Summary
Spok Holdings closed the third quarter of fiscal 2022 with revenue of $33.74 million, down 5.9% from $35.85 million in the prior-year quarter. Both halves of the business slipped. Wireless revenue fell to $19.05 million from $19.64 million as paging demand kept eroding, and software revenue fell to $14.69 million from $16.21 million. Inside software, license revenue rose to $2.15 million from $1.81 million, but professional services revenue dropped to $2.84 million from $4.16 million and maintenance revenue slipped to $9.18 million from $9.65 million. Revenue for the nine months ended September 30, 2022 was $101.28 million, down 5.9% from $107.61 million.
Profitability improved much faster than the top line. Operating income was $3.54 million in the quarter, a swing to a profit from an operating loss of $3.56 million a year earlier, a change the reported figures show as up 199.5%. Operating margin was 10.5%, up from negative 9.9%. Net income reached $2.92 million, or $0.15 per diluted share, against a net loss of $2.49 million, or $0.13 per diluted share, in the prior-year quarter. The nine-month picture is still red, but the loss is smaller. The operating loss narrowed to $2.72 million from $6.91 million, and the net loss narrowed to $2.37 million from $5.51 million. Diluted loss per share for the year to date was $0.12, better than the loss of $0.28 a year earlier.
The swing came from cost cuts, not growth. Total operating expenses fell to $30.21 million from $39.41 million. Research and development dropped to $2.22 million from $4.06 million after the company discontinued Spok Go, and selling and marketing fell to $3.44 million from $5.40 million. Severance and restructuring costs of $1.50 million ran through the quarter. On a non-GAAP basis, adjusted EBITDA was $4.7 million in the quarter against a loss of $2.5 million a year earlier, and $1.06 million for the nine months against a loss of $4.47 million. Excluding one-time costs tied to the strategic business plan, year-to-date adjusted EBITDA was $16.9 million. Cash generation is the soft spot. Operating cash flow was $5.75 million in the quarter, up 1.5% from $5.66 million. For the year to date, operating cash flow was negative $0.15 million, down 101.6% from $9.53 million.
Cash, cash equivalents and short-term investments totaled $37.2 million on September 30, 2022, and the company carries no debt. Capital returned to stockholders year to date was $18.8 million, and the board declared a regular quarterly dividend of $0.3125 per share, payable on December 9, 2022 to stockholders of record on November 16, 2022. Deferred revenue was $26.47 million, down 4.6% from the prior-year quarter, and remaining performance obligations were $44.00 million, down 3.5%. Software operations bookings rose 26% year over year in the quarter, and the company booked 49 deals worth over six figures year to date. Software backlog ended the period at $44.03 million. Wireless units in service fell 3.4% to 824,000.
Guidance for the full fiscal year 2022 moved up at the low end. Total revenue is now expected between $131.5 million and $136.0 million, compared with prior guidance of $130.0 million to $136.0 million, and adjusted operating expenses are guided to $123.0 million to $125.0 million from the prior range of $123.3 million to $126.1 million. Capital expenditures are guided to $3.2 million to $3.9 million for the fiscal year. The risk list is unchanged in substance. Management expects paging demand to keep declining as customers move to other technologies, maintenance churn is running ahead of new license bookings, and the restructuring program carries expected pre-tax charges of $7.0 million to $8.0 million, split between roughly $5.7 million to $6.6 million in severance and personnel related costs and roughly $1.3 million to $1.4 million in contractual terminations. Those payments are expected to pull cash on hand lower in 2022. Management said cash flow generation should largely cover the dividend in the fourth quarter of 2022 and later years, and it flagged recessionary conditions, inflation, higher interest rates and softness in hospital purchasing as risks.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2022 | Q2 FY2022 | QoQ | Q3 FY2021 | YoY |
|---|---|---|---|---|---|
| Revenue | $33.7M | $33.7M | +0.1% | $35.9M | -5.9% |
| Gross profit | $27.1M | $26.7M | +1.5% | $28.3M | -4.3% |
| Gross margin | 80.4% | 79.3% | +1.1 pp | 79.0% | +1.4 pp |
| Research & development | $2.2M | $2.6M | -15.3% | $4.2M | -46.8% |
| Sales & marketing | $3.4M | $3.9M | -11.2% | $5.2M | -33.4% |
| General & administrative | $8.9M | $9.6M | -7.8% | $12.5M | -29.3% |
| Total operating expenses | $30.2M | $31.3M | -3.5% | $39.4M | -23.4% |
| Operating income (loss) | $3.5M | $2.4M | +46.7% | -$3.6M | +199.5% |
| Operating margin | 10.5% | 7.2% | +3.3 pp | -9.9% | +20.4 pp |
| Net income (loss) | $2.9M | $1.9M | +51.8% | -$2.5M | +217.1% |
| Net margin | 8.7% | 5.7% | +2.9 pp | -7.0% | +15.6 pp |
| Diluted EPS | $0.15 | $0.10 | +$0.05 | -$0.13 | +$0.28 |
Risks
Wireless revenue declined 3.0% in the quarter and 5.1% year to date, reflecting a secular decrease in demand for paging services as customers shift to broadband technologies. Total units in service fell from 0.9 million to 0.8 million.
Software revenue declined 9.4% in the quarter and 6.9% year to date. Maintenance revenue is pressured by churn exceeding new license bookings, and professional services revenue fell 31.8% in the quarter due to fewer billable resources from restructuring.
Operating cash flow was negative $0.1 million for the nine months ended September 30, 2022, down 101.6% from $9.5 million in the prior year period. The company anticipates cash on hand will decrease during 2022 due to restructuring payments and may need to reduce capital expenses, dividends, or share repurchases.
The new strategic business plan discontinues Spok Go and eliminates approximately 183 positions, with pre-tax restructuring charges of $7.0 million to $8.0 million. Execution risk exists as the company expects restructuring substantially complete by Q4 2022.
Software projects involve protracted sales cycles, unforeseen complexity, and deviation from original scope, which affects backlog and timing of revenue recognition. COVID-19 previously caused delays in purchasing decisions and on-site implementations.
The company's primary market is the healthcare provider industry, particularly hospitals. A decline in hospital spending or customer consolidation could materially impact revenue.
The company's ability to consolidate paging networks may be limited by minimum frequency commitments outlined by the FCC, which could prevent further site rent reductions.
SaaS KPIs
All quarters →Adjusted EBITDA
Software Backlog
Software Operations Bookings
Wireless Units in Service
Wireless Average Revenue Per Unit (ARPU)
Software maintenance bookings
Summary, forecast, risks and KPIs are extracted from Spok Holdings, Inc's SEC filings for Q3 FY2022 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 6, 2026.