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Spok Reports Second Quarter Operating Results; Board Declares Regular Quarterly Dividend

Spok Holdings, Inc. (NASDAQ: SPOK), formerly USA Mobility, Inc., a global leader in critical communications, today announced operating results for the second quarter ended June 30, 2014. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2014 to stockholders of record on August 19, 2014.

Consolidated revenue for the second quarter was $49.1 million, compared to $52.3 million in the second quarter of 2013. Software revenue was $15.6 million versus $14.5 million in the year-earlier quarter. Wireless revenue was $33.5 million in the second quarter, compared to $37.8 million in the second quarter of 2013.

Second quarter EBITDA (earnings before interest, taxes, depreciation, amortization and accretion) totaled $11.7 million, or 23.9 percent of revenue, compared to $15.7 million, or 30.1 percent of revenue, in the year-earlier quarter.

Net income for the second quarter was $4.3 million, or $0.19 per fully diluted share, compared to $6.8 million, or $0.31 per fully diluted share, in the second quarter of 2013.

Key results and highlights for the second quarter included:

  • Bookings for the second quarter increased to $19.0 million from $15.6 million in the year-earlier quarter, achieving a record high.
  • Backlog totaled $40.2 million at June 30, 2014, compared to $39.6 million a year earlier.
  • Of the $15.6 million in second quarter Software revenue, $8.1 million was operations revenue and $7.5 million was maintenance revenue, compared to $7.6 million and $6.9 million, respectively, of the $14.5 million in Software revenue for second quarter of 2013.
  • The renewal rate for software maintenance in the second quarter was 99.5 percent.
  • The quarterly rate of Wireless revenue erosion improved to 2.4 percent from 2.6 percent in the second quarter of 2013, while the annual rate of revenue erosion improved to 11.3 percent from 11.7 percent in the year-earlier quarter.
  • Net paging unit losses were 28,000 in the second quarter versus 35,000 in the second quarter of 2013. The quarterly rate of unit erosion improved to 2.1 percent versus 2.4 percent a year earlier. Units in service at June 30, 2014 totaled 1,299,000, compared to 1,445,000 a year earlier.
  • Total paging ARPU (average revenue per unit) was $7.98 in the second quarter, compared to $8.22 in the year-earlier quarter.
  • Operating expenses (excluding depreciation, amortization and accretion) totaled $37.4 million in the second quarter, compared to $36.5 million in the year-earlier quarter.
  • Capital expenses were $2.4 million, compared to $2.9 million in the second quarter of 2013.
  • The number of full-time equivalent employees at June 30, 2014 totaled 615, compared to 659 at June 30, 2013.
  • Dividends paid to stockholders totaled $2.7 million in the second quarter.
  • The Company’s cash balance at June 30, 2014 was $97.0 million.

Vincent D. Kelly, president and chief executive officer, said: “The Company continued to make excellent progress during the quarter. We achieved or exceeded our expectations on nearly all performance measures and continued the positive momentum we established in recent quarters. Software revenue increased from the year-earlier quarter, bookings reached an all-time high, and our backlog remained near-record levels at mid-year. In addition, we met our goals for Wireless revenue, gross pager placements, and unit churn. At the same time, we continued to operate profitably, expand our market reach and product offerings, strengthen our balance sheet, and generate sufficient cash flow to again return capital to stockholders in the form of cash dividends.”

Kelly added: “We also announced our new corporate name – Spok, (pronounced “spoke”) – in early July as part of a rebranding initiative that we believe better reflects our evolving identity as a global leader in critical communications. Our new corporate identity under the brand Spok represents a fresh start for our organization after completing the consolidation of our Software and Wireless operations earlier this year. While we realize a brand strategy evolves over time, we are pleased with the positive response we’ve received to the name change from inside and outside the Company.”

Commenting on Software revenue, Kelly said: “Compared to the second quarter of 2013, operations revenue grew 6.5 percent, maintenance revenue increased 8.4 percent, and total Software revenue of $15.6 million was up 7.4 percent. The increase in operations revenue primarily reflected growing deliveries of software, hardware and professional services while higher maintenance revenue reflected our continued renewal rates in excess of 99 percent.”

