Spok Holdings, Inc

Previous wording

In April 2026, we announced a strategic realignment designed to further enhance our cost optimization efforts. These actions will enable us to direct resources towards continued investment in our Care Connect Suite and artificial intelligence initiatives, while sustaining our commitment to returning cash to stockholders. This realignment eliminated approximately 10% of our workforce, which is expected to result in annualized savings of over $6.0 million in payroll and related expenses and other operating expenses. The majority of the workforce reductions were completed in the second quarter of 2026, with the remainder expected to be completed in the third quarter of 2026.

Current wording

In April 2026, we announced a strategic realignment designed to further enhance our cost optimization efforts. These actions will enable us to direct resources towards continued investment in our Care Connect Suite and artificial intelligence initiatives, while sustaining our commitment to returning cash to stockholders. This realignment eliminated approximately 10% of our workforce, which is expected to result in annualized savings of over $6.0 million in payroll and related expenses and other operating expenses. The workforce reductions planned as a part of the strategic realignment were completed in the third quarter of 2026.

Previous wording

The following table is a summary of our Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025:

Current wording

The following table is a summary of our Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2026 and 2025:

Previous wording

Wireless revenue decreased during the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to a decrease in paging revenue. The decrease in paging revenue was primarily driven by secular decreases in our wireless units in service, from 694 thousand units as of June 30, 2025 to 645 thousand units as of June 30, 2026.

Current wording

Wireless revenue decreased during the three and nine months ended September 30, 2026, compared to the same periods in 2025, primarily due to a decrease in paging revenue. The decrease in paging revenue was primarily driven by secular decreases in our wireless units in service, from 684 thousand units as of September 30, 2025 to 634 thousand units as of September 30, 2026. This decrease was partially offset by increases in ARPU, as a result of price increases initiated in September 2026 and 2025, respectively. For the three months ended September 30, 2026, ARPU was $8.36, compared to $8.19 for the same period in 2025. For the nine months ended September 30, 2026, ARPU was $8.25, compared to $8.19 for the same period in 2025.

Previous wording

As demand for one-way and two-way messaging has declined, we have developed or added service offerings, such as encrypted paging and Spok Mobile with a pager number, to increase our revenue potential. These service offerings, along with the nominal increases in the standard rate, are designed to mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers with the highest value possible.

Current wording

As demand for one-way and two-way messaging has declined, we have developed or added service offerings, such as encrypted paging and Spok Mobile with a pager number, to increase our revenue potential. These service offerings, along with nominal increases in the standard rate, are designed to mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers with the highest value possible.

Previous wording

Software revenue increased during the three months ended June 30, 2026, compared to the same period in 2025. The increase was primarily due to higher license revenue generated from increased license bookings, partially offset by decreases in equipment, maintenance and subscription and professional services revenue. The decrease in professional services revenue was a result of lower billable hours, driven by a reduction in billable headcount within the professional services - projects line. This decrease in projects was partially offset by our managed services offering, which provides additional stability due to even revenue recognition over the contractual term, as compared to a revenue stream that has historically been highly dependent on individual project factors. The decrease in equipment revenue was due to lower sales, and the decrease in maintenance and subscription revenue resulted from higher churn.

Current wording

Software revenue decreased during the three and nine months ended September 30, 2026, compared to the same periods in 2025. The decreases were primarily due to reduced professional services revenue, hardware revenue, resulting from lower sales, alongside lower maintenance and subscription revenue and was partially offset by the increase in license revenue. The decrease in professional services revenue was a result of lower billable hours, driven by a reduction in billable headcount within the professional services - projects line. These decreases in projects were partially offset by our managed services offering, which provides additional stability due to even revenue recognition over the contractual term, as compared to the projects revenue stream that has historically been highly dependent on individual project factors. The decrease in maintenance and subscription revenue resulted from higher churn. The increase in license revenue was due to higher perpetual license sales.

Previous wording

The following is a review of our operating expense categories for the three and six months ended June 30, 2026, and 2025.

Current wording

The following is a review of our operating expense categories for the three and nine months ended September 30, 2026, and 2025.

Previous wording

Cost of revenue decreased by $0.6 million, or 7.7%, for the three months ended June 30, 2026, and $0.1 million, or 0.8%, for the six months ended June 30, 2026, compared to the same periods in 2025. The decrease was driven by a reduction in headcount within our professional services group and lower equipment costs resulting from lower hardware sales, as well as cost optimization efforts.

Current wording

Cost of revenue decreased by $0.7 million, or 9.7%, for the three months ended September 30, 2026, and $0.8 million, or 3.8%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The decreases were driven by a reduction in headcount within our professional services group and lower equipment costs resulting from lower hardware sales, as well as cost optimization efforts.

Previous wording

Research and development expenses increased by $0.2 million, or 7.0%, for the three months ended June 30, 2026, and $0.6 million, or 9.4%, for the six months ended June 30, 2026, compared to the same periods in 2025. The increases during the three and six months ended June 30, 2026 were driven by additional headcount and increased spend in outside services in conjunction with our continued investment in the enhancement of our software solutions, alongside an increase in technology costs.

Current wording

Research and development expenses increased by $0.2 million, or 6.4%, for the three months ended September 30, 2026, and $0.8 million, or 8.4%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The increases during the three and nine months ended September 30, 2026 were driven by increased spend in outside services in conjunction with our continued investment in the enhancement of our software solutions, alongside an increase in technology costs.

