Spok Holdings Inc
For the period ended Dec 31, 2024. Filed Feb 27, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Feb 27, 2025
SPOK$11.76+0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-02-22.
0001289945-24-000010
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-02-27.
0001289945-25-000008
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 143 previous paragraphs and 111 current paragraphs.
77 unchanged; 23 reworded; 10 added; 41 removed; 2 previous and 1 current paragraphs rearranged.
Tables are not compared: 11 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
Software operations revenue increased during 2024 when compared to 2023, primarily as a result of higher professional services revenue, resulting from increased sales of our managed services offering as well as targeted hiring efforts over the last 12 months, as we aligned staffing levels with our backlog, which had grown as a result of our operations bookings results. This increase was partially offset by decreases in license and hardware revenue, driven by lower sales.
Current report
Cost of revenue increased by $1.6 million, or 6.0%, for the year ended December 31, 2024, compared to 2023. This increase was primarily driven by the need for additional professional services personnel to better align staffing levels with our backlog. This increase was partially offset by lower hardware costs resulting from lower hardware sales as compared to 2023.
Current report
Research and development expenses increased by $1.0 million, or 9.5%, for the year ended December 31, 2024, compared to 2023. This increase was driven by our continued effort to invest in the enhancement of our software solutions.
Current report
Selling and marketing expenses decreased by $0.5 million, or 3.1%, for the year ended December 31, 2024, compared to 2023,. The decrease in commissions is primarily due to the amortization of certain commissions expenses, which were previously expensed as incurred under an ASC 606 practical expedient. With the growth in multi-year contracts over the last two years, more related revenue continues to extend beyond the 12-month period allowed for under this practical expedient. As a result, the associated commission expenses are now amortized in alignment with the related revenue, resulting in lower expenses compared to 2023. This resulted in a one-time benefit of approximately $0.9 million, as commissions expense was adjusted to account for the deferral of certain items that had been previously expensed.
Current report
General and administrative expenses increased by $0.1 million, or 0.4%, for the year ended December 31, 2024, compared to 2023. Expenses were largely in line with 2023.
Current report
Depreciation and Accretion
Current report
For the years ended December 31, 2024 and 2023, severance and restructuring expenses were $1.1 million and $0.6 million, respectively, primarily due to expenses related to the early termination of the lease of our corporate headquarters in Alexandria, Virginia.
Current report
Our operating cash results primarily from cash received from our customers, offset by cash payments we make for products and services, operating expenses and income taxes. Significant non-cash expenses include depreciation and accretion, deferred income tax expense and stock-based compensation. The cash impact from actual transaction gains and losses is reflected in the change in working capital.
Current report
For the years ended December 31, 2024 and 2023, net cash provided by operating activities was $28.9 million, and $26.2 million, respectively, primarily due to an increase in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.
Current report
There were no remaining amortizable intangible assets at December 31, 2024 and 2023.
Removed paragraphs (41)
Previous report
We have revised the Consolidated Balance Sheet as of December 31, 2022, Consolidated Statement of Stockholders' Equity for the years ended December 31, 2022 and 2021, as well as the relevant footnotes, and other financial information as applicable, included herein to reflect the reduction in opening retained earnings and a corresponding increase to deferred revenue, as described in Note 1, to correct an immaterial error related to the understatement of deferred revenue of approximately $1.0 million. There were no changes to previously issued total cash flows for any of the impacted periods.
Previous report
Further details related to costs incurred as a part of the restructuring can be found in Note 3 "Restructuring" in the Notes to Consolidated Financial Statements.
Previous report
2023 Highlights
Previous report
Total revenue grew for the first time in the Company's history, increasing by $4.5 million, or 3.3%, compared to 2022, as a result of renewed focus on our existing and established businesses, including the Spok Care Connect Suite and our wireless services offerings.
Previous report
Total operating expenses continued to decline, as the benefits from the restructuring of our business initiated in 2022 extended into 2023, decreasing by $16.5 million, or 12.3%, compared to 2022.
Previous report
Launched the Spok Care Connect Hosted Solution in early 2024, which is geared towards hospitals under 200 beds, alongside significant progress made in the continued enhancement of the Spok Care Connect Suite.
Previous report
Software operations revenue increased during 2023 when compared to 2022, primarily as a result of higher license, professional services and hardware revenue. License and hardware revenue increases were driven by higher operations bookings as compared to 2022. Professional services revenue increased primarily as a result of improved resource utilization.
