spok-20250331

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, 2025


☐			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.)

3000 Technology Drive

Suite 400

Plano

Texas

75074

(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 ☒

20,572,296 shares of the registrant’s common stock (par value $0.0001 per share) were outstanding as of April 25, 2025.

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, 2025 (Unaudited) and December 31, 2024	2
		Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	3
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	4
		Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	5
		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (Unaudited)	6
		Unaudited Notes to Condensed Consolidated Financial Statements	7
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	25
	Item 4.	Controls and Procedures	25
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	25
	Item 1A.	Risk Factors	25
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 5.	Other Information	26
	Item 6.	Exhibits	26
Signatures

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands)	March 31, 2025		December 31, 2024
	(Unaudited)

ASSETS
Current assets:
Cash and cash equivalents	$	19,873	$	29,145

Accounts receivable, net	20,672		21,950
Prepaid expenses	9,082		9,362
Other current assets	778		840
Total current assets	50,405		61,297
Non-current assets:
Property and equipment, net	5,869		5,952
Operating lease right-of-use assets	7,663		8,249
Goodwill	99,175		99,175

Deferred income tax assets, net	40,726		41,686
Other non-current assets	638		744
Total non-current assets	154,071		155,806
Total assets	$	204,476	$	217,103

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,297	$	5,630
Accrued compensation and benefits	3,126		7,363
Deferred revenue	26,961		28,366
Operating lease liabilities	2,799		2,904
Other current liabilities	4,584		4,511
Total current liabilities	40,767		48,774
Non-current liabilities:
Asset retirement obligations	5,759		5,945
Operating lease liabilities	5,380		5,869
Other non-current liabilities	832		1,769
Total non-current liabilities	11,971		13,583
Total liabilities	52,738		62,357
Commitments and contingencies (Note 12)
Stockholders' equity:
Preferred stock	$	—	$	—
Common stock	2		2
Additional paid-in capital	104,163		105,736
Accumulated other comprehensive loss	(1,774)		(1,784)
Retained earnings	49,347		50,792
Total stockholders’ equity	151,738		154,746
Total liabilities and stockholders' equity	$	204,476	$	217,103

The accompanying notes are an integral part of these unaudited 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)	2025		2024

Revenue:
Wireless revenue	$	18,474	$	18,595
Software revenue	17,820		16,314
Total revenue	36,294		34,909
Operating expenses:
Cost of revenue (exclusive of items shown separately below)	7,212		7,139
Research and development	3,055		2,951
Technology operations	5,850		6,299
Selling and marketing	4,845		4,149
General and administrative	8,398		7,984
Depreciation and accretion	859		1,068
Severance and restructuring	57		428

Total operating expenses	30,276		30,018
Operating income	6,018		4,891
Interest income	219		254
Other income (expense)	22		(2)
Income before income taxes	6,259		5,143
Provision for income taxes	(1,063)		(907)
Net income	$	5,196	$	4,236
Basic and diluted net income per common share	$	0.25	$	0.21

Basic weighted average common shares outstanding	20,440,306		20,170,548
Diluted weighted average common shares outstanding	20,656,794		20,446,587
Cash dividends declared per common share	$	0.3125	$	0.3125

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

SPOK HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	For the Three Months Ended March 31,
(Unaudited and in thousands)	2025		2024

Net income	$	5,196	$	4,236
Other comprehensive income, net of tax:
Foreign currency translation adjustments	10		42
Other comprehensive income	10		42
Comprehensive income	$	5,206	$	4,278

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 at January 1, 2024	19,992,102	$	2	$	101,172	$	62,597	$	163,771
Net income	—	—		—		4,236		4,236
Issuance of restricted stock under the Equity Plan	396,771	—		—		—		—
Purchase of common stock for tax withholding	(151,026)	—		(2,428)		—		(2,428)
Amortization of stock-based compensation	—	—		1,148		—		1,148
Cash dividends declared	—	—		—		(6,600)		(6,600)
Cumulative translation adjustment	—	—		42		—		42
Balance at March 31, 2024	20,237,847	$	2	$	99,934	$	60,233	$	160,169


(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 at January 1, 2025	20,284,177	$	2	$	103,952	$	50,792	$	154,746
Net income	—	—		—		5,196		5,196
Issuance of restricted stock under the Equity Plan	453,081	—		—		—		—
Purchase of common stock for tax withholding	(172,567)	—		(2,843)		—		(2,843)
Amortization of stock-based compensation	—	—		1,270		—		1,270
Cash dividends declared	—	—		—		(6,641)		(6,641)
Cumulative translation adjustment	—	—		10		—		10
Balance at March 31, 2025	20,564,691	$	2	$	102,389	$	49,347	$	151,738

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)	2025		2024

Operating activities:
Net income	$	5,196	$	4,236
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and accretion	859		1,068


Deferred income tax expense	962		902
Stock-based compensation	1,270		1,148
Provisions for credit losses, service credits and other	220		272
Changes in assets and liabilities:
Accounts receivable	1,050		1,318
Prepaid expenses and other assets	446		779
Net operating lease liabilities	(8)		41
Accounts payable and other liabilities	(6,160)		(6,405)
Deferred revenue	(1,582)		(1,361)
Net cash provided by operating activities	2,253		1,998
Investing activities:
Purchases of property and equipment	(745)		(875)



Net cash used in investing activities	(745)		(875)
Financing activities:
Cash distributions to stockholders	(7,947)		(7,386)


Purchase of common stock for tax withholding on vested equity awards	(2,843)		(2,428)
Net cash used in financing activities	(10,790)		(9,814)
Effect of exchange rate on cash and cash equivalents	10		42
Net decrease in cash and cash equivalents	(9,272)		(8,649)
Cash and cash equivalents, beginning of period	29,145		31,989
Cash and cash equivalents, end of period	$	19,873	$	23,340
Supplemental disclosure:
Income taxes paid (refunded)	$	(4)	$	5

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

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Spok Holdings, Inc. (NASDAQ: SPOK) ("Spok," "we," "our" or the "Company"), through its wholly owned subsidiary Spok, Inc., 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 Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients.

