Board Declares Regular Quarterly Dividend

SPRINGFIELD, Va.--(BUSINESS WIRE)-- 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.

			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.

			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.
• 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.

			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.

			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® 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.

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.

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.

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				$	19,788				$	20,025				$	18,659
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					92					95					98					102					106					110
101 to 1,000 units				197					198					198					201					204					214					217					222
>1,000 units				742					744					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.

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Spok Holdings, Inc.

Al Galgano, 952-567-0295

[email protected]

Source: Spok Holdings, Inc.