Spok Holdings, Inc
For the period ended Mar 31, 2025. Filed May 1, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 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-Q
Period ended 2024-09-30; filed 2024-10-31.
0001289945-24-000061
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001289945-25-000025
Item 2. 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 106 previous paragraphs and 75 current paragraphs.
55 unchanged; 16 reworded; 4 added; 34 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 5 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 (4)
Current report
Selling and marketing: increased by $0.7 million, or 16.8%, for the three months ended March 31, 2025, compared to 2024. The increase was primarily driven by additional headcount, higher advertising and events expenses due to increased trade show participation and overall travel, and higher commissions related to software operations bookings compared to the same period in 2024.
Current report
General and administrative: increased by $0.4 million, or 5.2%, for the three months ended March 31, 2025, compared to 2024. The increase was primarily driven by the timing of certain technology and outside services costs related to maintaining compliance with regulations compared to the same period in 2024.
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 three months ended March 31, 2025, and March 31, 2024, net cash provided by operating activities was $2.3 million, and $2.0 million, respectively, primarily due to an increase in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.
Removed paragraphs (34)
Previous report
In late 2021, we began offering our newest pager, GenA. This one-way alphanumeric pager features a high resolution ePaper display, intuitive modern user interface, advanced encryption and security features, over-the-air remote programming, and an antimicrobial housing. Users can select from various font sizes, and the large GenA display also leverages proportional fonts to maximize key information on a single screen.
Previous report
The GenA pager is the only product available on the market with these capabilities, and we maintain an exclusive arrangement with the product's manufacturer. Given the product differentiation of the GenA pager, its development is a key initiative providing a competitive advantage, and we expect this new technology will be popular with our customers in clinical environments and may help slow our wireless revenue attrition.
Previous report
Operations Revenue
Previous report
Software operations revenue decreased during the nine months ended September 30, 2024, compared to the same period in 2023. The decrease is primarily due to decreases in license and hardware revenue, driven by lower sales. More specifically, results from the second quarter of 2023 included $1.8 million in license revenue from a single customer contract with no similar performance in 2024. These decreases were partially offset by increases in professional services revenue, resulting from our 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.
Previous report
Maintenance Revenue
Previous report
Maintenance revenue remained flat for the three months ended September 30, 2024 compared to the same period in 2023. For the nine months ended September 30, 2024, maintenance revenue increased compared to the same period in 2023, as a result of improvement in our gross revenue churn as well as net new maintenance driven by our operational bookings performance. Given these dynamics, we believe annual maintenance revenue is likely to remain flat or increase marginally, as we continue to enhance our existing software solutions. Further enhancements are expected to provide additional revenues for license sales, which generate new maintenance revenue and help to reduce levels of gross churn.
Previous report
Cost of Revenue
Previous report
Cost of revenue consisted primarily of the following items:
Previous report
For the three and nine months ended September 30, 2024, cost of revenue increased compared to the same periods in 2023, primarily driven by increases in payroll and related expenses, partially offset by decreases in cost of sales.
Previous report
The increases in payroll and related expenses are primarily due to increases in headcount for added professional services resources in conjunction with our efforts to better align staffing levels with our backlog, as well as increases in employee compensation costs.
Previous report
The decreases in cost of sales are primarily related to lower hardware sales as compared to the same periods in 2023.
Previous report
Research and Development
Previous report
Research and development expenses consisted of the following items:
Previous report
For the three and nine months ended September 30, 2024, research and development expenses increased, compared to the same periods in 2023, primarily driven by an increase in outside services as we continue to invest in the enhancement of our software solutions.
Previous report
Technology Operations
Previous report
Technology operations expenses consisted primarily of the following items:
Previous report
For the three and nine months ended September 30, 2024, technology operations expenses decreased compared to the same periods in 2023, primarily due to decreases in payroll and related expenses and site rent.
Previous report
Selling and Marketing
Previous report
Selling and marketing expenses consisted of the following items:
Previous report
For the three and nine months ended September 30, 2024, selling and marketing expenses decreased compared to the same periods in 2023, driven primarily by decreases in commissions and partially offset by increases in payroll and related costs.