Kelly also noted that record high bookings for the second quarter included sales to both new and existing customers. “Demand was particularly strong for upgrades and installations of call center solutions, with one large health system, for example, adding new applications for its solutions suite to increase patient safety, improve nursing workflows and enhance overall operational efficiencies. Customer demand also remained strong for such software solutions as critical smartphone communications, secure texting, emergency management, and clinical alerting. Beyond healthcare, the public safety sector also showed solid growth with 19 new contracts signed during the quarter.”

Overall, Kelly added, “Software sales continued to be strongest in North America. However, our sales team also recorded an increasing number of contracts with international customers while continuing to build a solid pipeline of new business leads throughout both national and international markets.”

Spok’s Wireless sales efforts during the quarter continued to focus primarily on the core market segments of Healthcare, Government and Large Enterprise. “These core segments represented approximately 93.0 percent of our direct subscriber base and 89.7 percent of our direct paging revenue at the end of the quarter,” Kelly said. “Healthcare comprised 76.2 percent of our direct subscriber base at June 30 and continued to be our best performing market segment with the highest rate of gross placements (4.5 percent) and lowest level of unit disconnects (0.8 percent). Although competition remains strong for all Wireless services, we are pleased the vast majority of our customers continue to recognize the reliability and cost advantages of paging for their critical messaging needs.”

Kelly also noted that Spok’s Software and Wireless sales representatives continued to collaborate on numerous sales initiatives during the second quarter, resulting in 11 new cross-selling accounts.

Shawn E. Endsley, chief financial officer, said second quarter results were largely in line with the Company’s expectations. “Strong revenue from both Wireless and Software, along with continued expense management, enabled us to maintain solid operating cash flow, EBITDA and operating margins,” he noted. “In addition, we again improved our balance sheet, recording a cash balance of $97 million at June 30. While we continue to operate as a debt-free company, we still have approximately $40 million in available borrowing capacity through our existing credit facility for investment opportunities.”

Endsley added that the Company is maintaining its previously announced financial guidance for 2014, which projects total revenue to range from $183 million to $201 million, operating expenses (excluding depreciation, amortization and accretion) to range from $147 million to $156 million, and capital expenses to range from $7 million to $9 million.

* * * * * * * * *

Spok plans to host a conference call for investors on its second quarter operating results at 10:00 a.m. Eastern Time on Thursday, July 31, 2014. Dial-in numbers for the call are 719-325-2402 or 888-430-8691. The pass code for the call is 6085888. A replay of the call will be available from 12:30 p.m. ET on July 31 until 12:30 p.m. on Thursday, August 14. Replay numbers are 719-457-0820 or 888-203-1112. The pass code for the replay is 6085888.

* * * * * * * * *

About Spok

Spok Holdings, Inc., headquartered in Springfield, Va., is proud to be a leader in critical communications for healthcare, government, public safety, and other industries. We deliver smart, reliable solutions to help protect the health, well-being, and safety of people around the globe. More than 125,000 organizations worldwide rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. When communications matter, Spok delivers. Visit us at spok.com or find us on Twitter @Spoktweets.

Safe Harbor Statement under the Private Securities Litigation Reform Act: Statements contained herein or in prior press releases which are not historical fact, such as statements regarding Spok’s future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that may cause Spok’s actual results to be materially different from the future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from those expectations include, but are not limited to, declining demand for paging products and services, continued demand for our software products and services, our ability to develop additional software solutions for our customers and manage our development as a global organization, the ability to manage operating expenses, future capital needs, competitive pricing pressures, competition from both traditional paging services and other wireless communications services, competition from other software providers, government regulation, reliance upon third-party providers for certain equipment and services, as well as other risks described from time to time in our periodic reports and other filings with the Securities and Exchange Commission. Although Spok believes the expectations reflected in the forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Spok disclaims any intent or obligation to update any forward-looking statements.

