SEC Form 10-Q filed by Spok Holdings Inc.

7/25/24 4:02:33 PM ET

Telecommunications Equipment

Telecommunications

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spok-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

(Mark One)


☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2024


☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 001-32358


SPOK HOLDINGS, INC.
(Exact name of registrant as specified in its charter)


Delaware						16-1694797
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


5911 Kingstowne Village Pkwy, 6th Floor
Alexandria,	Virginia	22315
(Address of principal executive offices)		(Zip Code)

(800) 611-8488

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	SPOK	NASDAQ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

20,264,055 shares of the registrant’s common stock (par value $0.0001 per share) were outstanding as of July 19, 2024.

SPOK HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX


			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of June 30, 2024 (Unaudited) and December 31, 2023	2
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	4
		Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2024 and 2023 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2024 and 2023 (Unaudited)	7
		Unaudited Notes to Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
	Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	29
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
	Item 5.	Other Information	29
	Item 6.	Exhibits	31
Signatures

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	June 30, 2024		December 31, 2023
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	23,875	$	31,989

Accounts receivable, net	22,824		23,314
Prepaid expenses	8,590		7,885
Other current assets	858		704
Total current assets	56,147		63,892
Non-current assets:
Property and equipment, net	7,056		7,321
Operating lease right-of-use assets	9,177		10,526
Goodwill	99,175		99,175

Deferred income tax assets, net	43,939		46,260
Other non-current assets	883		510
Total non-current assets	160,230		163,792
Total assets	$	216,377	$	227,684

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	5,418	$	5,969
Accrued compensation and benefits	4,922		7,284
Deferred revenue	25,239		26,298
Operating lease liabilities	3,352		4,184
Other current liabilities	4,425		4,273
Total current liabilities	43,356		48,008
Non-current liabilities:
Asset retirement obligations	7,197		7,191
Operating lease liabilities	6,374		6,902
Other non-current liabilities	1,238		1,812
Total non-current liabilities	14,809		15,905
Total liabilities	58,165		63,913
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock	$	—	$	—
Common stock	2		2
Additional paid-in capital	102,946		102,936
Accumulated other comprehensive loss	(1,770)		(1,764)
Retained earnings	57,034		62,597
Total stockholders’ equity	158,212		163,771
Total liabilities and stockholders' equity	$	216,377	$	227,684

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Unaudited and in thousands except share and per share amounts)	2024		2023		2024		2023

Revenue:
Wireless revenue	$	18,297	$	18,877	$	36,892	$	37,905
Software revenue	15,685		17,586		31,999		31,738
Total revenue	33,982		36,463		68,891		69,643
Operating expenses:
Cost of revenue (exclusive of items shown separately below)	7,163		6,727		14,302		13,263
Research and development	3,176		2,853		6,127		5,346
Technology operations	6,181		6,452		12,480		13,039
Selling and marketing	3,506		4,354		7,655		8,255
General and administrative	8,067		8,489		16,051		16,189
Depreciation and accretion	1,067		1,265		2,135		2,501
Severance and restructuring	348		108		776		118

Total operating expenses	29,508		30,248		59,526		58,711
Operating income	4,474		6,215		9,365		10,932
Interest income	391		354		645		626
Other expense	(14)		(138)		(16)		(85)
Income before income taxes	4,851		6,431		9,994		11,473
Provision for income taxes	(1,426)		(1,698)		(2,333)		(3,623)
Net income	$	3,425	$	4,733	$	7,661	$	7,850
Basic net income per common share	$	0.17	$	0.24	$	0.38	$	0.39
Diluted net income per common share	$	0.17	$	0.23	$	0.37	$	0.39
Basic weighted average common shares outstanding	20,252,452		19,957,786		20,211,500		19,927,782
Diluted weighted average common shares outstanding	20,473,751		20,255,248		20,500,335		20,266,914
Cash dividends declared per common share	$	0.3125	$	0.3125	$	0.6250	$	0.6250

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Unaudited and in thousands)	2024		2023		2024		2023

Net income	$	3,425	$	4,733	$	7,661	$	7,850
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(48)		35		(6)		47
Other comprehensive (loss) income	(48)		35		(6)		47
Comprehensive income	$	3,377	$	4,768	$	7,655	$	7,897

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity

Balance at January 1, 2023	19,703,800	$	2	$	97,999	$	73,096	$	171,097
Net income	—	—		—		3,117		3,117
Issuance of restricted stock under the Equity Plan	382,568	—		—		—		—
Purchase of common stock for tax withholding	(144,516)	—		(1,245)		—		(1,245)
Amortization of stock-based compensation	—	—		936		—		936
Cash dividends declared	—	—		—		(6,549)		(6,549)
Cumulative translation adjustment	—	—		12		—		12
Balance at March 31, 2023	19,941,852	$	2	$	97,702	$	69,664	$	167,368
Net income	—	—		—		4,733		4,733

Amortization of stock-based compensation	—	—		923		—		923
Cash dividends declared	—	—		—		(6,538)		(6,538)

Issuance of restricted stock under the Equity Plan	20,210	—		90		—		90
Cumulative translation adjustment	—	—		35		—		35
Balance at June 30, 2023	19,962,062	$	2	$	98,750	$	67,859	$	166,611


(Unaudited and in thousands except share amounts)	Outstanding Common Shares	Common Stock		Additional Paid-In Capital & Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity

Balance at January 1, 2024	19,992,102	$	2	$	101,172	$	62,597	$	163,771
Net income	—	—		—		4,236		4,236
Issuance of restricted stock under the Equity Plan	396,771	—		—		—		—
Purchase of common stock for tax withholding	(151,026)	—		(2,428)		—		(2,428)
Amortization of stock-based compensation	—	—		1,148		—		1,148
Cash dividends declared	—	—		—		(6,600)		(6,600)
Cumulative translation adjustment	—	—		42		—		42
Balance at March 31, 2024	20,237,847	$	2	$	99,934	$	60,233	$	160,169
Net income	—	—		—		3,425		3,425
Issuance of restricted stock under the Equity Plan	17,768	—		131		—		131

Amortization of stock-based compensation	—	—		1,159		—		1,159
Cash dividends declared	—	—		—		(6,624)		(6,624)

Cumulative translation adjustment	—	—		(48)		—		(48)
Balance at June 30, 2024	20,255,615	$	2	$	101,176	$	57,034	$	158,212

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Six Months Ended June 30,
(Unaudited and in thousands)	2024		2023

Operating activities:
Net income	$	7,661	$	7,850
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion	2,135		2,501


Deferred income tax expense	2,313		3,602
Stock-based compensation	2,307		1,859
Provisions for credit losses, service credits and other	262		222
Changes in assets and liabilities:
Accounts receivable	223		1,168
Prepaid expenses and other assets	(1,232)		(653)
Net operating lease liabilities	(11)		(324)
Accounts payable, accrued liabilities and other	(3,046)		(1,745)
Deferred revenue	(1,192)		(3,282)
Net cash provided by operating activities	9,420		11,198
Investing activities:
Purchases of property and equipment	(1,516)		(1,815)



Net cash used in investing activities	(1,516)		(1,815)
Financing activities:
Cash distributions to stockholders	(13,715)		(13,163)

Proceeds from issuance of common stock under the Employee Stock Purchase Plan	131		90
Purchase of common stock for tax withholding on vested equity awards	(2,428)		(1,245)
Net cash used in financing activities	(16,012)		(14,318)
Effect of exchange rate on cash and cash equivalents	(6)		47
Net decrease in cash and cash equivalents	(8,114)		(4,888)
Cash and cash equivalents, beginning of period	31,989		35,754
Cash and cash equivalents, end of period	$	23,875	$	30,866
Supplemental disclosure:
Income taxes paid	$	241	$	253

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Spok Holdings, Inc. (NASDAQ: SPOK) ("Spok," "we," "our" or the "Company"), through its wholly owned subsidiary Spok, Inc., is proud to be the global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes. Top hospitals rely on Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients.