Previous report
For the three and nine months ended September 30, 2024, the decrease in commissions is primarily due to amortization of commissions expense that 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 expensed in alignment with the related revenue, resulting in lower expenses compared to the same periods in 2023. For the nine months ended September 30, 2024, the decrease also includes a one-time benefit from an adjustment to commissions expense that was previously expensed as incurred, as well as lower commissions expense stemming from lower license bookings as compared to the same period in 2023.
Previous report
The increase in payroll and related expenses is due to increases in employee compensation costs.
Previous report
General and Administrative
Previous report
General and administrative expenses consisted of the following items:
Previous report
For the three and nine months ended September 30, 2024, general and administrative expenses increased compared to the same periods in 2023, primarily driven by increases in other and stock-based compensation. These increases were partially offset by decreases in facility rent, office and technology costs.
Previous report
The increases in stock-based compensation are due to increases in employee compensation costs.
Previous report
The decreases in facility rent, office and technology costs were driven by an overall reduction in office space compared to the same periods in 2023.
Previous report
Depreciation and Accretion
Previous report
For the three months ended September 30, 2024, and 2023, depreciation and accretion expenses were $1.1 million and $1.3 million, respectively. For the nine months ended September 30, 2024, and 2023, depreciation and accretion expenses were $3.2 million and $3.8 million, respectively. These expenses decreased for the three and nine months ended September 30, 2024, compared to the same periods in 2023, primarily due to decreases in asset retirement costs.
Previous report
Severance and Restructuring
Previous report
For the three and nine months ended September 30, 2024, we incurred severance and restructuring expenses of $0.3 million and $1.1 million, respectively, primarily related to early termination for the lease of our corporate headquarters in Alexandria, Virginia in September 2023 as a result of our continuous efforts to optimize costs. No significant severance and restructuring expenses were incurred for the three and nine months ended September 30, 2023.
Previous report
Income Taxes
Previous report
For the nine months ended September 30, 2024, net cash provided by operating activities was $20.5 million, an increase of $6.1 million compared to the nine months ended September 30, 2023. The net cash provided by operating activities primarily consisted of net income of $11.3 million, accounts receivable of $1.5 million, deferred revenue of $2.3 million, and non-cash items such as depreciation and accretion of $3.2 million, deferred income tax expense of $3.6 million and stock-based compensation of $3.5 million, partially offset by accounts payable, accrued liabilities and other of $4.3 million and prepaid expenses and other assets of $1.1 million.
Previous report
For the nine months ended September 30, 2023, net cash provided by operating activities was $14.4 million, primarily driven by net income of $12.3 million, accounts receivable of $1.3 million and non-cash items such as depreciation and accretion of $3.8 million, deferred income tax expense of $5.6 million and stock-based compensation of $2.7 million. These increases were partially offset by accounts payable, accrued liabilities and other of $7.4 million, deferred revenue of $2.0 million, net operating lease liabilities of $1.2 million and prepaid expenses and other assets of $1.1 million.
Reworded paragraphs (16)
Previous wording
Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the U.S. healthcare industry, to help protect the health, well-being and safety of individuals. Organizations rely on Spok for workflow improvement, secure messaging, paging services, contact center optimization and public safety response.
Current wording
Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the United States healthcare industry, to help protect the health, well-being and safety of individuals. Organizations rely on Spok for workflow improvement, secure messaging, paging services, contact center optimization and public safety response.
Previous wording
The following table is a summary of our Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2024 and 2023:
Current wording
The following table is a summary of our Condensed Consolidated Statement of Operations for the three months ended March 31, 2025 and 2024:
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 provider 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 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, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical and critical 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 provider 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 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 Condensed 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 Condensed Consolidated 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 for both one-way and two-way messaging subscribers) is presented as wireless revenue in our Condensed 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 Condensed Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.
Previous wording
Wireless revenue decreased for the three months ended September 30, 2024, compared to the same period in 2023, reflective of the secular decrease in our wireless units in service, from 785 thousand as of September 30, 2023 to 730 thousand as of September 30, 2024. This was partially offset by an increase in ARPU, as a result of price increases initiated in September 2024. For the three months ended September 30, 2024, ARPU was $7.95 as compared to $7.59 for the same period in 2023.
