TMCnet News

Spok Reports Second Quarter Operating Results
[July 28, 2015]

Spok Reports Second Quarter Operating Results


Spok Holdings, Inc. (NASDAQ: SPOK), a global leader in critical communications, today announced operating results for the second quarter ended June 30, 2015. In addition, the Company's Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2015 to stockholders of record on August 19, 2015.

Software revenue increased 13.9 percent to $17.7 million in the second quarter from $15.6 million in the year-earlier quarter, while wireless revenue was $30.2 million versus $33.5 million in the second quarter of 2014. Consolidated revenue for the second quarter was $48.0 million, compared to $49.1 million in the second quarter of 2014.

Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $9.1 million, or 18.9 percent of revenue, compared to $11.7 million, or 23.9 percent of revenue, in the year-earlier quarter, and $10.0 million, or 20.8 percent of revenue, in the first quarter of 2015.

Net income for the second quarter was $3.4 million, or $0.16 per fully diluted share, compared to $4.3 million, or $0.19 per fully diluted share, in the second quarter of 2014.

Other key results and highlights for the second quarter included:

  • Software bookings increased 10.9 percent to $21.0 million from $19.0 million in the year-earlier quarter. Second quarter bookings included $10.5 million of operations bookings and $10.5 million of maintenance renewals.
  • Software backlog increased to $43.5 million at June 30, 2015, compared to $40.2 million a year earlier.
  • Of the $17.7 million in software revenue for the second quarter, $9.3 million was operations revenue and $8.4 million was maintenance revenue, compared to $8.1 million and $7.5 million, respectively, of the $15.6 million in software revenue for the second quarter of 2014.
  • The renewal rate for software maintenance in the second quarter was 99.8 percent.
  • The quarterly rate of paging unit erosion improved to 1.6 percent from 2.1 percent in the year-earlier quarter, while the annual rate of unit erosion improved to 6.8 percent from 10.1 percent in the year-earlier quarter. Both the quarterly and annual rates of unit erosion were the Company's lowest in more than a decade. Net paging unit losses total 19,000 versus 28,000 in the second quarter of 2014. Paging units in service at June 30, 2015 totaled 1,211,000, compared to 1,299,000 a year earlier.
  • The quarterly rate of wireless revenue erosion improved to 1.5 percent from 2.4 percent in the year-earlier quarter, reaching its lowest level in four years, while the annual rate of wireless revenue erosion improved to 9.8 percent versus 11.3 percent in the second quarter of 2014, falling below 10 percent for the first time in more than 10 years.
  • Total paging ARPU (average revenue per unit) was $7.86, compared to $7.98 in the year-earlier quarter and $7.91 in the first quarter of 2015.
  • Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $38.9 million in the second quarter, compared to $37.4 million in the year-earlier quarter.
  • Capital expenses were $2.0 million, compared to $2.4 million in the year-earlier quarter.
  • Capital returned to stockholders in the form of dividends and share repurchases in the second quarter totaled $2.7 million and $3.0 million, respectively.
  • The Company's cash balance at June 30, 2015 was $117.1 million.
  • The number of full-time equivalent employees at June 30, 2015 totaled 608, compared to 604 at March 31, 2015.

"We continued to make excellent progress in the second quarter," said Vincent D. Kelly, president and chief executive officer. "Software revenue and bookings increased from the prior and year-earlier quarters and our backlog and pipeline remained strong. Wireless results also reflected solid improvement as the rates of paging unit and revenue erosion reached their best levels in many years. In addition, we met or exceeded our expectations on virtually all other key operating metrics for the quarter, including revenue, cash flow, and average revenue per unit (ARPU). Overall, we continued to operate profitably, enhance our product offerings, expand our global market reach, and generate sufficient cash flow to again return capital to stockholders in the form of cash dividends and share repurchases."

Commenting on software results, Kelly said: "Software revenue totaled $17.7 million, a record high for the second quarter and third highest quarterly software revenue result in the Company's history. During the quarter we continued to see growing demand from long-term customers for upgrades to existing applications as well as for new communications products and solutions, all of which contributed to an increase in software licenses, hardware and professional services among Spok's expanding worldwide customer base. "In addition," Kelly noted, "both operations and maintenance revenue rose from the second quarter of 2014, with the higher maintenance revenue reflecting our continued success in achieving maintenance renewals rates in excess of 99 percent."

Kelly said second quarter bookings of $21.0 million included $10.5 million of operations bookings and $10.5 million in maintenance bookings, up 10.9 percent from the year-earlier quarter, while the software backlog of $43.5 million at June 30 neared its record high of $43.8 million. "Customer demand, especially among our healthcare customers, remained strongest for secure texting, upgrades to call center solutions, applications to increase patient safety, and improved clinical workflows." Kelly added: "We also experienced an uptick in demand for such software solutions as critical smartphone communications, emergency management, and delivery of critical test results. Overall, we added more than 50 new customers during the quarter."