We provide one-way and advanced two-way wireless messaging services, including information services, throughout the United States. These services are offered on a local, regional and nationwide basis, employing digital networks. One-way messaging consists of numeric and alphanumeric messaging services. Numeric messaging services enable subscribers to receive messages that are composed entirely of numbers, such as a phone number, while alphanumeric messages may include numbers and letters, which enable subscribers to receive text messages. Two-way messaging services enable subscribers to send and receive messages to and from other wireless messaging devices, including pagers, personal digital assistants and personal computers. We also offer voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers. These services are commonly referred to as wireless messaging and information services.

We also develop, sell and support enterprise-wide systems for hospitals and other organizations needing to automate, centralize and standardize clinical communications. These solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging and for public safety notifications. These areas of market focus complement the market focus of our wireless services outlined above.

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements include our accounts and the accounts of our wholly owned direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). In management's opinion, the unaudited Condensed Consolidated Financial Statements include all adjustments and accruals that are necessary for the presentation of the results of all interim periods reported herein and all such adjustments are of a normal, recurring nature.

Amounts shown in the Condensed Consolidated Statements of Operations within the operating expense categories include cost of revenue exclusive of: research and development, technology operations, selling and marketing, general and administrative, severance and restructuring and depreciation and accretion. These items are shown separately to the extent that they are considered material for the periods presented.

The financial information included herein, other than the Condensed Consolidated Balance Sheet as of December 31, 2024, is unaudited. The Condensed Consolidated Balance Sheet as of December 31, 2024 has been derived from, but does not include all, the disclosures contained in the audited Consolidated Financial Statements as of and for the year ended December 31, 2024.

These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”). The Condensed Consolidated Statements of Operations for the interim periods presented are not necessarily indicative of the results that may be expected for a full year.

Use of Estimates

The preparation of these Condensed Consolidated Financial Statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets, goodwill, accounts receivable allowances, revenue recognition, depreciation and accretion expense, asset retirement obligations and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 2 - RISKS AND OTHER IMPORTANT FACTORS

See “Item 1A. Risk Factors” of Part II of this Quarterly Report on Form 10-Q (“Quarterly Report”) and "Item 1A. Risk Factors" of Part I of the 2024 Annual Report, which describe key risks associated with our operations and industry.

NOTE 3 - RECENT ACCOUNTING STANDARDS

Recently adopted accounting pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures". This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within segment profit or loss. This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources. The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted the ASU for the year ended December 31, 2024 and for interim periods beginning with the three months ended March 31, 2025. The ASU required additional disclosures but did not otherwise impact our Condensed Consolidated Financial Statements. Refer to Note 14, "Segment Information" for the inclusion of the required disclosures.

Recently issued accounting pronouncements not yet adopted

In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which expands the disclosure requirements for income taxes, specifically related to the rate reconciliation and the income taxes paid. The update is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. We are currently evaluating the provisions of this ASU and expect to adopt them for the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, "Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses," requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements. This update is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact the update will have on our Consolidated Financial Statement disclosures.

NOTE 4 - SIGNIFICANT ACCOUNTING POLICIES

Our significant accounting policies are detailed in Note 1, “Organization and Significant Accounting Policies” of the 2024 Annual Report.

NOTE 5 - REVENUE, DEFERRED REVENUE AND PREPAID COMMISSIONS

Wireless Revenue

Wireless revenue consists of two primary components: paging revenue and product and other revenue. Paging revenue consists primarily of recurring fees associated with the provision of messaging services and fees for paging devices and is net of a provision for service credits. Product and other revenue reflects system sales, sales of paging devices and charges for devices that are not returned and are net of anticipated credits. Our core offering includes subscriptions to one-way or two-way messaging services for a periodic (monthly, quarterly, semiannual, or annual) service fee. This is generally based upon the type of service provided, the geographic area covered, the number of devices provided to the customer and the period of commitment. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs. Two-way messaging is generally offered on a nationwide basis. See "Item 1. Business,” in the 2024 Annual Report for more details.

Software Revenue

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

to the implementation of our solutions, and maintenance revenue that is generated from the ongoing support of our software solutions or related hardware, typically contracted for a period of between one and three years.

Revenue Recognition

Revenues are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s intellectual property ("IP") as it exists at a point in time at which the license is granted. Many of our software licenses have significant standalone functionality due to their ability to process a transaction or perform a function or task, and we do not need to maintain those products, once provided to the customer, for value to exist. While the functionality of the IP that we license may substantively change during the license period, customers are not contractually or practically required to update their license as a result of those changes.

Our wireless, professional services, and maintenance and subscription services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance, professional services - managed services and subscription services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services - projects, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project. Revenues are recognized proportionally as hours are incurred.

The following table presents our revenues disaggregated by revenue type:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024

Revenue:
Paging revenue	$	17,607	$	17,970
Product and other revenue	867		625
Wireless revenue	$	18,474	$	18,595

License	$	2,631	$	2,626
Professional services - projects	4,471		3,561
Professional services - managed services	1,315		464
Hardware	321		384


Maintenance	9,082		9,279
Software revenue	$	17,820	$	16,314
Total revenue	$	36,294	$	34,909

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company is currently structured as a single operating (and reportable) segment, a clinical communication and collaboration business. Sales are assigned to subsidiaries based on the geographic location of the customer at the signing of a contract. The United States was the only country that accounted for more than 10% of the Company’s total revenue for the three months ended March 31, 2025, and 2024. Revenue generated in the United States and internationally consisted of the following for the periods stated:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024

United States	$	35,563	$	34,142
International	731		767
Total revenue	$	36,294	$	34,909

Deferred Revenues

Our deferred revenues represent payments made by, or due from, customers in advance of our performance. Deferred revenue that is expected to be recognized as revenue during the next twelve-month period is recorded in deferred revenue and the remaining portion is recorded within other non-current liabilities in the Condensed Consolidated Balance Sheets. Changes in the balance of total deferred revenue during the three months ended March 31, 2025, are as follows:


(Dollars in thousands)	December 31, 2024		Additions		Revenue Recognized		March 31, 2025

Deferred Revenue	$	28,939	$	16,184	$	(17,766)	$	27,357

During the three months ended March 31, 2025, the Company recognized $12.9 million related to amounts deferred as of December 31, 2024.

