Spok Holdings, Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1

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8-K - 8-K - Spok Holdings, Inc	a2q188kpressrelease.htm



		Exhibit 99.1
NEWS RELEASE

CONTACT:

Al Galgano

952-567-0295

Al.Galgano@spok.com

Spok Reports 2018 Second Quarter Operating Results;

First Half Software Revenue Up 11 Percent from Prior Year, Company Maintains Full Year Guidance Levels

Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va. (July 25, 2018) - Spok Holdings, Inc. (NASDAQ: SPOK), the global leader in healthcare communications, today announced operating results for the second quarter and year-to-date period ended June 30, 2018. In addition, the Company’s Board of Directors declared a regular quarterly dividend of $0.125 per share, payable on September 10, 2018 to stockholders of record on August 17, 2018.

2018 Second-Quarter Results:

Consolidated revenue for the second quarter of 2018 under Generally Accepted Accounting Principles (“GAAP”) was $40.6 million compared to $42.3 million in the second quarter of 2017. On January 1, 2018, Spok adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Unless otherwise stated, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted, and continue to be reported in accordance with the Company’s historic accounting under ASC 605. As such, adjusted to exclude the adoption of ASC 606, consolidated revenue for the second quarter of 2018 was $41.8 million compared to the $42.3 million in the second quarter of 2017.



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	For the three months ended
(Dollars in thousands)	June 30, 2018		June 30, 2018⁽¹⁾		June 30, 2017		Change⁽²⁾ (%)
Wireless revenue
Paging revenue	$22,824		$	22,824	$	24,572	(7.1	)%
Product and other revenue	834		834		1,067		(21.8	)%
Total wireless revenue	$	23,658	$	23,658	$	25,639	(7.7	)%

Software revenue
Operations revenue	$	7,463	$	8,021	$	7,041	13.9	%
Maintenance revenue	9,507		10,115		9,645		4.9	%
Total software revenue	16,970		18,136		16,686		8.7	%
Total revenue	$	40,628	$	41,794	$	42,325	(1.3	)%

⁽¹⁾Adjusted to exclude the adoption of ASC 606.

⁽²⁾ As compared against results adjusted to exclude the adoption of ASC 606.

GAAP net loss for the second quarter of 2018 was $1.0 million, or $0.05 per share, compared to net income of $1.5 million, or $0.07 per share, in the second quarter of 2017.



	For the three months ended
(Dollars in thousands)	June 30, 2018			June 30, 2018⁽¹⁾		June 30, 2017
Net (loss) income	$	(976	)	$	36	$	1,498
Diluted net (loss) income per share	$	(0.05	)	$	0.00	$	0.07
EBITDA	$	519		$	1,559	$	5,261

⁽¹⁾Adjusted to exclude the adoption of ASC 606.

Other key results and highlights for the second quarter included:


•	Net paging unit losses were approximately 6,000 in the second quarter of 2018, down from approximately 19,000 in the first quarter of 2018 and consistent with second quarter 2017 levels.


•	The quarterly rate of wireless revenue erosion was 2.5 percent in the second quarter of 2018 versus 1.3 percent in the first quarter of 2018.


•	Total paging ARPU (average revenue per unit) was $7.41 in the second quarter of 2018, compared to $7.47 in the first quarter of 2018.


•	Software bookings for the 2018 second quarter were $18.5 million, an increase of 2.0 percent from the first quarter of 2018. Second quarter bookings included $9.4 million of operations bookings and $9.1 million of maintenance renewals.


•	Software backlog totaled $36.3 million at June 30, 2018, compared to $35.9 million in the first quarter of 2018.



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•	The revenue renewal rate for software maintenance in the second quarter of 2018 continued at greater than 99 percent.


•	Consolidated operating expenses (excluding depreciation, amortization and accretion) totaled $40.1 million in the second quarter of 2018, up slightly from $39.7 million in the first quarter of 2018.


•	Capital expenses were $2.3 million in the second quarter of 2018, compared to $1.2 million in the first quarter of 2018.