Kelly said the Company continued to expand software sales outside the United States during the quarter. "While demand remained strongest in North America, we continued to grow our customer base in Europe, the Middle East, and the Asia-Pacific region. In addition, we extended our sales focus to Latin America for the first time, attending a major healthcare tradeshow in Brazil that created an opportunity for our sale team to build partnerships and learn more about the needs of Latin American hospitals. As a result of these and other sales and marketing initiatives, we continued to build a solid pipeline of new business leads throughout targeted markets worldwide."

The Company also recorded solid results for its wireless products and services in the quarter. "Gross pager placements totaled 40,000 versus 29,000 in the prior quarter, while gross disconnects of 59,000 improved from 79,000 a year ago," Kelly said. "As a result, the rate of quarterly and annual net pager losses for the second quarter improved to 1.6 percent and 6.8 percent, respectively, the best levels in many years. In addition, the annual rate of wireless revenue erosion fell to 9.8 percent for the quarter, reaching its lowest level in more than a decade. Wireless sales continued to focus primarily on Spok's core market segments of Healthcare, Government and Large Enterprise. Healthcare continued to be our best performing market segment with the highest rate of gross placements and lowest rate of unit disconnects, and comprised 78.9 percent of our direct units-in-service and 73.9 percent of direct paging revenue at June 30."

Kelly also noted: "Once again all 15 Adult and 12 Children's Hospitals named to U.S. News & World Report's recently released 2015-2016 Honor Roll of Best Hospitals are among our current customers and rely on Spok solutions to help them provide the highest quality care for their patients."

Kelly added that Spok again returned capital to stockholders during the second quarter, distributing cash dividends totaling $2.7 million and repurchasing 177,330 shares of common stock for $3,009,471, or $16.97 per share, under its stock buy-back program.

Shawn E. Endsley, chief financial officer, said: "Strong revenue from both software and wireless, along with focused expense management companywide, resulted in solid operating cash flow for the quarter as we continued to invest in opportunities for long-term growth. Operating expenses were impacted by $2.5 million of one-time charges during the quarter. Absent these charges, consolidated expenses would have declined and EBITDA margin improved as compared to the first quarter. Our balance sheet also remained strong at June 30 with no debt and a cash balance of $117.1 million."

Endsley said the Company is maintaining previously provided financial guidance for 2015, which projects total revenue to range from $183 million to $201 million, operating expenses (excluding depreciation, amortization and accretion) to range from $145 million to $154 million, and capital expenses to range from $5.5 million to $7.5 million.

* * * * * * * * *

Spok plans to host a conference call for investors on its second quarter operating results at 10:00 a.m. Eastern Time on Thursday, July 30, 2015. Dial-in numbers for the call are 785-424-1666 or 877-876-9177. The pass code for the call is 9775155. A replay of the call will be available from 1:00 p.m. ET on July 30 until 1:00 p.m. on Thursday, August 13. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 9775155.

Spok's Annual Meeting of Stockholders will be held on Wednesday, July 29, in Washington, D.C.

Also, Spok has scheduled its annual "Analyst Day" Investor Meeting for financial analysts for November 3, 2015 in New York City. For further details and to RSVP, please contact Stacy Sloan at [email protected] or call 703-269-6950, or send email to [email protected].

* * * * * * * * *

About Spok

Spok Holdings, Inc., headquartered in Springfield, Va., is proud to be a leader in critical communications for healthcare, government, public safety, and other industries. We deliver smart, reliable solutions to help protect the health, well-being, and safety of people around the globe. Organizations worldwide rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. When communications matter, Spok delivers. Visit us at spok.com or find us on Twitter @Spoktweets.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok's future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok's actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