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
               
For the three months ended For the six months ended

6/30/2014

6/30/2013

6/30/2014

6/30/2013

Revenue:
Wireless $ 33,518 $ 37,771 $ 67,869 $ 76,550
Software   15,576     14,497     31,344     28,848  
Total revenue   49,094     52,268     99,213     105,398  
Operating expenses:
Cost of revenue 7,180 6,961 13,985 13,628
Service, rental and maintenance 11,420 12,018 23,212 24,209
Selling and marketing 7,780 6,538 15,026 12,932
General and administrative 10,990 11,022 23,125 23,353
Severance and restructuring 4 2 24 2
Depreciation, amortization and accretion   4,352     3,822     8,381     7,629  
Total operating expenses   41,726     40,363     83,753     81,753  
% of total revenue 85.0 % 77.2 % 84.4 % 77.6 %
Operating income 7,368 11,905 15,460 23,645
% of total revenue 15.0 % 22.8 % 15.6 % 22.4 %
Interest expense, net (64 ) (64 ) (131 ) (128 )
Other (expense) income, net   (194 )   (75 )   (178 )   6  
Income before income tax expense 7,110 11,766 15,151 23,523
Income tax expense   (2,819 )   (4,938 )   (5,970 )   (9,770 )
Net income $ 4,291   $ 6,828   $ 9,181   $ 13,753  
Basic net income per common share $ 0.20   $ 0.32   $ 0.42   $ 0.63  
Diluted net income per common share $ 0.19   $ 0.31   $ 0.42   $ 0.63  
Basic weighted average common shares outstanding   21,642,163     21,644,281     21,640,191     21,666,096  
Diluted weighted average common shares outstanding   22,099,791     21,827,149     22,073,254     21,921,742  
Reconciliation of operating income to EBITDA (b):
Operating income $ 7,368 $ 11,905 $ 15,460 $ 23,645
Add back: depreciation, amortization and accretion   4,352     3,822     8,381     7,629  
EBITDA $ 11,720   $ 15,727   $ 23,841   $ 31,274  
% of total revenue 23.9 % 30.1 % 24.0 % 29.7 %
Key statistics:
Units in service 1,299 1,445 1,299 1,445
Average revenue per unit (ARPU) $ 7.98 $ 8.22 $ 8.02 $ 8.24
Bookings $ 18,959 $ 15,626 $ 35,880 $ 29,879
Backlog $ 40,182 $ 39,576 $ 40,182 $ 39,576
 

