Q3 2022 Spok Holdings Inc Earnings Call
Greetings and welcome to the spoke holdings third quarter 2022 earnings call. At this time all participants are in a listen only mode. If anyone should require operator assistance. During the conference. Please press star zero on your telephone keypad.
As a reminder, this conference is being recorded.
Now my pleasure to introduce your host Lisa Fortuna you.
You may begin.
Hello, everyone and welcome to smoke Holdings third quarter 2022 earnings call I'm joined by Dennis Kelly, Chief Executive Officer, Mike Wallace, President spoke Inc, and Chief operating Officer, and Kelvin Rice, Chief Financial Officer.
I want to remind everyone that todays conference call May include forward looking statements that are subject to risks and uncertainties relating to spokes future financial and business performance. Such statements May include estimates of revenue expenses and income well as other predictive statements or plans, which are dependent upon future events or.
Condition.
These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results.
Actual results could differ materially from those anticipated in these forward looking statements.
Although these statements are based upon assumptions that the company believes to be reasonable they are subject to risks and uncertainties.
Please review the risk factors section relating to our operations and business environment, which are contained in our third quarter 2022, its Form 10-Q and related documents with the Securities and Exchange Commission Commission.
Please note that spoke assumes no obligation to update any forward looking statements from past or present filings and conference calls.
With that I'll turn the call over to Vince.
Thank you and good morning, everyone and thank you for joining us for our third quarter 2022 earnings call.
Today, we will share with you an update on how our strategic business plan is progressing as.
As well as our financial results for the quarter.
I'll start by reviewing the agenda for today's call the order will be as follows.
I'll begin by providing a corporate and strategic overview spoke including an update on our strategic business plan.
Then we will cover our third quarter and year to date 2022 as well as year to date pro forma results.
Next we'll cover our updated guidance for 2022 as well as review one time restructuring costs related to our strategic pivot and finally, we'll wrap up and take your questions.
To begin I want to provide an updated corporate and strategic overview of smoke.
Smarter faster clinical communication is more important today than ever before today I will share with you all spoke with a combination of software and wireless products deliver smarter faster clinical communications across our customer base and especially in the hospital setting where time and delivery consistency is critical.
<unk> to patient outcomes.
For those of you who renewed and spoke story spoke was formed in 2000 and for the combination of Metro calling arch wireless.
The company was renamed to USA mobility, and adopted a free cash flow business and right sizing strategy designed to harvest and distribute cash to shareholders mitigate subscriber erosion and focus on our core health care sector in 2011, USA mobility acquired M Com software in order to.
A future platform for growth arrest, the erosion of our topline and mitigate our paging churn in the health care market.
These two integrated service lines were rebranded in 2014 as the businesses spoke that you know today.
On February 17th 2022.
We announced our strategic business plan pivot to prioritize maximization of free cash flow with the goal of returning capital to shareholders. Our focus on return of capital includes distributing our annual free cash flow, which will fund the majority of our dividend distributions going forward supplemented by cash on there.
Balance sheet.
We right sized the company by streamlining management and employee head count and pivoting away from our spoke go product the focus on cash flow generation and stabilizing revenue and our core care connect suite and wireless service lines.
Spoke has an excellent track record of driving revenue and cash flow from these business lines and enjoys a significant market leadership position and narrow band personal communication services and hospital call Center software.
Since the strategic pivot in February morale has been high and spoke has seen a significant improvement in virtually all areas, including sales product development and overall execution over the past three quarters spoke has generated $16 9 million of pro forma free cash flow and has returned 18.
<unk> 8 million in cumulative capital to shareholders since the implementation of the strategic business plan.
Again as I noted previously spoke has an excellent track record of driving revenue and cash flow from our business lines and enjoys the market leadership position in hospital call Center software solutions and narrow band personal communications wireless services, we have.
Over 2200 health care organizations as customers, representing the who's who of hospitals in the United States. We have built our solutions over many years and have a long standing valuable customer relationships, we honor and respect our customer service and providing world class health care and we value our place in their communications Echo.
System.