•	The number of full-time equivalent employees at June 30, 2018 totaled 607, compared to 604 at June 30, 2017.


•	Capital returned to stockholders in the second quarter of 2018 totaled $10.0 million, in the form of $2.5 million from dividends and $7.5 million from share repurchases.


•	The Company’s cash balance at June 30, 2018 was $94.1 million, down from $107.2 million at December 31, 2017.

2018 Year-To-Date Results:

Consolidated revenue for the first six months of 2018 was $83.7 million compared to $83.8 million in the first six months of 2017. As discussed above, unless otherwise stated, results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts have not been adjusted, and continue to be reported in accordance with the Company’s historic accounting under ASC 605. As such, adjusted to exclude the adoption of ASC 606, consolidated revenue for the first six months of 2018 was $84.3 million compared to the $83.8 million in the first six months of 2017.



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	For the six months ended
(Dollars in thousands)	June 30, 2018		June 30, 2018⁽¹⁾		June 30, 2017		Change⁽²⁾ (%)
Wireless revenue
Paging revenue	$46,132		$	46,132	$	49,544	(6.9	)%
Product and other revenue	1,795		1,795		1,955		(8.2	)%
Total wireless revenue	$	47,927	$	47,927	$	51,499	(6.9	)%

Software revenue
Operations revenue	$	16,934	$	16,210	$	13,082	23.9	%
Maintenance revenue	18,881		20,114		19,188		4.8	%
Total software revenue	35,815		36,324		32,270		12.6	%
Total revenue	$	83,742	$	84,251	$	83,769	0.6	%

⁽¹⁾Adjusted to exclude the adoption of ASC 606.

⁽²⁾ As compared against results adjusted to exclude the adoption of ASC 606.

GAAP net loss for the first six months of 2018 was $0.5 million, or $0.02 per share, compared to net income of $2.4 million, or $0.11 per share, in the first six months of 2017.



	For the six months ended
(Dollars in thousands)	June 30, 2018			June 30, 2018⁽¹⁾		June 30, 2017
Net (loss) income	$	(465	)	$	368	$	2,352
Diluted net (loss) income per share	$	(0.02	)	$	0.02	$	0.11
EBITDA	$	3,983		$	4,831	$	9,866

⁽¹⁾Adjusted to exclude the adoption of ASC 606.

Management Commentary:

“Our performance in the second quarter of 2018 was in line with our seasonal expectations. We believe our year-to-date results provide a solid base as we enter the typically more robust second half of the year” said Vincent D. Kelly, president and chief executive officer. “We saw strong performance in a number of key operating measures and sequential improvements in subscriber retention, sales bookings, backlog levels, and operating expense management. These improvements allowed us to return $10.0 million of capital to our stockholders in the form of dividends and share repurchases and enhance our product offerings through our continued investments in our integrated communication platform, Spok Care Connect®.”

Kelly also noted that in addition to the Company’s quarterly financial performance, Spok made progress in several other areas, including product development, sales strategy and key strategic partnership agreements. “During the quarter, we announced partnerships with industry-leading organizations, including Bernoulli®



Spok.com

Health, to enhance our clinical alarm management offering, and our participation in Zebra Technologies’ PartnerConnect channel partner program, to offer Zebra’s enterprise-class mobile devices to hospitals and health systems throughout North America. Last month, we strengthened our position as an industry thought leader with the release of the results of our eighth consecutive survey of mobile strategies in healthcare. Also, during the quarter we started working with 13 new customers. Finally, we continue to make significant progress in enhancing our Care Connect platform offering, adding experienced product and development leadership, staff and consulting resources.”

Michael W. Wallace, chief financial officer, said: “Continued expense management and strong financial discipline have allowed us to invest in our business for long-term growth. Our ability to align our expense base with the market demand we are seeing helped Spok to partially offset the additional expenses related to our investments in our sales and product platforms.”

