Earnings call transcript Q1 2023

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Al Galgano

Hello, everyone, and welcome to Spok Holdings First Quarter 2023 Earnings Call. I am joined by Vince Kelly, Chief Executive Officer; Mike Wallace, President of Spok Inc. and Chief Operating Officer; and Calvin Rice, Chief Financial Officer.

Please be advised that, on today's call we will not be taking any questions after management's prepared remarks, as we will be hosting our Investor Day program subsequent to this earnings call.

During the Investor Day program, there will be ample opportunity for questions from both the in-person participants and the webcast listeners.

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

anticipated those from these materially differ could results actual statements. in Spok's forward-looking

Although, are believes upon risks that to assumptions be to uncertainties. these subject based statements the reasonable company they and are

with review environment, Securities Please Commission. relating that, which filings section to from and quarter update Spok Risk in note calls. business present assumes or contained statements filed and the first our forward-looking and and conference the Please are XX-Q, the past XXXX any Exchange our obligation Factors to no Form operations documents related

call With that, the turn I'll Vince. over to

Vince Kelly

joining First and shareholders quarterly cash and we and to our remind long mission generate believe so, We thank are to can a Good foreseeable I Earnings is everyone that, for to Quarter us you return morning, want Call. XXXX our everyone, the sustainable levels doing for to our pay term. on our for these dividends path at we the over believe capital future.

how Today, in an we to plan our back you and a this it our results quarter. focus. will grow into and to to on as primary level cover capital has the is support goal our path and as of strategic eventually That with in share full. progressing well our Further, our business shareholders on for we about so. is doing flow is legacy, the update good our believe dividend getting and our financial feel we Returning cash been our current job roots

a as performance. over the start by follows. and today's year. review and by turn operational to performance for be the Calvin will XXXX quarter quarter The call. providing first We'll call review for I'll to of agenda begin full order then our highlights financial reviewing our I'll the

will with XXXX our financial wrap remarks then for up and guidance and our call. we'll then We business the conclude prepared outlook

invite as to program, will we'll Investor the for time, be be Day you ample program. our opportunity call to any In morning's of all this like interest Al shortly taking there'll XX:XX earlier I'd after of Day during a.m. mentioned be this call, which questions Investor but starting Q&A at earnings on the Central. live not

that the us position believe to to our continue Investor visit section of quarter cash our what stockholders. able to remainder well webcast. generating been we the the and returning the for Please to year first of accomplish as website of the that on these focus Relations and in team access on We're execute scope proud has results capital

basis. in made quarter, operating in both year-over-year We performance progress to Care as while to management were levels Last as backlog Connect, as wireless continue our expenses we expense tremendous trends areas sequential solutions. a software this we and including see accomplish Spok on and bookings decline well able wireless several investing and key

performance pleased our I'm wireless. with particularly in

was XXXX in a sequential in sequential on both in lesser GenA nearly quarter of More the year-over-year and pricing extent pager. revenue first years, revenue actions grew than sales and the our ARPU taken also growth first X% late reflects per basis. impact unit and of a to first of new in half quarter on several Average further time we annual unit the a churn. up For the year-over-year our both minimize and ARPU basis or

continued to success year. the of forward for look We remainder the

the adjusted and we revenue say expectations. briefly later will increased guidance and call, more our financial reflecting into we that XXXX, our Calvin in the me confidence the let first saw for EBITDA performance go based strong increasing are in quarter detail While on

Our review first run goal, part that part to strategic and of goal is highlights me address simple: I which some minutes goal, the let But flow. the first the quarter a from key drove the the flow. cash business the of to few generate generate profitably cash that of take second before is

year Spok we value stockholder mentioned, flow intend of dividend. and As to creating quarterly record. I $XX legacy continue to generation our track regular our million free stockholders has Last cash a Spok through returned this through proud

to special In due million to XXXX, a or $XXX dividends, our fact repurchases. since Spok has quarterly share total dividends of our nearly regular stockholders returned

capital $X.X In XXXX. our the to totaling to XXXX, and quarterly in we of as EBITDA continued $X.X this expect history million adjusted form returned to to in Spok and regular stockholders cash dividend stockholders. in dividends our stockholders million policy of returning approximately of our our committed our we generated dividend pay to $XX million returning remains

