Spok Holdings Inc.

04/28/2022 | Press release | Archived content

Spok Reports First Quarter 2022 Results

Company makes progress on recently announced strategic business plan

Announces conclusion of thorough strategic alternatives review process; Spok's Board remains open to all pathways to maximize shareholder value

Alexandria, Va. (April 28, 2022) - Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in healthcare communications, today announced results for the first quarter ended March 31, 2022. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.3125 per share, payable on June 24, 2022, to stockholders of record on May 25, 2022.

2022 First Quarter Highlights:

  • Announced new strategic business plan prioritizing maximizing free cash flow and returning capital to shareholders
  • Reduced size of Board of Directors to better align the Board's size and composition with the Company's recently announced business strategy
  • Capital returned to stockholders in the first quarter of 2022 totaled $6.5 million in the form of the Company's regular quarterly dividend
  • Cash, cash equivalents and short-term investments balance of $46.3 million at March 31, 2022, and no debt
  • University of Rochester Medical Center (URMC) selected Spok Care Connect® to replace URMC's existing operator console and to support its clinical communication needs at its flagship Strong Memorial Hospital

"We have made great progress on our recently announced strategic business plan while also continuing to provide critical communications services to our healthcare customers," said Vincent D. Kelly, president and chief executive officer of Spok Holdings, Inc. "We are on target with our previously announced financial objectives, and our focus remains on creating significant value for our shareholders by maximizing revenue and cash flow generation from our established communication solutions. We continue to believe that we are on the best path forward, and we are optimistic about our prospects for the remainder of 2022 and beyond."

Strategic Review Update:

Spok has concluded the strategic alternatives review process it publicly commenced on September 3, 2021. At this time, Spok has no actionable options for a sale of the Company and the Board has determined it is in the best interests of all shareholders for Spok to focus on executing its strategic plan as a standalone company.

Since initiating the strategic review, the Board, along with its financial and legal advisors, conducted an exceptionally thorough process and reached out to and engaged with a wide range of strategic and financial parties.

Spok's Board is fully committed to maximizing value for all shareholders.

2022 First Quarter Results:

Consolidated revenue for the first quarter of 2022 under Generally Accepted Accounting Principles ("GAAP") was $33.8 million, compared to $36.0 million in the first quarter of 2021.

For the Three Months Ended March 31,

(Dollars in thousands)

2022

2021

Change (%)

Wireless revenue

Paging revenue

$ 18,313

$ 19,353

(5.4) %

Product and other revenue

533

767

(30.5) %

Total wireless revenue

$ 18,846

$ 20,120

(6.3) %

Software revenue

License

$ 1,824

$ 1,552

17.5 %

Professional services

3,336

4,354

(23.4) %

Hardware

589

616

(4.4) %

Maintenance

9,230

9,394

(1.7) %

Total software revenue

14,979

15,916

(5.9) %

Total revenue

$ 33,825

$ 36,036

(6.1) %

Operating expenses in the first quarter of 2022 totaled $42.5 million and included $4.5 million in restructuring costs, compared to $37.8 million in operating expenses in the first quarter of 2021.

Adjusted operating expenses (which excludes depreciation, amortization and accretion, and restructuring costs, and includes capitalized software development costs) totaled $37.1 million in the first quarter of 2022. Adjusted operating expenses for the first quarter of 2021 totaled $38.0 million.

For the Three Months Ended March 31,

(Dollars in thousands)

2022

2021

Change (%)

Operating expenses

$ 42,493

$ 37,776

(12.5) %

Adjusted operating expenses

$ 37,064

$ 37,969

2.4 %

GAAP net loss for the first quarter of 2022 was $7.2 million, or a loss of $0.37 per diluted share, compared to net loss of $2.3 million, or $0.12 per diluted share, in the first quarter of 2021. For the first quarter of 2022, adjusted EBITDA loss totaled $2.1 million compared to adjusted EBITDA of $0.3 million in the first quarter of 2021.