Business Outlook:

For the full-year 2018, adjusted to exclude the adoption of ASC 606, the Company continues to expect total revenue to range from $161 million to $177 million, operating expenses (excluding depreciation, amortization and accretion) to range from $158 million to $165 million, and capital expenditures to range from $4 million to $8 million.

* * * * * * * * *

2018 Second-Quarter Call and Replay:

Spok plans to host a conference call for investors to discuss its 2018 second quarter results at 10:00 a.m. ET on Thursday, July 26, 2018. Dial-in numbers for the call are 334-323-0522 or 877-260-1479. The pass code for the call is 8594119. A replay of the call will be available from 1:00 p.m. ET on July 26, 2018 until 1:00 p.m. ET on Thursday, August 9, 2018. To listen to the replay, please register at http://tinyurl.com/Spok2018Q2earningsreplay. Please cut and paste this address into your browser, enter the registration information, and you will be given access to the replay.

* * * * * * * * *



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About Spok

Spok Holdings, Inc. (NASDAQ: SPOK), headquartered in Springfield, Va., 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 the Spok Care Connect® platform to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our customers send over 100 million messages each month through their Spok® solutions. When seconds count, count on Spok. For more information, visit spok.com or follow @spoktweets on Twitter.

Spok is a trademark of Spok Holdings, Inc. Spok Care Connect and Spok Mobile are trademarks of Spok, Inc.

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, unauthorized breaches or failures in cybersecurity measures adopted by us and/or included in our products 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.

Tables to Follow



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
	6/30/2018			6/30/2017			6/30/2018			6/30/2017
Revenue:
Wireless	$	23,658		$	25,639		$	47,927		$	51,499
Software	16,970			16,686			35,815			32,270
Total revenue	40,628			42,325			83,742			83,769
Operating expenses:
Cost of revenue	7,400			7,190			15,133			14,226
Research and development	6,177			4,662			11,912			8,767
Service, rental and maintenance	7,698			7,944			15,448			16,010
Selling and marketing	6,093			5,329			12,562			11,251
General and administrative	12,741			11,939			24,704			23,649
Depreciation, amortization and accretion	2,669			2,851			5,382			6,074
Total operating expenses	42,778			39,915			85,141			79,977
% of total revenue	105.3		%	94.3		%	101.7		%	95.5		%
Operating (loss) income	(2,150		)	2,410			(1,399		)	3,792
% of total revenue	(5.3		)%	5.7		%	(1.7		)%	4.5		%
Interest income	342			154			625			276
Other income	102			89			54			58
(Loss) income before income taxes	(1,706		)	2,653			(720		)	4,126
Benefit from (provision for) income taxes	730			(1,155		)	255			(1,774		)
Net (loss) income	$	(976	)	$	1,498		$	(465	)	$	2,352
Basic net (loss) income per common share	$	(0.05	)	$	0.07		$	(0.02	)	$	0.12
Diluted net (loss) income per common share	(0.05		)	0.07			(0.02		)	0.11
Basic weighted average common shares outstanding	19,750,941			20,353,801			19,888,606			20,441,781
Diluted weighted average common shares outstanding	19,750,941			20,366,102			19,888,606			20,508,473
Cash dividends declared per common share	0.125			0.125			0.250			0.250
Key statistics:
Units in service	1,024			1,086			1,024			1,086
Average revenue per unit (ARPU)	$	7.41		$	7.52		$	7.42		$	7.58
Bookings	$	18,488		$	20,405		$	36,612		$	40,193
Backlog	$	36,295		$	43,455		$	36,295		$	43,455