(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (a)
(Unaudited and in thousands except share, per share amounts and ARPU)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Revenue:
Wireless $ 33,518 $ 34,351 $ 35,831 $ 37,067 $ 37,771 $ 38,779
Software   15,576     15,768     18,854     12,602     14,497     14,351  
Total revenue   49,094     50,119     54,685     49,669     52,268     53,130  
Operating expenses:
Cost of revenue 7,180 6,805 7,500 6,787 6,961 6,667
Service, rental and maintenance 11,420 11,792 11,442 11,820 12,018 12,191
Selling and marketing 7,780 7,246 7,297 6,388 6,538 6,394
General and administrative 10,990 12,135 11,470 11,282 11,022 12,331
Severance and restructuring 4 20 981 2
Depreciation, amortization and accretion   4,352     4,029     3,680     3,858     3,822     3,807  
Total operating expenses   41,726     42,027     42,370     40,135     40,363     41,390  
% of total revenue 85.0 % 83.9 % 77.5 % 80.8 % 77.2 % 77.9 %
Operating income 7,368 8,092 12,315 9,534 11,905 11,740
% of total revenue 15.0 % 16.1 % 22.5 % 19.2 % 22.8 % 22.1 %
Interest expense, net (64 ) (67 ) (64 ) (68 ) (64 ) (64 )
Other (expense) income, net   (194 )   16     15     84     (75 )   81  
Income before income tax expense 7,110 8,041 12,266 9,550 11,766 11,757
Income tax expense   (2,819 )   (3,151 )   (4,251 )   (3,788 )   (4,938 )   (4,832 )
Net income $ 4,291   $ 4,890   $ 8,015   $ 5,762   $ 6,828   $ 6,925  
Basic net income per common share $ 0.20   $ 0.23   $ 0.37   $ 0.27   $ 0.32   $ 0.32  
Diluted net income per common share $ 0.19   $ 0.22   $ 0.36   $ 0.26   $ 0.31   $ 0.32  
Basic weighted average common shares outstanding   21,642,163     21,638,198     21,633,706     21,629,289     21,644,281     21,688,153  
Diluted weighted average common shares outstanding   22,099,791     22,037,796     21,969,756     21,919,238     21,827,149     21,904,862  
Reconciliation of operating income to EBITDA (b):
Operating income $ 7,368 $ 8,092 $ 12,315 $ 9,534 $ 11,905 $ 11,740
Add back: depreciation, amortization and accretion   4,352     4,029     3,680     3,858     3,822     3,807  
EBITDA $ 11,720   $ 12,121   $ 15,995   $ 13,392   $ 15,727   $ 15,547  
% of total revenue 23.9 % 24.2 % 29.2 % 27.0 % 30.1 % 29.3 %
Key statistics:
Units in service 1,299 1,327 1,376 1,408 1,445 1,480
Average revenue per unit (ARPU) $ 7.98 $ 8.11 $ 8.15 $ 8.22 $ 8.22 $ 8.25
Bookings $ 18,959 $ 16,921 $ 16,271 $ 17,302 $ 15,626 $ 14,253
Backlog $ 40,182 $ 41,396 $ 40,211 $ 43,831 $ 39,576 $ 40,183
 

(a) Slight variations in totals are due to rounding.
(b) EBITDA or earnings before interest, taxes, depreciation, amortization and accretion is a non-GAAP measure and is presented for analytical purposes only.

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)
       

6/30/2014

12/31/2013

(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 97,035 $ 89,075
Accounts receivable, net 22,964 18,084
Prepaid expenses and other 6,681 7,399
Inventory 2,070 2,221
Deferred income tax assets, net   3,389   3,389
Total current assets 132,139 120,168
Property and equipment, net 20,936 21,122
Goodwill 133,031 133,031
Other intangible assets, net 22,653 25,368
Deferred income tax assets, net 20,542 25,494
Other assets   1,586   1,715
Total assets $ 330,887 $ 326,898
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities $ 9,796 $ 9,885
Accrued compensation and benefits 11,287 13,919
Deferred revenue   24,571   23,023
Total current liabilities 45,654 46,827
Deferred revenue 645 862
Other long-term liabilities   9,231   9,259
Total liabilities   55,530   56,948
Commitments and contingencies
Stockholders' equity:
Preferred stock
Common stock 2 2
Additional paid-in capital 128,988 127,264
Retained earnings   146,367   142,684
Total stockholders' equity   275,357   269,950
Total liabilities and stockholders' equity $ 330,887 $ 326,898
 

(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (a)
(Unaudited and in thousands)
       
For the six months ended

6/30/2014

6/30/2013

Cash flows from operating activities:
Net income $ 9,181 $ 13,753
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion 8,381 7,629
Amortization of deferred financing costs 129 129
Deferred income tax expense 4,952 8,849
Amortization of stock based compensation 1,710 1,254
Provisions for doubtful accounts, service credits and other 597 833
Adjustments of non-cash transaction taxes (229 ) (251 )
Loss on disposals of property and equipment 3 167
Changes in assets and liabilities:
Accounts receivable (5,478 ) 2,812
Prepaid expenses and other assets 850 (367 )
Accounts payable, accrued liabilities and accrued compensation and benefits (3,076 ) (7,578 )
Customer deposits and deferred revenue   1,331     (4,088 )
Net cash provided by operating activities   18,351     23,142  
Cash flows from investing activities:
Purchases of property and equipment (5,036 ) (5,268 )
Proceeds from disposals of property and equipment   59     9  
Net cash used in investing activities   (4,977 )   (5,259 )
Cash flows from financing activities:
Cash dividends to stockholders   (5,414 )   (6,900 )
Net cash used in financing activities   (5,414 )   (6,900 )
Net increase in cash and cash equivalents 7,960 10,983
Cash and cash equivalents, beginning of period   89,075     61,046  
Cash and cash equivalents, end of period $ 97,035   $ 72,029  
Supplemental disclosure:
Interest paid $ 3   $ 6  
Income taxes paid $ 884   $ 831  
 