For the three months ended March 31,

(Dollars in thousands)

2022

2021

Change (%)

Net loss

$ (7,214)

$ (2,297)

(214.1) %

Basic and diluted net loss per common share

$ (0.37)

$ (0.12)

(208.3) %

Adjusted EBITDA

$ (2,124)

$ 306

(794.1) %

Financial Outlook:

Regarding financial guidance, the Company expects the following for fiscal year 2022, which is unchanged from the previously provided 2022 financial guidance:

(Unaudited and in millions)

Current Guidance Full Year 2022

From

To

Revenue

Wireless

$ 71.6

$ 77.0

Software

$ 54.4

$ 62.2

Total Revenue

$ 126.0

$ 139.2

Adjusted Operating Expenses

$ 118.8

$ 128.6

Capital Expenditures

$ 3.4

$ 4.2

2022 First Quarter Call:

Management will host a conference call and webcast to discuss these financial results today at 8:30 a.m. Eastern Daylight Time. The presentation is open to all interested parties and may include forward-looking information.

Conference Call Details

Date/Time:

Thursday, April 28, 2022, at 8:30 a.m. EDT

Webcast:

https://www.webcast-eqs.com/spok042822_en/en

U.S. Toll-Free Dial In:

877-407-0890

International Dial In:

+1-201-389-0918

To access the call, please dial in approximately ten minutes before the start of the call. After the event the OnDemand version of the webcast will be available under the URL as well.

* * * * * * * * *

Non-GAAP Financial Measures

This press release contains the following non-GAAP financial measures: adjusted operating expenses and adjusted EBITDA. Adjusted operating expenses excludes depreciation, amortization and accretion, goodwill and restructuring costs, and includes capitalized software development costs. Adjusted EBITDA represents net income/(loss) before interest income/expense, income tax expense/benefit, depreciation, amortization and accretion expense restructuring costs, and stock-based compensation expense and includes capitalized software development costs.

We believe that these non-GAAP financial measures provide useful information to management and investors regarding certain financial and business trends relating to Spok's financial condition and results of operations. We use these non-GAAP measures for financial, operational, and budgetary decision-making purposes, to understand and evaluate our core operating performance and trends, and to generate future operating plans. We believe that these non-GAAP financial measures permit us to more thoroughly analyze key financial metrics used to make operational decisions and allow us to assess our core operating results. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with other software companies who present similar non-GAAP financial measures. We adjust for certain items because we do not regard these costs as reflective of normal costs related to the ongoing operation of the business in the ordinary course. In general, these items possess one or more of the following characteristics: non-cash expenses, factors outside of our control, items that are non-operational in nature, and unusual items not expected to occur in the normal course of business.

We do not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company's financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expenses and income are excluded or included in determining these non-GAAP financial measures. In order to compensate for these limitations, management presents non-GAAP financial measures in connection with GAAP results. We urge investors to review the reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures, which are included in this press release, and not to rely on any single financial measure to evaluate our business.

Tables to Follow

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)(b)

(Unaudited and in thousands except share, per share amounts and ARPU)

For the three months ended

3/31/2022

3/31/2021

Revenue:

Wireless

$ 18,846

$ 20,120

Software

14,979

15,916

Total revenue

33,825

36,036

Operating expenses:

Cost of revenue (exclusive of items shown separately below)

7,804

7,982

Research and development

6,497

4,444

Technology operations

7,013

7,204

Selling and marketing

5,315

5,139

General and administrative

10,435

10,280

Depreciation, amortization and accretion

934

2,727

Severance and restructuring

4,495

-

Total operating expenses

42,493

37,776

% of total revenue

125.6 %

104.8 %

Operating loss

(8,668)

(1,740)

% of total revenue

(25.6) %

(4.8) %

Interest income

67

61

Other expense

(13)

(27)

Loss before income taxes

(8,614)

(1,706)

Benefit from (provision for) income taxes

1,400

(591)

Net loss

$ (7,214)

$ (2,297)

Basic and diluted net loss per common share

$ (0.37)

$ (0.12)

Basic weighted average common shares outstanding

19,599,526

19,272,786

Cash dividends declared per common share

0.3125

0.125

Key statistics:

Units in service

838

874

Average revenue per unit (ARPU)

$ 7.24

$ 7.34

Bookings

$ 14,317

$ 14,597

Backlog

$ 40,532

$ 48,849

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (a)(b)

