Spok Holdings, Inc Q4 FY2024 earnings call

• Strategic pivot since 2022 focused on growing software revenue, generating cash, and returning capital to stockholders.
• In 2024, achieved milestones like software revenue growth, reduced wireless net unit churn, solid profitability, expense management, cash flow generation, product roadmap progress, sales team augmentation, record six/seven figure contracts, Gen A page placements, maintenance contract bookings, and high customer satisfaction.
• Invested over $11.5 million in R&D in 2024, a nearly 10% increase from 2023.
• Participated in HIMSS24 Conference, showcased products, and maintained premier industry reputation with top honors in Black Book Market Research and U.S. News & World Report Best Hospitals Honor Roll customers.
• Marked 10-year anniversary as Spok in July 2024.

In 2024, wireless revenue was $73.5 million, down from $76 million in 2023. Software revenue: License and hardware revenue was $9 million (down from $11.4 million in 2023), maintenance revenue totaled $37.2 million (slightly up from prior year). Professional services revenue in 2024 was $17.9 million, up 21.6% from 2023, with managed services revenue at $3.3 million (18.2% of professional services revenue in 2024, up from $1.4 million in 2023). Software operations bookings in 2024 were over $34 million, a 13% increase from the prior year.

• 2025 total revenue expected to range from $134 million to $142 million.
• Wireless revenue expected to be between $69 million to $72 million.
• Software revenue expected to range from $65 million to $70 million.
• Adjusted EBITDA guidance for 2025 is $27.5 million to $32.5 million.

• Wireless revenue is subject to secular decline in pager units, though initiatives like Gen A pager aim to offset revenue loss.
• Execution risks related to product development and market adoption of new features and solutions.

Q: Kyle Bauser asked about key attributes of software operations bookings growth and the metric of six and seven figure customer contracts.

A: Vince Kelly responded that growth was a mix of new customers, taking from competitors, existing customers renewing, and incremental sales to existing customers. He noted that pipeline deals are over $0.5 million and size of deals is increasing. On six/seven figure contracts, he said the number is reasonable and reflects expanding license thrust.

Q: John Dixon asked about the move of headquarters and bookings composition.

A: Michael Wallace replied that historically, ~15-20% of operations bookings are new logos, and ~80% are from existing customers with add-ons, upgrades. The 80% recurring revenue refers to wireless business (monthly recurring) and software maintenance component.

Q: George Milas asked about the product roadmap and confidence in license sales picking up in 2025.

A: Vincent Kelly detailed product updates like new UI on Spok operator console, updated Care Connect reporting package, modernized interfacing with cloud providers and EHRs, and updates to web and mobile products. He stated that these product developments, along with a growing pipeline and new business development team, give confidence in license sales picking up in 2025.