Previous report
Cost of revenue consisted primarily of the following items:
Previous report
Cost of revenue decreased for the year ended December 31, 2023, compared to 2022, primarily driven by decreases in payroll and related expenses and, cost of sales, partially offset by an increase in recoverable taxes and fees.
Previous report
The decrease in payroll and related expenses reflects the cost savings resulting from positions eliminated throughout 2022 stemming from execution of the strategic business plan announced in February 2022, partially offset by a higher average cost per employee as well as increase in headcount in 2023. Cost of sales expenses decreased primarily due to reduced use of third-party professional services utilized to augment company resources when short-term capacity constraints exist. Recoverable taxes and fees increased due to the rate change for USF fees, as established by the Federal Communications Commission on a quarterly basis. These fees are passed through to our wireless customer base and have a corresponding revenue impact.
Previous report
Research and development consisted primarily of the following items:
Previous report
Research and development expenses decreased for the year ended December 31, 2023, compared to 2022, primarily driven by decreases in payroll and related, other and outside services expenses.
Previous report
The decrease in payroll and related expenses reflects the cost savings resulting from positions eliminated throughout 2022 stemming from execution of the strategic business plan announced in February 2022, partially offset by a higher average cost per employee as well as increase in headcount in 2023,
Previous report
The decrease in other expenses was primarily driven by the favorable settlement of a loss contingency.
Previous report
Technology operations consisted primarily of the following items:
Previous report
Technology operations expenses decreased for the year ended December 31, 2023, compared to 2022, primarily driven by lower payroll and related expenses and site rent costs.
Previous report
The decrease in payroll and related expenses reflects the cost savings resulting from positions eliminated throughout 2022 stemming from execution of the strategic business plan announced in February 2022, partially offset by a higher average cost per employee in 2023.
Previous report
Selling and marketing consisted primarily of the following items:
Previous report
Selling and marketing expenses increased marginally for the year ended December 31, 2023, compared to 2022, primarily driven by an increase in commissions related to higher operations bookings, partially offset by decreases in payroll and related expenses.
Previous report
The decrease in payroll and related expenses reflects the cost savings resulting from positions eliminated throughout 2022 stemming from execution of the strategic business plan announced in February 2022, partially offset by a higher average cost per employee in 2023.
Previous report
General and administrative consisted primarily of the following items:
Previous report
General and administrative expenses decreased for the year ended December 31, 2023, compared to 2022, driven by decreases in outside services, facility rent, office and technology costs, payroll and related expenses and bad debt.
Previous report
The decrease in facility rent, office and technology costs was primarily due to reduction of office space in 2023.
Previous report
Outside services expense decreased as a result of lower legal and other professional services in 2023.
Previous report
The decrease in payroll and related expenses reflects the cost savings resulting from positions eliminated throughout 2022 stemming from execution of the strategic business plan announced in February 2022, partially offset by a higher average cost per employee as well as increase in headcount in 2023.
Previous report
The decreases in bad debt were driven by improvements in collections on aging receivables for the year ended December 31, 2023.
Previous report
Depreciation, Amortization and Accretion
Previous report
For the years ended December 31, 2023 and 2022, severance and restructuring expenses were $0.6 million and $7.3 million, respectively, The expenses incurred in 2022 were related to the restructuring program announced in February 2022. No similar severance and restructuring expenses were incurred for the year ended December 31, 2023 as the restructuring program reached its conclusion in the fourth quarter of 2022. Further details can be found in Note 3, "Restructuring" in the Notes to Consolidated Financial Statements.
Previous report
We perform our annual goodwill impairment testing in the fourth quarter of each year. For the years ended December 31, 2023 and 2022, no goodwill impairment was recognized.
Previous report
We evaluate our long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset group may not be recoverable. We did not record any impairment of long-lived assets for the years ended December 31, 2023 and 2022.
Previous report
Refer to Note 1, "Organization and Significant Accounting Policies" and Note 7, "Goodwill, Capitalized Software Development and Intangible Assets, Net" in the Notes to Consolidated Financial Statements for further discussion.
Previous report
Interest Income, Other Income (Expense) and Income Tax (Benefit) Expense
Previous report
Other Income
Previous report
For the year ended December 31, 2022, other income was $0.2 million as compared to no other income for the year ended December 31, 2023.