We offer a focused suite of unified clinical communication and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.

We provide one-way and advanced two-way wireless messaging services, including information services, throughout the United States. These services are offered on a local, regional and nationwide basis, employing digital networks. One-way messaging consists of numeric and alphanumeric messaging services. Numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number, while alphanumeric messages may include numbers and letters, which enable subscribers to receive text messages. Two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants and personal computers. We also offer voice mail, personalized greetings, message storage and retrieval, and equipment loss and/or maintenance protection to both one-way and two-way messaging subscribers. These services are commonly referred to as wireless messaging and information services.

We also develop, sell and support enterprise-wide systems for hospitals and other organizations needing to automate, centralize and standardize clinical communications. These solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging and for public safety notifications. These areas of market focus complement the market focus of our wireless services outlined above.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management's opinion, the unaudited Condensed Consolidated Financial Statements include all adjustments and accruals that are necessary for the presentation of the results of all interim periods reported herein and all such adjustments are of a normal, recurring nature.

Amounts shown in the Condensed Consolidated Statements of Operations within the operating expense categories of cost of revenue; research and development; technology operations; selling and marketing; and general and administrative are recorded exclusive of depreciation and accretion. These items are shown separately to the extent that they are considered material for the periods presented.

Certain prior period amounts in the Condensed Consolidated Financial Statements have been reclassified to conform to the current period's presentation. These reclassifications had no effect on the reported results of operations or the Condensed Consolidated Balance Sheets.

The financial information included herein, other than the Condensed Consolidated Balance Sheet as of December 31, 2023, is unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2023, has been derived from, but does not include all, the disclosures contained in the audited Consolidated Financial Statements as of and for the year ended December 31, 2023.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”). The Condensed Consolidated Statements of Operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Use of Estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets, goodwill, accounts receivable allowances, revenue recognition, depreciation expense, asset retirement obligations and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

NOTE 2 - RISKS AND OTHER IMPORTANT FACTORS

See “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q (“Quarterly Report”) and "Item 1A. Risk Factors" of Part I of the 2023 Annual Report, which describe key risks associated with our operations and industry.

NOTE 3 - RECENT ACCOUNTING STANDARDS

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within segment profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is also permitted, and retrospective applications is required. This ASU will likely result in additional required disclosures when adopted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2024.

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and the income taxes paid. The update is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the potential effect that the updated standard will have on our financial statement disclosures.

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES UPDATE

Our significant accounting policies are detailed in Note 1, “Organization and Significant Accounting Policies” of the 2023 Annual Report.

NOTE 5 - REVENUE, DEFERRED REVENUE AND PREPAID COMMISSIONS

Wireless Revenue

Wireless revenue consists of two primary components: paging revenue and product and other revenue. Paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits. Product and other revenue reflects system sales, sales of paging devices and charges for devices that are not returned and are net of anticipated credits. Our core offering includes subscriptions to one-way or two-way messaging services for a periodic (monthly, quarterly, semiannual, or annual) service fee. This is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Two-way messaging is generally offered on a nationwide basis. See Item 1. “Business,” in the 2023 Annual Report for more details.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Software Revenue

Software revenue consists of two primary components: operations revenue and maintenance revenue. Operations revenue consists primarily of license and subscription revenues for our healthcare communications solutions, revenue from the sale of hardware that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from our ongoing support of our software solutions or related hardware and access to when-and-if available software updates. Maintenance is generally purchased and renewed on an annual basis.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s intellectual property ("IP") as it exists at a point in time at which the license is granted. Many of our software licenses have significant standalone functionality due to their ability to process a transaction or perform a function or task, and we do not need to maintain those products, once provided to the customer, for value to exist. While the functionality of the IP that we license may substantively change during the license period, customers are not contractually or practically required to update their license as a result of those changes.

Our wireless, professional services, and maintenance are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance or subscription services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred.

The following table presents our revenues disaggregated by revenue type:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023

Revenue:
Paging revenue	$	17,633	$	18,271	$	35,603	$	36,796
Product and other revenue	664		606		1,289		1,109
Wireless revenue	$	18,297	$	18,877	$	36,892	$	37,905

License	$	1,697	$	3,692	$	4,323	$	5,310
Professional services	4,286		3,837		8,311		7,076
Hardware	334		933		718		1,289

Operations revenue	6,317		8,462		13,352		13,675
Maintenance	9,368		9,124		18,647		18,063
Software revenue	$	15,685	$	17,586	$	31,999	$	31,738
Total revenue	$	33,982	$	36,463	$	68,891	$	69,643

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The U.S. was the only country that accounted for more than 10% of the Company’s total revenue for the three and six months ended June 30, 2024, and 2023. Revenue generated in the U.S. and internationally consisted of the following for the periods stated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023

United States	$	33,302	$	35,649	$	67,444	$	67,860
International	680		814		1,447		1,783
Total revenue	$	33,982	$	36,463	$	68,891	$	69,643

Deferred Revenues

Our deferred revenues represent payments made by, or due from, customers in advance of our performance. Changes in the balance of total deferred revenue during the six months ended June 30, 2024, are as follows:


(Dollars in thousands)	December 31, 2023		Additions		Revenue Recognized		June 30, 2024

Deferred Revenue	$	26,946	$	30,806	$	(31,998)	$	25,754

During the six months ended June 30, 2024, the Company recognized $17.0 million related to amounts deferred as of December 31, 2023.

Prepaid Commissions

Our prepaid commissions represent payments made to employees in advance of our performance on the related underlying contracts. These costs have been incurred directly in relation to obtaining a contract. As such, these costs are amortized over the estimated period of benefit. Changes in the balance of total prepaid commissions during the six months ended June 30, 2024 are as follows:


(Dollars in thousands)	December 31, 2023		Additions		Commissions Recognized		June 30, 2024

Prepaid Commissions	$	2,285	$	1,865	$	(1,165)	$	2,985

Prepaid commissions are included within prepaid expenses in the Condensed Consolidated Balance Sheets and commissions expense is included within selling and marketing in the Condensed Consolidated Statements of Operations.

Remaining Performance Obligations

The balance of remaining performance obligations at June 30, 2024, was $55.0 million, which excludes $6.0 million of additional transaction value that was deemed cancellable by the customer without significant penalty. We expect to recognize approximately $35.1 million of our remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.