The overwhelming majority of or over 80% of our revenue is recurring in nature and we are a company with no debt, which provides us with significant flexibility. We continue to remain focused on investing in and enhancing our integrated care connect solution suite in order to continue our long standing relationships with the nation's law.
Leading health care providers we.
We believe these attributes combined with our experienced dedicated and committed employee base are what will allow us to generate significant cash that went to the future and return capital to our shareholders.
Okay.
Spokes solutions for critical communications provide a vital service for our trusted customers, which includes 18 of the top 20 adult hospitals and all 10 children's hospitals named to the U S News and World reports 2022 to 2020 three best hospitals honor roll in fact over the past decade, nearly every hospital named.
On the U S News and World report Best Hustle on her role has been U has used spokes clinical communications solutions.
Our market focus has evolved over the past 10 years to center on solving critical communications challenges that help hospitals and health systems improve patient outcomes.
While our focus has continued to grow in health care now representing approximately 85% of our total revenue. We also continue to serve hospitality and government accounts supporting public safety and large agencies.
[noise] spoke currently has over 600 total customers with our products being used at over 2200 hospital locations 50.
50% of these customers are wireless only 29% of our software only and 21% use both software and wireless.
For our software only market share by bed size. We currently have 287, 5% hospitals with 102 with one to 199 beds.
We have 388 customers are 30% of the market for hospitals with 200 to 599 beds and we currently have 156 customers are 50% of the market for hospitals was 600 beds or more and although we have a dominant market share of large hospitals 600 beds or more we are currently working on new and innovative way.
He used to serve the small mid size hospitals with a hosted model from our Plano data Center.
The spoke care connect platform is composed of three primary solutions, which drive our value proposition of improving patient outcomes by connecting clinical teams with the people and information they need when and where it matters. Most first with respect to patient customer relationship management, our contact center consoles.
Agents to connect staff and external collars and a fast reliable and professional manner, providing best in class service to care teams patients and their families.
They're able to do this at the hospital contact center or while working from home contact Center agents are not only key to bolstering our hospitals reputation in a competitive market, but also to directly assisting patient care by launching critical codes and providing physician answering services operators can also devote more time to customer serve.
By Offloading a portion of routine calls such as simple transfers, our internal calls with intuitive voice recognition technology.
Second efficient clinical workflows helped drive the complex work of care teams and spoke care connect helps care teams streamline them through smart alarm management and notification systems.
These systems provide full clinical context for alerts alarms and other important notifications and also can suppress nuisance alarms to prevent unnecessary interruptions.
Finally patient focused care team collaboration provides secure mobile and web messaging for fast and reliable care team communication.
Web based enterprise wide directory that can be accessed and updated by all roles and departments in real time insurers everyone has a single source of truth for contact details preferences and scheduling.
That way everyone can be assured that they are dealing with the most current accurate information when they're making decisions about patient care.
Now we deliver this value through three distinct console platforms that serve different aspects of the hospital space first our smart suite console is best suited for organizations with very complex workflows, such as academic medical centers and large ideas or integrated delivery networks.
Second our spoke console accommodate self care facilities needing basic functionality, such a smaller community hospitals.
And finally, our medical platform as the masks for health care customers, who require more advanced functionality, but not have the complexities of large idms.
And depending on the specific needs of the customer spoke off for several other products, which works seamlessly with our consoles. They include.
Alerting product products, such as messenger with its hundreds of systems integrations.
Our on call scheduling solution.
Emergency notification software through E. Notify speech recognition software through our speech product computer telephony integration a C. T. I a core strength of spoke and finally secure messaging bespoke mobile these products coupled with a centralized enterprise directory allows customers to streamline communications processes and.
Ensure information gets to the right person a role quickly.
So what exactly separate smoke care connect from our competitors spoke care connect is an integrated platform that has been purpose built from the ground up we do not rely on partnerships or acquisitions to do it. We do we offer extensive interoperability with the ability to connect to more than 300 hospital systems, including all the.
HR vendors to industry standards.
<unk> care connect is built around the enterprise directory the single source of truth for all communication that empower staff members to access an update contact details and schedules and real time.