Previous report
In September 2023, we exercised an early termination option for the lease of our corporate headquarters in Alexandria, Virginia. Upon exercising the option, the lease term was reduced by two years, with a revised end date of September 30, 2024. As a result of the early termination, the Company paid a one-time termination fee of $0.7 million, reflected in our cash balances as of December 31, 2023. A reduction of $1.3 million was made to operating lease right-of-use assets, and a corresponding reduction of $2.0 million was made to non-current operating lease liabilities. The termination fee and remaining lease costs, totaling approximately $1.3 million, will be amortized to Severance and Restructuring over the remaining lease term between October 1, 2023 and September 30, 2024. Thereafter, we expect to save approximately $1.0 million annually as a result of this lease termination.
Previous report
We anticipate relocation of our headquarters to the existing corporate location in Plano, Texas and do not expect material costs to be incurred as a result of this change. Approximately 30 employees will be impacted as a result of this decision. While these employees will formally transition to a remote work environment, this is largely consistent with how we have been operating since the onset of the COVID-19 pandemic in early 2020. While this decision was not made lightly, the Company expects to benefit greatly from the significant cash savings, greater flexibility for our employees and higher levels of productivity we have seen from the pre-existing work-from-home posture.
Previous report
For the year ended December 31, 2023, net cash provided by operating activities was $26.2 million, an increase of $19.7 million compared to 2022. This increase was primarily driven by net income of $15.7 million, accounts receivable of $2.6 million and non-cash items such as depreciation, amortization and accretion of $4.5 million, deferred income tax expense of $6.4 million and stock-based compensation of $4.1 million. These increases were partially offset by accounts payable of $5.2 million.
Previous report
For the year ended December 31, 2022, net cash provided by operating activities was $6.5 million, a decrease of $1.5 million compared to 2021. This decline was driven by accounts payable, accrued liabilities and other of $2.3 million and accounts receivable of $1.8 million. These declines were partially offset by non-cash items such as valuation allowance of $21.9 million, depreciation, amortization and accretion of $3.6 million, stock-based compensation of $3.8 million, the provision for credit losses, service provisions and other of $1.8 million, and deferred income tax expense of $0.9 million.
Previous report
In March 2021, we relocated our corporate headquarters to office space located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease that was to expire on September 30, 2026. In September 2023, we exercised an early termination option that reduced the lease term by two years, with a revised end date of September 30, 2024.
Previous report
In January 2024, we entered into a three year contract to renew a subscription for a total value of $3.6 million for future subscription services. This contract was an early renewal of our existing subscription which is included at $0.8 million within less than 1 year payments due by period within the table above.
Showing the first 40 of 41 passages. Open the source sections for the rest.
Reworded paragraphs (23)
Previous wording
We offer a focused suite of unified clinical communication and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions. Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization and public safety response. Our product offerings are capable of addressing a customer’s clinical communications needs. We develop, sell and support enterprise-wide systems for healthcare and other organizations needing to automate, centralize and standardize their approach to clinical communications. While our primary market has been the healthcare industry with a focus on prominent hospitals, our solutions can also be found in large government agencies; leading public safety institutions; colleges and universities; large hotels, resorts and casinos; and well-known manufacturers.
Current wording
We offer a focused suite of unified clinical communication and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions. Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization and public safety response. Our product offerings are capable of addressing a customer’s clinical communications needs. We develop, sell and support enterprise-wide systems for healthcare and other organizations needing to automate, centralize and standardize their approach to clinical communications. While our primary market has been the healthcare industry with a focus on prominent hospitals, our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos and well-known manufacturers.
Previous wording
Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our statements of operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (on-going maintenance), is presented as software revenue in our statements of operations. Our software is licensed to end users under an industry standard software license agreement.
Current wording
Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our Consolidated Statements of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (ongoing maintenance), is presented as software revenue in our Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.
Previous wording
In February 2022, our Board of Directors announced a new strategic business plan that included a restructuring of our business to discontinue Spok Go and eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. The strategic business plan included a renewed focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. These restructuring efforts were completed during the fourth quarter of 2022. As a result of the implementation of the plan, we eliminated 176 positions, primarily in research and development, and also in professional services, selling and marketing, and back-office support functions. These actions allowed us to better align costs and, as a result, continued to return capital to stockholders in the form of quarterly dividends of $0.3125 per share in 2023. We will continue to focus on optimizing costs to allow us to prioritize cash flow generation and the return of capital to stockholders.