NOTE 6 - LEASES

We have operating lease arrangements for corporate offices, cellular towers, storage units and small building space. The building space is used to house infrastructure, such as transmitters, antennae and other various equipment for the Company’s wireless paging services. For leases with a term of 12 months or less, renewal terms are generally of an evergreen nature (either month-to-month or year-to-year). For leases with a term greater than 12 months, renewal terms are generally explicit and provide for one to five optional renewals consistent with the initial term. Many of our leases, with the exception of those for our corporate offices, include options to terminate the lease within one year. Variable lease payments, residual value guarantees or purchase options are not generally present in these leases.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Lease costs are included in technology operations and general and administrative expenses in the Condensed Consolidated Statements of Operations. The following table presents lease costs disaggregated by type:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023

Operating lease cost	$	1,015	$	1,171	$	2,050	$	2,351
Short-term lease cost	2,449		2,262		4,901		4,539
Total lease cost	$	3,464	$	3,433	$	6,951	$	6,890

The following table presents supplemental cash flow information:


	For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023


Cash paid for amounts included in the measurement of lease liabilities - operating leases	$	2,416	$	2,661

The following table presents the weighted average remaining lease term and discount rate:


	June 30,
(Dollars in thousands)	2024	2023

Weighted average remaining lease term - operating leases (in years)	4.50	4.70
Weighted average discount rate - operating leases	6.28%	4.86%

Maturities of lease liabilities as of June 30, 2024, were as follows:


For the Year Ended December 31,	(Dollars in thousands)

2024 (remaining six months)	$	1,944
2025	2,655
2026	2,195
2027	1,612
2028	1,237
Thereafter	1,432
Total future lease payments	11,075
Imputed interest	(1,349)
Total	$	9,726

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 7 - CONSOLIDATED FINANCIAL STATEMENTS' COMPONENTS

Depreciation and Accretion

Depreciation and accretion expenses consisted of the following for the periods stated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023

Depreciation
Leasehold improvements	$	39	$	14	$	75	$	27
Asset retirement costs	(104)		64		(208)		130
Paging and computer equipment	877		967		1,778		1,905
Furniture, fixtures and vehicles	80		56		141		111
Total depreciation	892		1,101		1,786		2,173




Accretion	175		164		349		328
Total depreciation and accretion expense	$	1,067	$	1,265	$	2,135	$	2,501

Accounts Receivable, Net

Accounts receivable was recorded net of an allowance of $0.9 million at June 30, 2024, and $1.6 million at December 31, 2023. Accounts receivable, net includes $8.2 million and $6.0 million of unbilled receivables at June 30, 2024, and December 31, 2023, respectively. Unbilled receivables are defined as the Company's right to consideration in exchange for goods or services that we have transferred to the customer but have not yet billed for, generally as a result of contractual billing terms.

Property and Equipment, Net

Property and equipment, net consisted of the following as of the dates stated:


(Dollars in thousands)	Useful Life (In Years)	June 30, 2024		December 31, 2023

Leasehold improvements	lease term	$	2,279	$	2,202
Asset retirement costs	1-5	3,722		3,722
Paging and computer equipment	1-5	85,625		86,332
Furniture, fixtures and vehicles	3-5	3,204		3,129
Total property and equipment		94,830		95,385
Accumulated depreciation		(87,774)		(88,064)
Total property and equipment, net		$	7,056	$	7,321

NOTE 8 - GOODWILL

During the three months ended June 30, 2024, we performed a qualitative assessment of goodwill and determined that a triggering event had not occurred. While an impairment assessment is performed annually in the fourth quarter, the Company monitors its business environment for potential triggering events on a quarterly basis. There is potential for further impairment charges being recognized in future periods based on these ongoing assessments.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 - ASSET RETIREMENT OBLIGATIONS

The components of the changes in the asset retirement obligation liabilities were:


(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total

Balance as of December 31, 2023	$	206	$	7,191	$	7,397
Accretion	295		54		349
Amounts paid	(247)		—		(247)


Reclassifications	48		(48)		—
Balance as of June 30, 2024	$	302	$	7,197	$	7,499

The short-term portion of the balance above is included within other current liabilities in the Condensed Consolidated Balance Sheets as of June 30, 2024, and December 31, 2023.

The cost associated with the estimated removal costs and timing refinements due to ongoing network rationalization activities is expected to accrete to a total liability of $8.9 million. The total estimated liability is based on the transmitter locations remaining after we have consolidated the number of networks we operate and assuming the underlying leases continue to be renewed to that future date. Accretion expense related solely to asset retirement obligations and was recorded based on the interest method.

NOTE 10 - STOCKHOLDERS' EQUITY

General

Our authorized capital stock consists of 75 million shares of common stock, par value $0.0001 per share, and 25 million shares of preferred stock, par value $0.0001 per share.

At June 30, 2024, and December 31, 2023, we had no stock options outstanding.

At June 30, 2024, and December 31, 2023, there were 20,255,615 and 19,992,102 shares of common stock outstanding, respectively, and no shares of preferred stock were outstanding.

Dividends

Cash distributions to stockholders, as disclosed in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024, and 2023, include previously declared cash dividends on shares of vested restricted common stock ("restricted stock") issued to our non-executive directors and dividends related to vested restricted stock units ("RSUs") issued to eligible employees. Cash dividends on RSUs and restricted stock have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited restricted stock and RSUs are also forfeited. The following table details our cash dividends declared and paid in 2024 through the date hereof:


					(Dollars in thousands)
Declaration Date	Record Date	Payment Date	Per Share Amount		Total Declared(1)

February 21, 2024	March 15, 2024	March 29, 2024	$	0.3125	$	6,600
May 1, 2024	May 24, 2024	June 24, 2024	0.3125		6,624


Total			$	0.6250	$	13,224

(1) The total declared reflects the cash dividends declared in relation to common stock, deferred stock units ("DSUs") and unvested RSUs.

On July 24, 2024, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of August 19, 2024, and a payment date of September 9, 2024. Cash dividends related to common stock of approximately $6.3 million will be paid from available cash on hand.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Repurchase Program

On February 16, 2022, our Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. For the six months ended June 30, 2024, we did not repurchase any common stock.

Net Income per Common Share

Basic net income per common share is computed on the basis of the weighted average common shares outstanding. Diluted net income per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares, including outstanding restricted stock and RSUs, which are treated as contingently issuable shares, using the “treasury stock” method.

The components of basic and diluted net income per common share were as follows for the periods stated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(in thousands, except for share and per share amounts)	2024		2023		2024		2023

Numerator:
Net income	$	3,425	$	4,733	$	7,661	$	7,850

Denominator:
Basic weighted average common shares outstanding	20,252,452		19,957,786		20,211,500		19,927,782
Diluted weighted average common shares outstanding	20,473,751		20,255,248		20,500,335		20,266,914
Basic net income per common share	$	0.17	$	0.24	$	0.38	$	0.39
Diluted net income per common share	$	0.17	$	0.23	$	0.37	$	0.39

Stock-Based Compensation Plans

On April 10, 2023, our Board of Directors adopted an amendment and restatement of the 2020 Equity Plan to increase the number of shares available for issuance by 1,000,000 shares that our stockholders subsequently approved on July 25, 2023. At July 25, 2023, a total of 1,268,444 shares of common stock had been reserved for issuance under the 2020 Equity Plan.

Awards under the 2020 Equity Plan may be in the form of stock options, restricted common stock, RSUs, performance awards, dividend equivalents, stock payment awards, deferred stock, DSUs, stock appreciation rights or other stock or cash-based awards.