We are proud to be device agnostic, no matter, which mobile device a part of our customers' device mix, we will support their decision on the right device for the right role, but the power spoke care connect behind it.
And lastly in the World. We all live in security is critical we maintain a robust cyber security program designed to identify risks protect against attacks detect adverse effects and respond and recover from attacks.
Smoke also operates the largest nationwide paging network for one way and two way paging, which represents our wireless business. We offer multiple nationwide frequencies in process over 100 million messages. A month. This includes paging as part of a full critical communication platform with leading edge software.
And we've recently brought a new paging device to market our Gen. A pager, which continues to create great interest from our customer base and grow each quarter, providing a higher ARPA or average revenue per unit, adding to the stability of our wireless revenue stream.
So why do health care organizations still value. Our pagers are pages can complement secure messaging when you have staff and do not need a smartphone to do their job, but when you need additional technology to rely on during critical code or other time sensitive events.
We offer a HIPAA compliant encrypted pagers like a new Gen a pager.
Our pages are tried and true and cost effective to ensure communications from cold calls and disaster scenarios.
And then due to the simulcast and high power nature of our wireless networks paging works during events on self service can be offline are overloaded.
We have a long history and track record of running this company for free cash flow and returning capital to shareholders since our creation in 2000 and for smokers returned over $640 million of our free cash flow to stockholders through a combination of dividends and share repurchases and we will continue to do so.
Total spoke has generated close to $1 billion in cumulative free cash flow since our formation back in 2004, and we're not even close to being done yet as you've seen from this year and you will see going forward.
So why spoke here's just some of our attributes number one spoke helps improve patient satisfaction and H cap scores or hospital consumer assessment of healthcare providers and systems scores, which allows for objective comparisons of hospitals across a variety of metrics to inform health care consumers about.
Our relative standard of care at each facility.
Number two we reduce alarm fatigue.
Number three we protect ph I are protected health information.
Number four.
Better EHR or electronic health record irrigation.
Five contact center consolidation.
Number six capacity management optimization.
And number seven we have the largest and most reliable paging network in the nation.
Now before we get into our third quarter 2022 highlights I'd like to remind everyone that we continue to remain committed to our mission of being a strategic partner of choice for enterprise grade clinical communications and patient care coordination.
Commitment has allowed spoke to create a significant market position with long standing relationships with the nation's leading health care providers spoke as a best in class Paging network currently the largest in the United States, which continues to generate strong results. Additionally spoke continues to provide a valuable and critical service to our customer.
Delivering information to care teams win where it matters most to improve patient outcomes.
As previously discussed our spoke care connect solutions provide a suite of products with potential for new license sales and a valuable maintenance stream maintenance continues to provide a foundation under our legacy software business and it's important to maintain as we quickly transition to focus on cash flow generation.
As reflected in our guidance.
We are continuing to invest more in our legacy products as we progressed through our strategic pivot.
We believe this will drive future sales and upgrade opportunities and improve our results going forward in this important business line, while generating cash flow on a go forward basis.
We have a world class customer base and a large market share in health care contact Center solutions and we believe this represents a significant opportunity for the future.
Smoke continues to demonstrate a very predictable revenue base with over 80% of our revenue being recurring in nature coming from either our legacy wireless offerings are software and maintenance contracts.
This gives us confidence that we're not only on the right path forward for executing our strategic pivot, but also to maximize value for all shareholders. We believe that going forward, we will return significant cash flow to our shareholders and that our current stock valuation represents an attractive opportunity for share appreciation as well.
Now turning to our third quarter highlights.
Since the implementation of our strategic business plan eight months ago, we have been operating and cash flow business model featuring our wireless service line in our care connect suite software solutions with the goal of returning capital to shareholders I could not be more proud of our team here at spoke given what they've accomplished since the implementation of this plan as we continued to.
Cute on a strategic pivot during the third quarter.
This is evident in our results as we generated $2 9 million of GAAP net income and $4 7 million of adjusted EBITDA as you'll hear from Mike in detail with respect to our year to date pro forma results, we generated approximately $16 9 million and adjusted EBITDA, which is defined in the earnings release tables. This is arne.
non-GAAP calculation of cash flow generated by the company before net working capital items in the three quarters of the year, assuming we implemented our plan on January 1st.