Current wording
In February 2022, our Board of Directors announced a new strategic business plan that included a restructuring of our business to discontinue Spok Go and eliminate all associated costs and optimize the Company’s existing structure to drive continued cost improvement. Since then, the strategic business plan includes a focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. The restructuring efforts were completed during the fourth quarter of 2022. These actions allowed us to better align costs and, as a result, continue to return capital to stockholders in the form of quarterly dividends of $0.3125 per share in 2024. We will continue to focus on optimizing costs to allow us to prioritize cash flow generation and the return of capital to stockholders.
Previous wording
We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers. Our primary market is the healthcare industry, particularly hospitals. While we have historically identified hospitals with 200 or more beds as the primary targets for our software solutions, as well as our paging services, we have recently expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.
Current wording
We develop, sell and support enterprise-wide systems for healthcare, government, and large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos and well-known manufacturers. Our primary market is the healthcare industry, particularly hospitals. While we have historically identified hospitals with 200 or more beds as the primary targets for our software solutions, as well as our paging services, we have recently expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.
Previous wording
Revenue generated by wireless messaging services (including voice mail, personalized greeting, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection for both one-way and two-way messaging subscribers is presented as wireless revenue in our Statement of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment (to be used in conjunction with the software), and post-contract support (ongoing maintenance), is presented as software revenue in our Statement of Operations. Our software is licensed to end users under an industry standard software license agreement.
Current wording
Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our Consolidated Statements of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (ongoing maintenance), is presented as software revenue in our Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.
Previous wording
The increase in wireless revenue for the year ended December 31, 2023, as compared to the same period in 2022, reflects an increase in product revenue, primarily driven by the secular decrease in our wireless units in service, from approximately 817 thousand units as of December 31, 2022 to approximately 765 thousand units as of December 31, 2023. Product revenue includes one-time fees when customers cancel our services and is highly variable as the fees are charged to customers when pagers are disconnected and the customer is unable to return the units. The increase in product revenue was partially offset by a marginal decrease in paging revenue primarily due to the decrease in the units in service noted above, offset by continued increase in ARPU resulting from price increases initiated in the third quarter of 2023 and general increases in Universal Service Fund ("USF") fees, which are effectively pass-through items that have corresponding costs associated with them. ARPU was $7.71 in 2023, as compared to $7.34 in 2022. Excluding pass-through items, ARPU increased by $0.29, as compared to the same period in 2022, as a result of the price increases.
Current wording
Wireless revenue decreased for the year ended December 31, 2024, as compared to 2023, reflective of the secular decrease in our wireless units in service, from approximately 765 thousand units as of December 31, 2023 to approximately 720 thousand units as of December 31, 2024. These decreases were partially offset by an increase in ARPU as a result of price increases initiated in September 2024. ARPU was $7.97, as compared to $7.71 for the same period in 2023.
Previous wording
Software revenue consists of two components: operations revenue and maintenance revenue. Operations revenue consists primarily of license and subscription revenues for our healthcare communications solutions, revenue from the sale of hardware that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from our ongoing support of our software solutions or related hardware, typically for a period of one year after project completion.
Current wording
Software revenue consists of two components: operations revenue and maintenance revenue. Operations revenue consists primarily of license and subscription revenues for our healthcare communications solutions, revenue from the sale of hardware that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from the ongoing support of our software solutions or related hardware, typically contracted for a period of between one and three years.
Previous wording
•Depreciation, Amortization and Accretion. These areexpenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations, amortization of intangible assets, amortization of capitalized software development costs, and accretion of asset retirement obligations.
Current wording
•Depreciation and Accretion. These areexpenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations and accretion of asset retirement obligations.
Previous wording
Site rent costs decreased as a result of a reduction in the number of active transmitters, resulting from our network rationalization efforts. The number of active transmitters, which directly affects our telecommunication and site rent expenses, declined 3.3% from December 31, 2022 to December 31, 2023. As we reach certain minimum frequency commitments, as outlined by the FCC, we may be unable to continue our efforts to rationalize and consolidate our networks.