(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.

CONSOLIDATED OPERATING EXPENSES
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Cost of revenue
Payroll and related $ 3,827 $ 3,959 $ 3,609 $ 3,744 $ 3,743 $ 3,709
Cost of sales 2,232 1,917 2,726 1,992 2,133 1,890
Stock based compensation 81 81 74 64 49 49
Other   1,040     848   1,091     987   1,036   1,019
Total cost of revenue   7,180     6,805   7,500     6,787   6,961   6,667
Service, rental and maintenance
Site rent 3,981 4,015 3,972 4,142 4,237 4,235
Telecommunications 1,669 1,736 1,751 1,832 1,885 1,889
Payroll and related 4,434 4,594 4,296 4,577 4,589 4,698
Stock based compensation (17 ) 39 32 59 20 20
Other   1,353     1,408   1,391     1,210   1,287   1,349
Total service, rental and maintenance   11,420     11,792   11,442     11,820   12,018   12,191
Selling and marketing
Payroll and related 4,099 4,098 3,717 3,917 3,919 3,840
Commissions 2,087 1,952 2,162 1,310 1,519 1,387
Stock based compensation 131 131 (24 ) 122 119 119
Other   1,463     1,065   1,442     1,039   981   1,048
Total selling and marketing   7,780     7,246   7,297     6,388   6,538   6,394
General and administrative
Payroll and related 4,440 4,796 4,802 4,696 5,074 5,414
Stock based compensation 429 835 763 701 440 438
Bad debt 134 86 262 274 265 275
Facility rent 899 922 719 883 839 844
Telecommunications 399 395 420 388 343 375
Outside services 1,719 1,762 1,811 1,927 1,606 2,560
Taxes, licenses and permits 1,383 1,064 1,358 1,106 1,166 1,233
Other   1,587     2,275   1,335     1,307   1,289   1,192
Total general and administrative   10,990     12,135   11,470     11,282   11,022   12,331
Severance and restructuring 4 20 981 2
Depreciation, amortization and accretion   4,352     4,029   3,680     3,858   3,822   3,807
Operating expenses $ 41,726   $ 42,027 $ 42,370   $ 40,135 $ 40,363 $ 41,390
Capital expenditures $ 2,393 $ 2,643 $ 2,636 $ 2,504 $ 2,927 $ 2,341
 

(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.

UNITS IN SERVICE ACTIVITY (a)
(Unaudited and in thousands)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Paging units in service

