SPOK - Earnings call transcript Q1 2022

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Operator

Greetings, and welcome to Spok Holdings, Inc. Quarter One 2022 Earnings Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Lisa Fortuna. to over and you you. Thank

Lisa Fortuna

include to results. well welcome Hello XXXX revenue, and Holdings' Chief predictive Spok's conditions. as want date estimates quarter that are everyone intended Spok of business future may Such are future call. expenses differ everyone, assurance estimates forward-looking call Chief company's financial I well may Officer I could and Chief Officer; the President give and earnings in Kelly, or conference risks as materially am from first statements and and this those dependent today's of subject statements Vince forward-looking not actual income other that These Spok's Wallace, and to joined statements. anticipated and Mike events results as are Officer. Executive to which the on call actual as statements represent or to uncertainties Financial include future remind by these plans, Operating only upon any conference as statements relating to performance. to

any obligation and I'll update to the Exchange filings Commission. and With to that, Although, they file these statements Please relating risks and subject our first or Securities related business Spok call based and turn statements uncertainties. Form the Factors and with are expect that, assumes Risk we over calls. review XX-Q no environment, to Please the to are to to be documents, from our assumptions contained in Vince. company section conference note the present that believes are operations which reasonable, the upon quarter forward-looking past XXXX

Vince Kelly

expect it's of against morning our morning, forward. an first joining in our our will it's we'll the we first well only us business overview an provide you distributions related forward, flow, and within into is for cash targets free as a Care on dividend which we plan free toward our plan; no one-time Connect will is then, large going XXXX service our will of results well was guidance. of business model, capital update annual continue our business of and with capital fund call. share next, current XXXX dividend everyone, for earnings strategic you debt, back posture On results; and we thank I months is to the shareholders. in includes performing assets internal good our wireless are we shared how Today, our by of of conclude current that future. in distributing strategic away quarter flow our on a going. announced you, cover positive costs top to and an our quarter our but restructuring Today follows: Thank from our dividend you supplemented call. change of with we featuring in update know well the a we XX% with for pay company shift; we'll about When free we'll cash I'll and order pivot our share to will yield balance strategic excess going financial cash as a level we Go delivering line been two last to the goal our returning on our for in return as guidance today's current and start majority suite cash be strategic solutions our and reported for significant tax a in providing on business an The the update cash reviewing This results as Spok XXXX February, with agenda balance, now, as our flow-focused that, the will quarter. begin a February by well expect sheet. and terms this wrap-up. with finally, our business plan we of Spok significant by

is morale couple last has been than the I'd years. of higher it Additionally, in say

and wins at plan. ensure the now we including those is but and on in and very track direction. overcome, but our new realize into And Spok of risks, managers booked by momentum, and the of we optimism smooth why arrest competitive this deal Certain is Connect sales encouraged that progress contract grow. new the April possible. continuing employees Care about as Spok what share growth. seeing which future. customers Go as Our details Today, and The of continued long expense they and Spok right the we from that our can can early innings solutions is provide wind-down erosion to top some of pipeline to Everyone line just We're customers this are revenue the see we'll Mobile complete. We transition. related to are Spok We're us largely Go with there transition large moving another as adopting challenges closely and knows suite have work make the and our yesterday. are in process continue and we happen value yet what's if are solid a way to in threats other stake right Go

of Spok service associated employees in I contributions The once years. company of employees elimination costs completed. been and has the want the the from headcount, Spok impacted again Go of their majority to these largely mid-April. to over and many Additionally, management and employee left the thank the for streamlining

size plan announced our cost company's of to size, the we members of business of Directors composition six Board's the announcement to better the with align our reduced business the Board and strategy. pivot, strategic Following recently