Prepaid Commissions

Our prepaid commissions represent payments made to employees in advance of our performance on the related underlying contracts. These costs have been incurred directly in relation to obtaining a contract. As such, these costs are amortized over the estimated period of benefit. Changes in the balance of total prepaid commissions during the three months ended March 31, 2025 are as follows:


(Dollars in thousands)	December 31, 2024		Additions		Commissions Recognized		March 31, 2025

Prepaid Commissions	$	3,322	$	1,113	$	(893)	$	3,542

Prepaid commissions are included within prepaid expenses in the Condensed Consolidated Balance Sheets and commissions expense is included within selling and marketing in the Condensed Consolidated Statements of Operations.

Remaining Performance Obligations

The balance of consideration allocated to remaining performance obligations at March 31, 2025 was $63.2 million, which excludes $5.0 million of additional transaction value that was deemed cancellable by the customer without significant penalty. We expect to recognize approximately $36.5 million of our remaining performance obligations over the next 12 months, with the remaining balance recognized thereafter.

NOTE 6 - LEASES

We have operating lease arrangements for corporate offices, cellular towers, storage units and small building spaces. The building space is used to house infrastructure, such as transmitters, antennae and other various equipment for the Company’s wireless paging services. For leases with a term of 12 months or less, renewal terms are generally of an evergreen nature (either month-to-month or year-to-year). For leases with a term greater than 12 months, renewal terms are generally explicit and provide for one to five optional renewals consistent with the initial term. Many of our leases, with the exception of those for our corporate offices, include options to terminate the lease within one year. Variable lease payments, residual value guarantees or purchase options are not generally present in these leases.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Lease costs are included in technology operations and general and administrative expenses in the Condensed Consolidated Statements of Operations. The following table presents lease costs disaggregated by type:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024

Operating lease cost	$	764	$	1,035
Short-term lease cost	2,015		2,452
Total lease cost	$	2,779	$	3,487

The following table presents supplemental cash flow information:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024


Cash paid for amounts included in the measurement of lease liabilities - operating leases	$	771	$	1,172
Right-of-use assets obtained in exchange for lease obligations	$	38	$	337

The following table presents the weighted average remaining lease term and discount rate:


	March 31,
(Dollars in thousands)	2025	2024

Weighted average remaining lease term - operating leases (in years)	4.20	4.50
Weighted average discount rate - operating leases	6.66%	6.05%

Maturities of lease liabilities as of March 31, 2025, were as follows:


For the Year Ended December 31,	(Dollars in thousands)

2025 (remaining nine months)	$	2,143
2026	2,464
2027	1,858
2028	1,310
2029	508
Thereafter	1,004
Total future lease payments	9,287
Imputed interest	(1,108)
Total	$	8,179

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 7 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS' COMPONENTS

Depreciation and Accretion

Depreciation and accretion expenses consisted of the following for the periods stated:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024

Depreciation
Leasehold improvements	$	27	$	36
Asset retirement costs	23		(104)
Paging and computer equipment	723		901
Furniture, fixtures and vehicles	64		61
Total depreciation	837		894




Accretion	22		174
Total depreciation and accretion expense	$	859	$	1,068

Accounts Receivable, Net

Accounts receivable was recorded net of an allowance of $1.1 million at March 31, 2025, and $1.0 million at December 31, 2024. Accounts receivable, net includes $6.8 million and $6.4 million of unbilled receivables at March 31, 2025, and December 31, 2024, respectively. Unbilled receivables are defined as the Company's right to consideration in exchange for goods or services that we have transferred to the customer but have not yet billed for, generally as a result of contractual billing terms.

Property and Equipment, Net

Property and equipment, net consisted of the following as of the dates stated:


(Dollars in thousands)	Useful Life (In Years)	March 31, 2025		December 31, 2024

Leasehold improvements	lease term	$	2,564	$	2,430
Asset retirement costs	1-15	4,864		4,864
Paging and computer equipment	1-5	83,068		83,895
Furniture, fixtures and vehicles	3-5	2,504		2,570
Total property and equipment		93,000		93,759
Accumulated depreciation		(87,131)		(87,807)
Total property and equipment, net		$	5,869	$	5,952

NOTE 8 - GOODWILL

During the three months ended March 31, 2025, we performed a qualitative assessment of goodwill and determined that a triggering event had not occurred. While an impairment assessment is performed annually in the fourth quarter, the Company monitors its business environment for potential triggering events on a quarterly basis. There is potential for further impairment charges being recognized in future periods based on these ongoing assessments.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

NOTE 9 - ASSET RETIREMENT OBLIGATIONS

The components of the changes in the asset retirement obligation liabilities were:


(Dollars in thousands)	Short-Term Portion		Long-Term Portion		Total

Balance as of December 31, 2024	$	549	$	5,945	$	6,494
Accretion	(148)		170		22
Amounts paid	(78)		—		(78)

Reclassifications	356		(356)		—
Balance as of March 31, 2025	$	679	$	5,759	$	6,438

The short-term portion of the balance above is included within other current liabilities in the Condensed Consolidated Balance Sheets as of March 31, 2025, and December 31, 2024.

The cost associated with the estimated removal costs and timing refinements due to ongoing network rationalization activities is expected to accrete to a total liability of $12.6 million. The total estimated liability is based on the transmitter locations remaining after we have consolidated the number of networks we operate and assuming the underlying leases continue to be renewed to that future date. Accretion expense related solely to asset retirement obligations and was recorded based on the interest method.

NOTE 10 - STOCKHOLDERS' EQUITY

General

Our authorized capital stock consists of 75 million shares of common stock, par value $0.0001 per share, and 25 million shares of preferred stock, par value $0.0001 per share.

At March 31, 2025, and December 31, 2024, we had no stock options outstanding.

At March 31, 2025, and December 31, 2024, there were 20,564,691 and 20,284,177 shares of common stock outstanding, respectively, and no shares of preferred stock were outstanding.