Now I want to be clear that while we're pleased with the approximately $16 9 million and pro forma adjusted EBITDA for the first three quarters of 2022, we continue to expect to cover approximately 80% of our dollar twenty-five annual dividend this year, which equates to approximately $20 million per year from adjusted EBITDA as such our fourth quarter Pro.
Former adjusted EBITDA will be a bit lower than our run rate through the first three quarters capital expenditures are lumpy. This year due to supply chain lead times and while we did not receive a lot of pages in the third quarter, we expect to make up for some of that in the fourth quarter such that year, we'll still be consistent with our guidance on annual Capex.
That being said, we remain confident in our ability to deliver that $20 million level annually, we will share our improved 2023 outlook when we report fourth quarter results.
We've also continued to deliver on our strategic objectives driving revenue from our two service lines and investing in a targeted and limited manner such that we can return capital to shareholders.
The wireless service line of our business saw an average monthly revenue per unit increased to $7 40.
Our one 5% with units in service down only three 4% and our care connect suite of solutions continues to gain traction with third quarter software operations bookings, increasing by 26% as we've continued to see positive momentum from previous quarters. We have also been able to increase year to date software operations bookings by <unk>.
18% year over year with 49 of these deals worth over six figures. Each this is an exciting time for spoke in our pipeline continues to grow.
With that said I'd like to remind everyone that it does take time for these bookings to complete implementation and show up in our revenue, but we believe this is a good leading indicator for the health of our business.
Our expectations reflected in our guidance is to exceed our plan this year and continue making progress on cash flow generation of revenue stabilization in 2023 and beyond this will take time, but we're progressing ahead of plan and we expect to generate more cash this year than we anticipated when we announced the plan in the first quarter.
And we expect to generate more cash next year than we do this year.
As you know when we announced our strategic business plan in February we increased our quarterly dividend payment by 150% from 12, and a half cents per share to <unk> 31, and a quarter cents per share. We're returning $1 25 per share this year in dividends to our shareholders.
We're over three fourths of the way there since implementation of the plan in February $18 8 million in cumulative capital has now been returned to spoke stockholders. This return of capital includes distributing our annual cash flow, which will continue to fund the majority of our dividend distribution going forward supplemented by cash on our balance sheet.
Our expectation over time is we will continue to grow our annual cash flow and eventually cover our dividend.
As always the declaration and payment of future dividends are subject to the board's discretion and will depend on financial and legal requirements and other considerations.
Fiscal year 2022 half and continues to be a transition year for spoke given the implementation time required to execute and operationalize, our strategic shift to a cash flow focused model.
As we've previously mentioned we continue to anticipate that this transition will be completed by the end of this year with the majority of our right sizing already behind us as we move through this transition we will continue to update shareholders on our progress.
Okay. At this point before you hear from our President and Chief Operating Officer, Mike Wallace I'd like to recognize our new Chief Financial Officer Calvin Rice.
One was recently promoted to CFO in August and has been with spoke for the past eight years. Most recently as Chief Accounting Officer and controller carbon is an extremely talented financial executive with deep knowledge of our operations and has made numerous contributions since joining spoke he is available today for our Q&A session. After.
Our third quarter review and with that said I'd like to turn the call over to our President and Chief operating Officer, Michael Wallets.
Thanks, Vince and good morning, everyone and before I begin I as well, we'd like to congratulate Calvin on his promotion and new role.
With that I would now like to take a few minutes and provide a recap of our third quarter and year to date 2022 financial performance, which we reported yesterday.
I encourage you to review our 10-Q when filed as it includes significantly more information about our business operations and financial performance than we will cover on this call.
For the third quarter of 2022 total GAAP revenue was $33 7 million compared to revenue of $35 9 million in 2021.
Revenue for the quarter consisted of wireless revenue of $19 1 million, which was down 500000, or 3% from $19 $6 million and software revenue of $14 7 million down nine 4% from $16 2 million largely in line with our expectations.