Beginning units in service
Direct one-way 1,200 1,246 1,275 1,307 1,324 1,346
Direct two-way 69   69   70   73   73   75  
Total direct 1,269   1,315   1,345   1,380   1,397   1,421  
Indirect one-way 30 34 35 36 38 48
Indirect two-way 28   27   28   29   45   46  
Total indirect 58   61   63   65   83   94  
Total beginning units in service 1,327   1,376   1,408   1,445   1,480   1,515  
Gross placements
Direct one-way 48 34 32 40 49 39
Direct two-way 2   4   3   3   5   3  
Total direct 50   38   35   43   54   42  
Indirect one-way 1 1 1 1 1
Indirect two-way   1          
Total indirect 1   1   1   1   1   1  
Total gross placements 51   39   36   44   55   43  
Gross disconnects
Direct one-way (69 ) (80 ) (61 ) (72 ) (66 ) (61 )
Direct two-way (7 ) (4 ) (4 ) (6 ) (5 ) (5 )
Total direct (76 ) (84 ) (65 ) (78 ) (71 ) (66 )
Indirect one-way (2 ) (4 ) (2 ) (2 ) (3 ) (11 )
Indirect two-way (1 )   (1 ) (1 ) (16 ) (1 )
Total indirect (3 ) (4 ) (3 ) (3 ) (19 ) (12 )
Total gross disconnects (79 ) (88 ) (68 ) (81 ) (90 ) (78 )
Net loss
Direct one-way (21 ) (46 ) (29 ) (32 ) (17 ) (22 )
Direct two-way (5 )   (1 ) (3 )   (2 )
Total direct (26 ) (46 ) (30 ) (35 ) (17 ) (24 )
Indirect one-way (1 ) (4 ) (1 ) (1 ) (2 ) (10 )
Indirect two-way (1 ) 1   (1 ) (1 ) (16 ) (1 )
Total indirect (2 ) (3 ) (2 ) (2 ) (18 ) (11 )
Total net change (28 ) (49 ) (32 ) (37 ) (35 ) (35 )
Ending units in service
Direct one-way 1,179 1,200 1,246 1,275 1,307 1,324
Direct two-way 64   69   69   70   73   73  
Total direct 1,243   1,269   1,315   1,345   1,380   1,397  
Indirect one-way 29 30 34 35 36 38
Indirect two-way 27   28   27   28   29   45  
Total indirect 56   58   61   63   65   83  
Total ending units in service 1,299   1,327   1,376   1,408   1,445   1,480  
 

(a) Slight variations in totals are due to rounding.

 

SPOK HOLDINGS, INC.

AVERAGE REVENUE PER UNIT (ARPU) AND CHURN (a)
(Unaudited)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Paging ARPU

Direct one-way $ 7.48 $ 7.59 $ 7.60 $ 7.64 $ 7.67 $ 7.73
Direct two-way   18.21     18.91     19.43     19.93     19.95     20.41  
Total direct 8.06 8.19 8.23 8.29 8.33 8.40
Indirect one-way 8.18 8.22 8.68 8.90 8.97 8.22
Indirect two-way   4.45     4.32     3.97     3.97     3.89     3.76  
Total indirect 6.39 6.37 6.47 6.57 6.31 5.85
Total one-way 7.50 7.60 7.63 7.68 7.71 7.74
Total two-way   14.22     14.70     14.90     15.20     14.40     13.96  
Total paging ARPU $ 7.98   $ 8.11   $ 8.15   $ 8.22   $ 8.22   $ 8.25  

Gross disconnect rate (b)

Direct one-way (5.7 )% (6.4 )% (4.7 )% (5.6 )% (5.0 )% (4.6 )%
Direct two-way   (10.5 )%   (5.6 )%   (6.4 )%   (7.9 )%   (6.7 )%   (6.6 )%
Total direct (6.0 )% (6.4 )% (4.8 )% (5.7 )% (5.1 )% (4.7 )%
Indirect one-way (6.8 )% (8.2 )% (6.1 )% (6.3 )% (7.4 )% (23.6 )%
Indirect two-way   (2.7 )%   (2.3 )%   (5.7 )%   (4.8 )%   (34 )%   (1.6 )%
Total indirect (4.8 )% (5.5 )% (5.9 )% (5.6 )% (22.3 )% (12.5 )%
Total one-way (5.8 )% (6.5 )% (4.8 )% (5.6 )% (5.1 )% (5.2 )%
Total two-way   (8.3 )%   (4.7 )%   (6.2 )%   (7.0 )%   (17.3 )%   (4.7 )%
Total paging gross disconnect rate   (5.9 )%   (6.3 )%   (4.9 )%   (5.7 )%   (6.1 )%   (5.2 )%

Net loss rate (c)

