Spok Holdings, Inc

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 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.

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 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 value-added services, 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 Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.

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 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.

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 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 value-added services, 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 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 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.

Current wording

Wireless revenue decreased for the year ended December 31, 2025, as compared to 2024, reflective of the secular decrease in our wireless units in service, from approximately 720 thousand units as of December 31, 2024 to approximately 675 thousand units as of December 31, 2025. These decreases were partially offset by an increase in ARPU, from $7.97 for the year ended December 31, 2024 to $8.20 for the year ended December 31, 2025. The increase in ARPU was a result of price increases initiated in September 2025 and 2024, as well as general increases in pass-through fees, which effectively have corresponding costs associated with them. 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

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 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 wording

Software revenue increased during 2025 when compared to 2024, 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. This increase was partially offset by decreases in license and maintenance and subscription revenue, driven by lower license sales.

Previous wording

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 wording

Cost of revenue: increased by $1.1 million, or 3.8%, for the year ended December 31, 2025, compared to 2024. This increase was primarily driven by the need for additional professional services personnel to better align staffing levels with our backlog.

Previous wording

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 wording

Research and development: increased by $0.5 million, or 4.5%, for the year ended December 31, 2025, compared to 2024. This increase was driven by our continued effort to invest in the enhancement of our software solutions.

Previous 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.

Current wording

Technology operations: decreased by $1.0 million, or 4.0%, for the year ended December 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 5.9% from December 31, 2024 to December 31, 2025.

Previous wording

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 wording

Severance and restructuring: decreased by $0.6 million, or 58.5%, for the year ended December 31, 2025, compared to 2024, primarily due to expenses related to the early termination of the lease of our corporate headquarters in Alexandria, Virginia in 2024.

Previous 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.

Current wording

Depreciation and accretion: decreased by $0.7 million, or 17.3%, for the year ended December 31, 2025, compared to 2024, primarily due to decreases in accretion and pager depreciation, offset by increases in asset retirement cost.

Previous 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.

Current wording

Interest income: decreased by $0.3 million for the year ended December 31, 2025, compared to 2024, primarily due to a decrease in interest earned on the Company's cash balances, driven by lower interest rates from macroeconomic events.

Previous wording

The effects of foreign taxes are immaterial for all periods presented. The following provides the effective tax rate reconciliation for the years ended December 31, 2024, 2023 and 2022, respectively (See Note 9, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion on our income taxes):

Current wording

The following provides the effective tax rate reconciliation for the years ended December 31, 2025, 2024 and 2023 (See Note 9, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion on our income taxes):

Previous 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.

Current wording

The provision for income taxes increased by $0.5 million for the year ended December 31, 2025, compared to 2024, due to an increase in federal and state income taxes, stemming from higher income in 2025. Our investment in research and development in prior years qualified for the research and development income tax credit under Section 41 of the IRC. Unused research and development tax credits have a 20-year carry-over and will provide future tax benefits once Spok’s net operating losses are fully utilized.

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 and credits prior to expiration.

Current wording

We had a valuation allowance of $1.9 million and $2.3 million as of December 31, 2025 and 2024, respectively, 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. The change of $0.4 million resulted from a decrease in state tax credit carry-forwards as compared to 2024.

Previous 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.

Current wording

At December 31, 2025, we held cash and cash equivalents of $25.3 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 maximize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods.

Current wording

With 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 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.

Current wording

On February 25, 2026, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 16, 2026 and a payment date of March 31, 2026. This cash dividend of approximately $6.5 million is expected to be paid from available cash on hand.

Previous 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.

Current wording

For the years ended December 31, 2025 and 2024, net cash used in investing activities was $3.1 million and $3.2 million, respectively, primarily due to capital expenditures. For the year ended December 31, 2025, the net cash also includes proceeds from the sale of a domain name.

Previous 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.

Current wording

For the years ended December 31, 2025 and 2024, net cash used in financing activities was $29.8 million and $28.5 million, respectively, primarily due to cash distributions to stockholders of $27.3 million and $26.4 million and the purchase of common stock for tax withholding on vested equity awards of $2.8 million and $2.4 million , respectively.

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, 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.

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 and 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 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.

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 2025. We maintained a valuation allowance of $1.9 million and $2.3 million as of December 31, 2025 and 2024, respectively, 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. The change of $0.4 million resulted from a decrease in state tax credit carry-forwards as compared to 2024.