With respect to wireless revenue third quarter 2022 performance was driven by a continued decline in Patriot unit churn on a year over year basis.
Net pager decline during the trailing 12 months was three 4% another record low with units in service declining by only 29000 units.
As a result wireless revenue for the third quarter remained solid declining.
Declining 3% compared to the prior year and in the range of our expectations.
The monthly paging revenue component of wireless, which represents 97% of overall wireless revenue declined by only two 3% on a year over year basis.
The remainder of wireless revenue relates to product sales, primarily through lost pager fees, which are onetime in nature, it's far less impactful to the ongoing value of this business.
On a year to date basis wireless revenue declined by five 1% compared to the prior year and again in the range of our expectations.
With monthly paging revenue component of wireless declining only four 3% on a year over year basis.
Turning to the third quarter software revenue, specifically maintenance revenue, which is the largest component of our software revenue was $9 2 million versus $9 6 million in the same period of the prior year or four 8% lower.
As we have discussed in previous quarterly calls and as we continue through this pivot with the focus being brought back to our care connect suite of software products. Our expectation is for maintenance revenue to be down slightly on a year over year basis, giving gross churn and uplift uplift levels remaining constant with prior quarters.
Professional services revenue was $2 8 million versus $4 2 million in the third quarter of 2021.
As we have stated in our earnings calls over the past two quarters related to our 2022 financial guidance.
We assumed an intentional reduction in services revenue.
Planned reduction in personnel to better align with our current backlog and to drive a higher rate of net cash flow and alignment with the strategic shift in our business plan and.
And again it is important to remember that services has not historically driven meaningful cash flow on a standalone basis, but has been viewed as an opportunity to expand our licensed footprint and customer engagement as well as to fulfill upgrade obligations under our maintenance contracts, which is critical in maintaining our existing customers.
Lastly license and hardware revenue was $2 7 million compared with $2 4 million in the same period of the prior year.
On a year to date basis total GAAP revenue was $101 3 million compared to revenue of $107 6 million in 2021.
Wireless revenue on a year to date basis was $56 6 million compared to $59 6 million.
Collecting net pager revenue churn in line with the trends seen in the third quarter.
And year to date software revenue of $44 7 million compared to $48 million in the prior period.
This was driven by maintenance revenue being down three 6% on a year over year basis.
<unk> services down 29% due to the intentional reduction in professional services resources to better align with backlog.
And which was offset by higher license revenue of 39% driven by the strong software operations bookings during the year.
Third quarter, adjusted operating expenses, which excludes depreciation amortization and accretion of 800000, and severance and restructuring costs of $1 5 million total $27 9 million in the third quarter compared to $39 4 million in 2021.
On a year to date basis, adjusted operating expenses were approximately $95 million compared to $114 7 million.
As Vince mentioned earlier, the streamlining of employee and management head count reduction is now substantially complete.
And we are now in the final stages of paying the severance costs associated with our strategic business plan.
Adjusted EBITDA, which is defined in our earnings release tables and in represents EBITDA before stock based compensation expense impairment of intangible assets.
<unk> of capitalized software development costs, and including capital expenditures as our non-GAAP calculation of cash flow generated by the company before net working capital items.
In the third quarter adjusted EBITDA was a positive $4 7 million compared with a negative $2 5 million in the same quarter of 2021 and reflects the progress made to date with our strategic pivot.
On a year to date basis, our adjusted EBITDA was a positive $1 1 million compared to a negative $4 5 million in 2021.
Now I'd like to discuss our pro forma year to date, adjusted EBITDA results, which exclude one time costs related to the strategic pivot as well as costs related to operations under our prior strategy that will not be incurred going forward.
Had the strategic changes been in effect as of January one 2022, our adjusted EBITDA would have been $15 8 million higher year to date.
This $15 8 million includes severance and restructuring costs of approximately $5 7 million.
Costs related to personnel reductions of $7 4 million and non payroll spokeo and other costs of approximately $2 7 million.
Inclusive of these adjustments our year to date adjusted EBITDA for the nine months ended September 32022 would have been $16 9 million.