Oristano, and reduction annual at Stockholders. like contributed Matthew future serve the and not Hylton, contributions Yudkoff. endeavors. As will Annual company's for reelection Blair at XX. incumbent July for their directors I'd valuable Board Royce directors are: have expire and current perspectives Butterfield, The the experience in many continue full Chair these them which sincerely four on Those will size, success XXXX their of meeting Meeting a been to wish the Stacia All result stand the directors of great directors in these to years. thank departing we terms, extremely over has their directors

the rely at The Messenger the support source Medical replace Hospital. that During to to one and Center all Care existing operator Smart University Strong announced for contact operator Spok critical The clinical support to Medical organization first connectivity medical quarter, console to University communications that provide of of the Connect center's hospital. Memorial deploy Center Rochester we selected directory and Spok on will Spok's needs serve Rochester Web as accurate flagship its of services will for a roles Console and will powerful Smart for clinical vast response. data across centralized the

the solutions the Spok as revenue to is We're Mobile mentioned, I Connect the by and This closed more several and Rochester clinicians will recently, medical new have the Medical operation University established and our Care they to Spok the ensuring information will support opportunities efficiently other we wireless proven maximizing center's delivered in explore our the suite, have continue and Spok from we accurately. family of areas deals our Center center. to services commitment into of pipeline. cash staff other extend we reinforces medical and secure, including offerings, large flow Our need deeply gratified welcome to and and generation victory customer at to service

market solutions. a these call a significant services revenue lines center driving reminder, our company from track an business and excellent As narrowband in has leadership hospital enjoys personal communication record of position and

continue to these nation's We the to continue long-standing important and will invest leading valuable franchises relationships in in our with care providers. health order

the sale concluded would company strategic commenced today alternatives a interest on range fully At strategic financial review be parties. to that along committed Spok strategic and remains determined, legal thorough conducted our it reached and company. out earnings has the of exceptionally X, advisers company to no financial this Board of initiating with focused stand-alone has and actionable announced Since the time, we September fully engaged Board the best The and plan wide on the strategic process a review, process and our an shareholders publicly with maximizing review for as our will value in the our to that, turn now our all call executing be financial Wallace, the Michael who for I'll Chief quarter And to for Finally, over Officer, Mike? options Chief of Board Spok XXXX. with release, in we shareholders. Financial first a the Operating all results. Officer and

Mike Wallace

XX-Q earlier operations when would more our this this review and performance minutes on encourage as first take information contains recap performance, I it cover which to our you financial our will Vince, to than morning. provide business we XXXX financial quarter and good I call. like everyone. about a reported of a few Thanks, and now significantly filed, morning we

quarter For Revenue was of revenue year-over-year software in the $XX total revenue With million for unit revenue of respect XXXX. on reflected revenue, in revenue of $XX.X $XX.X of million. the first first a $XX million wireless and million consisted million $XX.X pager to of level a wireless of compared quarter of GAAP basis. to XXXX, million $XX.X revenue XXXX XXXX. churn lower quarter performance compares to This

net the X.X%, quarterly one of first quarter our during was fact, declines. the pager In lowest decline

we our minimizing and per XXXX, gross are additions in which to being our ARPU. driven continued from in as of our Furthermore, was sales or these pager, GenA previously, unit in XXXX, and organization, progress stable maintaining XXXX with in stated solid by maintaining new have significant the pricing. average late expect customers and we As revenue existing of a business minimization factor continued be unit strong churn churn we combination trends wireless announced

to software. on Moving

changed quarter our first Go, XXXX. decline which a focus Software was driven was for prior decrease million, from forward. This has largely going by revenue $XX now representing on the X.X% Spok

prior versus largest with maintenance same software to in consistent revenue software $X.X the expectations, year $X.X quarter revenue and being down, million prior First to levels period was remaining with Maintenance our revenue, the quarters. in be X.X% million line given uplift continues flat component of lower. churn the or gross of