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



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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
	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Revenue:
Wireless	$	23,658		$	24,269		$	24,579		$	25,110		$	25,639		$	25,860		$	26,535		$	27,024
Software	16,970			18,845			19,191			18,526			16,686			15,584			17,649			18,331
Total revenue	40,628			43,114			43,770			43,636			42,325			41,444			44,184			45,355
Operating expenses:
Cost of revenue	7,400			7,712			7,122			7,069			7,190			7,036			7,482			7,639
Research and development	6,177			5,735			4,934			5,001			4,662			4,105			3,702			3,645
Service, rental and maintenance	7,698			7,750			7,617			7,875			7,944			8,066			7,989			8,253
Selling and marketing	6,093			6,490			6,039			5,533			5,329			5,922			5,855			5,955
General and administrative	12,741			11,964			11,695			12,058			11,939			11,710			11,277			10,605
Depreciation, amortization and accretion	2,669			2,713			2,774			2,775			2,851			3,223			3,176			3,229
Total operating expenses	42,778			42,364			40,181			40,311			39,915			40,062			39,481			39,326
% of total revenue	105.3		%	98.3		%	91.8		%	92.4		%	94.3		%	96.7		%	89.4		%	86.7		%
Operating (loss) income	(2,150		)	750			3,589			3,325			2,410			1,382			4,703			6,029
% of total revenue	(5.3		)%	1.7		%	8.2		%	7.6		%	5.7		%	3.3		%	10.6		%	13.3		%
Interest income	342			283			229			214			154			122			99			67
Other income (expense)	102			(47		)	(282		)	359			89			(30		)	100			85
(Loss) income before income taxes	(1,706		)	986			3,536			3,898			2,653			1,474			4,902			6,181
Benefit from (provision for) income taxes	730			(475		)	(24,920		)	(171		)	(1,155		)	(620		)	(1,876		)	(2,123		)
Net (loss) income	$	(976	)	$	511		$	(21,384	)	$	3,727		$	1,498		$	854		$	3,026		$	4,058
Basic and diluted net (loss) income per common share	$	(0.05	)	$	0.03		$	(1.07	)	$	0.19		$	0.07		$	0.04		$	0.15		$	0.20
Basic weighted average common shares outstanding	19,750,941			20,027,800			19,987,763			19,977,263			20,353,801			20,530,739			20,529,958			20,541,275
Diluted weighted average common shares outstanding	19,750,941			20,153,291			19,987,763			20,008,321			20,366,102			20,585,542			20,529,958			20,541,275
Key statistics:
Units in service	1,024			1,030			1,049			1,063			1,086			1,091			1,111			1,124
Average revenue per unit (ARPU)	$	7.41		$	7.47		$	7.46		$	7.48		$	7.52		$	7.56		$	7.59		$	7.63
Bookings	$	18,488		$	18,124		$	19,190		$	18,327		$	20,405,000		$	19,788,000		$	20,025,000		$	18,659,000
Backlog	$	36,295		$	35,930		$	42,305		$	46,900		$	43,455		$	40,555		$	38,295		$	38,812

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



SPOK HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (a)
(In thousands)

	6/30/2018			12/31/2017
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	94,068		$	107,157
Accounts receivable, net	35,574			32,279
Prepaid expenses and other	7,050			5,752
Inventory	1,505			1,672
Total current assets	138,197			146,860
Non-current assets:
Property and equipment, net	13,035			13,399
Goodwill	133,031			133,031
Intangible assets, net	6,667			7,917
Deferred income tax assets	46,344			47,679
Other non-current assets	1,431			1,675
Total non-current assets	200,508			203,701
Total assets	$	338,705		$	350,561
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	310		$	1,305
Accrued compensation and benefits	9,261			11,018
Accrued taxes	2,055			2,547
Deferred revenue	32,449			31,414
Other current liabilities	4,010			4,610
Total current liabilities	48,085			50,894
Non-current liabilities:
Deferred revenue	961			1,063
Other long-term liabilities	8,393			8,075
Total non-current liabilities	9,354			9,138
Total liabilities	57,439			60,032
Commitments and contingencies
Stockholders' equity:
Preferred stock	$	—		$	—
Common stock	2			2
Additional paid-in capital	92,102			99,819
Accumulated other comprehensive loss	(1,850		)	(1,088		)
Retained earnings	191,012			191,796
Total stockholders' equity	281,266			290,529
Total liabilities and stockholders' equity	$	338,705		$	350,561