Tables to Follow



                             
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
 
For the three months ended For the six months ended
6/30/2015 6/30/2014 6/30/2015 6/30/2014
Revenue:
Wireless $ 30,222 $ 33,518 $ 60,912 $ 67,869
Software   17,747     15,576     35,195     31,344  
Total revenue   47,969     49,094     96,107     99,213  
Operating expenses:
Cost of revenue 9,131 7,180 17,944 13,985
Service, rental and maintenance 11,003 11,420 22,260 23,212
Selling and marketing 6,790 7,780 13,838 15,026
General and administrative 10,472 10,990 21,473 23,125
Severance and restructuring 1,504 4 1,504 24
Depreciation, amortization and accretion   3,448     4,352     7,195     8,381  
Total operating expenses   42,348     41,726     84,214     83,753  
% of total revenue 88.3 % 85.0 % 87.6 % 84.4 %
Operating income 5,621 7,368 11,893 15,460
% of total revenue 11.7 % 15.0 % 12.4 % 15.6 %
Interest income (expense), net 3 (64 ) 2 (131 )
Other income (expense), net   264     (194 )   325     (178 )
Income before income tax expense 5,888 7,110 12,220 15,151
Income tax expense   (2,512 )   (2,819 )   (4,927 )   (5,970 )
Net income $ 3,376   $ 4,291   $ 7,293   $ 9,181  
Basic net income per common share $ 0.16   $ 0.20   $ 0.33   $ 0.42  
Diluted net income per common share $ 0.16   $ 0.19   $ 0.33   $ 0.42  
Basic weighted average common shares outstanding   21,677,299     21,642,163     21,787,434     21,640,191  
Diluted weighted average common shares outstanding   21,735,829     22,099,791     21,843,591     22,073,254  
Reconciliation of operating income to EBITDA (b):
Operating income $ 5,621 $ 7,368 $ 11,893 $ 15,460
Add back: depreciation, amortization and accretion   3,448     4,352     7,195     8,381  
EBITDA $ 9,069   $ 11,720   $ 19,088   $ 23,841  
% of total revenue 18.9 % 23.9 % 19.9 % 24.0 %
Key statistics:
Units in service 1,211 1,299 1,211 1,299
Average revenue per unit (ARPU) $ 7.86 $ 7.98 $ 7.87 $ 8.02
Bookings $ 21,027 $ 18,959 $ 38,767 $ 35,880
Backlog $ 43,524 $ 40,182 $ 43,524 $ 40,182

 

(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.

                                               
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
 
For the three months ended
  6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/2013     9/30/2013  
Revenue:
Wireless $ 30,222 $ 30,690 $ 31,678 $ 32,855 $ 33,518 $ 34,351 $ 35,831 $ 37,067
Software   17,747     17,448     19,591     16,936     15,576     15,768     18,854     12,602  
Total revenue   47,969     48,138     51,269     49,791     49,094     50,119     54,685     49,669  
Operating expenses:
Cost of revenue 9,131 8,813 10,571 8,000 7,180 6,805 7,500 6,787
Service, rental and maintenance 11,003 11,256 11,285 10,988 11,420 11,792 11,442 11,820
Selling and marketing 6,790 7,048 7,915 7,072 7,780 7,246 7,297 6,388
General and administrative 10,472 11,001 11,905 10,866 10,990 12,135 11,470 11,282
Severance and restructuring 1,504 - 926 545 4 20 981 -
Depreciation, amortization and accretion   3,448     3,747     4,049     4,247     4,352     4,029     3,680     3,858  
Total operating expenses   42,348     41,865     46,651     41,718     41,726     42,027     42,370     40,135  
% of total revenue 88.3 % 87.0 % 91.0 % 83.8 % 85.0 % 83.9 % 77.5 % 80.8 %
Operating income 5,621 6,273 4,618 8,073 7,368 8,092 12,315 9,534
% of total revenue 11.7 % 13.0 % 9.0 % 16.2 % 15.0 % 16.1 % 22.5 % 19.2 %
Interest income (expense), net 3 (1 ) (262 ) (63 ) (64 ) (67 ) (64 ) (68 )
Other income (expense), net   264     60     (188 )   (2 )   (194 )   16     15     84  
Income before income tax expense 5,888 6,332 4,168 8,008 7,110 8,041 12,266 9,550
Income tax expense   (2,512 )   (2,415 )   2,744     (3,356 )   (2,819 )   (3,151 )   (4,251 )   (3,788 )
Net income $ 3,376   $ 3,917   $ 6,912   $ 4,652   $ 4,291   $ 4,890   $ 8,015   $ 5,762  
Basic net income per common share $ 0.16   $ 0.18   $ 0.32   $ 0.21   $ 0.20   $ 0.23   $ 0.37   $ 0.27  
Diluted net income per common share $ 0.16   $ 0.18   $ 0.31   $ 0.21   $ 0.19   $ 0.22   $ 0.36   $ 0.26  
Basic weighted average common shares outstanding   21,677,299     21,898,792     21,554,746     21,651,347     21,642,163     21,638,198     21,633,706     21,629,289  
Diluted weighted average common shares outstanding   21,735,829     22,053,015     22,101,600     22,135,554     22,099,791     22,037,796     21,969,756     21,919,238  
Reconciliation of operating income to EBITDA (b):
Operating income $ 5,621 $ 6,273 $ 4,618 $ 8,073 $ 7,368 $ 8,092 $ 12,315 $ 9,534
Add back: depreciation, amortization and accretion   3,448     3,747     4,049     4,247     4,352     4,029     3,680     3,858  
EBITDA $ 9,069   $ 10,020   $ 8,667   $ 12,320   $ 11,720   $ 12,121   $ 15,995   $ 13,392  
% of total revenue 18.9 % 20.8 % 16.9 % 24.7 % 23.9 % 24.2 % 29.2 % 27.0 %
Key statistics:
Units in service 1,211 1,230 1,256 1,274 1,299 1,327 1,376 1,408
Average revenue per unit (ARPU) $ 7.86 $ 7.91 $ 7.92 $ 7.97 $ 7.98 $ 8.11 $ 8.15 $ 8.22
Bookings $ 21,027 $ 17,740 $ 22,272 $ 20,362 $ 18,959 $ 16,921 $ 16,271 $ 17,302
Backlog $ 43,524 $ 40,551 $ 42,391 $ 42,117 $ 40,182 $ 41,396 $ 40,211 $ 43,831
 

