Spok Holdings, Inc Q2 FY2025 earnings call

• Vince Kelly highlighted the team's performance in Q3 despite seasonal headwinds, with year-to-date progress in key areas like net income, adjusted EBITDA, and cash generation. - Spok has advantages in the healthcare software contact center space with long-term relationships, integrated platforms, and continued investment in enhancing platforms. - Mike Wallace discussed the company's product platform including Spok Console, Messenger, and Mobile, which streamline workflows and ensure secure communication. - Calvin Rice reviewed financials, noting GAAP net income of $3.2 million or $0.15 per diluted share in Q3 2025, down from prior year, and reaffirmed guidance for 2025.

In the third quarter of 2025, total GAAP revenue was $33.9 million. Wireless revenue was $17.8 million, making up approximately 52.5% of total revenue, and software revenue was $16.1 million, accounting for about 47.5% of total revenue. Wireless revenue saw a 20 basis point sequential improvement in quarterly net unit churn to 1.4% from 1.6% in the prior quarter, with ARPU increasing $0.24 or 3% from the prior year. Software revenue had license and hardware revenue at $1.5 million compared to $2.4 million in the same period of 2024, but professional services revenue was $5.5 million in Q3 2025 versus $4.8 million in Q3 2024, up nearly 13% from the prior year period. Adjusted EBITDA in the third quarter totaled $6.6 million.

• For 2025, total revenue is expected to range from $138 million to $143.5 million. - Wireless revenue is expected to range between $71.5 million and $73.5 million. - Software revenue is expected to range between $66.5 million and $70 million. - Adjusted EBITDA is expected to range from $28.5 million to $32.5 million.

No specific detailed risks discussed, but notes that forward-looking statements are subject to risks and uncertainties relating to Spok's future financial and business performance, as per SEC filings.

Q: Could you talk about the 55% year-over-year decline in licensing revenue? What drove this and whether we should expect to see similar license revenue going forward?

A: Calvin Rice said license revenue is lumpy as it's directly related to sales, with variability from quarter to quarter, and no expectation of continued decline but variability.

Q: What led to the weaker third quarter in software contracts and bookings, and how should we think about the fourth quarter?

A: Vincent Kelly said they had an air pocket in Q3 with some deals slipping, but they have a robust pipeline and large deals in the hopper, expecting a strong fourth quarter.

Q: Do you still anticipate a 6% to 8% increase in R&D for 2026? Detail the focus of this investment and when to expect revenue contribution or margin improvement from these investments?

A: Vincent Kelly said R&D in 2026 will be a little over $13 million, focusing on consolidating and enhancing the Care Connect suite, with benefits seen in each quarter of 2026 resulting in more new logos, upgrades, and multiyear engagements.