balance, flow our this see our debt Spok cash share to into distributions we of take that since anticipate acquisitions, nearly cash you current repurchases, free and that generated quarter. and and billion When consideration threshold $X inception repayments has stockholders will we

on investment software capital number allocation continued number growing two, four, management; of stabilizing number focus three, flow four maximizing cash tenets in stockholder our expense base; and the one, Our and the our our and in strategy. supports are then continued disciplined Those a plan. long-term number solutions; major revenue wireless friendly

we for business customer operating will on a established maximizing by shareholders. our set new with flow solutions Going generation. base priority further goal and extensive flow that experience returning cash and capital a our to cash forward, revenue early maximizing believe a significant communication we plan value of create our our strategic shareholders world-class XXXX, announced In

we pivot, the and Go made costs. development associated strategic to decision of that all of part the eliminate and As discontinue tough Spok sales

then cash ability That's to to continuing capital we'll grow that our includes solutions potential. was long part ultimately and shareholders manner. maximize in over and revenue this to center to our wireless stabilize software and disciplined return However, in of felt how invest contact plan our also our the a We important run. generation

year-over-year And business GAAP million plan. a the share, the net growth diluted prior diluted $X.XX I'm have execute of $X.XX reversal prior period. of accomplished We that by per report or share nearly or a wireless generating increasing revenue per period $X.X our on generated quarter in software happy from million sequential booking in to to year of operations the income sharp we and XXXX this loss quarter the X% while $X.X on first from both and we basis. first XXXX, net continued year

strategy. true to in a most. financial remain outcomes, leader our improve solid progress information We the a capital faster, of in where teams being platform communications customers. matters To clinical mission enables all Spok mentioned care I creating when allocation clinical for it care global and to patient smarter, communications. and health our shareholder-friendly We deliver

coupled us XX% with of who relationships. United XXXX nature revenue of and the hospitals of customers recurring our of strength provides financial over We've with facilities our This a and representing debt, in have is years healthcare flexibility. the our -- solutions revenue is built which valuable we company no States. significant many long-standing customer over who's over that We the have are recurring in

bookings the of of In that the the more $X.X contracts a new Spok. new second saw business XX I'd previously last six-figure with that had These logo contracts operations momentum included sustaining year. customer we six-figure included four in new done financial customers half turn items first software call performance not to million detail, highlight like I just sales the over in of quarter, Calvin from Before review our to perspective. couple to our a

that we We're pleased of the quarter. with in of start this of the anticipated several had now to close especially first and in have quarter closed light in the XXXX the that few weeks second contracts first time

momentum continues. Our

Spok successful platform demonstrated There highlight Care throughout Voice Spok we our also month's our participation to conference. experts showcased last clinical power conference. solution communication Connect like healthcare communications the Connect also platform. in and the I'd top-rated Spok HIMSS of

At at worldwide. the than improve solutions learned XXXX conference, more Spok XXXX care hospitals HIMSS communications attendees and provider how

interactive Connect that callers responses. voice routine technologies speech hospital to on to featured We to instead our speech new Voice their user-friendly speak Voice experience interactive using with Spok also of of contact in Connect. request built of portion response a evolution the the is Spok offload keying enables latest calls centers technologies, allow

connects as well the needs or to The Spok call the system areas freeing reporting to response, listens being system the customer short more high volumes optimize service new capabilities manage and also staffed. of includes to Spok finds and calls, operators' into Connect better the periods Voice time information to system as for how higher-value customers. to complex improvement insights provide usage, support

these to prospects we are pleased and we've referral the conference seen in source participated our years Events such as sales in. further did as the the pipeline. growth have provide past, with they attendance meetings, for partner customer, a not important we were While

our over Calvin said, Now with I'd to Chief call that turn Financial like Officer, Rice. to Cal? the

