SPOK - Earnings call transcript Q1 2024

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Operator

Ladies and gentlemen, greetings, and welcome to the Spok Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.It is now my pleasure to introduce your host, Al Galgano. Please go ahead.

Al Galgano

Hello, everyone, and welcome to Spok Holdings' First Quarter 2024 Earnings Call. I am joined today by Vince Kelly, Chief Executive Officer; Mike Wallace, President of Spok, Inc. risks and that Chief include business today's that subject Officer; to Officer.I forward-looking performance. Operating to are everyone relating remind conference to Chief Calvin financial Financial Rice, want statements Spok's and future uncertainties and and call may other upon Such as future conditions. estimates events as include plans, or may revenue, expenses or statements statements income, which and of well predictive are dependent on give the are These assurance date this statements estimates represent future and to the conference actual not to only intended any company's as call of results. statements. those Spok's actual materially differ results could anticipated from in these forward-looking

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

Vincent Kelly

for to and is, while remains over we to that afternoon, and our I you business. term, strong believe these call. quarter, to everyone. responsibly everyone remainder and joining also this upfront position us take team start, the unchanged, our for the off remind was well return for cash long of investing our gotten performance Al, and the you, very proud me Thank in to mission deliver first first the good earnings XXXX our year. the opportunity quarter great Thank are I'm in capital of able generate maintaining We've momentum.Let us growing to and results shareholders that a that right solidly

your and our first I'll up for has questions.As Spok call our results year what it then for to and current the legacy, in a the that providing to today's as by The I so job feel about we are to progressing guidance review executing a the As is performance Wallace, business the years, have and is update quarter. sustainable a good I'll to be performance we our our Rice, in we've financial our share we X lot of Financial open a XXXX. quarterly order an doing it review as Michael capital follows. believe Calvin quarter over and path financial for and for believe We'll provide turn solid strategic wrap company the success upfront, the of call. reviewing I'll some quarter. well review cover Chief over cash annual to the then quarter an in Returning on level of and ahead. flow of as on plan with.Today, we had primary highlights call our focus. springboard strategy our last is that into we believe and up able this Then goal, first and on Chief a demonstrated dividend results begin our will President our Officer, a our is with to on to and accomplish shareholders with That's our Officer, you proud sales said of full by basis. our highlights. we're for in path financial agenda these support how been going for team the we'll Operating our start grow historical our

our increases in growth first second software First total operations growth revenues, a more XX% history; strong and by Spok's EBITDA all trends again the software in to driven income our while job and than churn actions in in level further year-over-year in we reflecting prior pager. the average X% dropped were highest net impact a stockholders than believe HIPAA-compliant to alphanumeric able covered net with sales I below of bookings encrypted our quarter; invest GenA per to unit our our of as year-over-year quarter In all order than goal growth.In short, we expansion over EBITDA, generated products in bookings, services the X% returning to adjusted year-over-year improved categories $X.X increase Spok And maintenance, growth include: doing quarter balancing million the in and of hardware; of of wireless XXXX, highlights XX% an software a unit, adjusted more license, in revenue, professional from those levels; million revenue of this future including more year-over-year continued revenues; stockholders. and $X.X we excellent prior continuing our investments of returned pricing fuel to accomplish which of cash infrastructure. of quarter our wireless first is

will I through extensive maximizing selling generation, by our quarter at intend stockholders this on and in established and development will communication million year-over-year free fuel software same has in However, a time, value by our our flow stockholder and basis cash increased and record. and we Spok value investment and legacy research development expenses believe XXXX. solutions on mentioned, continue million proud our we're We products product future approximately we revenue to this a to significant $X.X research the invest in first track track for flow of investment believe revenue $XX create creating cash growth experience operating and XX.X% or generation.As

billion more repurchases.When years, our last cash our debt $X over million through returned has dividends distributions than $XXX our stockholders, stockholders, Spok free our share cash XX or repurchases, acquisitions, either In the since of repayments to a quarterly current fact, Spok special you total has consideration dividend, flow. into over regular take of generated to and balance, inception, share