Restricted stock awards generally vest one year from the date of grant. Related dividends accumulate during the vesting period and are paid at the time of vesting.

Contingent RSUs generally vest over a three-year performance period upon successful completion of the performance objectives. Non-contingent RSUs generally vest in thirds, annually, over a three-year period. Dividend equivalent rights generally accompany each RSU award and those rights accumulate and vest along with the underlying RSU.

Dividend equivalent rights generally accompany each DSU award and are paid to participants in cash on the Company's applicable dividend payment date whether the DSU is vested or unvested. The dividend equivalent right associated with a DSU continues until delivery of the underlying shares of common stock is made.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Payment of the underlying shares of common stock occurs at the earliest of a participant's separation from service, disability, death, or a change in control.

The following table summarizes the activities under the 2020 Equity Plan from January 1, 2024, through June 30, 2024:


			Activity

Total equity securities available at January 1, 2024			1,275,704

RSU, DSU and restricted stock awarded to eligible employees, net of forfeitures			(296,920)
Total equity securities available at June 30, 2024			978,784

The following table details activities with respect to outstanding RSUs, DSUs, and restricted stock under the 2020 Equity Plan for the six months ended June 30, 2024:


	Shares	Weighted Average Grant Date Fair Value per Share

Unvested at January 1, 2024	1,035,268	$	9.12
Granted	300,964	15.49
Vested	(405,813)	10.01
Forfeited	(4,044)	11.13
Unvested at June 30, 2024	926,375	$	10.79

Of the 926,375 unvested RSUs, DSUs and restricted stock outstanding at June 30, 2024, 491,734 RSUs include contingent performance requirements for vesting purposes. At June 30, 2024, there was $5.2 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of 1.7 years.

Employee Stock Purchase Plan

In 2016, our Board of Directors adopted the Spok Holdings, Inc. Employee Stock Purchase Plan (the "ESPP") that our stockholders subsequently approved on July 25, 2016. A total of 250,000 shares of common stock were reserved for issuance under this plan.

The ESPP allows employees to purchase shares of common stock at a discounted rate, subject to plan limitations. Under the ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the ESPP limits. At the end of an offering period, contributions will be used to purchase the Company's common stock at a discount to the market price based on the first or last day of the offering period, whichever is lower.

Participants are required to hold common stock for a minimum period of two years from the grant date. Participants will begin earning dividends on shares after the purchase date. Each offering period will generally last for no longer than six months. Once an offering period begins, participants cannot adjust their withholding amount. If a participant chooses to withdraw, any previously withheld funds will be returned to the participant, with no stock purchased, and that participant will be eligible to participate in the ESPP during the next offering period. If the participant terminates employment with the Company during the offering period, all contributions will be returned to the employee and no stock will be purchased.

The Company uses the Black-Scholes model to calculate the fair value of the common stock to be purchased during each offering period on the offer date. The Black-Scholes model requires the use of estimates for the expected term, the expected volatility of the underlying common stock over the expected term, the risk-free interest rate and the expected dividend payment.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

For the six months ended June 30, 2024, 9,933 shares of the Company's stock were purchased, as compared to 12,558 shares purchased during the same period in 2023. The following table summarizes the activities under the ESPP from January 1, 2024, through June 30, 2024:


			Activity

Total ESPP equity securities available at January 1, 2024			109,762
ESPP common stock purchased by eligible employees			(9,933)
Total ESPP equity securities available at June 30, 2024			99,829

Amounts withheld from participants will be classified as accrued compensation and benefits in the Condensed Consolidated Balance Sheets until funds are used to purchase shares. This liability amount is immaterial to the Condensed Consolidated Financial Statements.

Stock-Based Compensation Expense

We record all stock-based compensation, which consist of RSUs, DSUs, restricted stock, equity in lieu of salary, and the option to purchase common stock under the ESPP, at fair value as of the grant date. Stock-based compensation expense is recognized based on a straight-line amortization basis over the respective service period. Forfeitures and withdrawals are accounted for as incurred.

The following table reflects the items for stock-based compensation expense in the Condensed Consolidated Statements of Operations for the periods stated:


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
(Dollars in thousands)	2024		2023		2024		2023

Performance-based RSUs	$	458	$	373	$	919	$	754
Time-based RSUs, DSUs and restricted stock	679		535		1,346		1,077
ESPP	22		15		42		28
Total stock-based compensation	$	1,159	$	923	$	2,307	$	1,859

NOTE 11 - INCOME TAXES

Spok files a consolidated U.S. federal income tax return and income tax returns in various state, local and foreign jurisdictions as required.

Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how we do business, changes in our stock price, foreign currency gains (losses), tax law developments (including changes in statutes, regulations, case law, and administrative practices), and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.

For 2024, the anticipated effective income tax rate is expected to continue to differ from the federal statutory rate of 21%, primarily due to the effect of state income taxes, permanent differences between book and taxable income, and certain discrete items.

We had total net deferred income tax assets ("DTAs") of $43.9 million and $46.3 million as of June 30, 2024, and December 31, 2023, respectively. We had a valuation allowance of $2.3 million as of both June 30, 2024, and December 31, 2023.

We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of the deferred income tax assets will be realized in future periods. During the fourth quarter of each year, we update our multi-year forecast of taxable income for our operations, which assists in analyzing the recoverability of our DTAs.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company maintains a valuation allowance related to Federal Foreign Tax Credits and certain state net operating losses and state tax credits, as the Company does not believe current projections of future taxable income will be sufficient to utilize those tax assets prior to expiration.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

There have been no material changes during the six months ended June 30, 2024, to the commitments and contingencies previously reported in the 2023 Annual Report.

NOTE 13 - RELATED PARTIES

A member of our Board of Directors serves as EVP and Chief Information Officer for an entity that is also a customer of the Company. For the three months ended June 30, 2024 and 2023, we recognized revenues of $0.4 million and $0.1 million, respectively, related to the contracts from the entity at which the individual is employed. For the six months ended June 30, 2024 and 2023, we recognized revenues of $0.8 million and $0.3 million, respectively, related to the contracts from the entity at which the individual is employed.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements and information relating to Spok Holdings, Inc. and its subsidiaries (collectively, “we,” "us," “Spok,” “our” or the “Company”) that set forth anticipated results based on management’s current plans, known trends and assumptions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “target,” “forecast” and similar expressions, as they relate to Spok are forward-looking statements.

Although these statements are based upon current plans, known trends and assumptions that management considers reasonable, they are subject to certain risks, uncertainties and assumptions, including, but not limited to, those discussed in this section and "Risk Factors" below and under the captions “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2023 ("2023 Annual Report"). Should known or unknown risks or uncertainties materialize, known trends change, or underlying assumptions prove inaccurate, actual results or outcomes may differ materially from past results and those described herein as anticipated, believed, estimated, expected, intended, targeted or forecasted. Investors are cautioned not to place undue reliance on these forward-looking statements.