(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
	6/30/2018			6/30/2017
Cash flows provided by operating activities:
Net (loss) income	$	(465	)	$	2,352
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, amortization and accretion	5,382			6,074
Deferred income tax (benefit) expense	(472		)	1,069
Stock based compensation	2,501			1,953
Provisions for doubtful accounts, service credits and other	1,016			458
Adjustments of non-cash transaction taxes	(104		)	(700		)
Changes in assets and liabilities:
Accounts receivable	(2,986		)	(1,242		)
Prepaid expenses, inventory and other assets	(277		)	(2,684		)
Accounts payable, accrued liabilities and other	(3,394		)	(3,261		)
Deferred revenue	5,191			2,561
Net cash provided by operating activities	6,392			6,580
Cash flows from investing activities:
Purchases of property and equipment	(3,464		)	(5,198		)
Net cash used in investing activities	(3,464		)	(5,198		)
Cash flows from financing activities:
Cash distributions to stockholders	(5,201		)	(10,239		)
Purchase of common stock for tax withholding on vested equity awards	(894		)	—
Purchase of common stock (including commissions)	(9,467		)	(10,024		)
Proceeds from issuance of common stock under the Employee Stock Purchase Plan	143			130
Net cash used in financing activities	(15,419		)	(20,133		)
Effect of exchange rate on cash	(598		)	86
Net decrease in cash and cash equivalents	(13,089		)	(18,665		)
Cash and cash equivalents, beginning of period	107,157			125,816
Cash and cash equivalents, end of period	$	94,068		$	107,151
Supplemental disclosure:
Income taxes paid	$	457		$	1,964

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



SPOK HOLDINGS, INC.
CONSOLIDATED REVENUE
SUPPLEMENTAL INFORMATION (a)
(Unaudited and in thousands)

	For the three months ended
	6/30/2018		3/31/2018		12/31/2017		9/30/2017		6/30/2017		3/31/2017		12/31/2016		9/30/2016
Revenue
Paging	$	22,824	$	23,308	$	23,624	$	24,128	$	24,572	$	24,972	$	25,441	$	25,944
Non-paging	834		961		955		982		1,067		888		1,094		1,080
Total wireless revenue	$	23,658	$	24,269	$	24,579	$	25,110	$	25,639	$	25,860	$	26,535	$	27,024

Subscription	441		420		559		577		623		543		551		560
License	1,552		3,956		2,431		1,995		1,641		1,171		1,594		1,842
Services	4,363		4,071		5,437		5,189		3,650		3,354		4,500		5,578
Equipment	1,107		1,024		945		1,102		1,127		973		1,402		1,091
Operations revenue	$	7,463	$	9,471	$	9,372	$	8,863	$	7,041	$	6,041	$	8,047	$	9,071

Maintenance revenue	$	9,507	$	9,374	$	9,819	$	9,663	$	9,645	$	9,543	$	9,602	$	9,260
Total software revenue	$	16,970	$	18,845	$	19,191	$	18,526	$	16,686	$	15,584	$	17,649	$	18,331

Total revenue	$	40,628	$	43,114	$	43,770	$	43,636	$	42,325	$	41,444	$	44,184	$	45,355