However, it is important to note that adjusted EBITDA for the year to date period has been benefited from the timing of our capital expenditures. Our capex were purchases have been slowed by the effects of a tightening macro level supply chain environment.
Under normal circumstances, we would have expected our capex to be approximately $1 million higher for the year to date period.
Additionally, third the third quarter has benefited from the timing of certain expenses that we ultimately expect to be incurred during the fourth quarter.
Given where we stand with $16 9 million and pro forma adjusted EBITDA for the year to date period I want to underscore. The fact that we still expect to generate approximately 80% of our full year dividend.
Approximately $20 million and adjusted EBITDA for the full year and this is reiterated in our updated guidance that I will walk through next.
Turning to our guidance for full year for full fiscal year 2022.
As a reminder, the figures I'm going to discuss today are included in our guidance table in the earnings release. It had been updated from those previously provided for the second quarter 2022 financial guidance at our previous earnings call in July .
We now expect total revenue to be in the range of 130, $31 5 million to $136 million of which we expect wireless revenue to range between $74 5 million to $75 5 million.
Software revenue is expected to range from 57 million to $16 5 million.
We expect adjusted operating expenses for the full year of 2022 to be in the range of $123 million to $125 million and Capex will be in the range of $3 2 million to $3 9 million with the majority of Capex related to our wireless business.
These changes to our 2022 guidance served to further narrow the ranges previously provided and slightly improve the midpoint compared with our original guidance.
Now turning to our forecast for restructuring costs for 2022 as you can see from this slide we have increased our range for total restructuring costs from 6 million to $6 5 million from the second quarter, two our updated range of 7 million to $8 million.
Breaking this down we now expect severance and restructuring costs to be in the range of $5 7 million to $6 6 million at contractual terminations to be in the range of $1 3 million to $1 4 million.
There are two primary drivers that I would like to quickly expand upon to provide some additional insight for the increase.
Each of the items surfaced through our ongoing planning and preparation for 2023, which will continue through the fourth quarter.
Firstly, we identified additional employee severance costs, we expect to incur during the fourth quarter, which will result in lower ongoing payroll expense.
Secondly, we accelerated approximately $700000 of expense during the third quarter related to a satellite office space, which we no longer use and do not anticipate extending the lease which will lead to future savings.
With that I will now turn the call over to the operator for Q&A operator.
Okay.
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So you can pick up there.
Your question Sachin.
Our first question comes from the line.
With Lake Street Capital markets. Please proceed with your question.
Good morning, Thanks for taking the questions and congrats on the great results and progress here.
Maybe first <unk> came in nicely well above our asking that can you talk a little bit about the push and pull dynamics here and what's influencing and thinking about things like price increases mix.
<unk> change by hospital side. The next Gen version et cetera.
Sure Kyle and thank you for your comments much appreciated Calvin why don't you take the IP question sure. Thanks, Vince Ah Hey, Kyle Good morning, Yeah. So three primary factors on the RP front that I kind of want to point out the first is.
USF, which is a universal service funds, which is really just a pass through tax it's established at the direction of the FCC to.
Updating every quarter and it's pretty variable.
And on that front it can go up and it can go down.
As I mentioned its largely a pass through so as it goes up or down you're going to see that impacting product cost as well from a cost standpoint in the same manner really are net net a wash when it comes down to the bottom line.
That's going to be one of the biggest components that we've seen in that change in <unk>.
Secondarily, we've got the Gen <unk> product, which you mentioned, we're seeing great traction on that front, we get great feedback from all of the customers that we've introduced that too but right now it's still in its early stages and we're really seeing a relatively minor impact on overall <unk>. Although we are again really excited at that traction we've seen especially.
Actually over this this last quarter thirdly, we got the price increases as you've mentioned we did on about a third of our customer base are put into effect a price increase on September 1st. So you really only seen a partial effect of that in the third quarter. We do have another tranche of customers that we anticipate.
Increasing prices on in Q4, and there's a smaller subset of customers that have longer term contracts that will work with <unk> as our contracts kind of rescue I do want to point out we're very sensitive to customer churn here and we're just rolling this out in a very cautious manner, but we do anticipate as we head into next year really seen.