The Company undertakes no obligation to update forward-looking statements. Investors are advised to consult all further disclosures the Company makes in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it will file with the SEC. Also note that, in the 2023 Annual Report, the Company provides a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to its business. These are factors that, individually or in the aggregate, could cause the Company’s actual results to differ materially from past results as well as those results that may be anticipated, believed, estimated, expected, intended, targeted or forecasted. It is not possible to predict or identify all such risk factors. Consequently, investors should not consider the risk factor discussion to be a complete discussion of all of the potential risks or uncertainties that could affect Spok's business, statement of operations or financial condition, subsequent to the filing of this Quarterly Report.

Overview

The following MD&A is intended to help the reader understand the results of operations and financial condition of Spok. This MD&A is provided as a supplement to, and should be read in conjunction with, our 2023 Annual Report and our unaudited Condensed Consolidated Financial Statements and accompanying notes. A reference to a “Note” in this section refers to the accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the U.S. healthcare industry, to help protect the health, well-being and safety of individuals. Organizations rely on Spok for workflow improvement, secure messaging, paging services, contact center optimization and public safety response.

Business

See Note 1, "Organization and Significant Accounting Policies" in Item 1 of Part I of this Quarterly Report and Item 1. "Business" of Part I of the 2023 Annual Report, which describe our business in further detail.

Results of Operations

The following table is a summary of our Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2024 and 2023:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Revenue:
Wireless revenue	$	18,297	$	18,877	$	(580)	(3.1)	%	$	36,892	$	37,905	$	(1,013)	(2.7)	%
Software revenue	15,685		17,586		(1,901)		(10.8)	%	31,999		31,738		261		0.8	%
Total revenue	33,982		36,463		(2,481)		(6.8)	%	68,891		69,643		(752)		(1.1)	%
Operating expenses:
Cost of revenue (exclusive of items shown separately below)	7,163		6,727		436		6.5	%	14,302		13,263		1,039		7.8	%
Research and development	3,176		2,853		323		11.3	%	6,127		5,346		781		14.6	%
Technology operations	6,181		6,452		(271)		(4.2)	%	12,480		13,039		(559)		(4.3)	%
Selling and marketing	3,506		4,354		(848)		(19.5)	%	7,655		8,255		(600)		(7.3)	%
General and administrative	8,067		8,489		(422)		(5.0)	%	16,051		16,189		(138)		(0.9)	%
Depreciation and accretion	1,067		1,265		(198)		(15.7)	%	2,135		2,501		(366)		(14.6)	%
Severance and restructuring	348		108		240		222.2	%	776		118		658		557.6	%

Total operating expenses	29,508		30,248		(740)		(2.4)	%	59,526		58,711		815		1.4	%
Operating income	4,474		6,215		(1,741)		(28.0)	%	9,365		10,932		(1,567)		(14.3)	%
Interest income	391		354		37		10.5	%	645		626		19		3.0	%
Other expense	(14)		(138)		124		(89.9)	%	(16)		(85)		69		(81.2)	%
Income before income taxes	4,851		6,431		(1,580)		(24.6)	%	9,994		11,473		(1,479)		(12.9)	%
Provision for income taxes	(1,426)		(1,698)		272		(16.0)	%	(2,333)		(3,623)		1,290		(35.6)	%
Net income	$	3,425	$	4,733	$	(1,308)	(27.6)	%	$	7,661	$	7,850	$	(189)	(2.4)	%

Supplemental Information
Full-Time Equivalent ("FTE") Employees	398		382		16		4.2	%
Active transmitters	3,101		3,278		(177)		(5.4)	%

Revenue

We offer a focused suite of unified clinical communications and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.

We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers. Our primary market is the healthcare provider industry, particularly hospitals. While we have historically identified hospitals with 200 or

more beds as the primary targets for our software solutions, as well as our paging services, we have expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.

Revenue generated by wireless messaging services (including voice mail, personalized greeting, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection for both one-way and two-way messaging subscribers is presented as wireless revenue in our Condensed Consolidated Statements of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software), and post-contract support (ongoing maintenance), is presented as software revenue in our Condensed Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.

Refer to Note 5, "Revenue, Deferred Revenue and Prepaid Commissions" in the Notes to Condensed Consolidated Financial Statements for additional information on our wireless and software revenue streams.

The table below details revenue for the periods stated:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Revenue - wireless:
Paging revenue	$	17,633	$	18,271	$	(638)	(3.5)	%	$	35,603	$	36,796	$	(1,193)	(3.2)	%
Product and other revenue	664		606		58		9.6	%	1,289		1,109		180		16.2	%
Total wireless revenue	18,297		18,877		(580)		(3.1)	%	36,892		37,905		(1,013)		(2.7)	%

Revenue - software:
License	1,697		3,692		(1,995)		(54.0)	%	4,323		5,310		(987)		(18.6)	%
Professional services	4,286		3,837		449		11.7	%	8,311		7,076		1,235		17.5	%
Hardware	334		933		(599)		(64.2)	%	718		1,289		(571)		(44.3)	%
Operations revenue	6,317		8,462		(2,145)		(25.3)	%	13,352		13,675		(323)		(2.4)	%
Maintenance revenue	9,368		9,124		244		2.7	%	18,647		18,063		584		3.2	%
Total software revenue	15,685		17,586		(1,901)		(10.8)	%	31,999		31,738		261		0.8	%
Total revenue	$	33,982	$	36,463	$	(2,481)	(6.8)	%	$	68,891	$	69,643	$	(752)	(1.1)	%

Wireless Revenue

Wireless revenue is generally reflective of the number of units in service and measured monthly as Average Revenue Per User ("ARPU"). On a consolidated basis, ARPU is affected by several factors, including the mix of units in service and the pricing of the various components of our services. The number of units in service changes based on subscribers added, referred to as gross placements, less subscriber cancellations, or disconnects.

Wireless revenue decreased for the three months ended June 30, 2024, compared to the same period in 2023, reflective of the secular decrease in our wireless units in service, from 806 thousand as of June 30, 2023 to 747 thousand as of June 30, 2024. This was partially offset by an increase in ARPU, as a result of price increases initiated in September of 2023. For the three months ended June 30, 2024, ARPU was $7.84 as compared to $7.53 for the same period in 2023.

Wireless revenue decreased for the six months ended June 30, 2024, compared to the same period in 2023, reflective of the secular decrease in our wireless units in service, from 806 thousand as of June 30, 2023 to 747 thousand as of June 30, 2024. This was partially offset by an increase in ARPU, as a result of price increases initiated in September of 2023. For the six months ended June 30, 2024, ARPU was $7.85 as compared to $7.56 for the same period in 2023.

We believe that demand for wireless services will continue to decline for the foreseeable future in line with recent trends, as our wireless products and services are replaced with other competing technologies, such as the shift from narrowband wireless service offerings to broadband technology services.

The following reflects the impact of subscribers and ARPU on the change in paging revenue:


	For the Three Months Ended June 30,						Change Due To:
(in thousands)	2024		2023		Change		ARPU		Units

Paging revenue	$	17,633	$	18,271	$	(638)	$	691	$	(1,329)

	For the Six Months Ended June 30,						Change Due To:
(in thousands)	2024		2023		Change		ARPU		Units

Paging revenue	$	35,603	$	36,796	$	(1,193)	$	1,331	$	(2,524)

As demand for one-way and two-way messaging has declined, we have developed or added service offerings such as encrypted paging and Spok Mobile with a pager number to increase our revenue potential. These service offerings, along with the nominal increases in the standard rate, are designed to mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers with the highest value possible.