(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only

             
SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
 
6/30/2015 12/31/2014
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 117,144 $ 107,869
Accounts receivable, net 22,014 24,969
Prepaid expenses and other 6,627 7,250
Inventory 1,914 2,673
Deferred income tax assets, net   1,768   2,194
Total current assets 149,467 144,955
Property and equipment, net 16,104 17,395
Goodwill 133,031 133,031
Other intangible assets, net 17,203 19,698
Deferred income tax assets, net 18,187 21,949
Other assets   1,564   862
Total assets $ 335,556 $ 337,890
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 11,370 $ 11,688
Accrued compensation and benefits 13,299 14,041
Deferred revenue   27,222   24,034
Total current liabilities 51,891 49,763
Deferred revenue 819 937
Other long-term liabilities   8,455   8,131
Total liabilities   61,165   58,831
Commitments and contingencies
Stockholders' equity:
Preferred stock - -
Common stock 2 2
Additional paid-in capital 120,214 126,678
Retained earnings   154,175   152,379
Total stockholders' equity   274,391   279,059
Total liabilities and stockholders' equity $ 335,556 $ 337,890
 

(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 six months ended
6/30/2015 6/30/2014
Cash flows from operating activities:
Net income $ 7,293 $ 9,181
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 7,195 8,381
Amortization of deferred financing costs - 129
Deferred income tax expense 4,086 4,952
Amortization of stock based compensation 1,104 1,710
Provisions for doubtful accounts, service credits and other 716 597
Adjustments of non-cash transaction taxes (97 ) (229 )
(Gain) Loss on disposals of property and equipment (166 ) 3
Changes in assets and liabilities:
Accounts receivable 2,239 (5,478 )
Prepaid expenses and other assets 741 850
Accounts payable, accrued liabilities and accrued compensation and benefits (4,510 ) (3,076 )
Customer deposits and deferred revenue   3,070     1,331  
Net cash provided by operating activities   21,671     18,351  
Cash flows from investing activities:
Purchases of property and equipment (3,033 ) (5,036 )
Proceeds from disposals of property and equipment   180     59  
Net cash used in investing activities   (2,853 )   (4,977 )
Cash flows from financing activities:
Cash dividends to stockholders (6,069 ) (5,414 )
Purchase of common stock   (3,475 )   -  
Net cash used in financing activities   (9,544 )   (5,414 )
Net increase in cash and cash equivalents 9,274 7,960
Cash and cash equivalents, beginning of period   107,869     89,075  
Cash and cash equivalents, end of period $ 117,144   $ 97,035  
Supplemental disclosure:
Interest paid $ 2 $ 3
Income taxes paid $ 337   $ 884  
 

(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
  6/30/2015   3/31/2015   12/31/2014   9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013
Revenue
Paging $ 28,782 $ 29,491 $ 30,071 $ 30,776 $ 31,458 $ 32,896 $ 34,015 $ 35,141
Non-paging   1,440   1,199   1,607   2,079   2,060   1,455   1,816   1,926
Total wireless revenue   30,222   30,690   31,678   32,855   33,518   34,351   35,831   37,067
 
Subscription 419 398 365 458 377 283 248 220
License 3,011 2,595 3,474 2,374 2,497 2,929 4,138 2,000
Services 4,609 5,018 5,579 4,305 3,558 3,930 5,493 2,080
Equipment   1,301   1,374   2,145   1,930   1,614   1,250   1,875   1,251
Operations revenue 9,340 9,385 11,563 9,067 8,046 8,392 11,754 5,551
 