strategic again, organization is bolster as $XX.X Connect February flow it's first engagement, in cash Spok professional our through more lastly, upgrade with to to which revenue, under a product our or opportunity quarter an severance financial footprint, license compared the the and professional licensed existing stated $X.X period in the hardware rate expenses to Regarding line, revenue Connect license meaningful XXXX. million guidance, on directed XXXX the that net our of $X.X expenses stand-alone with and XXXX we in viewed has Operating in suite as shift Care to And $X.X restructuring our same to as and customer call and of our plan alignment assumed our of versus XXXX totaled prior align Care flow in we of which in in includes of fulfill historically services the and refocus hardware $XX.X backlog spend. and was $X.X obligations operating we customers. million solely driven not first suite year better has maintenance been plan. XX.X% but expand remember cash compared services to to costs, contracts, so quarter in across higher, our the in million with to and R&D in basis, our million begin important And through in business critical of the the as an bookings quarter to on well higher as million we drive related higher a mix reduction first begin million professional a our saw revenue services current maintaining was intentional in earnings million as $X.X

employee and last in notification we to us restructuring of million payroll mid-April longer operating employees quarter the to new through related XXXX. development adjusted quarter First ongoing the quarter with pivot the is compared the accretion includes plan, amortization, excludes severance and capitalized costs remember although $XX.X made no WARN depreciation, Act. due of totaled adherence the first that of expenses Federal and And costs primarily with it million, strategic which software and to continued important majority costs announcement to to our $XX

change of quarter going $X.X of ongoing dividend negative quarter we flow to compared first XXXX. of net million same negative the in effect with March Given have $X.X mentioned reverse a December of our this XXst XXXX $X.X XXXX, the depressing the free costs those Clearly cash the of expect forward. a in million the XXXX, previously excluding to cash performance, as payment from free those and cash flow, March million our defined was for XXst in

forma to As $X.X the to the understand pro changes balances as free second payment dividends each our year the flow of our incremental through important strategic cash thus quarter to non-payroll accruals negative $X.X million resulting cash cash first first to totaled mentioned build perspective, is for such, cash flow. we this been there million, made fourth approximately just first material million and trend an business for XXXX quarter essentially And excluding flow year-end of pursuant given free the the Xst cash free of the Spok for outlays breakeven January it the these the in approximately in been made additionally cash quarters cash in flow $X.X a employees the from strategic quarter. changes $X.X impact Had for to new million would million. Go the benefit costs approximately XXXX, in And in continue. cash impact terminated and free XXXX including of historically $X.X of expect Spok's have plan, cash

number Going employees and forward in in at beyond, the this the due lower will of continue, quarter reduced albeit dynamic first levels to company. XXXX

our XXXX, February. XXXX to release am I reminder in financial are during previously figures as turning the guidance from given guidance to today unchanged are guidance going earnings our the provided Now in the our discuss and table, for call in a included

to range of XXXX expect expect million to $XX.X the with to where of million to annual revenue $XXX X.X%, we just approximately reflects in $XXX.X to million range the trends. to an be However, of $XX midpoint we our between revenue recent when attrition rate reiterate, revenue compared total wireless million, which consistent

to reflects midpoint from Software $XX.X approximately revenue million is where attrition million expected revenue the of $X to annual $XX.X range XXXX. from million

and majority full million in XXXX $X.X wireless as will the adjusted $XXX.X be unchanged million to previous to CapEx range is expenses $X.X of for years. the is CapEx million be our expect year related to the operating We to range of of in million the $XXX.X which business of from

continues to for our flow-focused to earlier, time required As given strategic fiscal year mentioned to a year XXXX, the execute cash a remain model. implementation Spok, transition shift

cash generation XXXX will end this third third the with of of free positive flow by anticipate flow a we we of savings majority us. by will quarter $XX.X to on $XX.X basis. cost be behind the expect the cash transition flow we the and be XXXX. be head cash to majority However, fourth we that by the to that annualized the through plan, of With the XXXX, reductions full quarter completed our said and of end execution expect reach million into the rate the already dividends company cover run the million of XXXX, between forma to pivot strategic full pro as continue Upon of