Current wording
The decrease in wireless revenue for the three months ended March 31, 2025, as compared to the same period in 2024, reflects a decrease in paging revenue, primarily driven by , compared to the same period in the secular decrease in our wireless units in service, from 753 thousand units as of March 31, 2024 to 705 thousand units as of March 31, 2025. This decrease was partially offset by an increase in ARPU, as a result of price increases initiated in September 2024. For the three months ended March 31, 2025, ARPU was $8.24 as compared to $7.89 for the same period in 2024. The decrease in paging revenue was partially offset by an increase in product revenue, driven by the pricing increase on one-time fees assessed for pagers not returned at contract termination, implemented in early 2025. 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.
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 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, professional services revenue related to the implementation of our solutions, and maintenance revenue that 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
Software operations revenue increased during the three months ended September 30, 2024, compared to the same period in 2023. The increase is primarily due to increases in professional services revenue, resulting from our 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 wording
Software revenue increased during the three months ended March 31, 2025, compared to the same period in 2024. The increase is primarily due to increases in professional services revenue, resulting from increased sales and the ratable benefit from our managed services offering as well as additional hiring efforts over the last 12 months as we aligned staffing levels with our backlog which have grown as a result of our operations bookings results.
Previous wording
•Depreciation, Amortization and Accretion. These are expenses 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 are expenses 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
The following is a review of our operating expense categories for the three and nine months ended September 30, 2024, and 2023. Certain prior period amounts have been reclassified to conform to the current period's presentation.
Current wording
The following is a review of our operating expense categories for the three months ended March 31, 2025, and 2024.
Previous wording
The decreases in payroll and related expenses are primarily due to the reduction in headcount as a result of our continuous efforts to optimize costs, partially offset by increases in employee compensation costs. In addition, as a result of our network rationalization efforts, site rent and telecommunications costs decreased in response to a 5.6% decline in active transmitters from September 30, 2023 to September 30, 2024. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.
Current wording
Technology operations: decreased by $0.4 million, or 7.1%, for the three months ended March 31, 2025, compared to 2024. The decrease was driven by a 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 6.3% from March 31, 2024 to March 31, 2025. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.
Previous wording
Provision for income taxes was $1.5 million and $2.0 million for the three months ended September 30, 2024 and 2023, respectively. Provision for income taxes was $3.8 million and $5.7 million for the nine months ended September 30, 2024 and 2023, respectively. Provision for income taxes decreased for the three and nine months ended September 30, 2024 compared to the same periods in 2023, primarily due to the effect of the anticipated annual effective tax rate change resulting from certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.
Current wording
Income taxes: Provision for income taxes was $1.1 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively. Provision for income taxes increased for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the effect of the anticipated annual effective tax rate change resulting from certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.
Previous wording
As of September 30, 2024, we held cash and cash equivalents of $27.8 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. The Company maintains a majority of its 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
As of March 31, 2025, we held cash and cash equivalents of $19.9 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 a 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. In February 2022, the Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. This repurchase authority allows us, at management's discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.
Current wording
In February 2022, the Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. This repurchase authority allows us, at management's discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.
Previous wording
For the nine months ended September 30, 2024, and 2023, net cash used in investing activities was $2.3 million and $2.4 million, respectively. Net cash used in investing activities reflects purchases of property and equipment.
Current wording
For the three months ended March 31, 2025, and 2024, net cash used in investing activities was $0.7 million and $0.9 million, respectively. Net cash used in investing activities reflects purchases of property and equipment.
Previous wording
For the nine months ended September 30, 2024, and 2023, net cash used in financing activities was $22.3 million and $20.6 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.
Current wording
For the three months ended March 31, 2025, and 2024, net cash used in financing activities was $10.8 million and $9.8 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.
Previous wording
On October 30, 2024, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of November 18, 2024, and a payment date of December 9, 2024. This cash dividend of approximately $6.3 million, applicable to our common stock outstanding, will be paid from available cash on hand.
Current wording
On April 30, 2025, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of May 23, 2025 and a payment date of June 24, 2025. This cash dividend of approximately $6.4 million, applicable to our common stock outstanding, will be paid from available cash on hand.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
Wireless revenue decreased for the nine months ended September 30, 2024, compared to the same period in 2023, reflective of the secular decrease in our wireless units in service, from 785 thousand as of September 30, 2023 to 730 thousand as of September 30, 2024. This was partially offset by an increase in ARPU, as a result of price increases initiated in September 2024. For the nine months ended September 30, 2024, ARPU was $7.91 as compared to $7.62 for the same period in 2023.