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

Going our extensive the take recognition quarter the established forward, over significant the value me the tremendous Mike, world-class by call and base stockholders of solid selling right let is and first a end growth, further to a major disciplined a customer operating our for what solutions I generation.Before management I we review team. moment think revenue communication we through a at cash that received accomplishment Spok entire believe to create and flow will experience expense and turn

improvement. survey the the year, honored Spok clients clinical no placed industry customer or satisfaction of recognition Book particularly received including have Black of healthcare Book XX trust Market have healthcare clients seventh such rank. of of as overall go-to Research honors on account consecutive the in #X involved. by We're the on indicators industry support top-rated Spok to partner breadth We research participation our by unwavering securing the believe process as For survey care, subscriber Mike? honored Wallace. Black fees key enhances a is communications enhances and for our that best-of-breed for platforms, the and are goals, truly reputation years to rating honors I'll commitment technology call that, alignment independent. of are which other Spok survey, and programs, that And turn patient client by highest over built.With position and performance safety.In hospital customer that The XX the that consecutive copyrighted indicative because this care We're for top the strong offerings, X health critical clinical underscores communications. ultimately and these received technology of delivering communication achievement innovation, unlike strategic communication, Research management we measures, in Michael system the their

Michael Wallace

Thanks, thank joining you, this us Vince, everyone, and afternoon. for

clinical most a patient where Spok in to quarter, communications.We pointed was Vince our to all faster a leader care areas. smarter, customers. And very a strategy, amidst to strong a made our improve it in being teams we shareholder-friendly number progress outcomes. key Yet, true communications and As the creating mission remain and global performance we solid and to healthcare matters of clinical financial capital allocation it when deliver progress enables of out, platform in tremendous information

X,XXX who of customers, hospitals as States. healthcare facilities who's in the over United representing have the We

those bookings average our was year. solutions financial strength first our last saw impressively, the years coupled the and prior over we engagements. of $X.X contract built are that no operations us XX% customer that over X have multi-year flexibility.In up had many longstanding We momentum quarter. that that million have the revenue with significant X-figure sustaining is nearly included contracts, of the from This contracts is included valuable XX with software a our debt, quarter, relationships. we Most nature, an provides XX% and size And X-figure customer which company in reoccurring

feature upgrades This platform solutions. Spok they rural X We with me pages, year. [ for an system budgeting, million are XX a using a to patients codes operates system, Through They we plan with commitment, workforce XXX,XXX organization nearly engagements health X,XXX quarter. customer multi-year and enhancements.Next, Spok with extensive employees. been benefit signed this flexibility Connect oversees CTI years. covering few last X,XXX dispatching square ] nearly highlight Care almost members, messages a XXX,XXX The extremely we initiate XXX,XXX Spok test for customer more secured pleased across annually, X steady and per hospitals few this sends contract groups has customer more of codes on-call as take messages month functionality serves adopt use XXX,XXX area exceeding that the X of or approximately of XX,XXX a per and X.X FirstHealth new million a XXXX.Let upgrades, the health to value-added with years than dependencies from desired This and miles. over services handles start and the to minutes required to another who than

includes X,XXX usage Our Spok licenses. Console engagement system licenses, this Smart for Mobile organization's Smart Spok the and multi-year Suite Messenger health Suite upgrades, e.Notify, with Spok

data emergency derive which more X system their solutions.Another enterprise. covers workflow hospitalized value cases, over growing maximum existing the contract patients, approximately nearly support from with customer our health across about X analysis, needs an XX XXX,XXX the Spok communication organization's integrity year. customer, As their per is years clinical partner help room million oversees health to XXX,XXX value-added partner This to will longstanding of XX opted visits outpatient and and specialties than system Spok Spok also for a services,

Console, a will facility engagement expand opening As Epic, Spok Console to next EHR-ADT and Spok Spok Care Spok with extensive which Mobile, integration e.Notify encompasses this platform, directory, year. including state-of-the-art Messenger, web encrypted new the paging, Connect client, multi-year a use of

expansion and includes Spok executed Additionally, of a X,XXX employees, X this hospital X-year agreement over flagship a beds. focusing services.And the customer's optimization Their value-added we environment. has last, than of on Connect strategic more agreement, Care XX,XXX staffing our

all-in-one of partnership Our includes voice system's by upgrades; a to console X,XXX users; Voice expansion Mobile, the MediCall interactive and powered Spok Spok AI-powered device initiative, total our system, the Connect. of response health

our maximum to a March. in this services pleased our participation a capabilities attracted solution customer the communication around like and over The the participated value-added of with critical opted meetings top-rated reporting HIMSSXX showcased performance. also as I help solution note, our from healthcare also to growth event to Rice, and source user further highlight Care We experts this Events globe. as success pipeline.I more to various very provide Connect our Spok referral year's we also new the them the the call such There, addition, would sales customer, of now demonstrated they conference. Messenger. the In at the in leaders briefly partner Spok we to quarter financial power will successful review our final prospect platform. are Chief were from for turn Financial these solutions.On our new hosted than drive Calvin to first value in Spok and the clinical Officer, Calvin? dashboards for Conference XX,XXX