will to to capital So best continue Committee, shareholder a Allocation with move standpoint. along shareholders way Capital from value transition, the allocation will this continue to we our as drive we through Board, progress. Also its on the update assess

our previously our February. and call costs to turning as in provided restructuring for severance on XXXX Now, for estimates

actual severance you range As largely estimates this terminations lowered from costs costs at to thus termination end current With over for to see I'll of million range for the is the is to to that our number Go, the low-end of in have not back to for restructuring costs related unchanged expected. for largely $X.X remain voluntarily the important of have that of The result reduction completed company can range left the million been change $X.X turn our which Spok of high required million it The reason Vince? that, range a payment is of been have Also, lower has and severance and our initial the their personnel to prior we million. note high this the actual increased. employees the exit date point. and was to would closing the specifically comments. slide, estimates while some than $XX.X call Vince and end severance from $X.X the of down

Vince Kelly

remind flow history execution our be confidence returned has running successful pivot. creation have This I Mike. record to Thanks, Spok stockholders million through we our repurchases. flow pivot, XXXX, track will our dividends this gives in in of of combination share strategic and for progress we free and the Since us a through capital returning $XXX of to want free and we long cash of shareholders. to a as our company investors cash

We will continue to do so.

the for expect level as on Capital I of year Spok the attractive our an As increase company's dividend of totaled to dividend future stockholders plan. XXXX very quarter we foreseeable quarter new in the be that form $X.XXXX This first regular yield policy. reflecting current of $X.X returned $X.X share. pay to quarterly million mentioned is million dividend over new the per we the is in our to able and first last of the focus upfront, of

payment and the and subject of and always discretion requirements depend declaration considerations. legal future dividends other the financial is and Board's As to on will

reminder, company the a stock. of the company's capital common repurchasing authorization the has return opportunistically share to shareholders million authorized shares. of additional Board by to repurchase company's a As program $XX the to allows This up

XXXX to to and our as allocation continue our strategic capital strategy Spok evaluate beyond. will pivot We transitions during

of equivalents of Our sheet as balance with strong March the million and to short-term XX, remain continues cash, balance investment $XX.X cash XXXX.

a company. debt-free We operate continue as to

And position to partner for enterprise-grade of has remain healthcare with and network, I'd communications which our committed Spok This care the alphanumeric continue coordination. to exclusive messaging product. to strategic choice everyone market being has with create United currently remind best-in-class continues results. new in patient in commitment the allowed now largest clinical to our a the GenA pager Additionally, we have of device mission relationships like States, paging generate long-standing a that significant strong Spok to we providers. a a nation's leading

a to where critical delivering important information matters to continues and care teams to outcomes. improve our most the provide Spok valuable and it customers when Additionally service to patient

foundation Spok to solutions provide flow previously provide we maintenance with of transition continues legacy quickly license discussed, on software Care it's Connect our and stream. As and our valuable sales a important suite a as new Maintenance to a maintain cash products for business potential focus generation. to under

and Go more away while Care our pivot legacy opportunities flow this generating guidance. us from reflected suite allows our improve our invest as on important line, our sales on and business products in drive in believe a go-forward of upgrade will now new and to significantly focus this We Spok cash Our forward solutions our free in basis. Connect results going future

world-class large a this base demonstrate market with significant in recurring solutions believe have software customer center and very nature contracts. from or the we We being XX% revenue offerings our our opportunity revenue of contact and base maintenance for legacy Spok a over healthcare in continues wireless represents future. a to predictable coming a share either

like we today. and interest and closing, thank forward look your in I'd Spok in We joining everyone support for So appreciate to quarter. again next everyone us to updating

out and stay a Relations Thank If have team great Investor please day you safe and have reach any healthy. our questions to please and you.

Spok (SPOK) 28 Apr 222022 Q1 Earnings call transcript