Maintenance revenue   8,407   8,063   8,028   7,869   7,530   7,376   7,100   7,051
Total software revenue   17,747   17,448   19,591   16,936   15,576   15,768   18,854   12,602
 
Total revenue $ 47,969 $ 48,138 $ 51,269 $ 49,791 $ 49,094 $ 50,119 $ 54,685 $ 49,669
 

 

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

                                               
SPOK HOLDINGS, INC.
CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
 
For the three months ended
  6/30/2015   3/31/2015   12/31/2014   9/30/2014   6/30/2014     3/31/2014   12/31/2013     9/30/2013
Cost of revenue
Payroll and related $ 4,274 $ 4,157 $ 4,222 $ 3,743 $ 3,827 $ 3,959 $ 3,609 $ 3,744
Cost of sales 3,801 3,620 5,225 3,098 2,232 1,917 2,726 1,992
Stock based compensation 34 34 81 108 81 81 74 64
Other   1,022   1,002   1,043   1,051   1,040     848   1,091     987
Total cost of revenue   9,131   8,813   10,571   8,000   7,180     6,805   7,500     6,787
Service, rental and maintenance
Site rent 3,783 3,766 3,834 3,914 3,981 4,015 3,972 4,142
Telecommunications 1,288 1,343 1,487 1,548 1,669 1,736 1,751 1,832
Payroll and related 4,555 4,652 4,533 4,106 4,434 4,594 4,296 4,577
Stock based compensation 29 29 30 56 (17 ) 39 32 59
Repairs and maintenance 478 528 467 489 436 508 482 484
Other   870   938   934   875   917     900   909     726
Total service, rental and maintenance   11,003   11,256   11,285   10,988   11,420     11,792   11,442     11,820
Selling and marketing
Payroll and related 3,732 3,916 3,945 3,859 4,099 4,098 3,717 3,917
Commissions 1,792 1,836 2,481 1,949 2,087 1,952 2,162 1,310
Stock based compensation 51 51 131 151 131 131 (24 ) 122
Other   1,215   1,245   1,358   1,113   1,463     1,065   1,442     1,039
Total selling and marketing   6,790   7,048   7,915   7,072   7,780     7,246   7,297     6,388
General and administrative
Payroll and related 4,611 4,879 4,737 4,217 4,440 4,796 4,802 4,696
Stock based compensation 548 329 780 791 429 835 763 701
Bad debt 140 160 127 136 134 86 262 274
Facility rent 841 941 830 863 899 922 719 883
Telecommunications 374 333 381 427 399 395 420 388
Outside services 1,728 1,786 1,786 1,698 1,719 1,762 1,811 1,927
Taxes, licenses and permits 1,150 1,125 1,283 1,225 1,383 1,064 1,358 1,106
Repairs & maintenance 363 406 506 510 421 374 314 333
Financial Services 367 362 346 336 379 363 357 350
Other   350   680   1,129   663   787     1,538   664     624
Total general and administrative   10,472   11,001   11,905   10,866   10,990     12,135   11,470     11,282
Severance and restructuring 1,504 - 926 545 4 20 981 -
Depreciation, amortization and accretion   3,448   3,747   4,049   4,247   4,352     4,029   3,680     3,858
Operating expenses $ 42,348 $ 41,865 $ 46,651 $ 41,718 $ 41,726   $ 42,027 $ 42,370   $ 40,135
Capital expenditures $ 1,992 $ 1,040 $ 1,352 $ 1,291 $ 2,393 $ 2,643 $ 2,636 $ 2,504

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

                                               
SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
 
For the three months ended
6/30/2015   3/31/2015   12/31/2014   9/30/2014   6/30/2014   3/31/2014   12/31/2013   9/30/2013  