Calvin Rice

of information financial a provide or Thanks, XX-Q first a afternoon, in million to now quarter and today. about take we diluted you would everyone. I XXXX. $X.XX our when first few than or cover share, more review statement, we good I of which income compared minutes quarter reported XXXX our Mike, per on financial it includes performance, per of $X.X recap to filed, million and and as encourage net diluted operations net like significantly share call.Turning income GAAP $X.X to to income will business performance the totaled our XXXX, this in $X.XX our

revenue revenue from $XX to GAAP of prior which $XX.X of revenue in the total year, was of respect the in quarter quarter the revenue, down the actions we XXXX $XX.X our X.X% and For in last success the net and, in the XXXX. The from XXXX, pricing GenA ARPU first the of of wireless increase million, software improvement from first by increase of to of of down a in prior quarter, continued up X% million or sales the quarter first and of saw The up revenue year. $XX.X compared and quarter in year.With new X.X% consisted was wireless XX.X% revenue ARPU prior Revenue $XX.X million, for quarter, million, million churn at from quarterly lesser late X.X% primarily was to pager. from undertaken a extent, our $X.XX unit driven in prior

the like prior first through to totaled maintenance a basis, services offset continue pager quarter for unit in focus by further $X.X we year service, on reflected our X.X%. up decline.Turning demand initiatives will are as pager to revenue hopeful software approximately was quarter units GenA on secular pricing other continue pager revenue, declining decline the loss we that While from wireless and our believe our million the revenue in and will to

second hires was nature a from positive the beginning operations half Much of higher in increase quarters.Professional and are revenue, maintenance see on months. $X driven revenue license last quarter quarter software will basis, levels services several continuing maintenance we on work and additional revenue healthy XX a the personnel first the million with sales was X of first XXXX the over Given in through versus in over $X.X bookings the of million past revenue the of an to by the impact this into XXXX. lagging

our to new software be pace As from services expect to continue months hired. with ongoing the professional services the backlog. growth they in time generally personnel to personnel operations we bookings in expand, an increase X fully expect billable We need are roughly to maintain

levels a So margin present there's short Again, the $XX.X term, period. quarter totaled first prior on million, strong accretion, nothing software from restructuring would we year of see.First XXXX. excludes and up in a impact $X million basis.License bookings calendar totaled expenses, same the in the the the quarter this operating from operations in in that depreciation, compared period very million to adjusted severance some of impact revenue results but and and which to million costs, continue year $XX.X hardware $X meaningful

research also the $XX due marketing.Adjusted year-over-year investment cost hiring to due While the a like the and end Spok's half of expenses software million, to EBITDA products line EBITDA $X.X to increased at development, revenue. related XXXX, to $X.X in were in were aforementioned as adjusted over selling nearly through quarter to increase well and driven remainder services increase a totaled million cash $X.X year.I'd about up balances, directly increase revenue, results The first in by primarily of just our the and quarter. was our the million, as increase the which of begin was top software million million $X.X of our strong the reflection X.X% same from of in and address

to ranging $XX million said, between turn $XXX range EBITDA we and back to revenue fully a balances in million financial wireless ended you've are final expect expect million.With with our press we year, software mentioned Based As total This a than what cash cash as seen and first outlook, now million, the calendar we Vince. current call we to revenue probably adjusted traditionally our in million guidance release, first reiterating in different. performance in to between million given the substantially experience was note, the range $XX to quarter.On we from $XXX to the to on disbursements we already XXXX on for quarter with XXXX. to the quarter in $XX no $XX million, this based that our higher exit today's million have revenue where I of peak and ranging the past, are $XX.X first year, from quarter, will over $XX.X

Vincent Kelly

you much, Thank Calvin. very

Before our the questions, I strong the for up first us in like proud these we're I again our your deliver year. believe -- believe We the to and while a out point team in performance remainder to results spot shareholders. call position the well returning of to open to grow while was able capital growing of great our franchise, quarter I'd how the to am

have X engine and financial and questions. quarter customer We everyone Spok's your largest call in much with our software believe, healthcare growth We for quarter in interest for a you second support next bright.We the us us devices of software the service to and you when line. integrated look have we our paging operations, updating long-term Spok, core assets and Care results enhanced of going user results source strong recurring again these paging Spok we for base. Thank our in now we have organic run best forward and world, serve future us, to our solutions we joining in our open and may appreciate very a July. revenue is a wireless our are the platform maintain and with offering We ahead day.Operator, great through in Connect, report