Direct one-way (1.9 )% (3.7 )% (2.1 )% (2.5 )% (1.3 )% (1.7 )%
Direct two-way   (4.5 )%   (0.6 )%   (2.2 )%   (3.6 )%   (0.4 )%   (1.9 )%
Total direct (2.0 )% (3.5 )% (2.1 )% (2.5 )% (1.3 )% (1.7 )%
Indirect one-way (4.8 )% (6.3 )% (3.9 )% (3.3 )% (4.7 )% (21.8 )%
Indirect two-way   (2.2 )%   (1.9 )%   (4.9 )%   (4.1 )%   (33.7 )%   (1.3 )%
Total indirect (3.5 )% (4.2 )% (4.4 )% (3.6 )% (21.0 )% (11.5 )%
Total one-way (2.0 )% (3.7 )% (2.2 )% (2.5 )% (1.4 )% (2.4 )%
Total two-way   (3.8 )%   (1.0 )%   (3.0 )%   (3.8 )%   (13.3 )%   (1.6 )%
Total paging net loss rate   (2.1 )%   (3.5 )%   (2.2 )%   (2.6 )%   (2.4 )%   (2.3 )%
 

(a) Slight variations in totals are due to rounding.
(b) Gross disconnect rate is current period disconnected units divided by prior period ending units in service.
(c) Net loss rate is net current period placements and disconnected units in service divided by prior period ending units in service.

 

SPOK HOLDINGS, INC.

SUPPLEMENTAL INFORMATION BY MARKET SEGMENT (a)
(Unaudited)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Gross placement rate (b)
Healthcare 4.5 % 3.1 % 2.9 % 3.3 % 4.5 % 3.4 %
Government 2.6 % 1.9 % 1.5 % 1.7 % 2.3 % 1.6 %
Large enterprise 2.0 % 2.9 % 3.0 % 4.3 % 2.4 % 2.1 %
Other 2.2 % 2.1 % 1.7 % 2.0 % 1.5 % 1.8 %
Total direct 4.0 % 2.9 % 2.7 % 3.1 % 3.8 % 3.0 %
Total indirect 1.3 % 1.2 % 1.5 % 1.9 % 1.4 % 1.0 %
Total 3.9 % 2.8 % 2.7 % 3.1 % 3.7 % 2.9 %
Gross disconnect rate (b)
Healthcare (5.3 )% (6.5 )% (4.5 )% (5.2 )% (4.4 )% (3.9 )%
Government (7.6 )% (5.6 )% (4.7 )% (7.9 )% (7.1 )% (5.9 )%
Large enterprise (8.9 )% (5.4 )% (6.4 )% (6.0 )% (6.7 )% (7.0 )%
Other (7.7 )% (6.5 )% (6.5 )% (6.5 )% (7.4 )% (7.3 )%
Total direct (6.0 )% (6.4 )% (4.8 )% (5.7 )% (5.1 )% (4.7 )%
Total indirect (4.8 )% (5.5 )% (5.9 )% (5.6 )% (22.3 )% (12.5 )%
Total (5.9 )% (6.3 )% (4.9 )% (5.7 )% (6.1 )% (5.2 )%
Net loss rate (b)
Healthcare (0.8 )% (3.5 )% (1.5 )% (1.9 )% % (0.5 )%
Government (5.0 )% (3.6 )% (3.2 )% (6.3 )% (4.6 )% (4.3 )%
Large enterprise (6.9 )% (2.5 )% (3.3 )% (1.6 )% (4.2 )% (4.9 )%
Other (5.5 )% (4.4 )% (4.8 )% (4.5 )% (5.9 )% (5.5 )%
Total direct (2.0 )% (3.5 )% (2.1 )% (2.5 )% (1.3 )% (1.7 )%
Total indirect (3.5 )% (4.2 )% (4.4 )% (3.6 )% (21 )% (11.5 )%
Total (2.1 )% (3.5 )% (2.2 )% (2.6 )% (2.4 )% (2.3 )%
End of period units in service % of total (b)
Healthcare 73.0 % 72.0 % 71.9 % 71.4 % 70.9 % 68.4 %
Government 8.3 % 8.6 % 8.6 % 8.8 % 9.1 % 10.1 %
Large enterprise 7.8 % 8.2 % 8.1 % 8.2 % 8.1 % 8.3 %
Other 6.6 % 6.8 % 7.0 % 7.1 % 7.3 % 7.6 %
Total direct 95.7 % 95.6 % 95.6 % 95.5 % 95.4 % 94.4 %
Total indirect 4.3 % 4.4 % 4.4 % 4.5 % 4.6 % 5.6 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
 

