Spok Holdings, Inc.
Q1 2023 Earnings Call Transcript

Published: 5 May 2023

[Al Galgano:]

Hello, everyone, and welcome to Spok Holdings First Quarter 2023 Earnings Call. I am joined by Vince Kelly, Chief Executive Officer; Mike Wallace, President of Spok Inc. and Chief Operating Officer; and Calvin Rice, Chief Financial Officer. Please be advised that, on today's call we will not be taking any questions after management's prepared remarks, as we will be hosting our Investor Day program subsequent to this earnings call. During the Investor Day program, there will be ample opportunity for questions from both the in-person participants and the webcast listeners. I also want to remind everyone that, today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to Spok's future financial and business performance. Such statements may include estimates of revenue, expenses and income as well as other predictive statements or plans which are dependent upon future events or conditions. These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results. Spok's actual results could differ materially from those anticipated in these forward-looking statements. Although, these statements are based upon assumptions that the company believes to be reasonable they are subject to risks and uncertainties. Please review the Risk Factors section relating to our operations and the business environment, which are contained in our first quarter 2023 Form 10-Q, and related documents filed with the Securities and Exchange Commission. Please note that, Spok assumes no obligation to update any forward-looking statements from past or present filings and conference calls. With that, I'll turn the call over to Vince.

[Vince Kelly:]

Good morning, everyone, and thank you for joining us for our First Quarter 2023 Earnings Call. I want to remind everyone that, our mission is to generate cash and return capital to our shareholders over the long term. We believe we are on a sustainable path to doing so, and believe we can pay our quarterly dividends at these levels for the foreseeable future. Further, we believe our cash flow is on a path to grow into our current dividend level and eventually cover it in full. That is our job and our primary focus. Returning the capital to shareholders has been our legacy, and we feel good about getting back to our roots and doing so. Today, we will share with you an update on how our strategic business plan is progressing in support of this goal as well as our financial results for the quarter. I'll start by reviewing the agenda for today's call. The order will be as follows. We'll begin by providing a review of our operational performance for the quarter and full year. I'll then turn the call over to Calvin to review our first quarter 2023 financial highlights and performance. We will then conclude our prepared remarks with our business outlook and financial guidance for 2023 and then we'll wrap up the call. I'd like to invite all of you to our Investor Day program, which will be starting shortly after this call at 10

[Calvin Rice:]

Thanks, Vince, and good morning, everyone. I would now like to take a few minutes and provide a recap for our first quarter 2023 financial performance, which we reported yesterday. I encourage you to review our 10-Q, when filed, as it includes significantly more information about our business operations and financial performance than we will cover on this call. Turning to our income statement. In the first quarter of 2023 GAAP net income totaled $3.1 million or $0.15 per diluted share compared to a net loss of $7.2 million or $0.37 per diluted share in 2022. For the first quarter of 2023, total GAAP revenue was $33.2 million in line with the prior quarter and compared to revenue of $33.8 million in the first quarter of 2022. Revenue for the quarter consisted of wireless revenue of $19 million, which was up $0.2 million or 1% from the prior year and software revenue of $14.2 million, down 5.5% from last year in line with our expectations. With respect to wireless revenue, first quarter 2023 totaled $19.0 million, up on both a sequential and year-over-year basis. While we continue to see improvement in net unit churn declining to only 3.2% on a year-over-year basis, this performance was primarily driven by a $0.35 increase in ARPU or nearly 5% from the prior year. I would like to take a minute to break that down a bit further. Changes in recoverable taxes and fees, which are pass-through items and have a corresponding cost element that typically fluctuates on a roughly 1

[Vince Kelly:]

Thank you, Calvin. Again, I'd like to remind everybody that, shortly following this call we'll be hosting our Investor Day program. The program will include presentations from myself and our broader management team as well as an opportunity for Q&A. We hope you can join us as the event will be webcast. Please go to the Investor Relations section of our website to register for the webcast. We appreciate your support and interest in Spok and we look forward to updating everyone again next quarter. We'll move you for a second quarter 2023 results in July. Thank you for joining us this morning, and have a great day.

[End of Q&A:]