Spok Holdings, Inc

Previous 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:

Current wording

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

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 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 revenue 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, 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 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.

Current wording

The decreases in paging revenue during the three and nine months ended September 30, 2025, compared to the same periods in 2024, was partially offset by increases 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.

Previous wording

To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from the original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Current wording

Software revenue, to a large degree, corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from the original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Previous 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.

Current wording

Software revenue decreased during the three months ended September 30, 2025, compared to the same period in 2024. The decrease was primarily due to a decrease in license revenue, resulting from lower sales, partially offset by an increase in professional services revenue. During the nine months ended September 30, 2025, software revenue increased compared to the same period in 2024, primarily due to increases 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 the backlog. Additionally, our managed services offering has continued to grow providing additional stability, because of its even revenue recognition over the contractual term, to a revenue stream that has historically been highly dependent on individual project factors.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Technology operations: decreased by $0.4 million, or 6.5%, for the three months ended September 30, 2025, and $1.1 million, or 6.1%, for the nine months ended September 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 5.5% from September 30, 2024 to September 30, 2025.

Previous 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.

Current wording

Selling and marketing: increased by $0.2 million, or 5.7%, for the three months ended September 30, 2025, and $1.7 million, or 14.5%, for the nine months ended September 30, 2025, compared to the same periods in 2024. Increases during the nine months ended September 30, 2025 were primarily driven by higher commissions and personnel costs. Commissions were higher because of a one-time benefit in 2024 that was not repeated in 2025. The second quarter of 2024 included a one-time benefit to adjust for commissions expense that was previously expensed as incurred.

Previous wording

General and administrative: increased by $0.8 million, or 10.4%, for the three months ended June 30, 2025, and $1.3 million, or 7.8%, for the six months ended June 30, 2025, compared to the same periods in 2024. The increases were primarily driven by technology costs, bad debt (largely attributable to benefits in 2024 that were not repeated in 2025), compensation costs, and the timing of costs related to compliance compared to the same periods in 2024.

Current wording

General and administrative: decreased by $0.2 million, or 2.9%, for the three months ended September 30, 2025, and increased by $1.0 million, or 4.1%, for the nine months ended September 30, 2025, compared to the same periods in 2024. Increases during the nine months ended September 30, 2025 were primarily driven by technology costs, bad debt (largely attributable to benefits in 2024 that were not repeated in 2025), and compensation costs compared to the same period in 2024.

Previous wording

Other income (expense): Other income was $0.7 million and $0.8 million, for the three and six months ended June 30, 2025, respectively, compared to negligible amounts in the same periods in 2024, primarily due to the gain on sale of a domain name for $0.7 million in the second quarter of 2025.

Current wording

Other income (expense): increased by $0.1 million for the three months ended September 30, 2025 and $0.9 million for the nine months ended September 30, 2025, compared to the same periods in 2024. For the nine months ended September 30, 2025, the other income primarily includes a gain on sale of a domain name for $0.7 million in the second quarter of 2025.

Previous 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.

Current wording

Income taxes: Provision for income taxes was $1.4 million and $1.5 million for the three months ended September 30, 2025 and 2024, respectively. Provision for income taxes was $4.3 million and $3.8 million for the nine months ended September 30, 2025 and 2024, respectively. Provision for income taxes increased for the nine months ended September 30, 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 and certain discrete items that include a windfall tax benefit from stock based compensation. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

Previous 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.

Current wording

As of September 30, 2025, we held cash and cash equivalents of $21.4 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 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.

Current wording

For the nine months ended September 30, 2025, and September 30, 2024, net cash provided by operating activities was $17.4 million and $20.5 million, respectively, primarily due to a decrease in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.

Previous 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.

Current wording

For the nine months ended September 30, 2025, and 2024, net cash used in investing activities was $1.6 million and $2.3 million, respectively. Net cash used in investing activities reflects purchases of property and equipment. For the nine months ended September 30, 2025, the net cash also includes proceeds from the sale of a domain name.

Previous 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.

Current wording

For the nine months ended September 30, 2025, and 2024, net cash used in financing activities was $23.6 million and $22.3 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.