Previous wording

Selling and marketing expenses decreased by $0.4 million, or 9.8%, for the three months ended June 30, 2026, and $0.9 million, or 9.3%, for the six months ended June 30, 2026, compared to the same periods in 2025. The decreases during the three and six months ended June 30, 2026 were primarily driven by our cost optimization efforts and the strategic realignment.

Current wording

Selling and marketing expenses decreased by $1.0 million, or 23.1%, for the three months ended September 30, 2026, and $1.8 million, or 13.6%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The decreases during the three and nine months ended September 30, 2026 were primarily driven by our cost optimization efforts and the strategic realignment.

Previous wording

General and administrative expenses decreased by $1.2 million, or 13.9%, for the three months ended June 30, 2026, and $1.4 million, or 8.6%, for the six months ended June 30, 2026, compared to the same periods in 2025. The decreases during the three and six months ended June 30, 2026 were primarily driven by lower technology and compensation costs as a result of our cost optimization efforts and the strategic realignment.

Current wording

General and administrative expenses decreased by $0.5 million, or 6.9%, for the three months ended September 30, 2026, and $1.9 million, or 8.1%, for the nine months ended September 30, 2026, compared to the same periods in 2025. The decreases during the three and nine months ended September 30, 2026 were primarily driven by lower technology and compensation costs as a result of our cost optimization efforts and the strategic realignment.

Previous wording

Severance and restructuring expenses increased by $1.5 million for the three months ended June 30, 2026, and $1.8 million for the six months ended June 30, 2026, compared to the same periods in 2025. The increases were primarily related to severance expenses incurred due to the reduction in headcount during the second quarter of 2026 as a result of the strategic realignment.

Current wording

Severance and restructuring expenses increased by $0.2 million for the three months ended September 30, 2026, and $2.0 million for the nine months ended September 30, 2026, compared to the same periods in 2025. The increases were primarily related to severance expenses incurred due to the reduction in headcount during the second and third quarters of 2026 as a result of the strategic realignment.

Previous wording

For the three and six months ended June 30, 2026, the Company recognized negligible Other expense. For the three and six months ended June 30, 2025, the Company recognized other income of $0.7 million and $0.8 million, respectively. The other income for the three and six months ended June 30, 2025 primarily consisted of a gain of $0.7 million from the sale of a domain name.

Current wording

For both the three and nine months ended September 30, 2026, the Company recognized $7.5 million in other income. For the three and nine months ended September 30, 2025, the Company recognized a negligible amount and $0.8 million in other income, respectively. The other income for the three and nine months ended September 30, 2026 primarily consisted of a gain of $7.5 million from the sale of certain narrowband spectrum licenses, as compared to a gain of $0.7 million from the sale of a domain name for the nine months ended September 30, 2025.

Previous wording

Provision for income taxes was $1.5 million and $1.8 million for the three months ended June 30, 2026 and 2025, respectively. Provision for income taxes was $2.2 million and $2.9 million for the six months ended June 30, 2026 and 2025, respectively. Provision for income taxes decreased for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to the decrease in pre-tax book income. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

Current wording

Provision for income taxes was $3.6 million and $1.4 million for the three months ended September 30, 2026 and 2025, respectively. Provision for income taxes was $5.8 million and $4.3 million for the nine months ended September 30, 2026 and 2025, respectively. Provision for income taxes increased for the three and nine months ended September 30, 2026, compared to the same periods in 2025, primarily due to the increases in pre-tax book income. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

Previous wording

As of June 30, 2026, we held cash and cash equivalents of $16.6 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, 2026, we held cash and cash equivalents of $30.1 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 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

On June 23, 2026, we entered into an agreement to sell certain narrowband spectrum licenses in our two-way paging inventory to Sensus USA, Inc. for a purchase price of $8.0 million. The transaction received approval by the Federal Communications Commission ("FCC") and closed on July 20, 2026. We expect to recognize a pre-tax gain upon closing of approximately $7.5 million within other income in the Condensed Consolidated Statements of Operations, reflecting the $8.0 million purchase price less estimated transaction-related costs of approximately $0.5 million. Upon receipt, the net cash proceeds are expected to positively impact our liquidity position.

Current wording

On June 23, 2026, we entered into an agreement to sell certain narrowband spectrum licenses in our two-way paging inventory to Sensus USA, Inc. for a purchase price of $8.0 million. The transaction received approval by the Federal Communications Commission and closed on July 20, 2026. The net proceeds positively impacted our liquidity position as of September 30, 2026. We do not anticipate any material payments towards the transaction costs in the future.

Previous wording

For the six months ended June 30, 2026, and 2025, net cash used in investing activities was $1.2 million and $1.1 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, 2026 net cash provided by investing activities was $5.8 million as compared to net cash used in investing activities of $1.6 million for the same period in 2025. For the nine months ended September 30, 2026 net cash provided by investing activities includes the net proceeds from the sale of certain narrowband spectrum licenses, partially offset by purchases of property and equipment. Net cash used in investing activities for the nine months ended September 30, 2025 reflects purchases of property and equipment partially offset by the net proceeds from the sale of a domain name.

Previous wording

For the six months ended June 30, 2026, and 2025, net cash used in financing activities was $16.4 million and $17.1 million, respectively. Net cash used in financing activities primarily consists of 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, 2026 and 2025, net cash used in financing activities was $22.9 million and $23.6 million, respectively. Net cash used in financing activities primarily consists of cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.

Previous wording

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and goodwill, accounts receivable, revenue recognition, depreciation expense, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Current wording

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and goodwill, accounts receivable allowances, revenue recognition, depreciation and accretion expense, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.