Paging units in service

Beginning units in service
Direct one-way 1,116 1,140 1,157 1,179 1,200 1,246 1,275 1,307
Direct two-way 64   64   63   64   69   69   70   73  
Total direct 1,180   1,204   1,220   1,243   1,269   1,315   1,345   1,380  
Indirect one-way 25 26 28 29 30 34 35 36
Indirect two-way 25   26   26   27   28   27   28   29  
Total indirect 50   52   54   56   58   61   63   65  
Total beginning units in service 1,230   1,256   1,274   1,299   1,327   1,376   1,408   1,445  
Gross placements
Direct one-way 36 25 31 40 48 34 32 40
Direct two-way 4   3   3   4   2   4   3   3  
Total direct 40   28   34   44   50   38   35   43  
Indirect one-way - 1 1 1 1 - 1 1
Indirect two-way -   -   -   -   -   1   -   -  
Total indirect -   1   1   1   1   1   1   1  
Total gross placements 40   29   35   45   51   39   36   44  
Gross disconnects
Direct one-way (50 ) (49 ) (47 ) (62 ) (69 ) (80 ) (61 ) (72 )
Direct two-way (3 ) (3 ) (3 ) (5 ) (7 ) (4 ) (4 ) (6 )
Total direct (53 ) (52 ) (50 ) (67 ) (76 ) (84 ) (65 ) (78 )
Indirect one-way (1 ) (2 ) (2 ) (2 ) (2 ) (4 ) (2 ) (2 )
Indirect two-way (5 ) (1 ) (1 ) (1 ) (1 ) -   (1 ) (1 )
Total indirect (6 ) (3 ) (3 ) (3 ) (3 ) (4 ) (3 ) (3 )
Total gross disconnects (59 ) (55 ) (53 ) (70 ) (79 ) (88 ) (68 ) (81 )
Net loss
Direct one-way (13 ) (24 ) (16 ) (22 ) (21 ) (46 ) (29 ) (32 )
Direct two-way -   -   -   (1 ) (5 ) -   (1 ) (3 )
Total direct (13 ) (24 ) (16 ) (23 ) (26 ) (46 ) (30 ) (35 )
Indirect one-way (1 ) (1 ) (1 ) (1 ) (1 ) (4 ) (1 ) (1 )
Indirect two-way (5 ) (1 ) (1 ) (1 ) (1 ) 1   (1 ) (1 )
Total indirect (6 ) (2 ) (2 ) (2 ) (2 ) (3 ) (2 ) (2 )
Total net change (19 ) (26 ) (18 ) (25 ) (28 ) (49 ) (32 ) (37 )
Ending units in service
Direct one-way 1,103 1,116 1,141 1,157 1,179 1,200 1,246 1,275
Direct two-way 64   64   63   63   64   69   69   70  
Total direct 1,167   1,180   1,204   1,220   1,243   1,269   1,315   1,345  
Indirect one-way 24 25 27 28 29 30 34 35
Indirect two-way 20   25   25   26   27   28   27   28  
Total indirect 44   50   52   54   56   58   61   63  
Total ending units in service 1,211   1,230   1,256   1,274   1,299   1,327   1,376   1,408  
 

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

                                               
SPOK HOLDINGS, INC.
AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(Unaudited)
 
For the three months ended
  6/30/2015     3/31/2015     12/31/2014     9/30/2014     6/30/2014     3/31/2014     12/31/2013     9/30/2013  

Paging ARPU

Direct one-way $ 7.41 $ 7.45 $ 7.45 $ 7.48 $ 7.48 $ 7.59 $ 7.60 $ 7.64
Direct two-way   17.16     17.69     17.95     18.17     18.21     18.91     19.43     19.93  
Total direct 7.93 7.99 8.00 8.05 8.06 8.19 8.23 8.29
Indirect one-way 8.11 8.08 8.13 8.24 8.18 8.22 8.68 8.90
Indirect two-way   4.09     3.93     4.06     4.31     4.45     4.32     3.97     3.97  
Total indirect 6.19 6.01 6.12 6.32 6.39 6.37 6.47 6.57
Total one-way 7.42 7.46 7.46 7.50 7.50 7.60 7.63 7.68
Total two-way   13.69     13.72     13.87     14.10     14.22     14.70     14.90     15.20  
Total paging ARPU $ 7.86   $ 7.91   $ 7.92   $ 7.97   $ 7.98   $ 8.11   $ 8.15   $ 8.22  

Gross disconnect rate (b)

Direct one-way (4.4 )% (4.3 )% (4.1 )% (5.5 )% (5.7 )% (6.4 )% (4.7 )% (5.6 )%
Direct two-way   (5.9 )%   (5.4 )%   (4.5 )%   (7.3 )%   (10.5 )%   (5.6 )%   (6.4 )%   (7.9 )%
Total direct (4.5 )% (4.4 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )% (5.7 )%
Indirect one-way (6.4 )% (6.7 )% (6.5 )% (6.4 )% (6.8 )% (8.2 )% (6.1 )% (6.3 )%
Indirect two-way   (20.0 )%   (4.4 )%   (2.3 )%   (1.9 )%   (2.7 )%   (2.3 )%   (5.7 )%   (4.8 )%
Total indirect (13.2 )% (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )% (5.6 )%
Total one-way (4.5 )% (4.4 )% (4.2 )% (5.3 )% (5.8 )% (6.5 )% (4.8 )% (5.6 )%
Total two-way   (9.9 )%   (5.1 )%   (3.9 )%   (5.7 )%   (8.3 )%   (4.7 )%   (6.2 )%   (7.0 )%
Total paging gross disconnect rate   (4.9 )%   (4.4 )%   (4.1 )%   (5.3 )%   (5.9 )%   (6.3 )%   (4.9 )%   (5.7 )%

