spok-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM			10-Q

(Mark One)


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

For the quarterly period ended March 31, 2022


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

For the transition period from to

Commission File Number: 001-32358


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


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


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

(800) 611-8488

(Registrant’s telephone number, including area code)

N/A

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

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


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

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

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

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


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐

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

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

19,693,657 shares of the registrant’s common stock (par value $0.0001 per share) were outstanding as of April 22, 2022.

SPOK HOLDINGS, INC.

QUARTERLY REPORT ON FORM 10-Q

INDEX


			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Condensed Consolidated Financial Statements
		Condensed Consolidated Balance Sheets as of March 31, 2022, (Unaudited) and December 31, 2021	2
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022, and 2021 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2022, and 2021 (Unaudited)	4
		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2022, and 2021 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 202 2 , and 2021 (Unaudited)	6
		Unaudited Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
	Item 4.	Controls and Procedures	32
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	33
	Item 1A.	Risk Factors	33
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
	Item 6.	Exhibits	34
Signatures

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	March 31, 2022		December 31, 2021
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	31,350	$	44,583
Short-term investments	14,978		14,999
Accounts receivable, net	23,373		26,908
Prepaid expenses	8,095		6,641
Other current assets	878		922
Total current assets	78,674		94,053
Non-current assets:
Property and equipment, net	6,642		6,746
Operating lease right-of-use assets	14,993		15,821
Goodwill	99,175		99,175

Deferred income tax assets, net	32,684		31,653
Other non-current assets	707		706
Total non-current assets	154,201		154,101
Total assets	$	232,875	$	248,154

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,863	$	5,292
Accrued compensation and benefits	15,769		13,948
Deferred revenue	24,223		25,608
Operating lease liabilities	5,112		5,405
Other current liabilities	5,147		4,745
Total current liabilities	54,114		54,998
Non-current liabilities:
Asset retirement obligations	6,372		6,355
Operating lease liabilities	11,256		11,883
Other non-current liabilities	1,238		1,227
Total non-current liabilities	18,866		19,465
Total liabilities	72,980		74,463
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock	$	—	$	—
Common stock	2		2
Additional paid-in capital	97,197		97,291
Accumulated other comprehensive loss	(1,563)		(1,588)
Retained earnings	64,259		77,986
Total stockholders’ equity	159,895		173,691
Total liabilities and stockholders' equity	$	232,875	$	248,154

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


	For the Three Months Ended March 31,
(Unaudited and in thousands except share and per share amounts)	2022		2021

Revenue:
Wireless revenue	$	18,846	$	20,120
Software revenue	14,979		15,916
Total revenue	33,825		36,036
Operating expenses:
Cost of revenue (exclusive of items shown separately below)	7,804		7,982
Research and development	6,497		4,444
Technology operations	7,013		7,204
Selling and marketing	5,315		5,139
General and administrative	10,435		10,280
Depreciation, amortization and accretion	934		2,727
Severance and restructuring	4,495		—

Total operating expenses	42,493		37,776
Operating loss	(8,668)		(1,740)
Interest income	67		61
Other expense	(13)		(27)
Loss before income taxes	(8,614)		(1,706)
Benefit from (provision for) income taxes	1,400		(591)
Net loss	$	(7,214)	$	(2,297)
Basic and diluted net loss per common share	$	(0.37)	$	(0.12)

Basic and diluted weighted average common shares outstanding	19,599,526		19,272,786

Cash dividends declared per common share	$	0.3125	$	0.1250

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


	For the Three Months Ended March 31,
(Unaudited and in thousands)	2022		2021

Net loss	$	(7,214)	$	(2,297)
Other comprehensive income, net of tax:
Foreign currency translation adjustments	25		14
Other comprehensive income	25		14
Comprehensive loss	$	(7,189)	$	(2,283)

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY


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

Balance, January 1, 2021	19,384,192	$	2	$	90,328	$	110,283	$	200,613
Net loss	—	—		—		(2,297)		(2,297)

Purchase of common stock for tax withholding	(132,281)	—		(1,444)		—		(1,444)
Amortization of stock-based compensation	—	—		2,239		—		2,239
Cash dividends declared	—	—		—		(2,553)		(2,553)
Issuance of restricted stock under the Equity Plans and other	20,952	—		—		—		—
Issuance of common stock in lieu of cash compensation	50,741	—		—		—		—
Cumulative translation adjustment	—	—		14		—		14
Balance, March 31, 2021	19,323,604	$	2	$	91,137	$	105,433	$	196,572




Balance, January 1, 2022	19,828,033	$	2	$	95,703	$	77,986	$	173,691
Net loss	—	—		—		(7,214)		(7,214)

Purchase of common stock for tax withholding and other	(134,354)	—		(1,209)		—		(1,209)
Amortization of stock-based compensation	—	—		1,115		—		1,115
Cash dividends declared	—	—		—		(6,513)		(6,513)


Cumulative translation adjustment	—	—		25		—		25
Balance, March 31, 2022	19,693,679	$	2	$	95,634	$	64,259	$	159,895

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	For the Three Months Ended March 31,
(Unaudited and in thousands)	2022		2021

Operating activities:
Net loss	$	(7,214)	$	(2,297)
Adjustments to reconcile net loss to net cash net (used ) provided by operating activities:
Depreciation, amortization and accretion	934		2,727


Deferred income tax (benefit) expense	(1,024)		510
Stock-based compensation	1,115		2,239
Provisions for credit losses, service credits and other	594		215
Changes in assets and liabilities:
Accounts receivable	2,951		1,039
Prepaid expenses and other assets	(1,421)		457
Net operating lease liabilities	(91)		338
Accounts payable, accrued liabilities and other	879		(3,038)
Deferred revenue	(1,602)		(1,471)
Net cash (used in) provided by operating activities	(4,879)		719
Investing activities:
Purchases of property and equipment	(679)		(727)
Capitalized software development	—		(2,920)
Purchase of short-term investments	(

SEC Form 10-Q filed by Spok Holdings Inc.