Operator

Capital. of Instructions] first Our question from Lake with Eric [Operator Street Martinuzzi is the line

Eric Martinuzzi

highest second second history. in having million QX for -- XX% quarter given questions year. with know Congratulations on the was, company's what was to wrong excited the that number, bookings that think, I $X.X start page off software I but the you jumped it's to in me your certainly, that the I too growth. wanted a successful just get start number, highest said, quarter, to as any the

to -- kind like for a looking growth back we still double-digit it basis bookings? take are on full of are -- So we still full year the software view, a out year to for just

Vincent Kelly

okay yes. a That it's get excited, And to Eric. be would little bit

Eric Martinuzzi

Yes.

pipeline had behind far deals the confluence there, As there large of we is something in? else was coming goes it? this a of as kind just Or

Vincent Kelly

The pipeline continues to grow.

had of the customers, functionality of our to our our fantastic the And previews June One the buying was right of and right? and our and lot we've of since off the really they're gotten know pivot going to giving and our off the been into it. investment rest now, what sales quarter, you that's year April things May first and map, phenomenal, are is ball a put we've the now team to this knocking cover adding is, So and never map time it. year to we're helping but bring, and road road that we've us solutions a the

months first to year. X months incredibly X the strong The is compared first last

gigantic, having really colossal that, Now, one had last second million said bumped that in $X year, you'll quarter big, the recall numbers way up. deal, the second quarter we which

those And But second I well. good don't million one But wheel end pretty having as we're another the now. so, have we a going single I sized always to could $X get April. just up wheels. the one right into a target and pretty right be quarter honest, We to big did good now, a darn of pull crosshairs deal in think

Michael Wallace

Mike. guess little that. I Eric, color add I piece of would it's one to

highest those those We deals. one XX XX deals, -- deal the quarter was and $XXX,XXX within we The of have of $XXX,XXX. actually positive really about didn't or in had was really big area the first X-figure

I as we for will, lot which and of the are portends you for basics really things just the if -- of triples, singles well. So doing year rest a we're the doubles really, and good we're think hitting

Eric Martinuzzi

Okay.

press incremental far that's going center? release Where into investment the You being the R&D pointing dollars as Is the this are What's going is spent. noted element incremental the wireless there contact to the as those -- -- slight we in an product? lift...

Vincent Kelly

do Messenger, our it. there. out clinical bringing to new does going and to console alerting call our solution, operator with which alerting which and kind also a console of functionality But to operator Primarily lot it's the we

Eric Martinuzzi

from and a feedback Okay. working customers this I through just list. is assume punch

Vincent Kelly

Absolutely.

Eric Martinuzzi

what then, cash, And QX, year, for QX the more mentioned, you million that the talked I still model, on $XX free about on ballpark stepping of you seasonally a on roughly it adjusted had expect around EBITDA, here -- year would my challenging. that cash Calvin converting Okay. in you've always into as $XX got million, full in the All Is right. flow. basis? outlook down the midpoint the being Based for

Calvin Rice

[ Yes, it Eric. sure is ],

Eric Martinuzzi

question. last then, And right. All Okay.

talked like period for for about expectation basis a That's little here down I that how in really to What months is great to the the ending full outlook? You look a churn it year the is What's see. at more on was trailing and know year X% being it, XX-month QX. churn? you full the XX QX. the expectation, over around

Calvin Rice

and in our quarter saw Yes. I quarter. saw here results, expect I saying. from consistent we've drop of what the first pleased drop say those very I that the for is would first QX. second been month that what to with we would We the you it with in significantly that expectation we quite tell are can

we've annualized So, the on line in with I kind of range X% in return been kind the basis. saying. to of mean X% an to expect to still what

Eric Martinuzzi

the of rest congrats right. All year. Got and luck it. the for good Well,

Operator

further closing for conference to over there no I his questions, are [Operator hand Instructions] As Vincent would the now comments. Kelly

Vincent Kelly

you thank evening. we this July nice you with well, for joining have your evening. for second to and very when It look everyone, in support teleconference. report numbers. conclude does speaking Okay, Everyone, our forward much quarter us We today's a

Operator

Ladies today's that participation. concludes and you conference. your Thank gentlemen, for

disconnect your lines. You may now

Spok (SPOK) 1 May 242024 Q1 Earnings call transcript