Net loss rate (c)

Direct one-way (1.2 )% (2.1 )% (1.4 )% (1.8 )% (1.9 )% (3.7 )% (2.1 )% (2.5 )%
Direct two-way   (0.2 )%   (0.9 )%   (0.1 )%   (3.0 )%   (4.5 )%   (0.6 )%   (2.2 )%   (3.6 )%
Total direct (1.1 )% (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )% (2.5 )%
Indirect one-way (4.4 )% (4.0 )% (4.3 )% (4.1 )% (4.8 )% (6.3 )% (3.9 )% (3.3 )%
Indirect two-way   (19.4 )%   (3.6 )%   (2.0 )%   (1.5 )%   (2.2 )%   (1.9 )%   (4.9 )%   (4.1 )%
Total indirect (11.9 )% (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )% (3.6 )%
Total one-way (1.3 )% (2.1 )% (1.5 )% (1.9 )% (2.0 )% (3.7 )% (2.2 )% (2.5 )%
Total two-way   (5.7 )%   (1.7 )%   (0.6 )%   (2.5 )%   (3.8 )%   (1.0 )%   (3.0 )%   (3.8 )%
Total paging net loss rate   (1.6 )%   (2.1 )%   (1.4 )%   (1.9 )%   (2.1 )%   (3.5 )%   (2.2 )%   (2.6 )%
 

(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(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.
SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(Unaudited)
 
For the three months ended
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Gross placement rate (b)
Healthcare 3.8 % 2.6 % 3.0 % 3.8 % 4.5 % 3.1 % 2.9 % 3.3 %
Government 1.9 % 1.0 % 1.2 % 1.5 % 2.6 % 1.9 % 1.5 % 1.7 %
Large enterprise 1.7 % 2.1 % 2.3 % 2.7 % 2.0 % 2.9 % 3.0 % 4.3 %
Other 1.8 % 1.6 % 2.1 % 4.3 % 2.2 % 2.1 % 1.7 % 2.0 %
Total direct 3.4 % 2.3 % 2.8 % 3.5 % 4.0 % 2.9 % 2.7 % 3.1 %
Total indirect 1.3 % 1.7 % 1.3 % 1.4 % 1.3 % 1.2 % 1.5 % 1.9 %
Total 3.3 % 2.3 % 2.7 % 3.4 % 3.9 % 2.8 % 2.7 % 3.1 %
Gross disconnect rate (b)
Healthcare (3.8 )% (3.9 )% (3.8 )% (5.1 )% (5.3 )% (6.5 )% (4.5 )% (5.2 )%
Government (7.0 )% (5.0 )% (4.7 )% (7.5 )% (7.6 )% (5.6 )% (4.7 )% (7.9 )%
Large enterprise (7.3 )% (5.7 )% (4.7 )% (4.8 )% (8.9 )% (5.4 )% (6.4 )% (6.0 )%
Other (7.0 )% (7.1 )% (6.4 )% (6.9 )% (7.7 )% (6.5 )% (6.5 )% (6.5 )%
Total direct (4.5 )% (4.3 )% (4.1 )% (5.4 )% (6.0 )% (6.4 )% (4.8 )% (5.7 )%
Total indirect (13.1 )% (5.5 )% (4.4 )% (4.2 )% (4.8 )% (5.5 )% (5.9 )% (5.6 )%
Total (4.9 )% (4.4 )% (4.1 )% (5.3 )% (5.9 )% (6.3 )% (4.9 )% (5.7 )%
Net loss rate (b)
Healthcare 0.1 % (1.3 )% (0.7 )% (1.3 )% (0.8 )% (3.5 )% (1.5 )% (2.0 )%
Government (5.1 )% (4.0 )% (3.5 )% (6.0 )% (5.0 )% (3.6 )% (3.2 )% (6.3 )%
Large enterprise (5.6 )% (3.6 )% (2.4 )% (2.1 )% (6.9 )% (2.5 )% (3.3 )% (1.6 )%
Other (5.1 )% (5.5 )% (4.4 )% (2.5 )% (5.5 )% (4.4 )% (4.8 )% (4.5 )%
Total direct (1.1 )% (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )% (2.5 )%
Total indirect (11.9 )% (3.8 )% (3.1 )% (2.8 )% (3.5 )% (4.2 )% (4.4 )% (3.6 )%
Total (1.6 )% (2.1 )% (1.4 )% (1.9 )% (2.1 )% (3.5 )% (2.2 )% (2.6 )%
End of period units in service % of total (b)
Healthcare 75.9 % 74.7 % 74.1 % 73.6 % 73.0 % 72.0 % 71.9 % 71.4 %
Government 7.4 % 7.7 % 7.8 % 7.9 % 8.3 % 8.6 % 8.6 % 8.8 %
Large enterprise 7.2 % 7.6 % 7.7 % 7.8 % 7.8 % 8.2 % 8.1 % 8.2 %
Other 5.7 % 6.0 % 6.2 % 6.4 % 6.6 % 6.8 % 7.0 % 7.1 %
Total direct 96.2 % 95.9 % 95.8 % 95.7 % 95.7 % 95.6 % 95.6 % 95.5 %
Total indirect 3.8 % 4.1 % 4.2 % 4.3 % 4.3 % 4.4 % 4.4 % 4.5 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
 