(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
	6/30/2018		3/31/2018		12/31/2017			9/30/2017		6/30/2017		3/31/2017		12/31/2016			9/30/2016
Cost of revenue
Payroll and related	$	4,853	$	4,874	$	4,374		$	4,330	$	4,613	$	4,490	$	4,611		$	4,469
Cost of sales	1,923		2,309		1,990			2,228		1,904		1,995		2,415			2,587
Stock based compensation	75		55		58			4		60		58		(108		)	57
Other	549		474		700			507		613		493		564			526
Total cost of revenue	7,400		7,712		7,122			7,069		7,190		7,036		7,482			7,639
Research and development
Payroll and related	4,506		4,002		3,521			4,005		3,807		3,405		3,195			2,939
Outside services	1,481		1,513		1,361			849		659		516		511			569
Stock based compensation	90		71		(71		)	43		65		55		(82		)	46
Other	100		149		123			104		131		129		78			91
Total research and development	6,177		5,735		4,934			5,001		4,662		4,105		3,702			3,645
Service, rental and maintenance
Payroll and related	2,618		2,693		2,413			2,582		2,607		2,665		2,687			2,638
Site rent	3,538		3,496		3,471			3,534		3,604		3,620		3,618			3,626
Telecommunications	935		898		979			1,060		1,001		1,081		1,096			1,162
Stock based compensation	24		24		20			20		20		20		(29		)	15
Other	583		639		734			679		712		680		617			812
Total service, rental and maintenance	7,698		7,750		7,617			7,875		7,944		8,066		7,989			8,253
Selling and marketing
Payroll and related	3,311		3,294		2,573			3,113		3,039		3,071		3,556			3,467
Commissions	1,397		1,774		1,634			1,234		1,121		1,202		1,248			1,317
Stock based compensation	135		135		93			84		99		101		(131		)	75
Advertising and events	996		1,158		1,481			952		840		1,281		889			866
Other	254		129		258			150		230		267		293			230
Total selling and marketing	6,093		6,490		6,039			5,533		5,329		5,922		5,855			5,955
General and administrative
Payroll and related	4,340		4,416		3,649			4,569		4,420		4,439		4,426			4,076
Stock based compensation	943		949		774			711		755		722		(863		)	507
Bad debt	279		528		143			184		107		94		137			97
Facility rent and related costs	1,743		1,941		1,865			2,013		1,995		1,838		1,694			1,673
Outside services	3,023		2,122		2,924			2,351		2,507		2,627		2,430			2,247
Taxes, licenses and permits	1,024		1,080		1,120			1,077		1,034		989		976			1,164
Other	1,389		928		1,220			1,153		1,121		1,001		2,477			841
Total general and administrative	12,741		11,964		11,695			12,058		11,939		11,710		11,277			10,605
Depreciation, amortization and accretion	2,669		2,713		2,774			2,775		2,851		3,223		3,176			3,229
Operating expenses	$	42,778	$	42,364	$	40,181		$	40,311	$	39,915	$	40,062	$	39,481		$	39,326
Capital expenditures	$	2,299	$	1,164	$	2,179		$	1,816	$	2,353	$	2,851	$	1,878		$	1,396

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



SPOK HOLDINGS, INC.
UNITS IN SERVICE ACTIVITY, MARKET SEGMENT, CHURN
AND AVERAGE REVENUE PER UNIT (ARPU) (a)
(Unaudited and in thousands)

	For the three months ended
	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Paging units in service
Beginning units in service (000's)	1,030			1,049			1,063			1,086			1,091			1,111			1,124			1,144
Gross placements	35			25			26			30			42			28			36			34
Gross disconnects	(41		)	(44		)	(40		)	(53		)	(47		)	(48		)	(49		)	(54		)
Net change	(6		)	(19		)	(14		)	(23		)	(5		)	(20		)	(13		)	(20		)
Ending units in service	1,024			1,030			1,049			1,063			1,086			1,091			1,111			1,124
End of period units in service % of total (b)
Healthcare	81.5		%	81.1		%	80.7		%	80.4		%	80.4		%	79.7		%	79.3		%	78.6		%
Government	5.7		%	5.9		%	6.0		%	6.1		%	6.3		%	6.4		%	6.5		%	6.7		%
Large enterprise	6.0		%	6.0		%	6.0		%	6.0		%	6.1		%	6.1		%	6.2		%	6.5		%
Other(b)	6.8		%	7.0		%	7.2		%	7.4		%	7.3		%	7.7		%	8.0		%	8.2		%
Total	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%
Account size ending units in service (000's)
1 to 100 units	85			88			0.092			95			98			102			106			110
101 to 1,000 units	197			198			0.198			201			204			214			217			222
>1,000 units	742			744			0.759			767			784			775			788			792
Total	1,024			1,030			1.049			1,063			1,086			1,091			1,111			1,124
Account size net loss rate(c)
1 to 100 units	(3.8		)%	(4.7		)%	(3.6		)%	(2.8		)%	(3.7		)%	(3.4		)%	(3.9		)%	(3.5		)%
101 to 1,000 units	(0.6		)%	(10.0		)%	(1.1		)%	(1.8		)%	(4.5		)%	(1.3		)%	(2.3		)%	(2.6		)%
>1,000 units	(0.2		)%	(1.9		)%	(1.1		)%	(2.2		)%	1.1		%	(1.7		)%	(0.5		)%	(1.2		)%
Total	(0.6		)%	(1.8		)%	(1.3		)%	(2.2		)%	(0.4		)%	(1.8		)%	(1.2		)%	(1.7		)%
Account size ARPU
1 to 100 units	$	12.04		$	12.13		$	12.11		$	12.23		$	12.16		$	12.22		$	12.25		$	12.34
101 to 1,000 units	8.34			8.47			8.58			8.62			8.61			8.66			8.63			8.64
>1,000 units	6.62			6.65			6.59			6.59			6.64			6.64			6.67			6.68
Total	$	7.41		$	7.47		$	7.46		$	7.48		$	7.52		$	7.56		$	7.59		$	7.63