(a) Slight variations in totals are due to rounding.
(b) Changes in the classification of units in service are reflected in the quarter when such changes are identified. Such changes are then appropriately reflected in calculating the gross placement, gross disconnect and net loss rates.

 

SPOK HOLDINGS, INC.

SUPPLEMENTAL INFORMATION - DIRECT PAGING UNITS IN SERVICE AND
CELLULAR ACTIVATIONS (a)
(Unaudited)
                       
For the three months ended

6/30/2014

3/31/2014

12/31/2013

9/30/2013

6/30/2013

3/31/2013

Account size ending units in service (000's)
1 to 3 units 39 41 43 45 47 49
4 to 10 units 23 24 25 26 28 29
11 to 50 units 56 57 61 64 67 71
51 to 100 units 38 41 42 43 45 47
101 to 1,000 units 275 282 287 293 305 321
>1,000 units   812     824     857     874     888     880  
Total   1,243     1,269     1,315     1,345     1,380     1,397  
End of period units in service % of total direct
1 to 3 units 3.1 % 3.2 % 3.2 % 3.3 % 3.4 % 3.5 %
4 to 10 units 1.8 % 1.9 % 1.9 % 2.0 % 2.0 % 2.1 %
11 to 50 units 4.5 % 4.5 % 4.6 % 4.8 % 4.8 % 5.1 %
51 to 100 units 3.1 % 3.2 % 3.2 % 3.2 % 3.2 % 3.4 %
101 to 1,000 units 22.1 % 22.3 % 21.9 % 21.8 % 22.1 % 23.0 %
>1,000 units   65.4 %   64.9 %   65.2 %   64.9 %   64.5 %   62.9 %
Total   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %   100.0 %
Account size net loss rate
1 to 3 units (4.1 )% (4.9 )% (4.4 )% (4.6 )% (5.1 )% (4.8 )%
4 to 10 units (5.4 )% (4.1 )% (3.8 )% (5.3 )% (5.3 )% (6.0 )%
11 to 50 units (3.2 )% (5.3 )% (4.4 )% (3.9 )% (6.4 )% (4.8 )%
51 to 100 units (8.7 )% (1.2 )% (3.5 )% (2.8 )% (5.3 )% (4.0 )%
101 to 1,000 units (2.5 )% (1.7 )% (1.7 )% (4.0 )% (5.0 )% (3.9 )%
>1,000 units   (1.2 )%   (4.0 )%   (1.8 )%   (1.7 )%   1.1 %   (0.2 )%
Total   (2.0 )%   (3.5 )%   (2.1 )%   (2.5 )%   (1.3 )%   (1.7 )%
Account size ARPU
1 to 3 units $ 14.86 $ 14.96 $ 14.98 $ 15.13 $ 15.12 $ 15.22
4 to 10 units 14.12 14.22 14.29 14.38 14.29 14.33
11 to 50 units 12.00 12.07 11.96 12.06 11.96 12.06
51 to 100 units 10.18 10.27 10.34 10.66 10.42 10.47
101 to 1,000 units 8.58 8.76 8.89 8.85 8.84 8.84
>1,000 units   7.00     7.11     7.11     7.17     7.19     7.23  
Total $ 8.06   $ 8.19   $ 8.23   $ 8.29   $ 8.33   $ 8.40  
Cellular:
Number of activations   1,679     281     690     970     799     925  
Revenue from cellular services (000's) $ 278   $ 108   $ 129   $ 235   $ 163   $ 195  
 

(a) Slight variations in totals are due to rounding.

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