In late 2021, we began offering our newest pager, GenA. This one-way alphanumeric pager features a high resolution ePaper display, intuitive modern user interface, advanced encryption and security features, over-the-air remote programming, and an antimicrobial housing. Users can select from various font sizes, and the large GenA display also leverages proportional fonts to maximize key information on a single screen.

The GenA pager is the only product available on the market with these capabilities, and we maintain an exclusive arrangement with the product's manufacturer. Given the product differentiation of the GenA pager, its development is a key initiative providing a competitive advantage, and we expect this new technology will be popular with our customers in clinical environments and may help slow our wireless revenue attrition.

Software Revenue

Software revenue consists of two components: operations revenue and maintenance revenue. Operations revenue consists primarily of license and subscription revenues for our healthcare communications solutions, revenue from the sale of hardware that facilitates the use of our software solutions, and professional services revenue related to the implementation of our solutions. Maintenance revenue is generated from our ongoing support of our software solutions or related hardware, typically for a period of one year after project completion.

To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from the original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Operations Revenue

Software operations revenue decreased during the three and six months ended June 30, 2024, when compared to the same periods in 2023. These decreases are primarily due to decreases in license and hardware revenue, driven by lower sales. More specifically, results from the second quarter of 2023 included $1.8 million in license revenue from a single customer contract with no similar performance in 2024. These decreases were partially offset by increases in professional services revenue, resulting from our targeted hiring efforts over the last twelve months, as we aligned staffing levels with our backlog which has grown as a result of our operations bookings results.

Maintenance Revenue

For the three and six months ended June 30, 2024, maintenance revenue increased compared to the same periods in 2023, as a result of improvement in our gross revenue churn as well as net new maintenance driven by our operational bookings performance. Given these dynamics, we believe annual maintenance revenue is likely to remain flat or increase marginally, as we continue to enhance our existing software solutions. Further enhancements are expected to provide additional revenues for license sales which generate new maintenance revenue and help to reduce levels of gross churn.

Operating Expenses

Our operating expenses are presented in functional categories. Certain of our functional categories are especially important to overall expense control and management. These operating expenses are categorized as follows:

•Cost of Revenue. These are expenses we incur for the delivery of products and services to our customers and consist primarily of hardware, third-party software, outside services expenses and payroll and related expenses for our professional services, logistics, customer support and maintenance staff.

•Research and Development. These expenses relate primarily to the development of new software products and the ongoing maintenance and enhancement of existing products. This classification consists primarily of employee payroll and related expenses, outside services related to the design, development, testing and enhancement of our solutions and, to a lesser extent, hardware equipment. Research and development expenses exclude any development costs that qualify for capitalization.

•Technology Operations. These are expenses associated with the operation of our paging networks. Expenses consist largely of site rent expenses for transmitter locations, telecommunication expenses to deliver messages over our paging networks, and payroll and related expenses for our engineering and pager repair functions. We actively pursue opportunities to consolidate transmitters and other service, rental and maintenance expenses in order to maintain an efficient network while simultaneously ensuring adequate service for our customers. We believe continued reductions in these expenses will occur for the foreseeable future as we continue to consolidate our networks, although the benefits of such network rationalization efforts and resulting costs savings will continue to decline.

•Selling and Marketing. The sales and marketing staff are involved in selling our communication solutions primarily in the United States. These expenses support our efforts to maintain gross placements of units in service, which mitigated the impact of disconnects on our wireless revenue base, and to identify business opportunities for additional or future software sales. We maintain a centralized marketing function that is focused on supporting our products and vertical sales efforts by strengthening our brand, generating sales leads and facilitating the sales process. These marketing functions are accomplished through targeted email campaigns, webinars, regional and national user conferences, monthly newsletters and participation at industry trade shows. Expenses consist largely of payroll and related expenses, commissions and other costs such as travel and advertising costs.

•General and Administrative. These are expenses associated with information technology and administrative functions, including finance and accounting, human resources and executive management. This classification consists primarily of payroll and related expenses, outside service expenses, taxes, licenses and permit expenses, and facility rent expenses.

•Depreciation, Amortization and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations, amortization of intangible assets, amortization of capitalized software development costs, and accretion of asset retirement obligations.

The following is a review of our operating expense categories for the three and six months ended June 30, 2024, and 2023. Certain prior period amounts have been reclassified to conform to the current period's presentation.

Cost of Revenue

Cost of revenue consisted primarily of the following items:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Payroll and related	$	4,709	$	3,862	$	847	21.9	%	$	9,277	$	7,842	$	1,435	18.3	%
Cost of sales	1,222		1,541		(319)		(20.7)	%	2,443		2,746		(303)		(11.0)	%
Recoverable taxes and fees	943		905		38		4.2	%	1,888		1,876		12		0.6	%
Stock-based compensation	80		57		23		40.4	%	160		133		27		20.3	%
Other	209		362		(153)		(42.3)	%	534		666		(132)		(19.8)	%
Total cost of revenue	$	7,163	$	6,727	$	436	6.5	%	$	14,302	$	13,263	$	1,039	7.8	%

FTE Employees	154		132		22		16.7	%

For the three and six months ended June 30, 2024, cost of revenue increased compared to the same periods in 2023, primarily driven by increases in payroll and related expenses, partially offset by decreases in cost of sales.

The decreases in cost of sales are primarily related to lower hardware sales as compared to the same periods in 2023.

The increases in payroll and related expenses are primarily due to increases in headcount for added professional services resources in conjunction with our efforts to better align staffing levels with our backlog, as well as increases in employee compensation costs.

Research and Development

Research and development expenses consisted of the following items:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Payroll and related	$	1,464	$	1,586	$	(122)	(7.7)	%	$	3,001	$	3,127	$	(126)	(4.0)	%
Outside services	1,505		1,180		325		27.5	%	2,771		2,026		745		36.8	%
Stock-based compensation	49		30		19		63.3	%	98		57		41		71.9	%
Other	158		57		101		177.2	%	257		136		121		89.0	%
Total research and development	$	3,176	$	2,853	$	323	11.3	%	$	6,127	$	5,346	$	781	14.6	%

FTE Employees	36		40		(4)		(10.0)	%

For the three and six months ended June 30, 2024, research and development expenses increased when compared to the same periods in 2023, primarily driven by an increase in outside services as we continue to invest in the enhancement of our software solutions.

Technology Operations

Technology operations expenses consisted primarily of the following items:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Payroll and related	$	2,153	$	2,247	$	(94)	(4.2)	%	$	4,361	$	4,586	$	(225)	(4.9)	%
Site rent	2,740		2,856		(116)		(4.1)	%	5,527		5,737		(210)		(3.7)	%
Telecommunications	687		708		(21)		(3.0)	%	1,379		1,415		(36)		(2.5)	%
Stock-based compensation	44		40		4		10.0	%	89		95		(6)		(6.3)	%
Other	557		601		(44)		(7.3)	%	1,124		1,206		(82)		(6.8)	%
Technology Operations	$	6,181	$	6,452	$	(271)	(4.2)	%	$	12,480	$	13,039	$	(559)	(4.3)	%

FTE Employees	67		71		(4)		(5.6)	%

For the three and six months ended June 30, 2024, technology operations expenses decreased compared to the same periods in 2023, primarily due to decreases in payroll and related expenses and site rent.