(a) Slight variations in totals are due to rounding.
(b) Other includes hospitality, resort and indirect units
(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.
RECONCILIATION FROM NET (LOSS) INCOME TO EBITDA (a)
(Unaudited and in thousands)

	For the three months ended
	6/30/2018			3/31/2018			12/31/2017			9/30/2017			6/30/2017			3/31/2017			12/31/2016			9/30/2016
Reconciliation of net (loss) income to EBITDA (b):
Net (loss) income	$	(976	)	$	511		$	(21,384	)	$	3,727		$	1,498		$	854		$	3,026		$	4,058
Less (plus): Benefit from (provision for) income taxes	(730		)	475			24,920			171			1,155			620			1,876			2,123
Plus (less): Other income (expense)	(102		)	47			282			(359		)	(89		)	30			(100		)	(85		)
Less: Interest income	(342		)	(283		)	(229		)	(214		)	(154		)	(122		)	(99		)	(67		)
Operating (loss) income	(2,150		)	750			3,589			3,325			2,410			1,382			4,703			6,029
Plus: depreciation, amortization and accretion	2,669			2,713			2,774			2,775			2,851			3,223			3,176			3,229
EBITDA (as defined by the Company)	$	519		$	3,463		$	6,363		$	6,100		$	5,261		$	4,605		$	7,879		$	9,258

	For the six months ended
	6/30/2018			6/30/2017
Reconciliation of net (loss) income to EBITDA (b):
Net (loss) income	$	(465	)	$	2,352
Less (plus): Benefit from (provision for) income taxes	(255		)	1,774
Less: Other income	(54		)	(58		)
Less: Interest income	(625		)	(276		)
Operating (loss) income	(1,399		)	3,792
Plus: depreciation, amortization and accretion	5,382			6,074
EBITDA (as defined by the Company)	$	3,983		$	9,866

	For the three months ended			For the six months ended
	6/30/2018			6/30/2018
Reconciliation of EBITDA to EBITDA adjusted to exclude the adoption of ASC 606 (b):
EBITDA (as defined by the Company)	$	519		$	3,983
Plus: Software revenue	1,166			509
(Less) plus: Cost of revenue	(21		)	5
(Less) plus: Selling and marketing	(105		)	334
Adjusted EBITDA (c)	$	1,559		$	4,831

(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. Management and the Board of Directors rely on EBITDA for purposes of determining the Company’s capital allocation policies. EBITDA is also the starting point for the calculation of operating cash flow for purposes of determining whether management has achieved certain performance objectives in the Company’s short term and long term incentive plans.
(c) Adjusted EBITDA represents EBITDA adjusted to exclude the adoption of ASC 606. Adjusted EBITDA is used by the Company for purposes of comparison to prior period results during its year of transition (2018) under the modified retrospective approach.

Spok Holdings, Inc - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - July 25, 2018

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Spok Holdings, Inc Reports