SPOK - Earnings call transcript Q2 2022

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Operator

Greetings, and welcome to Spok Holdings Second Quarter 2022 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Lisa Fortuna. Thank you.

You may begin.

Lisa Fortuna

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

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

Vince Kelly

our provide on well forma updated reviewing our our an Thank order well results will I our our plan; strategic us earnings update and as our our update will for today's follows: you second with by we cover strategic by for good next, an providing results; as call. share We as second of business progressing The everyone, quarter business will results XXXX call. is quarter as Today, for you, how and as our pro this be overview year-to-date the agenda and year-to-date then an the start we thank will you will on begin XXXX morning, plan joining morning for strategic solution shareholders. financial of well we happy quarter. will been cash of now the suite up wireless to strategic we our related as and goal and announce months your implementation we we've X that one-time flow business offerings shift; I’m plan restructuring well take schedule. of complete. with announced plan as finally, strategic XX, is to model capital employee our will is wrap to business The that software management today costs returning line February on our a Connect and headcount service business Care ahead of the featuring had our previously and for guidance operating streamlining tracking substantially business ago, XXXX Since questions.

notification posture. operating Our months so in we XX-day quarter X in WARN least second had in Act the at mid-April, our period ended new

will the operating are and they capital that We’ve driving return objectives in manner expenses shareholders. limited revenue a of and from are and half. coming our plan, confident Our to in so on two to we we delivered and second such investing do targeted service to lines can capital in favorable expenditures continue strategic our our

Connect on our our focus distractions. Connect of increase of solutions, quarter in each. with force second We deals these with Most on worth software XXX% to solutions the been other expect we've this suite our Care Care by XX figures variance focused over able positive X as was year-over-year came bookings renewed so. software With sales no of do to suite to XX% our continue software year-to-date

sales alerting enhancing and they importantly, use, have plans positively solutions our with reacted know contact and in investing already that arms this center, mobile our orders. and news love. They've our very for Additionally, with customers to welcomed and open

bookings in a our the a there's couple named having more period year-ago, this over GenA. more and these been hear out quarter show up X we Mike relative focus In takes and and alphanumeric past to in the that leading health new has same in the for pager have Additionally, details able is short, resulted sales we've second XX% unit as to indicator to a revenue, And years, we by have for is our low decline. plan it continues quarter achieve implementation business. rolled in software increasing believe plenty wireless last bookings our positive while the from this the representative to sites complete of minutes, of the Plus, you'll And a in visit good time with our business person our encrypted effect. a record pipeline. the

Our rejuvenate here so in to is the far so we're while And pagers. to good. stages resistance goal interest reduce and early

X,XXX much in resolution, in approximately set commanding and multiple We increased that to the screen units functions benefits. growing. other a due features, market They're ARPU improved higher and battery service their feature have and life includes

too. are, sales is wireless about Our offering and this team our customers excited

year to on the initiative this progress progresses. We further expect as report

$XX year, also will the our to answer earnings generated the of plan items generated assuming Mike January cash hear we EBITDA, from results, the flow is but year-to-date X. respect tables. capital working well non-GAAP by pro the half in before net first calculation adjusted of level in is on had have release which You the would This company million the over in our forma high we is, with defined implemented

revenue guidance progress to in XXXX and will making expectation This cash a time, achieve off take we’ve and but generation is beyond. on Our plan to year this our stabilization continue great into start. gotten flow reflected and

partner in Spok's its relationships ability first end of a network signed a provide Spok. channel. In plan to implementation and when we the progress in distribution We distribution for Subsequent expect the for the will XX/X generate Pacific building our in Pacific believe pre our made provide we meaningful cash within post-sale to value-added the enhance perfect support IT that a a to agreement services IT ability desk driving partner more to and technologies the and Asia second Asia technologies to outcomes technology, we and this we clients than opportunities. partnership make We quarter, year the distributor, distribution into leading support company continue the quarter. technology region. And anticipated announced

know, strategic from increased by announced business in per quarterly share Now to $X.XXX We dividend our you payment per as we our plan XXX% February. $X.XXXX share.

capital shareholders. returned We balance sheet. February, are return forward, going our to distributing on of in our includes $X.XX which fund year our dividend this majority in by cash cash million our the distribution there. and been has flow, capital halfway share of to already the in annual dividends to will now continue returning of per Since implementation we're plan the Spok This supplemented $XX.X cumulative shareholders

Again, for evaluate shift the to news capital remain is pivot this will good declaration as year Along continues depend Board financial its to execute to given we've our As time strategy dividends share to will gotten to year to other future always, repurchase transition a beyond. payment and discretion, using At great our to common Board's any of and allocation Spok authorized with program required start. the year off model. the Fiscal the and transition considerations. the $XX strategic shares continue requirements this to advisers, and our continues repurchased and the we operationalize of million the cash subject on Spok XXXX flow-focused up implementation of a time, company not our is strategic legal stock. has a and company's

be As already of we previously rightsizing we the will XXXX, our anticipate with to this majority that us. end behind mentioned, continue transition completed of by the

fourth EBITDA quarter adjusted flow. going portion be to positive cover company the to expect dividends We cash significant a and third will the and forward of