Dividends

Cash distributions to stockholders, as disclosed in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025, and 2024, include previously declared cash dividends on shares of vested restricted common stock ("restricted stock") issued to our non-executive directors and dividends related to vested restricted stock units ("RSUs") issued to eligible employees. Cash dividends on restricted stock and RSUs have been accrued and are paid when the applicable vesting conditions are met. Accrued cash dividends on forfeited restricted stock and RSUs are also forfeited. The following table details our cash dividends declared and paid in 2025 through the date hereof:


					(Dollars in thousands)
Declaration Date	Record Date	Payment Date	Per Share Amount		Total Declared(1)

February 26, 2025	March 14, 2025	March 31, 2025	$	0.3125	$	6,641



Total			$	0.3125	$	6,641

(1) The total declared reflects the cash dividends declared in relation to common stock, deferred stock units ("DSUs"), unvested restricted stock and unvested RSUs.

On April 30, 2025, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of May 23, 2025 and a payment date of June 24, 2025. Cash dividends related to common stock of approximately $6.4 million will be paid from available cash on hand.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Common Stock Repurchase Program

On February 16, 2022, our Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. Under the repurchase program, repurchases can be made from time to time using a variety of methods, which may include open market purchases, privately negotiated transactions or otherwise, all in accordance with the rules of the SEC and other applicable legal requirements. The specific timing, price and size of purchases will depend on prevailing stock prices, general economic and market conditions, legal requirements and other considerations. The repurchase program does not obligate the Company to acquire any particular amount of common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. For the three months ended March 31, 2025, the Company did not repurchase any shares of common stock.

Net Income per Common Share

Basic net income per common share is computed on the basis of the weighted average common shares outstanding. Diluted net income per common share is computed on the basis of the weighted average common shares outstanding plus the effect of all potentially dilutive common shares, including outstanding restricted stock and RSUs, which are treated as contingently issuable shares, using the “treasury stock” method.

The components of basic and diluted net income per common share were as follows for the periods stated:


	For the Three Months Ended March 31,
(in thousands, except for share and per share amounts)	2025		2024

Numerator:
Net income	$	5,196	$	4,236

Denominator:
Basic weighted average common shares outstanding	20,440,306		20,170,548
Diluted weighted average common shares outstanding	20,656,794		20,446,587
Basic and diluted net income per common share	$	0.25	$	0.21

Stock-Based Compensation Plans

On April 10, 2023, our Board of Directors adopted an amendment and restatement of the Spok Holdings, Inc. 2020 Equity Incentive Award Plan (the "2020 Equity Plan") to increase the number of shares available for issuance by 1,000,000 shares that our stockholders subsequently approved on July 25, 2023. At July 25, 2023, a total of 1,268,444 shares of common stock had been reserved for issuance under the 2020 Equity Plan.

Awards under the 2020 Equity Plan may be in the form of stock options, restricted common stock, RSUs, performance awards, dividend equivalents, stock payment awards, deferred stock, DSUs, stock appreciation rights or other stock or cash-based awards.

Restricted stock awards generally vest one year from the date of grant. Related dividends accumulate during the vesting period and are paid at the time of vesting.

Contingent RSUs generally vest over a three-year performance period upon successful completion of the performance objectives. Non-contingent RSUs generally vest in thirds, annually, over a three-year period. Dividend equivalent rights generally accompany each RSU award, and those rights accumulate and vest along with the underlying RSU.

Dividend equivalent rights generally accompany each DSU award and are paid to participants in cash on the Company's applicable dividend payment date whether the DSU is vested or unvested. The dividend equivalent right associated with a DSU continues until delivery of the underlying shares of common stock is made.

Payment of the underlying shares of common stock occurs at the earliest of a participant's separation from service, disability, death, or a change in control.

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The following table summarizes the activities under the 2020 Equity Plan from January 1, 2025, through March 31, 2025:


			Activity

Total equity securities available at January 1, 2025			962,044

RSU, DSU and restricted stock awarded to eligible employees, net of forfeitures			(350,584)
Total equity securities available at March 31, 2025			611,460

The following table details activities with respect to outstanding RSUs, DSUs, and restricted stock under the 2020 Equity Plan for the three months ended March 31, 2025:


	Shares	Weighted Average Grant Date Fair Value per Share

Unvested at January 1, 2025	928,522	$	10.81
Granted	353,002	14.91
Vested	(453,365)	9.50
Forfeited	(2,418)	15.85
Unvested at March 31, 2025	825,741	$	13.27

Of the 825,741 unvested RSUs, DSUs and restricted stock outstanding at March 31, 2025, 430,008 RSUs include contingent performance requirements for vesting purposes. At March 31, 2025, there was $6.8 million of unrecognized net compensation cost related to RSUs and restricted stock, which is expected to be recognized over a weighted average period of 1.9 years.

Employee Stock Purchase Plan

In 2016, our Board of Directors adopted the Spok Holdings, Inc. Employee Stock Purchase Plan (the "ESPP") that our stockholders subsequently approved on July 25, 2016. A total of 250,000 shares of common stock were reserved for issuance under this plan.

The ESPP allows employees to purchase shares of common stock at a discounted rate, subject to plan limitations. Under the ESPP, eligible participants can voluntarily elect to have contributions withheld from their pay for the duration of an offering period, subject to the ESPP limits. At the end of an offering period, contributions will be used to purchase the Company's common stock at a discount to the market price based on the first or last day of the offering period, whichever is lower.

Participants are required to hold common stock for a minimum period of two years from the grant date. Participants will begin earning dividends on shares after the purchase date. Each offering period will generally last for no longer than six months. Once an offering period begins, participants cannot adjust their withholding amount. If a participant chooses to withdraw, any previously withheld funds will be returned to the participant, with no stock purchased, and that participant will be eligible to participate in the ESPP during the next offering period. If the participant terminates employment with the Company during the offering period, all contributions will be returned to the employee and no stock will be purchased.

The Company uses the Black-Scholes model to calculate the fair value of the common stock to be purchased during each offering period on the offer date. The Black-Scholes model requires the use of estimates for the expected term, the expected volatility of the underlying common stock over the expected term, the risk-free interest rate and the expected dividend payment.