Current wording
Technology operations expenses decreased by $1.5 million, or 5.9%, for the year ended December 31, 2024, compared to 2023. The decrease was driven by reduction in the number of active transmitters, resulting from our network rationalization efforts. The number of active transmitters, which directly affects our telecommunications and site rent expenses, declined 5.2% from December 31, 2023 to December 31, 2024. As we reach certain minimum frequency commitments, as outlined by the FCC, we may be unable to continue our efforts to rationalize and consolidate our networks.
Previous wording
For the year ended December 31, 2023, compared to 2022, depreciation, amortization and accretion expenses increased by $0.9 million, primarily due to increases in asset retirement cost and pager depreciation.
Current wording
For the year ended December 31, 2024, compared to 2023, depreciation and accretion expenses decreased by $0.3 million, primarily due to decreases in asset retirement cost and pager depreciation.
Previous wording
Interest income increased by $0.5 million for the year ended December 31, 2023, compared to 2022, primarily due to an increase in interest earned on the Company's cash balances and short-term investments, driven by higher interest rates from macroeconomic events.
Current wording
Interest income increased by $0.1 million for the year ended December 31, 2024, compared to 2023, primarily due to an increase in interest earned on the Company's cash balances, driven by higher interest rates from macroeconomic events.
Previous wording
The provision for income taxes changed by $27.5 million for the year ended December 31, 2023, compared to 2022 primarily due to a reduction of the valuation allowance in 2022, as well as an increase in both federal and state income taxes stemming from higher income in 2023. Our investment in research and development in prior years qualified for the research and development income tax credit under Section 41 of the Internal Revenue Code. Unused research and development tax credits have a 20-year carryover and will provide future tax benefits once Spok’s net operating losses are fully utilized. We did not qualify for the research and development tax credits in 2023.
Current wording
The provision for income taxes decreased by $1.6 million for the year ended December 31, 2024, compared to 2023, primarily due to a decrease in both federal and state income taxes stemming from lower income in 2024. Our investment in research and development in prior years qualified for the research and development income tax credit under Section 41 of the Internal Revenue Code. Unused research and development tax credits have a 20-year carryover and will provide future tax benefits once Spok’s net operating losses are fully utilized. We did not qualify for the research and development tax credits in 2024.
Previous wording
We maintained a valuation allowance of $2.3 million related to Federal Foreign Tax Credits and certain state net operating losses and state tax credits, as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets prior to expiration.
Current wording
We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses and state tax credits, as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration.
Previous wording
At December 31, 2023, we held cash, cash equivalents and short-term investments of $32.0 million. The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations.
Current wording
At December 31, 2024, we held cash and cash equivalents of $29.1 million. The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. We maintain the majority of our cash and cash equivalents in accounts with major United States and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations.
Previous wording
With the successful completion of the restructuring plan and our ongoing efforts to stabilize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods.
Current wording
With the successful completion of the restructuring plan and our ongoing efforts to maximize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods.
Previous wording
On February 21, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 15, 2024 and a payment date of March 29, 2024. This cash dividend of approximately $6.3 million is expected to be paid from available cash on hand.
Current wording
On February 26, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 14, 2025 and a payment date of March 31, 2025. This cash dividend of approximately $6.4 million is expected to be paid from available cash on hand.
Previous wording
For the year ended December 31, 2023, net cash used in investing activities was $3.4 million, primarily due to capital expenditures. For the year ended December 31, 2022, net cash provided by investing activities was $11.3 million, primarily due to the sale and purchase of U.S. treasury securities offset by capital expenditures.
Current wording
For the years ended December 31, 2024 and 2023, net cash used in investing activities was $3.2 million and $3.4 million, respectively, primarily due to capital expenditures.
Previous wording
For the years ended December 31, 2023 and 2022, net cash used in financing activities was $26.7 million and $26.2 million, respectively, primarily due to cash distributions to stockholders of $25.6 million and $25.0 million, respectively.
Current wording
For the years ended December 31, 2024 and 2023, net cash used in financing activities was $28.5 million and $26.7 million, respectively, primarily due to cash distributions to stockholders of $26.4 million and $25.6 million, respectively.
Previous wording
We review each contract to determine whether to account for the various promises as one or more performance obligations. The assessment and determination of performance obligations for a given contract requires significant judgment. Wireless service contracts are generally considered to be a single promise and therefore accounted for as a single performance obligation. Contracts which include goods or services related to our software solutions and subscriptions are generally sold with multiple promises, and therefore, will often include multiple performance obligations. Material performance obligations related to the sale of our software solutions include software licenses, professional services, hardware and maintenance.