We we will into end full rate reach XXXX XXXX. of run head cash by our flow the as

call progress. shareholders has of to an business we driving narrowband excellent personal communication track the will software center in wireless market solutions from lines As leadership our and this we Spok move on through revenue in services. transition, position enjoys our continue update record hospital

have revenue world-class We We many recurring honor care our nature. care. health relationships. hospitals our and valuable over customer The place the value respect our in States. X,XXX We've We representing who's overwhelming have or organizations long our communications their over of built is and providing ecosystem. of XX% majority solutions over and in service customer United years as in who the customers, health standing

which We flexibility. significant a company no provides us are with debt,

quarter our the over Chief Officer and future review our our into to will Operating and capital We I base And Care remain our financial nation's Mike return the cash investing with Mike? relationships call now providers. standing with and generate will health Connect Financial second Chief long focused allows our our continue continue employee We with on us Integrated the attributes care enhancing and to combined ecosystem to are turn Wallace, what that, shareholders. committed these in results. to leading who order to Officer, believe significant dedicated flow

Mike Wallace

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

compared of wireless quarter revenue, and down line revenue second in GAAP churn from quarter with million, million our million, XXXX of second quarter was for was of basis. $X.X performance decline $XX consisted $XX.X by unit million million, of -- was $XX.X wireless on $XX.X million, $XX.X revenue year-over-year -- $XX.X the expectations. XXXX. revenue revenue to With XXXX, X.X% Revenue continued For software down total a a in to pager the in which of X.X% continued driven respect from largely million

X.X%. decline months units basis, net service sequential And record XX a pager the In or X.X%, by the low. X,XXX and declined only fact, on another during trailing units was

second of the the year As a expectations. quarter revenue the and our declining wireless solid, to in prior range result, compared remains for X.X%

from remainder being overall primarily wireless With ongoing strong this the combination gross year-over-year of which a additions X.X% business of customers our by the business. for These nature ago average with by decreases to organization, declining revenue less service wireless year churn fees $X.XX fees not impactful based in are on far rates solid the and ARPU, to and approximately by next. as FCC. quarter bottom well one in decline do sales continued revenue. quarter existing wireless, value the the the FCC are attributable monthly universal to of or per when they are versus on relates customers to offset or are pricing of of unit costs trends collected charged quarterly from materially through from sales, fluctuate which basis. wireless line These our These stable minimization The was adjusted as set lost customers one-time to continued period the the product of to impact fund $X.XX revenue, XX% the in paging revenue owed on in for of $X.XX can as represents unit, are fees, to revenue only driven pager component

by our of ARPU favorably in previously Additionally, announced being which was GenA stages impacted customers. sold to early is the pager, now

expect future expectations. discussed, declining the X.X% to will basis, to ability degradation. be wireless in range our dynamics again of saw the year On year-to-date and the We pager second compared in a an quarter our the to churn prior similar ARPU that and important factor GenA just minimize unit revenue as

the a year-over-year only wireless on of paging With monthly component X.X% revenue declining basis.

revenue. Turning software second quarter the to

or is which year million X.X% in revenue, the the was Specifically, of same period of component versus $X.X $X.X maintenance lower. revenue, the million prior software the largest

calls quarterly through As Care pivot, focus as back the products. we’ve with to previous our suite in brought we software Connect discussed and being this continue

for remain uplift levels with churn year-over-year, is gross prior consistent revenue to given slightly down expectation maintenance Our and be quarters.

as versus in provide million services move bookings inflows will licensing $X.X pivot, this of the quarter license million with was However, the maintenance license basis new we expected revenue maintenance. drive second XXXX. to bookings serve for through as to higher revenue Professional $X.X

rate better strategic stated assumed planned guidance, in business earnings our personnel the backlog call we our our flow revenue, net financial way As of February reduction in to with shift and align to alignment with an higher services XXXX related a customers. plan. in but cash in well engagement the to current drive intentional we services to under in in has to And is reduction important in remember maintaining driven again, footprint an been as existing meaningful obligations not opportunity our basis, through historically viewed our which cash it's as licensed flow critical a expand standalone fulfill as contracts, to has customer upgrade maintenance that our on our

the the in on reduction million to the This in down $XX compared and higher being second intentional professional and a the higher, of by bookings of the license $X.X software offset the $XX.X driven quarter services a of to revenue year. half in prior million compared paging during with to million, GAAP revenue $XX.X and X% due of better resources the was with saw in in hardware down a Lastly, maintenance revenue was million XXXX. and second On seen solid million revenue was XX.X% by hardware year-to-date bookings compared of year-over-year million, was line $XX $X.X by trends million year total same $XX.X in the quarter, $XX.X revenue bookings. million we in period license as or higher compared churn and was those first revenue professional driven year-to-date in services prior basis, basis, backlog revenue with which net the Wireless license align mix to strong the XX% revenue XX.X%, of period. reflecting to