For the three months ended March 31, 2025 and 2024, no shares of the Company's stock were purchased. The following table summarizes the activities under the ESPP from January 1, 2025 through March 31, 2025:


			Activity

Total ESPP equity securities available at January 1, 2025			88,007
ESPP common stock purchased by eligible employees			—
Total ESPP equity securities available at March 31, 2025			88,007

SPOK HOLDINGS, INC.

UNAUDITED NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Amounts withheld from participants will be classified as accrued compensation and benefits in the Condensed Consolidated Balance Sheets until funds are used to purchase shares. This liability amount is immaterial to the Condensed Consolidated Financial Statements.

Stock-Based Compensation Expense

We record all stock-based compensation, which consist of RSUs, DSUs, restricted stock, equity in lieu of salary, and the option to purchase common stock under the ESPP, at fair value as of the grant date. Stock-based compensation expense is recognized based on a straight-line amortization basis over the respective service period. Forfeitures and withdrawals are accounted for as incurred.

The following table reflects the items for stock-based compensation expense in the Condensed Consolidated Statements of Operations for the periods stated:


	For the Three Months Ended March 31,
(Dollars in thousands)	2025		2024

Performance-based RSUs	$	489	$	461
Time-based RSUs, DSUs and restricted stock	756		667
ESPP	25		20
Total stock-based compensation	$	1,270	$	1,148

NOTE 11 - INCOME TAXES

Spok files a consolidated United States federal income tax return and income tax returns in various state, local and foreign jurisdictions as required.

Our quarterly tax provision and our quarterly estimate of our annual effective tax rate are subject to significant variation due to several factors, including variability in accurately predicting our pre-tax and taxable income and loss and the mix of jurisdictions to which they relate, changes in how we do business, changes in our stock price, foreign currency gains (losses), tax law developments (including changes in statutes, regulations, case law, and administrative practices), and relative changes of expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items and non-deductible expenses on our effective tax rate is greater when our pre-tax income is lower.

For 2025, the anticipated effective income tax rate is expected to continue to differ from the federal statutory rate of 21%, primarily due to the effect of state income taxes, permanent differences between book and taxable income, and certain discrete items.

We had total net deferred income tax assets ("DTAs") of $40.7 million and $41.7 million as of March 31, 2025, and December 31, 2024, respectively. We had a valuation allowance of $2.3 million as of both March 31, 2025, and December 31, 2024.

We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies. This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of the deferred income tax assets will be realized in future periods. During the fourth quarter of each year, we update our multi-year forecast of taxable income for our operations, which assists in analyzing the recoverability of our DTAs.

The Company maintains a valuation allowance related to federal foreign tax credits and certain state net operating losses and state tax credits, as the Company does not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration.

NOTE 12 - COMMITMENTS AND CONTINGENCIES

There have been no material changes during the three months ended March 31, 2025, to the commitments and contingencies previously reported in the 2024 Annual Report.

NOTE 13 - RELATED PARTIES

A member of our Board of Directors serves as EVP and Chief Information Officer for an entity that is also a customer of the Company. For the three months ended March 31, 2025 and 2024, we recognized revenues of $0.4 million related to the contracts from the entity at which the individual is employed.

NOTE 14 - SEGMENT INFORMATION

FASB ASC 280, Segment Reporting, establishes standards for reporting information about operating segments. Operating segments are defined as components of a public entity about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), in deciding how to allocate resources and in assessing performance. Our CODM is our Chief Executive Officer. We identify our business as a single segment, clinical communications and collaboration solutions, which includes operating revenues from our wireless and software solutions.

The accounting policies of the clinical communications and collaboration solutions segment is the same as those described in the summary of significant accounting policies disclosed in Note 1, “Organization and Significant Accounting Policies” of the 2024 Annual Report. The CODM evaluates the performance of the clinical communications and collaboration segment based on net income that is also reported on the Condensed Consolidated Statements of Operations as consolidated net income.

Significant expenses within net income include cost of revenue, research and development, technology operations, selling and marketing, and general and administrative expenses, which are each separately presented on the Company’s Condensed Consolidated Statements of Operations. Other segment items within net income include interest and other income (expense) and provision for income taxes on the Condensed Consolidated Statements of Operations.

The measurement of segment assets is reported on the Condensed Consolidated Balance Sheets as total consolidated assets. Depreciation and accretion details are tabulated in Note 7, "Condensed Consolidated Financial Statements' Components." An immaterial amount of long-lived assets, were held outside of the United States as of March 31, 2025 and 2024.

The principal category we use to disaggregate revenues is the nature of our products and services, as presented in Note 5, "Revenue, Deferred Revenue and Prepaid Commissions." All our revenues are derived from external customers. The table summarizing the disaggregation of the revenue by geography is disclosed in Note 5 , "Revenue, Deferred Revenue and Prepaid Commissions."

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

This Quarterly Report on Form 10-Q ("Quarterly Report") contains forward-looking statements and information relating to Spok Holdings, Inc. and its subsidiaries (collectively, “we,” "us," “Spok,” “our” or the “Company”) that set forth anticipated results based on management’s current plans, known trends and assumptions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements that are predictive in nature, that depend upon or refer to future events or conditions, or that include words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “will,” “target,” “forecast” and similar expressions, as they relate to Spok are forward-looking statements.

Although these statements are based upon current plans, known trends and assumptions that management considers reasonable, they are subject to certain risks, uncertainties and assumptions, including, but not limited to, those discussed in this section and "Risk Factors" below and under the captions “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”),” and “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 ("2024 Annual Report"). Should known or unknown risks or uncertainties materialize, known trends change, or underlying assumptions prove inaccurate, actual results or outcomes may differ materially from past results and those described herein as anticipated, believed, estimated, expected, intended, targeted or forecasted. Investors are cautioned not to place undue reliance on these forward-looking statements.

