Spok Holdings, Inc

Previous wording

The following table is a summary of our Condensed Consolidated Statement of Operations for the three months ended March 31, 2025 and 2024:

Current wording

The following table is a summary of our Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2025 and 2024:

Previous 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.

Current wording

Wireless revenue increased during the three and six months ended June 30, 2025, compared to the same periods in 2024, due to an increase in product and other revenue. Product and other revenue includes one-time fees for customers that cancel our services and do not return their equipment within the allotted time-frame, as contractually required. We implemented a price increase on these fees in early 2025, and we expect this will continue to benefit wireless revenue for the remainder of 2025, as compared to 2024. The increases in product and other revenue were partially offset by decreases in paging revenue. The decreases in paging revenue were primarily driven by the secular decrease in our wireless units in service, partially offset by an increase in ARPU, as a result of price increases initiated in September 2024.

Previous 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.

Current wording

Software revenue consists primarily of license revenues, including revenues from our perpetual and term software license arrangements, 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 and subscription revenue that is generated from the ongoing support of our perpetual and term software license arrangements, typically contracted for a period of between one and three years.

Previous 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.

Current wording

Software revenue increased during the three and six months ended June 30, 2025, compared to the same periods in 2024. The increases are primarily due to increases in license revenue, resulting from increased sales, and in professional services revenue. The growth in our backlog has allowed us to continue hiring efforts over the last 12 months as we seek to balance staffing levels with a growing backlog driven by increasing sales. Additionally, our managed services offering has continued to grow providing additional stability to a revenue stream that has historically been highly dependent on individual project factors, because of its even revenue recognition over the contractual term.

Previous wording

The following is a review of our operating expense categories for the three months ended March 31, 2025, and 2024.

Current wording

The following is a review of our operating expense categories for the three and six months ended June 30, 2025, and 2024.

Previous 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.

Current wording

Technology operations: decreased by $0.3 million, or 4.6%, for the three months ended June 30, 2025, and $0.7 million, or 5.9%, for the six months ended June 30, 2025, compared to the same periods in 2024. The decreases were 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 5.7% from June 30, 2024 to June 30, 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

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 wording

Selling and marketing: increased by $0.8 million, or 21.7%, for the three months ended June 30, 2025, and $1.5 million, or 19.0%, for the six months ended June 30, 2025, compared to the same periods in 2024. Compared to the same periods in 2024, the increases were primarily driven by additional headcount, higher advertising and events expenses due to increased trade show participation and overall travel, and higher commissions. The increase in commissions is related to the one-time benefit recorded in the second quarter of 2024 to adjust for commissions expense that was previously expensed as incurred.

Previous 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.

Current wording

Income taxes: Provision for income taxes was $1.8 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively. Provision for income taxes was $2.9 million and $2.3 million for the six months ended June 30, 2025 and 2024, respectively. Provision for income taxes increased for the three and six months ended June 30, 2025, compared to the same periods 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 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.

Current wording

As of June 30, 2025, we held cash and cash equivalents of $20.2 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

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.

Current wording

For the six months ended June 30, 2025, and June 30, 2024, net cash provided by operating activities was $9.3 million, and $9.4 million, respectively, primarily due to an increase in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.

Previous 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.

Current wording

For the six months ended June 30, 2025, and 2024, net cash used in investing activities was $1.1 million and $1.5 million, respectively. Net cash used in investing activities reflects purchases of property and equipment. For the six months ended June 30, 2025, the net cash also includes proceeds from the sale of a domain name.

Previous 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.

Current wording

For the six months ended June 30, 2025, and 2024, net cash used in financing activities was $17.1 million and $16.0 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.