Second expenses, to totaled $X.X compared restructuring of second basis, depreciation, amortization in severance quarter a million. which And were compared on operating in adjusted $XX.X million $XX million, million million, of quarter $XX.X excludes $X.X and year-to-date million operating XXXX. accretion expenses and the and $XX adjusted costs to

will flow in headcount earnings plan. the the As quarter, streamlining we Adjusted release $X.X including generated paying costs development is EBITDA intangible our with company positive stock-based strategic capital was a of and quarter to a of items. our before progress basis, and EBITDA begun million substantially with second before negative the costs cash expected, through now calculation now our our reflects strategic $X year-to-date to in pivot. EBITDA have exclude compared the which capital with million which will that employee EBITDA of $X.X date related negative reverse in minutes, In And of the On tables you the associated a pro our reduction forma year-to-date of mentioned $X.X EBITDA, walk pivot and same costs complete, the effects compared the our business progressing is improve. seen represents results with past strategic non-GAAP was expense, But our XXXX final defined management as strategic severance stages our in few a of Vince and adjusted in impairment over negative we adjusted adjusted several has XXXX. made working capitalized compensation by EBITDA are is expenditures assets, and to to pivot. adjusted the million net a earlier, the onetime I and software million quarters

trend normalized more continue going this expect forward. We to

costs would months million discuss Next, and changes have million we $XX.X X, the mentioned. in $XX.X of previously adjusted non-payroll $X.X in EBITDA adjusted been year-to-date restructuring pro forma X these and personnel our severance negative January Spok the June would includes XXXX, I $XX.X of million, to would $X.X our to of made million XXXX. EBITDA adjusted Go that million, $X.X and as costs. This approximately first been ended strategic of adjustments, million million, a other like $X.X our the approximately impact higher EBITDA costs Inclusive Had of XX, for X year-to-date for in costs XXXX, reductions with million. approximately months effect related have of $X.X

to turning full year our fiscal Now guidance for XXXX.

million the we in been earnings the calls. revenue to $XXX XXXX of revenue are guidance range of provided figures be million expect between February range I’m in wireless reminder, the now million, a $XX.X April million. guidance total We to and today the to table previously earnings $XX.X to $XXX expect to which in in our included from updated have and our going discuss As release financial

to is million. range to revenue $XX.X expected from million $XX.X Software

ranges operating to significantly of previously million, range million year to CapEx narrow expect changes guidance. the with the expenses for with wireless adjusted will serve We and original to to the XXXX of largely be million, million in related our business. XXXX the of majority CapEx indicate range the $XXX.X full midpoints of $XXX.X $X.X our to and guidance These to in $X.X be provided consistent our

costs our XXXX. forecast restructuring for to for Now turning

these from updated and now of $X.X in we $X.X Vince? restructuring $X.X million million terminations can the largely contractual $X.X costs you we’ve for to the costs that are turn to the With million. our million Q&A. quarter the As see to comfort to range range Breaking $X $X.X and be I of Vince the this million, be This million further million. our restructuring reflects total from to our to narrowing to expect this call million in costs range before $X.X lowered $X.X point. behind that, range first slide, the will down, in to severance back us at over of of range

Vince Kelly

create Mike. for This to being remain committed to partner communications Thanks, Spok I'd a with has significant generate like that enterprise providers. which reminding has coordination. currently everyone largest and Spok continue clinical results. to States, commitment to health the our best-in-class we nation's allowed United mission by care the with paging relationships strategic of to a strong the care longstanding leading position patient market end choice a continues of network, grade, in

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

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

upgrade will basis. this are business our this to more products cash strategic flow our progress in we and legacy our pivot. reflected as forward and generating go-forward a while improve on in we results our drive guidance, important going line, future invest believe in opportunities As continuing sales We through

world-class a contracts. right market valuation have demonstrate flow also that and very current This all offerings a going confidence cash in significant base well. stock our recurring we forward, significant pivot, only customer a care an from share predictable to for as that or a maintenance future. contact continues us we believe the Spok health center either the this for wireless attractive executing coming nature over with value maximize XX% believe gives in not for solutions, strategic appreciation are We being our represents to large shareholders. revenue share legacy of base and we our that and shareholders path opportunity revenue return for our but represents forward will to on our we opportunity software

that, I call will to with Q&A. Now over operator the Operator? turn the for

Operator

Q - A -

Vince Kelly

see don't I the any questions in queue. Yes,

want your wrap So I Spok. interest today. and everybody appreciate by to I thanking your just -- up support joining us just for We in

We you our think second coming. nice our a see and to get a be going for think you're half we off gotten wait yield, paid second fantastic by for you and represents compelling value the while quarter, a appreciation appreciation, As results the can bullish will stock the year. We're of we've on to very start.

and So day, look great again you to next thanks to speaking we a forward all. Have quarter.

Operator

Thank you. conclude This does teleconference. today's

may your day. a lines this at You time, wonderful and have disconnect

Spok (SPOK) 30 Jul 222022 Q2 Earnings call transcript