• Net Income: $15 million or $0.73 per diluted share for 2024.
• Total Revenue: $137.7 million in 2024, down from $139 million in 2023.
• Wireless Revenue: $73.5 million in 2024, down from $76 million in 2023.
• Software Revenue: $64.1 million in 2024, driven by a nearly 22% increase in professional services revenue.
• Adjusted EBITDA: $29.2 million in 2024, down from $30.3 million in 2023.
• Cash Returned to Stockholders: $26.4 million in 2024.
• Software Operations Bookings: $34.1 million in 2024, up more than 13% from the prior year.
• Professional Services Revenue: $17.9 million in 2024, up 21.6% from 2023.
• Managed Services Revenue: $3.3 million in 2024, up from $1.4 million in 2023.
• Cash and Cash Equivalents: $29.1 million at the end of 2024.
• 2025 Revenue Guidance: Expected to range from $134 million to $142 million.
• 2025 Adjusted EBITDA Guidance: Expected to range from $27.5 million to $32.5 million.

• Warning! GuruFocus has detected 7 Warning Sign with SPOK.

Release Date: February 26, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Spok Holdings Inc (NASDAQ:SPOK) returned $26.4 million of cash to stockholders and generated over $29 million of adjusted EBITDA in 2024.
• The company achieved double-digit growth in its professional services business and software operations bookings, with a 13% increase in software operations bookings from the prior year.
• Spok Holdings Inc (NASDAQ:SPOK) maintained solid profitability levels and continued effective expense management, with operating expenses virtually unchanged from 2023.
• The company invested over $11.5 million in product research and development, enhancing its product offerings and maintaining a strong industry reputation.
• Spok Holdings Inc (NASDAQ:SPOK) secured 82 six and seven-figure customer contracts, a 22% increase from 2023, and executed 40 multi-year engagements, indicating strong sales momentum.

Negative Points

• Total GAAP revenues for 2024 were $137.7 million, down from $139 million in 2023, indicating a slight decline in overall revenue.
• Wireless revenue decreased to $73.5 million from $76 million in the prior year, reflecting a continued decline in demand for wireless services.
• License and hardware revenue fell to $9 million from $11.4 million in 2023, showing a decrease in this segment of the business.
• Adjusted EBITDA decreased to $29.2 million in 2024 from $30.3 million in 2023, reflecting lower consolidated revenue.
• The company anticipates continued secular decline in demand for wireless services, with expected net unit churn ranging from 4% to 6% in 2025.

Q & A Highlights

Q: Can you discuss the key attributes of the growth in software operations bookings, and how should we think about the metric of six to seven-figure customer contracts going forward? A: Vincent Kelly, CEO, explained that the growth is attributed to a mix of new customers, takeaways from competitors, and incremental sales to existing customers. The strategic pivot in 2022 and enhancements to the Care Connect Suite have contributed to this success. The company is focusing on expanding license sales, which will drive more maintenance revenue and profitability.

Q: Can you elaborate on the key contributors to the earnings leverage seen in the EBITDA guidance? A: Calvin Rice, CFO, noted that the leverage is primarily driven by a greater mix of software sales, which come with significant margins. The focus is on growing the top line, with software license sales being a critical component for 2025 and beyond.

Q: Why did Spok Holdings move its headquarters from Virginia to Plano, Texas? A: Vincent Kelly, CEO, stated that the move was primarily to reduce costs. The company has closed most of its real estate, except for two locations, to drive costs out of the business while maintaining operational efficiency.

Q: Is it accurate to assume that about 80% of your bookings come from recurring customers? A: Mike Wallace, COO, clarified that historically, about 80% of bookings are from existing customers, with 15-20% from new logos. The recurring revenue primarily comes from wireless business and software maintenance, which together make up about 80% of total revenue.

Q: Can you provide insights into the product roadmap and timelines for 2025? A: Vincent Kelly, CEO, highlighted several updates, including a new UI for the operator console, enhancements to the Care Connect reporting package, and integration with cloud providers. These developments are expected to boost license sales in 2025, supported by a growing pipeline and a new business development team.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.