Spok Holdings, Inc. (SPOK Quick QuoteSPOK - Free Report) reported earnings per share (EPS) of 17 cents in the second quarter of 2024, which decreased 26.1% from the year-ago figure of 23 cents.

Revenues in Detail

Spok Holdings registered revenues of $33.9 million in the second quarter, down 6.8% year over year.

Lower revenues from both segments dampened the topline.

Segment Details

Spok Holdings derives revenues from two segments — Wireless and Software.

For the quarter under review, Wireless revenues were $18.3 million, down 3.1% from the year-ago quarter. This primarily resulted from a decline in year-over-year Paging revenues, partly offset by an uptick in Product and other revenues.

Wireless average revenue per unit (ARPU) in the second quarter of 2024 was $7.84, up 4.1% on a year-over-year basis.

Paging revenues during the second quarter were $17.6 million (down 3.5% year over year), while Product and other revenues were $0.7 million (up 9.6% year over year).

Revenues in the Software segment totaled $15.7 million, down 10.8% year over year. The decline was primarily the result of lower revenues from License and Hardware, partly offset by an uptick in Professional services and Maintenance.

Software operations bookings were $8.7 million in the second quarter, down 37.9% year over year. This included 18 six-figure customer contracts and one seven-figure customer contract. Software backlog totaled $55 million on Jun 30, 2024, up 3.6% from the prior-year quarter.

The License unit generated revenues of $1.7 million (down 54% from the year-ago quarter), while Hardware revenues were $0.3 million (down 64.2% year over year). Professional services revenues were $4.3 million (up 11.7% year over year), while Maintenance revenues were $9.4 million (up 2.7% year over year).

Spok Holdings, Inc. Price, Consensus and EPS Surprise

Spok Holdings, Inc. price-consensus-eps-surprise-chart | Spok Holdings, Inc. Quote

Spok Holdings Gross Margin

In the quarter under review, Spok Holdings’ gross profit declined 9.8% to $26.8 million. The gross margin contracted 263 basis points (bps) to 78.9%.

Adjusted Operating Expenses Analysis

Selling and marketing expenses declined 19.5% to $3.5 million. Research and development expenses went up 11.3% year over year to $3.2 million, while general and administrative expenses declined 4.9% to $8.1 million. Total adjusted operating expenses of $14.7 million decreased 6% year over year.

Profitability

Adjusted operating profit totaled $12.1 million, which decreased 14% from the prior-year quarter. The adjusted operating margin in the second quarter contracted 299 bps to 35.5%.

In the second quarter, Spok Holdings’ net income was $3.4 million, down 27.6% from the year-ago quarter.

Adjusted EBITDA during the reported quarter was $7 million, down 17.2% from the year-ago quarter.

Liquidity & Debt Management

Spok Holdings exited second-quarter 2024 with cash and cash equivalents of $23.9 million compared with $23.3 million at the first-quarter end.

Cumulative net cash provided by operating activities at the end of second-quarter 2024 was $9.4 million compared with $11.2 million a year ago.

Guidance

Spok Holdings has reiterated its full-year guidance.

For 2024, total revenues are expected to be between $136 million and $144 million.

The Wireless revenues are projected to lie between $72 million and $75 million, while Software revenues are expected to be in the range of $64 million-$69 million.

Adjusted EBITDA for 2024 is projected to lie between $27.5 million and $32.5 million.

Our Take

Spok Holdings exited the second quarter of 2024 with dismal top-line and bottom-line results. Lower revenues from both segments and lower software operations bookings were also discouraging. During the reported quarter, both the gross and adjusted operating margins contracted, which did not bode well. 

On a positive note, an uptick in Wireless ARPU and software backlog during the reported quarter were impressive.