The full impact of those price increases.
Good job Calvin Thank you.
I appreciate that that's great.
And.
Maybe second question, excluding the restructuring costs, you mentioned being on track to generate that 20 million in EBITDA on an annualized basis and even more next year, which is excellent.
And this is a little under the the dividend payments, but the strong cash balance should support this three years the economy and you kind of mentioned in the press release prepared remarks could you talk about some of the key levers that you're focusing on that to drive margins further and kind of close this gap.
Yeah, Hey, Kyle it's Mike I'm Gonna go ahead and take take that question.
Yeah, a couple of things here I think I'd start out from a cost perspective.
Kind of the easiest to discuss I mean, we've taken the majority of costs as you would expect.
Out of the organization now we will obviously continue to.
To push that dynamic in and take as much cost out of the company as possible, but but really the biggest lever that we have as it relates to margin expansion is going to be on the top line.
Specifically with wireless.
Through the dynamics that Calvin just walked you through.
To the extent that we can slow down the erosion of our wireless revenue.
Helps and here's the thing both on wireless and software.
At the end of the day.
We get a lot of operating leverage.
To the extent that in the case of wireless we slow down erosion.
And as we've talked about previously on the software side.
We're looking to stabilize that revenue and then ultimately grow it in the next several years.
And like I said Theres, a great deal of operating leverage because we have a fairly large.
Fixed cost number.
Already embedded in our business so a lot of that.
Sort of top line benefit falls right to the bottom line. So over the next several years.
That dynamic is going to come from from really what we're able to do on the top line.
Okay.
That's great thanks for that and it kind of following up on that how should we think about the additional restructuring costs going forward I know you talked about it in the prepared remarks, a little bit presumably work through once we get through Q4.
We should be past the majority of that.
Is that is that crack to I guess any help here with modeling would be great.
Hey, Carter. This is Calvin I can take that one as well and Youre absolutely right. Once we get through Q4 <unk>.
Should largely be wrapped and really from a modeling perspective, you know certainly there will continue to be some of those costs sprinkled in but theyre going to be very minor in nature relative to kind of what we've seen over the last decade, and really related to the to the wireless business as we continue to optimize those costs in relation to to their revenues.
Okay got it and then two more quick ones here it was great to see the strong bookings in the quarter.
Would love if you could provide any additional color regarding the six figure deal size of the hospital where.
Are they new clients kind of product categories et cetera.
Yeah, Colin Vince I'll take that one and I think that the best way, it's probably by way of some examples but first I mean, since we've announced the pivot our sales force is now 100% focused on you know Cai.
What they grew up with what they had their long standing relationships with the solutions and the applications, where we're still the dominant player in the market with respect to contact center solutions inside the hospital. So they're operating in their sweet spot right now and that's a good thing and they're turning in really really good numbers. We're also benefiting from the tailwind.
Coming out of Covid for two years during Covid hospitals really didn't start any new projects. They didn't want to buy a whole lot of new stuff and that's getting better they're not 100% healthy you know.
Financially in resource wise, but it's getting a lot better yeah with respect to some of the deals. We got this year I mean, here's a couple of examples of a couple of really big ones and then I'll give you a couple of examples of some medium sized deals that were a result of cross selling between our wireless and our software service lines. The first one's a $700000 deal we got with a large hospital systems.
I'm in the northwest they bought our entire platform, including our console across the entire enterprise. It's a multiyear deal. The total contract value across three years is about $1 5 million, but this deal include half a million of software license upfront.
Three years of maintenance and support and professional services as well and so really good example of the value that I think a large health system finds on our software and really expanding our software to other locations, where they currently didn't have spoke solutions and really expanding our footprint across our entire enterprise.
It was a great great win for our team and another one we got was at $300000 deal in Hawaii with another very large hospital system. They did not have.
And integrated health care grade operator console they rely on a bunch of you know old nine integrated into life systems to support their critical communications theyre going to implement our spoke console to all their Hawaiian facilities offer operational parity with what they have on the mainland you know, it's just an example and customers like this <unk>.