(Unaudited and in thousands except share, per share amounts and ARPU)

For the three months ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Revenue:

Wireless

$ 18,846

$ 19,203

$ 19,644

$ 19,859

$ 20,120

$ 20,300

$ 20,828

$ 21,078

Software

14,979

15,341

16,207

15,864

15,916

17,180

16,865

14,661

Total revenue

33,825

34,544

35,851

35,723

36,036

37,480

37,693

35,739

Operating expenses:

Cost of revenue (exclusive of items shown separately below)

7,804

8,290

8,340

7,859

7,982

8,588

7,223

6,372

Research and development

6,497

4,851

4,063

4,156

4,444

4,122

3,445

2,740

Technology operations

7,013

7,331

7,287

7,022

7,204

7,253

7,269

7,174

Selling and marketing

5,315

5,356

5,404

5,184

5,139

5,209

4,483

4,015

General and administrative

10,435

11,099

11,664

10,481

10,280

8,882

10,206

10,162

Depreciation, amortization and accretion

934

2,694

2,568

2,457

2,727

2,503

2,335

2,072

Severance and restructuring

4,495

71

82

173

-

366

-

45

Goodwill and capitalized software development impairment

-

15,663

-

-

-

25,007

-

-

Total operating expenses

42,493

55,355

39,408

37,332

37,776

61,930

34,961

32,580

% of total revenue

125.6 %

160.2 %

109.9 %

104.5 %

104.8 %

165.2 %

92.8 %

91.2 %

Operating (loss) income

(8,668)

(20,811)

(3,557)

(1,609)

(1,740)

(24,450)

2,732

3,159

% of total revenue

(25.6) %

(60.2) %

(9.9) %

(4.5) %

(4.8) %

(65.2) %

7.2 %

8.8 %

Interest income

67

56

141

61

61

51

127

146

Other (expense) income

(13)

54

10

29

(27)

95

151

101

(Loss) income before income taxes

(8,614)

(20,701)

(3,406)

(1,519)

(1,706)

(24,304)

3,010

3,406

Benefit from (provision for) income taxes

1,400

4,032

912

800

(591)

(22,306)

155

353

Net (loss) income

$(7,214)

$(16,669)

$(2,494)

$ (719)

$(2,297)

$(46,610)

$ 3,165

$ 3,759

Basic net (loss) income per common share

$(0.37)

$(0.86)

$(0.13)

$(0.04)

$ (0.12)

$ (2.44)

$ 0.17

$ 0.20

Diluted net (loss) income per common share

(0.37)

(0.86)

(0.13)

(0.04)

(0.12)

(2.44)

0.16

0.20

Basic weighted average common shares outstanding

19,599,526

19,483,004

19,464,893

19,395,364

19,272,786

19,088,329

19,051,502

19,016,853

Diluted weighted average common shares outstanding

19,599,526

19,483,004

19,464,893

19,395,364

19,272,786

19,088,329

19,208,452

19,115,148

Key statistics:

Units in service

838

847

853

869

874

885

898

915

Average revenue per unit (ARPU)

$ 7.24

$ 7.26

$ 7.29

$ 7.32

$ 7.34

$ 7.30

$ 7.34

$ 7.24

Bookings

$ 14,317

$ 14,793

$ 17,116

$ 13,037

$ 14,597

$ 16,528

$ 21,414

$ 15,411

Backlog

$ 40,532

$ 43,361

$ 45,584

$ 45,632

$ 48,849

$ 50,504

$ 51,708

$ 48,441

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)

(In thousands)

3/31/2022

12/31/2021

ASSETS

(Unaudited)

Current assets:

Cash and cash equivalents

$ 31,350

$ 44,583

Short-term investments

14,978

14,999

Accounts receivable, net

23,373

26,908

Prepaid expenses

8,095

6,641

Other current assets

878

922

Total current assets

78,674

94,053

Non-current assets:

Property and equipment, net

6,642

6,746

Operating lease right-of-use assets

14,993

15,821

Capitalized software development, net

-

-

Goodwill

99,175

99,175

Intangible assets, net

-

-

Deferred income tax assets, net

32,684

31,653

Other non-current assets

707

706

Total non-current assets

154,201

154,101

Total assets

$ 232,875

$ 248,154

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$ 3,863

$ 5,292

Accrued compensation and benefits

15,769

13,948

Deferred revenue

24,223

25R,608

Operating lease liabilities

5,112

5,405

Other current liabilities

5,147

4,745

Total current liabilities

54,114

54,998

Non-current liabilities:

Asset retirement obligations

6,372

6,355

Operating lease liabilities

11,256

11,883

Other non-current liabilities

1,238

1,227

Total non-current liabilities

18,866

19,465

Total liabilities

72,980

74,463

Commitments and contingencies

Stockholders' equity:

Preferred stock

$ -

$ -

Common stock

2

2

Additional paid-in capital

97,197

97,291

Accumulated other comprehensive loss

(1,563)

(1,588)

Retained earnings

64,259

77,986

Total stockholders' equity

159,895

173,691

Total liabilities and stockholders' equity

$ 232,875

$ 248,154

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)

(Unaudited and in thousands)

For the three months ended

3/31/2022

3/31/2021

Operating activities:

Net loss

$ (7,214)

$ (2,297)

Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:

Depreciation, amortization and accretion

934

2,727

Deferred income tax (benefit) expense

(1,024)

510

Stock-based compensation

1,115

2,239

Provisions for credit losses, service credits and other

594

215

Changes in assets and liabilities:

Accounts receivable

2,951

1,039

Prepaid expenses and other assets

(1,421)

457

Net operating lease liabilities

(91)

338

Accounts payable, accrued liabilities and other

879

(3,038)

Deferred revenue

(1,602)

(1,471)

Net cash (used in) provided by operating activities

(4,879)

719

Investing activities:

Purchases of property and equipment

(679)

(727)

Capitalized software development

-

(2,920)

Purchase of short-term investments

(14,967)

(14,995)

Maturity of short-term investments

15,000

15,000

Net cash used in investing activities

(646)

(3,642)

Financing activities:

Cash distributions to stockholders

(6,524)

(2,730)

Purchase of common stock for tax withholding on vested equity awards

(1,209)

(1,444)

Net cash used in financing activities

(7,733)

(4,174)

Effect of exchange rate on cash and cash equivalents

25

14

Net decrease in cash and cash equivalents

(13,233)

(7,083)

Cash and cash equivalents, beginning of period

44,583

48,729

Cash and cash equivalents, end of period

$ 31,350

$ 41,646

Supplemental disclosure:

Income tax refunds received

$ (39)

$ (118)

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

CONSOLIDATED REVENUE

SUPPLEMENTAL INFORMATION (a)

(Unaudited and in thousands)

For the three months ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Revenue

Paging

$ 18,313

$ 18,513

$ 18,844

$ 19,135

$ 19,353

$ 19,513

$ 19,961

$ 19,990

Non-paging

$ 533

$ 690

$ 800

$ 724

$ 767

$ 787

$ 867

$ 1,088

Total wireless revenue

$ 18,846

$ 19,203

$ 19,644

$ 19,859

$ 20,120

$ 20,300

$ 20,828

$ 21,078

License

$ 1,824

$ 1,650

$ 1,807

$ 908

$ 1,552

$ 1,528

$ 2,012

$ 749

Services

$ 3,336

$ 3,783

$ 4,159

$ 4,865

$ 4,354

$ 4,778

$ 4,772

$ 3,812

Equipment

$ 589

$ 573

$ 596

$ 482

$ 616

$ 961

$ 554

$ 601

Operations revenue

$ 5,749

$ 6,006

$ 6,562

$ 6,255

$ 6,522

$ 7,267

$ 7,338

$ 5,162

Maintenance revenue

$ 9,230

$ 9,335

$ 9,645

$ 9,609

$ 9,394

$ 9,913

$ 9,527

$ 9,499

Total software revenue

$ 14,979

$ 15,341

$ 16,207

$ 15,864

$ 15,916

$ 17,180

$ 16,865

$ 14,661

Total revenue

$ 33,825

$ 34,544

$ 35,851

$ 35,723

$ 36,036

$ 37,480

$ 37,693

$ 35,739

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES

SUPPLEMENTAL INFORMATION (a)(b)