 

(a) Slight variations in totals are due to rounding.
(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.

                                               
SPOK HOLDINGS, INC.
SUPPLEMENTAL INFORMATION - DIRECT PAGING UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)
(Unaudited)
 
For the three months ended
6/30/2015 3/31/2015 12/31/2014 9/30/2014 6/30/2014 3/31/2014 12/31/2013 9/30/2013
Account size ending units in service (000's)
1 to 3 units 32 33 35 37 39 41 43 45
4 to 10 units 19 20 21 22 23 24 25 26
11 to 50 units 47 49 51 53 56 57 61 64
51 to 100 units 33 32 34 36 38 41 42 43
101 to 1,000 units 244 252 262 267 275 282 287 293
>1,000 units 792   794   801   805   812   824   857   874  
Total 1,167   1,180   1,204   1,220   1,243   1,269   1,315   1,345  
End of period units in service % of total direct
1 to 3 units 2.8 % 2.8 % 2.9 % 3.0 % 3.1 % 3.2 % 3.2 % 3.3 %
4 to 10 units 1.6 % 1.7 % 1.7 % 1.8 % 1.8 % 1.9 % 1.9 % 2.0 %
11 to 50 units 4.0 % 4.2 % 4.2 % 4.3 % 4.5 % 4.5 % 4.6 % 4.8 %
51 to 100 units 2.8 % 2.7 % 2.8 % 3.0 % 3.1 % 3.2 % 3.2 % 3.2 %
101 to 1,000 units 20.9 % 21.4 % 21.8 % 21.9 % 22.1 % 22.3 % 21.9 % 21.8 %
>1,000 units 67.9 % 67.2 % 66.6 % 66.0 % 65.4 % 64.9 % 65.2 % 64.9 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Account size net loss rate
1 to 3 units (2.9 )% (6.2 )% (4.4 )% (4.8 )% (4.1 )% (4.9 )% (4.4 )% (4.6 )%
4 to 10 units (5.0 )% (6.2 )% (5.5 )% (4.0 )% (5.4 )% (4.1 )% (3.8 )% (5.3 )%
11 to 50 units (4.1 )% (4.6 )% (3.8 )% (5.2 )% (3.2 )% (5.3 )% (4.4 )% (3.9 )%
51 to 100 units 0.2 % (4.1 )% (5.4 )% (5.2 )% (8.7 )% (1.2 )% (3.5 )% (2.8 )%
101 to 1,000 units (3.0 )% (3.9 )% (2.0 )% (2.9 )% (2.5 )% (1.7 )% (1.7 )% (4.0 )%
>1,000 units (0.2 )% (0.8 )% (0.5 )% (1.0 )% (1.2 )% (4.0 )% (1.8 )% (1.7 )%
Total (1.1 )% (2.0 )% (1.4 )% (1.9 )% (2.0 )% (3.5 )% (2.1 )% (2.5 )%
Account size ARPU
1 to 3 units $ 14.52 $ 14.52 $ 14.53 $ 14.65 $ 14.86 $ 14.96 $ 14.98 $ 15.13
4 to 10 units 14.11 14.07 14.09 14.04 14.12 14.22 14.29 14.38
11 to 50 units 12.13 12.02 12.00 11.95 12.00 12.07 11.96 12.06
51 to 100 units 10.42 10.26 10.15 10.16 10.18 10.27 10.34 10.66
101 to 1,000 units 8.78 8.81 8.79 8.69 8.58 8.76 8.89 8.85
>1,000 units 6.90   6.95   6.93   6.99   7.00   7.11   7.11   7.17  
Total $ 7.93   $ 7.99   $ 8.00   $ 8.05   $ 8.06   $ 8.19   $ 8.23   $ 8.29  
Cellular:
Number of activations 144   92   264   2,198   1,679   281   690   970  
Revenue from cellular services (000's) $ 39   $ 40   $ 77   $ 395   $ 278   $ 108   $ 129   $ 235  

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


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