And spoke it's really a testament to our ability to understand the needs and demonstrate a solution that really really fits those needs and it also shows that largest health systems in the world really continue to value our ability to deliver solutions as their trusted partner.
An example, a couple of examples of two medium sized deals one was $293000 that was a new logo deal to a small medium sized hospital up in Massachusetts, they're existing wireless customer with us. They didn't have any software we've been working with them to cross sell our console solutions.
They recognize they needed our solution for their organization they used to funding from another area of the organization to bring our console solution with our web application and on call scheduling to them <unk>.
Accessible deal and a great example of collaboration between our wireless and our software sales team and similarly, we had a small university medical center in Texas. They did $127000 new logo deal with us they had been a long standing wireless customer that did not have our software we approached them with the cross selling opportunity there.
Ignites, what we could do for them a lot of references they bought the system for their adult hospital for $127000 in the third quarter and the good news is in the fourth quarter, even though they're not big they're going to buy another $100000 from us for their children's hospital in in November . So good news. Good. Good. Examples. These are the kinds of things that we're doing and we.
Expect to do a lot more of these going forward.
No that's great. Thanks for those examples.
And great to hear that I guess, just lastly.
I'm curious you mentioned a little bit Vince in the call, but how is the launch of Gen eight and going I guess any.
Client feedback.
Or anything you can provide here.
Yeah.
Yeah, I mean, we're really excited about it it's like Calvin said, though its early days I mean, we think the feedback has been Fabulous we had our connect conference a couple of weeks ago over 300 registrants.
Some of the best feedback we got from that conference was on the Gen eight Pedro and the piece that our CIO did with respect to talking about its benefits we've more than doubled our units in service in the third quarter and I think right now we're up to close to 6000 units out there, they're getting a significantly higher <unk> than what our normal pay.
<unk> get but I want to caution you on that because we're still at a point, where we're evaluating what the proper price for that product should be in the market because we want a balance a much higher <unk> with kind of volume and getting more units out out in service and we also have to time that with and coordinate that with some supply chain.
Challenges that we've had in this past year that seem to be mitigating I've mentioned in my comments that our capex has been lumpy on the paging side look our capex is going to be right in that.
Sweet spot of where we set our guidance would be this year, if the vendors can ship everything to us in the fourth quarter that they promised and so part of that's going to impact. The tube. We think G&A has a great future RP and an enhancer for our revenue line and wireless for US as you know it's exclusive to US no one else can.
Can have it you know its something that we developed its got a kind of paper white type screen to us we can read it outside the system much more modern user interface and that helps us with the younger in turns in our medical professionals. So we're really excited about it's going to breathe new wind into that wireless service line that business is going to be around for a long time, it's gone.
Throw awful lot of cash and we're going to take that cash and give it back to our shareholders.
Okay, well, hey, great update thank Mike Calvin Thanks for taking my question.
Perfect.
Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.
Our next question comes from the line of David Wright with Henry Investment Trust. Please proceed with your question.
Yeah. Good morning, Thanks for taking my question.
That was a really excellent management presentation gave a great overview of the company made me Wonder if if spoke has any plans to.
Go out on the IR circuit to tell the story. Thanks.
Yeah. Yeah. We are we're actually are working with a couple of organizations right now to get much more aggressive in telling the story I wanted to do that overview today, just to kind of reintroduce us because it's been a couple of quarters since we announced our pivot things are going really well and as I said morale up customers are really happy with what we're doing and what the feedback.
Back on our business plans so.
Corey that we need to get out there and tell the story more aggressively get more analyst coverage and it is at the top of our to do list as soon as we finish this call today.
Okay, well good luck going forward.
You very much.
Yeah.
Thank you. Our next question comes from the line of George I'm sorry.
It seems that we have no other questions at this time I'll turn the floor back to Mr. Kelly for any final comments.
Okay, well look I want to thank everybody for joining us today, we really appreciate your support and your interest in spoke we look forward to updating you again next quarter. When we report and hopefully more good news from smoke coming down the Pike, everyone have a great day. Thank you.
Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.