(Unaudited and in thousands)

For the three months ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Cost of revenue

Payroll and related

$ 5,110

$ 5,268

$ 5,208

$ 4,720

$ 5,139

$ 5,244

$ 4,743

$ 4,158

Cost of sales

1,557

1,713

1,699

1,633

1,386

1,924

1,165

1,193

Recoverable taxes and fees

712

781

792

903

867

798

803

591

Stock-based compensation

109

127

220

262

291

112

121

111

Other

316

401

421

341

299

510

391

319

Total cost of revenue

7,804

8,290

8,340

7,859

7,982

8,588

7,223

6,372

Research and development

Payroll and related

4,305

4,329

4,291

4,333

4,475

4,358

4,147

4,115

Outside services

1,899

1,760

1,759

2,060

2,277

2,358

2,113

1,803

Capitalized software development

-

(2,603)

(2,621)

(2,698)

(2,920)

(3,046)

(2,906)

(3,596)

Stock-based compensation

130

234

435

305

475

246

240

243

Other

163

1,131

199

156

137

206

(149)

175

Total research and development

6,497

4,851

4,063

4,156

4,444

4,122

3,445

2,740

Technology operations

Payroll and related

2,509

2,584

2,585

2,323

2,467

2,467

2,246

2,213

Site rent

3,067

3,104

3,122

3,143

3,196

3,313

3,467

3,399

Telecommunications

771

826

828

825

837

857

949

961

Stock-based compensation

55

53

139

131

137

48

52

47

Other

611

764

613

600

567

568

555

554

Total technology operations

7,013

7,331

7,287

7,022

7,204

7,253

7,269

7,174

Selling and marketing

Payroll and related

3,468

3,383

3,592

3,361

3,365

3,115

2,971

2,730

Commissions

1,024

1,153

924

1,244

1,105

1,178

1,059

852

Stock-based compensation

79

114

264

277

350

216

235

217

Advertising and events

568

630

527

247

161

539

151

160

Other

176

76

97

55

158

161

67

56

Total selling and marketing

5,315

5,356

5,404

5,184

5,139

5,209

4,483

4,015

General and administrative

Payroll and related

4,051

4,040

3,911

3,564

3,818

3,373

3,476

3,355

Stock-based compensation

742

675

958

806

986

726

968

744

Facility rent, office, and technology costs

2,680

2,579

2,692

2,484

2,480

2,412

2,260

2,276

Outside services

1,900

2,392

3,078

2,219

1,825

1,584

2,148

2,043

Taxes, licenses and permits(b)

265

408

211

214

214

(314)

190

213

Bad debt

(14)

255

(29)

328

106

202

178

628

Other

811

750

843

866

851

899

986

903

Total general and administrative

10,435

11,099

11,664

10,481

10,280

8,882

10,206

10,162

Depreciation, amortization and accretion

934

2,694

2,568

2,457

2,727

2,503

2,335

2,072

Severance and restructuring

4,495

71

82

173

-

366

-

45

Goodwill and capitalized software development impairment

-

15,663

-

-

-

25,007

-

-

Operating expenses

$ 42,493

$ 55,355

$ 39,408

$ 37,332

$ 37,776

$ 61,930

$ 34,961

$ 32,580

Capital expenditures

$ 684

$ 1,295

$ 905

$ 1,480

$ 727

$ 638

$ 934

$ 846

(a) Slight variations in totals are due to rounding.

(b) Certain prior period amounts have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN

AND AVERAGE REVENUE PER UNIT (ARPU) (a)

(Unaudited and in thousands)

For the three months ended

3/31/2022

12/31/2021

9/30/2021

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

Paging units in service

Beginning units in service (000's)

847

853

869

874

885

898

915

926

Gross placements

19

19

23

31

20

20

25

35

Gross disconnects

(28)

(25)

(39)

(36)

(31)

(33)

(42)

(46)

Net change

(9)

(6)

(16)

(5)

(11)

(13)

(17)

(11)

Ending units in service

838

847

853

869

874

885

898

915

End of period units in service % of total (b)