Calvin Rice

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

$X.XX net XXXX or million totaled our the loss diluted per share of $X.XX income million In income statement. per to net share $X.X a in $X.X to diluted quarter Turning or XXXX. first GAAP compared of

was revenue and revenue in and million of expectations. XXXX. down GAAP in revenue $XX.X was first total year in year quarter XXXX, wireless prior of of to the $XX.X quarter of X.X% of software for X% $XX quarter line the our $X.X with up line million which of compared last from first the the from consisted prior million, or million, revenue the $XX.X quarter million For with Revenue

respect both first and a up sequential million, With on basis. XXXX revenue, quarter to totaled year-over-year wireless $XX.X

a improvement prior ARPU While on we a basis, X.X% by see net $X.XX in to this increase churn nearly X% was year. continue the driven from to year-over-year primarily only or in declining unit performance

recoverable I are would pass-through items fees, and increase to a Changes minute for to break XX% a or accounted and typically cost fluctuates that like on X:X approximately of basis, further. $X.XX. take bit in taxes element down that a that roughly corresponding have which a

reminder, these fees significantly. a FCC As can the basis fluctuate by and on a are set quarterly

extent With to of pager. driven new $X.XX was the in lesser ARPU sales undertaken XXXX our that actions GenA late in pricing and a of the increase our remaining by said, success

the improvement our XX% of Excluding during churn revenue net and offset to recoverable of quarter from first in unit effects the lost the able ARPU fees, was XXXX. roughly of taxes

basis through demand While walk in in pricing services revenue like secular our offset will will the to decline we other on focus a This reflected updated our through as to declining we pager shortly. believe for reflected continue are and guidance, further on further hopeful lost that unit pager service, our in units will initiatives continue decline. which the financial GenA pager is I wireless

Turning revenue. quarter first to prior million software and by from our with X% quarter totaled line $X.X approximately year was expectations. Maintenance in the down revenue

have to to be a we our slightly gross previous calls, products, reorient we in Spok discussed year-over-year remaining maintenance our uplift for expectation revenue basis, As churn on consistent continue as is software Connect Care back levels with quarterly prior given focus to on and flat down quarters.

on years make product As in in expect Spok Care will coming grow maintenance progress the map our along we revenue bookings with we with Connect, it. continue continue to road to

of on through nature work revenue lagging revenue, sales basis. higher Given maintenance will license the a

So begin to it. that then and stabilizing we to first revenue look grow decline will

XXXX. in resource of million XX less of our roughly revenue on total flow, resources. improvement net $X.X $X.X services better our driving higher versus a Professional initiatives align the to billable first delivering saw internal in a cash backlog having despite quarter was with resources healthy and utilization, We rate million significant

Lastly the hardware with in license period $X.X was prior compared year. and same million of million revenue $X.X the

in First and totaled depreciation, $XX.X and accretion which compared the to operating severance year costs quarter million expenses, quarter the first restructuring excludes period. million in adjusted and amortization $XX.X prior

a of remainder completed to result from the of and While last of in early year-over-year the quarter year year, our of is first expect cost undertaken restructuring incur throughout expenses, XXXX. benefited efforts decline the in timing we million $X.X million approximately primarily the the which late to $X.X

And XXXX lastly, with compared million EBITDA adjusted negative a made reflects $X.X with to-date of a the strategic million was progress pivot. in same our quarter $X.X and positive the

levels in our guidance bookings performance take and the revised to improvement XXXX. I'd backlog in on strengthening are along categories. our minutes for we outline trends, a quarter software our to increasing like Finally, Based financial the with first operations expectations all across and few wireless

earnings our in As release. the a are I'm going discuss table reminder, the to today included figures in guidance

million, the million recent revised in range continue $XX increase revenue range guidance we expect to $XXX XXXX, to from of expect previous as the from the a In guidance $XX.X wireless million revenue million Included million, the previous in guidance, we total $XXX.X trends $X.X midpoint. discussed now expect as a earlier. be million to between improve, will to I we midpoint $X.XX to increase

range to the trends $XX.X increase expected the midpoint. million with the performance total representing of is our from improving in revenue a our prior guidance $XX the from software $XX.X increase to Software on guidance million, $X.X Based million in million EBITDA for midpoint revenue midpoint from XXXX the revised adjusted guidance. small a first quarter, implying to is previous million $XX

now turn said, that back to Vince. will call With I the over

Vince Kelly

from program. an event Investor like will and I'd presentations program to everybody register of Calvin. this that, as broader as our you include our webcast. remind team go management Day you, webcast. our for we'll Thank for shortly myself Relations opportunity the will the hope following call Q&A. hosting join be the Please The Investor as well website We be to us can section Again, to

for everyone second quarter look appreciate this Spok you forward quarter. to updating results in you and us a day. and your and great We We'll again a XXXX interest move July. support morning, for next in have we Thank joining

Spok (SPOK) 4 May 232023 Q1 Earnings call transcript