The decreases in payroll and related expenses are primarily due to the reduction in headcount as a result of our continuous efforts to optimize costs, partially offset by increases in employee compensation costs. In addition, as a result of our network rationalization efforts, site rent and telecommunications costs decreased in response to a 5.4% decline in active transmitters from June 30, 2023 to June 30, 2024. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.

Selling and Marketing

Selling and marketing expenses consisted of the following items:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Payroll and related	$	2,564	$	2,470	$	94	3.8	%	$	5,142	$	4,919	$	223	4.5	%
Commissions	433		1,496		(1,063)		(71.1)	%	1,165		2,295		(1,130)		(49.2)	%
Stock-based compensation	135		92		43		46.7	%	270		186		84		45.2	%
Advertising and events	323		271		52		19.2	%	659		502		157		31.3	%
Other	51		25		26		104.0	%	419		353		66		18.7	%
Total selling and marketing	$	3,506	$	4,354	$	(848)	(19.5)	%	$	7,655	$	8,255	$	(600)	(7.3)	%

FTE Employees	68		68		—		—	%

For the three and six months ended June 30, 2024, selling and marketing expenses decreased compared to the same periods in 2023, driven primarily by decreases in commissions and partially offset by payroll and related costs.

The decrease in commissions was primarily driven by a one-time benefit from the adjustment of commissions expense that was previously expensed as incurred, with a corresponding increase in our prepaid commissions. While the majority of our commissions are expensed in proportion to revenue, an immaterial subset was historically expensed as incurred under an ASC 606 practical expedient. With the growth in multi-year contracts over the last two years, more related revenue continues to extend beyond the 12-month period allowed for under this practical expedient. Going forward, these costs will be expensed in alignment with their related revenue in the same manner as the majority of our commissions.

The increase in payroll and related expenses is due to increases in employee compensation costs.

General and Administrative

General and administrative expenses consisted of the following items:


	For the Three Months Ended June 30,				Change				For the Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023		Total		%		2024		2023		Total		%

Payroll and related	$	3,393	$	3,555	$	(162)	(4.6)	%	$	6,836	$	6,821	$	15	0.2	%
Stock-based compensation	851		704		147		20.9	%	1,690		1,388		302		21.8	%
Facility rent, office and technology costs	1,724		1,910		(186)		(9.7)	%	3,403		3,758		(355)		(9.4)	%
Outside services	1,253		1,143		110		9.6	%	2,168		2,146		22		1.0	%
Taxes, licenses and permits	231		277		(46)		(16.6)	%	473		539		(66)		(12.2)	%
Bad debt	(138)		31		(169)		(545.2)	%	(7)		(104)		97		(93.3)	%
Other	753		869		(116)		(13.3)	%	1,488		1,641		(153)		(9.3)	%
Total general and administrative	$	8,067	$	8,489	$	(422)	(5.0)	%	$	16,051	$	16,189	$	(138)	(0.9)	%

FTE Employees	73		71		2		2.8	%

For the three and six months ended June 30, 2024, general and administrative expenses decreased compared to the same periods in 2023, primarily driven by decreases in facility rent, office and technology costs resulting from reductions in office space in late 2023. These decreases were partially offset by increases in stock-based compensation expenses due to increases in employee compensations costs.

For the three months ended June 30, 2024, bad debt expense was also lower, driven by changes in accounts receivable and allowance for doubtful accounts.

Depreciation and Accretion

For the three months ended June 30, 2024, and 2023, depreciation and accretion expenses were $1.1 million and $1.3 million, respectively. For the six months ended June 30, 2024, and 2023, depreciation and accretion expenses were $2.1 million and $2.5 million, respectively. These expenses decreased for the three and six months ended June 30, 2024, compared to the same periods in 2023 primarily due to decreases in asset retirement costs.

Severance and Restructuring

For the three and six months ended June 30, 2024, we incurred severance and restructuring expenses of $0.3 million and $0.8 million, respectively, primarily related to early termination for the lease of our corporate headquarters in Alexandria, Virginia in September 2023 as a result of our continuous efforts to optimize costs. No significant severance and restructuring expenses were incurred for the three and six months ended June 30, 2023.

Income Taxes

Provision for income taxes was $1.4 million and $1.7 million for the three months ended June 30, 2024 and 2023, respectively. Provision for income taxes was $2.3 million and $3.6 million for the six months ended June 30, 2024 and 2023, respectively. Provision for income taxes changed for the three and six months ended June 30, 2024 compared to the same periods in 2023, primarily due to the effect of the anticipated annual effective tax rate change resulting from certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of June 30, 2024, we held cash and cash equivalents of $23.9 million. The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. The Company maintains a majority of its cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations.

Cash Sources

Our primary sources of liquidity have been our cash flows generated from operations and existing cash and cash equivalents. We maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short term (next 12 months) and long term (beyond 12 months). At any point in time, we maintain approximately $5.0 million to $10.0 million in our operating accounts at third-party financial institutions. While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

Cash Uses

We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and repurchases of our common stock. We may also consider using cash to fund or complete opportunistic investments and acquisitions that we believe will provide a measure of growth or revenue stability while supporting our existing operations.

With the successful completion of the restructuring plan and our ongoing efforts to stabilize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods. In February 2022, the Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. This repurchase authority allows us, at management's discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.

Cash Flows Overview

In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce or eliminate our cash dividends to stockholders, not repurchase shares of our common stock under the share repurchase program, sell assets or seek additional financing. We can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that outside financing would be available on acceptable terms.

Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at June 30, 2024, should be adequate to meet our anticipated cash requirements for the short term (next 12 months) and long term (beyond 12 months).

The following table sets forth information on our net cash flows from operating, investing, and financing activities for the periods stated:


	Six Months Ended June 30,				Change
(Dollars in thousands)	2024		2023

Net cash provided by operating activities	$	9,420	$	11,198	$	(1,778)
Net cash used in investing activities	(1,516)		(1,815)		299
Net cash used in financing activities	(16,012)		(14,318)		(1,694)

Operating Activities

As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements. Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses.

For the six months ended June 30, 2024, net cash provided by operating activities was $9.4 million, a decrease of $1.8 million compared to the six months ended June 30, 2023. This decrease was primarily driven by net income of $7.7 million and non-cash items such as depreciation and accretion of $2.1 million, deferred income tax expense of $2.3 million and stock-based compensation of $2.3 million partially offset by, accounts payable, accrued liabilities and other of $3.0 million and deferred revenue of $1.2 million.

For the six months ended June 30, 2023, net cash provided by operating activities was $11.2 million, primarily driven by net income of $7.9 million, accounts receivable of $1.2 million and non-cash items such as depreciation and accretion of $2.5 million, deferred income tax expense of $3.6 million and stock-based compensation of $1.9 million. These increases were partially offset by accounts payable, accrued liabilities and other of $1.7 million and deferred revenue of $3.3 million.

Investing Activities

For the six months ended June 30, 2024, and 2023, net cash used in investing activities was $1.5 million and $1.8 million, respectively. Net cash used in investing activities reflects purchases of property and equipment.

Financing Activities

For the six months ended June 30, 2024, and 2023, net cash used in financing activities was $16.0 million and $14.3 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.