Healthcare

84.7 %

84.7 %

84.6 %

84.5 %

84.1 %

83.6 %

83.7 %

83.6 %

Government

4.7 %

4.8 %

4.8 %

4.9 %

4.8 %

5.3 %

5.3 %

5.5 %

Large enterprise

3.9 %

3.9 %

4.1 %

4.1 %

4.3 %

4.3 %

4.3 %

4.4 %

Other(b)

6.7 %

6.6 %

6.4 %

6.4 %

6.8 %

6.8 %

6.6 %

6.6 %

Total

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

100.0 %

Account size ending units in service (000's)

1 to 100 units

54

55

57

58

59

61

63

65

101 to 1,000 units

150

154

154

155

163

167

167

165

>1,000 units

634

638

642

656

652

657

668

685

Total

838

847

853

869

874

885

898

915

Account size net loss rate(c)

1 to 100 units

(1.8) %

(3.5) %

(1.1) %

(1.7) %

(3.3) %

(3.2) %

(2.9) %

(3.1) %

101 to 1,000 units

(2.6) %

- %

(0.9) %

(4.9) %

(2.4) %

- %

1.5 %

(4.2) %

>1,000 units

(0.6) %

(0.6) %

(2.2) %

0.6 %

(0.8) %

(1.6) %

(2.5) %

(0.4) %

Total

(1.1) %

(0.7) %

(1.8) %

(0.6) %

(1.2) %

(1.4) %

(1.9) %

(1.3) %

Account size ARPU

1 to 100 units

$ 11.52

$ 11.58

$ 11.67

$ 11.69

$ 11.72

$ 11.62

$ 11.80

$ 11.65

101 to 1,000 units

8.24

8.30

8.38

8.35

8.33

8.35

8.37

8.24

>1,000 units

6.64

6.63

6.65

6.68

6.68

6.62

6.67

6.57

Total

$ 7.24

$ 7.26

$ 7.29

$ 7.32

$ 7.34

$ 7.30

$ 7.34

$ 7.24

(a) Slight variations in totals are due to rounding.

(b) Other includes hospitality, resort and indirect units

(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

SPOK HOLDINGS, INC.

RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA (a)

(Unaudited and in thousands)

For the three months ended

3/31/2022

3/31/2021

Net loss

$ (7,214)

$ (2,297)

Add back:

(Benefit from) provision for income taxes

(1,400)

591

Other expenses

13

27

Interest income

(67)

(61)

Operating loss

(8,668)

(1,740)

Depreciation, amortization and accretion

934

2,727

EBITDA

$ (7,734)

$ 987

Capitalized software development costs

-

(2,920)

Stock-based compensation

1,115

2,239

Severance and restructuring

4,495

-

Adjusted EBITDA

$ (2,124)

$ 306

(a) Slight variations in totals are due to rounding.

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in thousands)

For the three months ended

3/31/2022

3/31/2021

Operating expenses

$ 42,493

$ 37,776

Add back:

Depreciation, amortization and accretion

(934)

(2,727)

Capitalized software development costs

-

2,920

Severance and restructuring

(4,495)

-

Adjusted operating expenses

$ 37,064

$ 37,969

(a) Slight variations in totals are due to rounding.

SPOK HOLDINGS, INC.

2022 FINANCIAL OUTLOOK

(Unaudited and in millions)

Guidance Range

From

To

Revenues

Wireless

$ 71.6

$ 77.0

Software

54.4

62.2

Total Revenues

$ 126.0

$ 139.2

Adjusted Operating Expenses (a)

$ 118.8

$ 128.6

Capital Expenditures

$ 3.4

$ 4.2

RECONCILIATION OF OPERATING EXPENSES TO ADJUSTED OPERATING EXPENSES (a)

(Unaudited and in millions)

Guidance Range

From

To

Operating expenses

$ 128.7

$ 142.3

Add back:

Depreciation, amortization and accretion

(3.5)

(3.5)

Severance and restructuring

$ (6.4)

$ (10.2)

Adjusted operating expenses

$ 118.8

$ 128.6

(a) Adjusted operating expenses exclude depreciation, amortization and accretion, goodwill and capitalized software development impairment costs, and severance and restructuring costs, and includes capitalized software development costs.