The Company undertakes no obligation to update forward-looking statements. Investors are advised to consult all further disclosures the Company makes in its subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K that it will file with the SEC. Also note that, in the 2024 Annual Report, the Company provides a cautionary discussion of risks, uncertainties and possibly inaccurate assumptions relevant to its business. These are factors that, individually or in the aggregate, could cause the Company’s actual results to differ materially from past results as well as those results that may be anticipated, believed, estimated, expected, intended, targeted or forecasted. It is not possible to predict or identify all such risk factors. Consequently, investors should not consider the risk factor discussion to be a complete discussion of all of the potential risks or uncertainties that could affect Spok's business, statement of operations or financial condition, subsequent to the filing of this Quarterly Report.

Overview

The following MD&A is intended to help the reader understand the results of operations and financial condition of Spok. This MD&A is provided as a supplement to, and should be read in conjunction with, our 2024 Annual Report and our unaudited Condensed Consolidated Financial Statements and accompanying notes. A reference to a “Note” in this section refers to the accompanying Unaudited Notes to Condensed Consolidated Financial Statements.

Spok, acting through its indirect wholly owned operating subsidiary, Spok, Inc., delivers smart, reliable clinical communication and collaboration solutions to organizations, primarily in the United States healthcare industry, to help protect the health, well-being and safety of individuals. Organizations rely on Spok for workflow improvement, secure messaging, paging services, contact center optimization and public safety response.

Business

See Note 1, "Organization and Significant Accounting Policies" in Item 1 of Part I of this Quarterly Report and Item 1. "Business" of Part I of the 2024 Annual Report, which describe our business in further detail.

Results of Operations

The following table is a summary of our Condensed Consolidated Statement of Operations for the three months ended March 31, 2025 and 2024:


	For the Three Months Ended March 31,				Change
(Dollars in thousands)	2025		2024		Total		%

Revenue:
Wireless revenue	$	18,474	$	18,595	$	(121)	(0.7)	%
Software revenue	17,820		16,314		1,506		9.2	%
Total revenue	36,294		34,909		1,385		4.0	%
Operating expenses:
Cost of revenue (exclusive of items shown separately below)	7,212		7,139		73		1.0	%
Research and development	3,055		2,951		104		3.5	%
Technology operations	5,850		6,299		(449)		(7.1)	%
Selling and marketing	4,845		4,149		696		16.8	%
General and administrative	8,398		7,984		414		5.2	%
Depreciation and accretion	859		1,068		(209)		(19.6)	%
Severance and restructuring	57		428		(371)		(86.7)	%

Total operating expenses	30,276		30,018		258		0.9	%
Operating income	6,018		4,891		1,127		23.0	%
Interest income	219		254		(35)		(13.8)	%
Other income (expense)	22		(2)		24		(1,200.0)	%
Income before income taxes	6,259		5,143		1,116		21.7	%
Provision for income taxes	(1,063)		(907)		(156)		17.2	%
Net income	$	5,196	$	4,236	$	960	22.7	%

Supplemental Information
Full-Time Equivalent ("FTE") Employees	418		392		26		6.6	%
Active transmitters	2,966		3,165		(199)		(6.3)	%

Revenue

We offer a focused suite of unified clinical communications and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.

We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical and critical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers. Our primary market is the healthcare provider industry, particularly hospitals. While we have historically identified hospitals with 200 or more beds as the primary targets for our software solutions, as well as our paging services, we have expanded our focus to include smaller hospitals with shorter sales cycles, including academic medical centers.

Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection for both one-way and two-way messaging subscribers) is presented as wireless revenue in our Condensed Consolidated Statements of Operations. Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software), and post-contract support (ongoing maintenance), is presented as software revenue in our Condensed Consolidated Statements of Operations. Our software is licensed to end users under an industry standard software license agreement.

Refer to Note 5, "Revenue, Deferred Revenue and Prepaid Commissions" in the Notes to Condensed Consolidated Financial Statements for additional information on our wireless and software revenue streams.

The table below details revenue for the periods stated:


	For the Three Months Ended March 31,				Change
(Dollars in thousands)	2025		2024		Total		%

Revenue - wireless:
Paging revenue	$	17,607	$	17,970	$	(363)	(2.0)	%
Product and other revenue	867		625		242		38.7	%
Total wireless revenue	18,474		18,595		(121)		(0.7)	%

Revenue - software:
License	2,631		2,626		5		0.2	%
Professional services - projects	4,471		3,561		910		25.6	%
Professional services - managed services	1,315		464		851		183.4	%
Hardware	321		384		(63)		(16.4)	%


Maintenance revenue	9,082		9,279		(197)		(2.1)	%
Total software revenue	17,820		16,314		1,506		9.2	%
Total revenue	$	36,294	$	34,909	$	1,385	4.0	%

Wireless Revenue

Wireless revenue is generally reflective of the number of units in service and measured monthly as Average Revenue Per User ("ARPU"). On a consolidated basis, ARPU is affected by several factors, including the mix of units in service and the pricing of the various components of our services. The number of units in service changes based on subscribers added, referred to as gross placements, less subscriber cancellations, or disconnects.

The decrease in wireless revenue for the three months ended March 31, 2025, as compared to the same period in 2024, reflects a decrease in paging revenue, primarily driven by , compared to the same period in the secular decrease in our wireless units in service, from 753 thousand units as of March 31, 2024 to 705 thousand units as of March 31, 2025. This decrease was partially offset by an increase in ARPU, as a result of price increases initiated in September 2024. For the three months ended March 31, 2025, ARPU was $8.24 as compared to $7.89 for the same period in 2024. The decrease in paging revenue was partially offset by an increase in product revenue, driven by the pricing increase on one-time fees assessed for pagers not returned at contract termination, implemented in early 2025. Product revenue includes one-time fees when customers cancel our services and is highly variable as the fees are charged to customers when pagers are disconnected and the customer is unable to return the units.

We believe that demand for wireless services will continue to decline for the foreseeable future in line with recent trends, as our wireless products and services are replaced with other competing technologies, such as the shift from narrowband wireless service offerings to broadband technology services.

