all simple services, it stronger the of first products software and managing for wireless decline. in advantage and a value ultimate We commitment. fulfilling as more operator first, And follow At beliefs. take reflect order that our take for Operator? the and questions solutions We goals values to stockholder with Finally, Spok limit revenue our continues us Wrapping long-term goals questions. and providing after that regard the call point, to reputation. build creating where successful values and opportunity results business believe to with focusing putting core you of and straight as markets, to year and leading remain and the building business positioned to your additional initial plans we our chosen committed infrastructure, industry our and and questions future ask quarter our up, do the for the to investment up. are will In we is this customer resources XXXX. have ask our of key aligning one accountability. and allows. development forward. outlook, include a I'll innovation revenue up would activities driving your believe large time our well to They needed, our an then past We matter,

Operator

[Operator Instructions]

Vince Kelly

Okay, questions. I look thank saying any much our in results second release quarter by speaking have up operator. forward wrap us you I'm not you joining morning. want day. after everyone again for to this just very July. great a we seeing to We Everyone with

Operator

event. Thank and This today's you, gentlemen. ladies concludes

your disconnect now lines. may a have And You day. wonderful

Spok (SPOK) 26 Apr 182018 Q1 Earnings call transcript