Spok Holdings, Inc Q3 FY2024 earnings call

• Strong Q3 performance with 65% year-over-year growth in software operations bookings, software backlog at $63.6 million (+19% y-o-y). - Product R&D updates: completed operator console upgrades, launched Spok Care Connect Contact Center for Universal Interoperability, with plans for Q4 upgrades including Spok Care Connect enterprise reporting deployments, enhanced dashboard services, expanded soft phone support, and HL7 standards expansion. - Key customer engagements: multi-year contracts with large healthcare systems, including a Northeastern health system, an East Coast academic health system, and a large non-profit integrated health system. - Wireless team's response to hurricanes Helene and Milton, mitigating impact with quick mobilization of techs. - Hosted Connect 24 users’ conference with 233 registered customers, showcasing product roadmap and R&D efforts.

In Q3 2024, total GAAP revenue was $34.9 million. Wireless revenue was $18.3 million, down from $19 million in the prior year. Software revenue was $16.6 million, up slightly from $16.5 million in the prior year. Professional services revenue was $4.8 million, up 26.1% year-over-year. License and hardware revenue was $2.4 million, down from $3.2 million in 2023. Maintenance revenue was $9.3 million, essentially flat year-over-year. ARPU for wireless increased $0.36 (4.7%) from the prior year, driven by pricing actions and new product offerings.

• Reiterates 2024 guidance: total revenue to range from $136 million to $144 million, wireless revenue $72 million to $75 million, software revenue $64 million to $69 million, and adjusted EBITDA $27.5 million to $32.5 million. - Expect low-double-digit year-over-year software bookings growth for full year, with 24 six-figure customer contracts in Q3 doubling prior quarter's amount. - Confident in fourth quarter performance and positioned for strong 2025.

• Secular decline in wireless services demand, reflected in declining pager units and service. - Potential impact of macro environment on customers affecting their ability to invest in services. - Challenges in penetrating smaller healthcare markets, where managed services may be cost prohibitive for smaller customers but well received by medium and large ones.

Q: On software operations bookings makeup, can you talk more about if they were from existing clients or new hospitals?

A: Most of these contracts were larger existing customers doing upgrades and including managed services; not a ton of new logo business this quarter but focus on new solutions in 2025.

Q: On GenA pager and pager churn, what is the churn related to?

A: Churn on an annual basis is about 4-5% on units; offset by revenue-based initiatives like GenA pager (higher ARPU per unit) and revenue-focused wireless sales team incentives.

Q: On international expansion, can you provide more color?

A: Most international effort focused on APAC region, particularly Australia with partnership with InTechnology, but no major activity expected in 2024.

Q: On October's start, any software bookings or activity to note?

A: Off to a good start, hunting big deals with hopes to bring one or two in by year end, but depends on signing off processes.