The following reflects the impact of subscribers and ARPU on the change in paging revenue:


	For the Three Months Ended March 31,						Change Due To:
(in thousands)	2025		2024		Change		ARPU		Units

Paging revenue	$	17,607	$	17,970	$	(363)	$	746	$	(1,109)

As demand for one-way and two-way messaging has declined, we have developed or added service offerings, such as encrypted paging and Spok Mobile with a pager number, to increase our revenue potential. These service offerings, along with the nominal increases in the standard rate, are designed to mitigate the decline in our wireless revenue. We will continue to explore ways to innovate and provide customers with the highest value possible.

Software Revenue

Software revenue consists primarily of license and subscription revenues for our healthcare communications solutions, revenue from the sale of hardware that facilitates the use of our software solutions, professional services revenue related to the implementation of our solutions, and maintenance revenue that is generated from the ongoing support of our software solutions or related hardware, typically contracted for a period of between one and three years.

To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition. Our software projects generally originate from fixed-bid contracts, although many involve a protracted sales cycle and may result in unforeseen complexity and deviation from the original scope. The time needed to complete projects, therefore, may not align with our original expectations, which affects our backlog. As a result, software revenue may fluctuate on a short-term basis, and we generally evaluate longer-term trends when managing this business.

Software revenue increased during the three months ended March 31, 2025, compared to the same period in 2024. The increase is primarily due to increases in professional services revenue, resulting from increased sales and the ratable benefit from our managed services offering as well as additional hiring efforts over the last 12 months as we aligned staffing levels with our backlog which have grown as a result of our operations bookings results.

Operating Expenses

Our operating expenses are presented in functional categories. Certain of our functional categories are especially important to overall expense control and management. These operating expenses are categorized as follows:

•Cost of Revenue. These are expenses we incur for the delivery of products and services to our customers and consist primarily of hardware, third-party software, outside services expenses and payroll and related expenses for our professional services, logistics, customer support and maintenance staff.

•Research and Development. These expenses relate primarily to the development of new software products and the ongoing maintenance and enhancement of existing products. This classification consists primarily of employee payroll and related expenses, outside services related to the design, development, testing and enhancement of our solutions and, to a lesser extent, hardware equipment. Research and development expenses exclude any development costs that qualify for capitalization.

•Technology Operations. These are expenses associated with the operation of our paging networks. Expenses consist largely of site rent expenses for transmitter locations, telecommunication expenses to deliver messages over our paging networks, and payroll and related expenses for our engineering and pager repair functions. We actively pursue opportunities to consolidate transmitters and other service, rental and maintenance expenses in order to maintain an efficient network while simultaneously ensuring adequate service for our customers. We believe continued reductions in these expenses will occur for the foreseeable future as we continue to consolidate our networks, although the benefits of such network rationalization efforts and resulting costs savings will continue to decline.

•Selling and Marketing. The sales and marketing staff are involved in selling our communication solutions primarily in the United States. These expenses support our efforts to maintain gross placements of units in service, which mitigated the impact of disconnects on our wireless revenue base, and to identify business opportunities for additional or future software sales. We maintain a centralized marketing function that is focused on supporting our products and vertical sales efforts by strengthening our brand, generating sales leads and facilitating the sales process. These marketing functions are accomplished through targeted email campaigns, webinars, regional and national user conferences, monthly newsletters and participation at industry trade shows. Expenses consist largely of payroll and related expenses, commissions and other costs such as travel and advertising costs.

•General and Administrative. These are expenses associated with information technology and administrative functions, including finance and accounting, human resources and executive management. This classification consists primarily of payroll and related expenses, outside service expenses, taxes, licenses and permit expenses, and facility rent expenses.

•Depreciation and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories. This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations and accretion of asset retirement obligations.

The following is a review of our operating expense categories for the three months ended March 31, 2025, and 2024.

Technology operations: decreased by $0.4 million, or 7.1%, for the three months ended March 31, 2025, compared to 2024. The decrease was driven by a reduction in the number of active transmitters, resulting from our network rationalization efforts. The number of active transmitters, which directly affects our telecommunications and site rent expenses, declined 6.3% from March 31, 2024 to March 31, 2025. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.

Selling and marketing: increased by $0.7 million, or 16.8%, for the three months ended March 31, 2025, compared to 2024. The increase was primarily driven by additional headcount, higher advertising and events expenses due to increased trade show participation and overall travel, and higher commissions related to software operations bookings compared to the same period in 2024.

General and administrative: increased by $0.4 million, or 5.2%, for the three months ended March 31, 2025, compared to 2024. The increase was primarily driven by the timing of certain technology and outside services costs related to maintaining compliance with regulations compared to the same period in 2024.

Income taxes: Provision for income taxes was $1.1 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively. Provision for income taxes increased for the three months ended March 31, 2025 compared to the same period in 2024, primarily due to the effect of the anticipated annual effective tax rate change resulting from certain permanent tax differences, estimated research and development tax credits and related valuation allowance, and certain discrete items. Further details can be found in Note 11, "Income Taxes" in the Notes to Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

Cash and Cash Equivalents

As of March 31, 2025, we held cash and cash equivalents of $19.9 million. The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. We maintain a majority of our cash and cash equivalents in accounts with major United States and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we would be able to access uninsured funds in a timely manner or at all. Any inability to access or delay in accessing these funds could adversely affect our business, financial condition and results of operations.

Cash Sources

Our primary sources of liquidity have been our cash flows generated from operations and existing cash and cash equivalents. We maintain a level of liquidity sufficient to allow us to meet our cash needs in both the short term (next 12 months) and long term (beyond 12 months). At any point in time, we maintain approximately $5.0 million to $10.0 million in our operating accounts at third-party financial institutions. While we monitor daily the cash balances in our operating

accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.

Cash Uses

We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and repurchases of our common stock. We may also consider using cash to fund or complete opportunistic investments and acquisitions that we believe will provide a measure of growth or revenue stability while supporting our existing operations.

In February 2022, the Board of Directors authorized a share repurchase program for up to $10 million of the Company’s common stock. This repurchase authority allows us, at management's discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.

Cash Flows Overview

In the event that net cash provided by operating activities and cash on hand are not sufficient to meet future cash requirements, we may be required to reduce planned capital expenses, reduce or eliminate our cash dividends to stockholders, not repurchase shares of our common stock under the share repurchase program, sell assets or seek additional financing. We can provide no assurance that reductions in planned capital expenses or proceeds from asset sales would be sufficient to cover shortfalls in available cash or that outside financing would be available on acceptable terms.

Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at March 31, 2025, should be adequate to meet our anticipated cash requirements for the short term (next 12 months) and long term (beyond 12 months).

The following table sets forth information on our net cash flows from operating, investing, and financing activities for the periods stated:


	Three Months Ended March 31,				Change
(Dollars in thousands)	2025		2024

Net cash provided by operating activities	$	2,253	$	1,998	$	255
Net cash used in investing activities	(745)		(875)		130
Net cash used in financing activities	(10,790)		(9,814)		(976)

Operating Activities

As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements. Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses.

Our operating cash results primarily from cash received from our customers, offset by cash payments we make for products and services, operating expenses and income taxes. Significant non-cash expenses include depreciation and accretion, deferred income tax expense and stock-based compensation. The cash impact from actual transaction gains and losses is reflected in the change in working capital.

For the three months ended March 31, 2025, and March 31, 2024, net cash provided by operating activities was $2.3 million, and $2.0 million, respectively, primarily due to an increase in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.

Investing Activities

For the three months ended March 31, 2025, and 2024, net cash used in investing activities was $0.7 million and $0.9 million, respectively. Net cash used in investing activities reflects purchases of property and equipment.

Financing Activities

For the three months ended March 31, 2025, and 2024, net cash used in financing activities was $10.8 million and $9.8 million, respectively, primarily due to cash distributions to stockholders and the purchase of common stock for tax withholding purposes on vested equity awards.

On April 30, 2025, our Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock with a record date of May 23, 2025 and a payment date of June 24, 2025. This cash dividend of approximately $6.4 million, applicable to our common stock outstanding, will be paid from available cash on hand.

Commitments and Contingencies

In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Purchase obligations are defined as agreements to purchase goods or services that are enforceable, legally binding, non-cancelable, have a remaining term in excess of one year and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable pricing provisions; and the approximate timing of transactions. The amounts of such obligations are based on our contractual commitments; however, it is possible that we may be able to negotiate lower payments if we choose to exit these contracts before their expiration date.

Our contractual payment obligations for operating leases apply to leases for office space and transmitter locations. Substantially all of these leases have lease terms ranging from one month to five years. We continue to review our office and transmitter locations and intend to replace, reduce or consolidate leases where possible. As we reach certain minimum frequency commitments, as outlined by the United States Federal Communications Commission, we may be unable to continue our efforts to rationalize and consolidate our networks.

We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As such, we are not exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in such relationships.

The Company evaluates contingencies on an ongoing basis and establishes loss provisions for matters in which losses are probable and the amount of loss can be reasonably estimated.

The following table provides the Company's significant commitments and contractual obligations as of March 31, 2025:


	Payments Due by Period
(Dollars in thousands)	Total		1 year or less		1 to 3 years		3 to 5 years		More than 5 years

Operating lease obligations	$	9,761	$	3,201	$	4,065	$	1,515	$	980
Unconditional purchase obligations	4,589		2,218		2,371		—		—
Total contractual obligations	$	14,350	$	5,419	$	6,436	$	1,515	$	980

Refer to Note 6, "Leases" and Note 12, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for further discussion on our commitments and contingencies.

Related Party Transactions

See Note 13, "Related Parties" in the Notes to Condensed Consolidated Financial Statements for a discussion regarding our related party transactions.

Critical Accounting Policies and Estimates

The preceding discussion and analysis of financial condition and operations is based on our Condensed Consolidated Financial Statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of our Condensed Consolidated Financial Statements requires management to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses, and related disclosures. On an ongoing basis, we evaluate estimates and assumptions, including, but not limited to, those related to the impairment of long-lived assets and goodwill, accounts receivable, revenue recognition, depreciation expense, asset retirement obligations, and income taxes. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no changes to the critical accounting policies reported in the 2024 Annual Report that affect our significant judgments and estimates used in the preparation of our Condensed Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of March 31, 2025, we had no outstanding debt and no revolving credit facility.

Foreign Currency Exchange Rate Risk

We conduct a limited amount of business outside the United States. The financial impact of transactions billed in foreign currencies is immaterial to our financial results and, consequently, we do not have any material exposure to the risk of foreign currency exchange rate fluctuations.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management carried out an evaluation, as required by Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with the participation of our principal executive officer and our principal financial officer, of the effectiveness of our disclosure controls and procedures, as of the end of our last fiscal quarter. Disclosure controls and procedures are defined under Rule 13a-15(e) under the Exchange Act as controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective as of March 31, 2025.

Changes in Internal Control over Financial Reporting

There were no changes made to the Company’s internal control over financial reporting during the three months ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Refer to Note 12, "Commitments and Contingencies" in the Notes to Condensed Consolidated Financial Statements for information regarding legal proceedings in which we are involved.

ITEM 1A. RISK FACTORS

The risk factors included in “Item 1A. Risk Factors” of Part I of the 2024 Annual Report have not materially changed during the three months ended March 31, 2025.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The Company did not repurchase any shares of its common stock during the three months ended March 31, 2025.

ITEM 5. OTHER INFORMATION.

Securities Trading Plans of Directors and Executive Officers

During the three months ended March 31, 2025, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K.

ITEM 6. EXHIBITS

The exhibits listed in the accompanying Exhibit Index below are filed or incorporated by reference as part of this report.

EXHIBIT INDEX

Incorporated by Reference

Exhibit Number

Exhibit Description

Form

File No.

Exhibit/Appendix

Filing Date

Filed/Furnished Herewith

10.1†

Spok Holdings, Inc. 2025 Short-Term Incentive Plan

10-K

001-32358

10.14

2/27/2025

Filed

31.1

Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

31.2

Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

Filed

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350

Furnished

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350

Furnished

101.INS

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document*

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema*

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation*

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition*

Filed

101.LAB

Inline XBRL Taxonomy Extension Labels*

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation*

Filed

SEC Form 10-Q filed by Spok Holdings Inc.