In This Article:
Release Date: April 30, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Spok Holdings Inc (NASDAQ:SPOK) reported a 4% year-over-year growth in total revenues, driven by a more than 9% increase in software revenues.
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The company achieved strong year-over-year increases in net income and adjusted EBITDA levels of 22.7% and 8.9%, respectively.
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Professional services revenue saw a 44% increase year-over-year, driven by a three-fold increase in the managed services category.
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Spok Holdings Inc (NASDAQ:SPOK) maintained a strong software backlog with a more than 15% increase, indicating future revenue potential.
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The company successfully returned $7.9 million to shareholders while maintaining research and development investment at prior year levels.
Negative Points
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Wireless revenue remained nearly flat compared to the first quarter of 2024, indicating challenges in growing this segment.
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The company experienced a slight decline in software maintenance revenue by approximately 2.1% from the prior year quarter.
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Despite strong bookings, it will take several quarters for new maintenance revenue to grow back to a point where revenue growth can be achieved.
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Spok Holdings Inc (NASDAQ:SPOK) anticipates that the demand for its wireless services will continue to decline on a secular basis.
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The macroeconomic environment and potential impacts on the healthcare industry create uncertainty, leading the company to maintain a position of guarded optimism.
Q & A Highlights
Q: You signed 22 six-figure customer contracts in the first quarter. Is there any seasonality with larger seven-figure contracts that we should consider? A: Vince Kelly, CEO: There's really not. We've noticed a good trend so far this year, with more contracts signed in March than in February or January. So far, the second quarter is looking promising too. We haven't seen any tariff-related or economic slowdown pressures on our customers; they're buying at a healthy rate.
Q: It was a strong quarter for wireless product revenue. What drove this, and should we expect this to continue? A: Calvin Rice, CFO: The increase was primarily due to our initiative to raise prices for pagers not returned when service is discontinued. This change, implemented in the first quarter, is expected to provide an annualized benefit of about $1 million, translating to approximately $250,000 per quarter.
Q: Gross margin improved to 80%. What drove this, and can we expect it to continue at this level? A: Calvin Rice, CFO: The strong revenue quarter was the primary driver of the improved gross margin. The cost side remained relatively stable. While you might see fluctuations based on quarterly performance, the overall dynamics are not expected to change significantly.