Current wording
We review each contract to determine whether to account for the various promises as one or more performance obligations. The assessment and determination of performance obligations for a given contract requires significant judgment. Wireless service contracts are generally considered to be a single promise and therefore accounted for as a single performance obligation. Contracts which include goods or services related to our software solutions and subscriptions are generally sold with multiple promises, and therefore, will often include multiple performance obligations. Material performance obligations related to the sale of our software solutions include software licenses, professional services - projects, professional services - managed services, hardware and maintenance.
Previous wording
Our wireless, professional, maintenance, and subscription services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance, or subscription services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred. This is a significant area of judgment as it requires an estimate at completion ("EAC") for each contract. Our initial EAC is primarily based on prior experience also taking into consideration any specific facts and circumstances for a given contract. As projects progress, the EAC is periodically updated and reviewed to ensure the timing of revenue recognition is appropriate. The creation, maintenance and review of a project's EAC requires significant judgment to determine an appropriate number of hours over which the remaining project is expected to be completed.
Current wording
Our wireless, professional, maintenance, and subscription services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance, professional services - managed services, or subscription services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services - projects, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred. This is a significant area of judgment as it requires an estimate at completion ("EAC") for each contract. Our initial EAC is primarily based on prior experience also taking into consideration any specific facts and circumstances for a given contract. As projects progress, the EAC is periodically updated and reviewed to ensure the timing of revenue recognition is appropriate. The creation, maintenance and review of a project's EAC requires significant judgment to determine an appropriate number of hours over which the remaining project is expected to be completed.
Previous wording
Deferred income tax assets and liabilities are calculated based on temporary differences between the financial statement values and the tax bases of assets and liabilities including net operating loss and tax credit carryforwards at the enacted tax rates expected to apply to taxable income when taxes are actually paid or recovered. Changes in deferred income tax assets and liabilities are included as a component of deferred income tax expense. Deferred income tax assets represent amounts available to reduce future income taxes payable. We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of our deferred income tax assets will be realized in future periods. We provide a valuation allowance when we consider it "more likely than not" that a deferred income tax asset will not be fully recovered. The assessment of our deferred income tax assets requires significant judgment, however, our methods, assumptions, and estimates used in assessing the need for a valuation allowance remained materially unchanged in 2023. We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets prior to expiration.
Current wording
Deferred income tax assets and liabilities are calculated based on temporary differences between the financial statement values and the tax bases of assets and liabilities including net operating loss and tax credit carryforwards at the enacted tax rates expected to apply to taxable income when taxes are actually paid or recovered. Changes in deferred income tax assets and liabilities are included as a component of deferred income tax expense. Deferred income tax assets represent amounts available to reduce future income taxes payable. We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of our deferred income tax assets will be realized in future periods. We provide a valuation allowance when we consider it "more likely than not" that a deferred income tax asset will not be fully recovered. The assessment of our deferred income tax assets requires significant judgment, however, our methods, assumptions, and estimates used in assessing the need for a valuation allowance remained materially unchanged in 2024. We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration.
Previous wording
Goodwill and Long-Lived Asset Impairment
Current wording
Impairment of Goodwill and Long-Lived Assets
Previous wording
Quarterly, we assess whether circumstances exist which suggest that the carrying value of long-lived and amortizable intangible assets (asset groups) may not be recoverable. Similar to our quarterly assessment of goodwill, significant judgment is required in the determination of a triggering event given the qualitative nature of the assessment. We did not identify any triggering events for long-lived assets in 2023.
Current wording
Quarterly, we assess whether circumstances exist which suggest that the carrying value of long-lived assets (asset groups) may not be recoverable. Similar to our quarterly assessment of goodwill, significant judgment is required in the determination of a triggering event given the qualitative nature of the assessment. We did not identify any triggering events for long-lived assets in 2024. We did not record any impairment of long-lived assets for the years ended December 31, 2024 and 2023.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Interest Income and Provision for (Benefit from) Income Taxes
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Returned approximately $25.6 million of capital to stockholders in the form of cash dividends.
Previous report — wording carried elsewhere
Impairment of Goodwill, Long-Lived Assets and Intangible Assets Subject to Amortization