On July 24, 2024, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of August 19, 2024, and a payment date of September 9, 2024. This cash dividend of approximately $6.3 million, applicable to our common stock outstanding, will be paid from available cash on hand.

Commitments and Contingencies

In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Purchase obligations are defined as agreements to purchase goods or services that are enforceable, legally binding, non-cancelable, have a remaining term in excess of one year and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of transactions. The amounts of such obligations are based on our contractual commitments, however, it is possible that we may be able to negotiate lower payments if we choose to exit these contracts before their expiration date.

Our contractual payment obligations for operating leases apply to leases for office space and transmitter locations. Substantially all of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

The Company evaluates contingencies on an ongoing basis and establishes loss provisions for matters in which losses are probable and the amount of loss can be reasonably estimated.

The following table provides the Company's significant commitments and contractual obligations as of June 30, 2024:


	Payments Due by Period
(Dollars in thousands)	Total		1 year or less		1 to 3 years		3 to 5 years		More than 5 years

Operating lease obligations	$	11,709	$	2,390	$	5,038	$	2,849	$	1,432
Unconditional purchase obligations	5,888		2,184		3,182		522		—
Total contractual obligations	$	17,597	$	4,574	$	8,220	$	3,371	$	1,432

Refer to Note 6, "Leases" and Note 12, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for further discussion on our commitments and contingencies.

Related Party Transactions

See Note 13, "Related Parties" in the Notes to Condensed Consolidated Financial Statements for a discussion regarding our related party transactions.

Critical Accounting Policies and Estimates

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and goodwill, accounts receivable, revenue recognition, depreciation expense, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to the critical accounting policies reported in the 2023 Annual Report that affect our significant judgments and estimates used in the preparation of our Condensed Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of June 30, 2024, we had no outstanding debt and no revolving credit facility.

Foreign Currency Exchange Rate Risk

We conduct a limited amount of business outside the United States. The financial impact of transactions billed in foreign currencies is immaterial to our financial results and, consequently, we do not have any material exposure to the risk of foreign currency exchange rate fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the participation of our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Disclosure controls and procedures are defined under Rule 13a-15(e) under the Exchange Act as controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes made to the Company’s internal control over financial reporting during the three months ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 12, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

The risk factors included in “Item 1A – Risk Factors” of Part I of the 2023 Annual Report have not materially changed during the six months ended June 30, 2024.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not repurchase any shares of its common stock during the three months ended June 30, 2024.

ITEM 5. OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

During the three months ended June 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

2024 Annual Meeting Results

On July 23, 2024, the Company held its 2024 Annual Meeting of Stockholders (the “Annual Meeting”). There were 20,255,615 shares of common stock eligible to vote, of which 16,495,626 shares were represented in person (virtually) or by proxy at the Annual Meeting. The purpose of the Annual Meeting was to elect six directors, to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2024, and to approve, on an advisory basis, the compensation of the Company’s named executive officers (“NEOs”).

As reported in the tables below, six directors were elected to hold office until the next annual meeting and until their respective successors have been elected or appointed, Grant Thornton LLP was ratified as the Company's independent registered public accounting firm for the year ending December 31, 2024, and the compensation of the Company's NEOs was approved, on a non-binding advisory basis.

The voting results for the items acted upon at the Annual Meeting were as follows:


	Vote For	Vote Against	Abstentions	Broker Non-Votes

Election of Directors
Bobbie Byrne	11,942,293	386,599	30,663	4,136,071
Christine M. Cournoyer	12,136,802	193,228	29,525	4,136,071
Randy Hyun	12,228,008	99,734	31,813	4,136,071
Vincent D. Kelly	11,840,806	488,362	30,387	4,136,071
Brett Shockley	12,119,335	208,710	31,510	4,136,071
Todd Stein	11,832,120	497,092	30,343	4,136,071

Ratification of the Appointment of Grant Thornton LLP	16,174,815	273,735	47,076	—

Advisory Vote to Approve NEO Compensation	11,263,626	947,441	148,488	4,136,071

ITEM 6. EXHIBITS

The exhibits listed in the accompanying Exhibit Index below are filed or incorporated by reference as part of this report.

EXHIBIT INDEX

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit/Appendix

Filing Date

Filed/Furnished Herewith

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Furnished

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

Furnished

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema*

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation*

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition*

Filed

101.LAB

Inline XBRL Taxonomy Extension Labels*

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation*

Filed

104

Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101

Filed


*			The financial information contained in these XBRL documents is unaudited.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SPOK HOLDINGS, INC.

Dated: July 25, 2024

/s/ Calvin C. Rice

Name:

Calvin C. Rice

Title:

Chief Financial Officer

(Principal Financial Officer and duly authorized officer)

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Date	Price Target	Rating	Analyst
9/26/2024	$15.00	Neutral	B. Riley Securities
12/19/2022	$15.00	Buy	Lake Street
9/23/2022	$14.00	Buy	Lake Street

SEC Form 10-Q filed by Spok Holdings Inc.

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Spok Reports Third Quarter 2024 Results

Spok Customers Highlighted on U.S. News & World Report's Children's Best Hospitals Honor Roll

Spok Sets Date to Report Third Quarter 2024 Results

$SPOK Financials

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Spok Reports Third Quarter 2024 Results

Spok Sets Date to Report Third Quarter 2024 Results

Spok Reports Second Quarter 2024 Results

$SPOK Leadership Updates

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Spok Announces 2021 Annual Meeting Results

Spok Reports 2020 Fourth Quarter and Full Year Operating Results

$SPOK Insider Trading

Insider transactions reveal critical sentiment about the company from key stakeholders. See them live in this feed.

Director Byrne Barbara Peterson was granted 1,660 shares, increasing direct ownership by 5% to 33,821 units (SEC Form 4)

Director Stein Todd J was granted 1,660 shares, increasing direct ownership by 5% to 38,233 units (SEC Form 4)

Director Shockley Brett A was granted 1,660 shares, increasing direct ownership by 6% to 28,107 units (SEC Form 4)

$SPOK Large Ownership Changes

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Amendment: SEC Form SC 13G/A filed by Spok Holdings Inc.

SEC Form SC 13G/A filed by Spok Holdings Inc. (Amendment)

SEC Form SC 13G/A filed by Spok Holdings Inc. (Amendment)

$SPOK SEC Filings

Spok Holdings Inc. filed SEC Form 8-K: Regulation FD Disclosure, Financial Statements and Exhibits

SEC Form 10-Q filed by Spok Holdings Inc.

Spok Holdings Inc. filed SEC Form 8-K: Results of Operations and Financial Condition, Other Events, Financial Statements and Exhibits

$SPOK Market Insights

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$SPOK Insider Purchases

Insider purchases reveal critical bullish sentiment about the company from key stakeholders. See them live in this feed.

Spok Sees FY24 Revenue $136M-$144M Vs $140.074M Est.

Spok Holdings Q2 2024 GAAP EPS $0.17 Misses $0.19 Estimate, Sales $33.982M Miss $34.310M Estimate

Spok Holdings shares are trading lower after the company reported worse-than-expected Q1 GAAP EPS results.

Byrne Barbara Peterson bought $159,627 worth of shares (10,000 units at $15.96), increasing direct ownership by 43% to 33,246 units (SEC Form 4)

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