Q2 2023 Spok Holdings Inc Earnings Call

Good morning, and welcome to the spoke holdings second quarter 2023 earnings call at.

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.

It is now my pleasure to introduce your host Al Galgano.

You may begin Hello, everyone and welcome to scope Holdings second quarter 2023 earnings call I'm joined by Vince Kelly, Chief Executive Officer, Mike Wallace, President kept smoking and Chief operating officer at <unk>.

Rice Chief Financial Officer.

After a brief presentation by management, we will open up the call to your questions.

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.

Statements May include estimates of revenue expenses and income as well as other predictive statements or plans, which are dependent upon future events or conditions. 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 spokes actual results may 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 second quarter 2023 Form 10-Q and related documents.

Files with the Securities and Exchange Commission please.

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 al and good morning, everyone. Thank you for joining us for our second quarter 2023 earnings call.

I want to preface my comments today with a reminder for everyone that our mission has not changed and simply put is to generate cash and return capital to our shareholders over the long term.

We do this by responsibly growing revenue, while closely managing our operating expenses and capital expenditures that.

That was our goal when we embarked upon our strategic pivot 18 months ago and that is a bowl we are achieving and intend to continue to achieve.

We believe we are on a sustainable path to continue paying our quarterly dividend at these levels for the foreseeable future.

Further we believe our cash flow was on a path to grow into our current dividend level and eventually cover it in full on an annual basis as we've done in the first half of 2023.

That is our job and our primary focus returning capital to shareholders has been our legacy and we feel good about getting back to our roots in doing so.

Today, we will share with you an update on how our strategic business plan is progressing in support of this goal.

As well as our financial results for the quarter I'll start by reviewing the agenda for today's call.

Order will be as follows.

We will begin by providing a review of our operational performance for the quarter.

I'll, then turn the call over to Calvin to review, our second quarter 2023 financial highlights and performance in more detail.

We will then conclude our prepared remarks, with our business outlook and financial guidance for 2023 and then we'll open up the call to your questions.

Any conversation about spoke second quarter results has to start with how truly proud I am of this team and the performance that they were able to deliver in the period.

Most notably for the first time in the company's history, we were able to grow on a year over year basis, our consolidated revenue and also grow revenue in each of our product lines. Our team was able to shatter many of the performance records set in previous quarters, and we generated record levels of adjusted EBITDA result.

Sting and sequential growth in our cash balances.

We made tremendous progress in several other key performance areas, including wireless trends.

Software bookings and backlog levels.

And we continued our focus on expense management as we drove expense reductions on a year over year basis, while continuing to make the necessary investments in our product development and sales and marketing to support the growth of our spoke care connect and wireless solutions.

We look forward to continued success in the second half of the year and believe our extensive experience operating our established communication solutions will create significant value for stockholders by maximizing revenue and cash flow generation.

In short we're firing on all cylinders and are confident that as we enter the second half of the year, we're going to continue to outperform well.

While carbon will go into more detail regarding our forward looking guidance later in the call based on our performance in the second quarter. We are once again, increasing our guidance estimates for revenue and adjusted EBITDA generation.

We believe we are on track to grow consolidated revenue for 2023 on a year over year basis for the first time in our company's history and the low point of our revenue guidance reflects that.

Before I dive into our operational highlights for the second quarter, Let me take this opportunity to summarize our mission for those of you that may be new to our story, our strategic goal of simple one the business profitably and generate cash flow and return that capital to shareholders.

As I mentioned spoke as a proud legacy of creating stockholder value the free cash flow generation and we intend to continue this track record.

Since the beginning of our strategic pivot, which started 18 months ago spoke has returned approximately $38 million or $1 87 per share to our shareholders in the form of a regular quarterly dividend in fact since we founded this company in 2004 spoke has returned more than 660 million to our stockholders.

Either through our regular quarterly dividend special dividend or share repurchases.

In the second quarter 'twenty twenty-three this history of returning cash to our stockholders continues as we generated record levels of adjusted EBITDA and returned $6 2 million to our stockholders.

And we expect to pay dividends totaling approximately 25 million and 2023, that's what we did in 2022 spoke remains committed to our dividend policy and returning capital to our stockholders.

When you take into consideration our current cash balance distributions to stockholders share repurchases debt repayments and acquisitions.

Focus now generated more than $1 billion of free cash flow since our inception, our focus on maximizing cash over the long term supports the four major tenants of our strategy that was our number one.

<unk> investment in our wireless and software solutions number two <unk>.

Stabilizing and growing our revenue base number three.

Disciplined expense management.

And number four a stockholder friendly capital allocation plan.

Going forward, we believe our extensive expertise operating our established communication solutions and World class customer base will continue to create significant value for our stockholders.

In early 2022 we announced a new strategic business plan that set of priority on maximizing cash flow with the goal of returning capital to our shareholders.

As part of that strategic pivot, we made the decision to discontinue the development and sales of spoke go a cloud native clinical communication and collaboration platform and eliminate all associated costs.

In retrospect, it was a hard decision to make but it was the right decision.

During COVID-19 and since the market has changed significantly and we had to do the same.

That is how we will maximize our ability to return capital to our shareholders over the long run.

I'm happy to report that we have continued to execute on our business plan in the second quarter of 2023 we generated GAAP net income of $4 7 million or 23 cents per diluted share a 146% increase from net income of $1 9 million or 10 cents per diluted share in the prior year period.

We accomplished this while generating an all time high of 14 million in second quarter software operations bookings, a 90% increase from the prior year period, and generating year over year wireless revenue growth and record low unit churn of less than 1% in the quarter.

Amidst all the progress in creating a solid financial platform and shareholder friendly capital allocation strategy, we remain true to our mission of being a global leader in health care Communications, we deliver clinical information to care teams, when and where it matters most to improve patient outcomes spoke enable smarter faster clinical communications for our.

Customers.

We have over 2200 health care facilities as customers, representing the who's who of hospitals in the United States.

We have built our solutions over many years and have longstanding valuable customer relationships. This is coupled with the financial strength that over 80% of our revenue is reoccurring in nature and we are a company with no debt, which provides us significant flexibility.

Now, let me take a few minutes to provide some perspective on our massive sales performance in the second quarter.

Our 14 million up record software operations bookings included 23, new six figure customer contracts and three seven figure contracts. In fact, we closed one of our largest customer contracts in our history that totaled approximately $3 9 million.

This is particularly impressive as we believe that this contract represents only about 30% of the overall opportunity with this customer.

We've been working on this deal with the health care system for a number of years and it was executed during the quarter. Our team was also aggressive enabled to put a number of deals in place that we have slated for Q3 and Q4 we.

We don't expect this level of bookings success every quarter and that is reflected in our updated revenue guidance. Nevertheless, there are some very large deals out there and our team continues to hunt and we could see more big quarters like this in future periods, depending on our success and our customers' timing.

Let me review a couple of our new customer contracts with yet.

First there's a multimillion dollar deal we secured with one of the largest health systems in the nation cell system boasts 140 hospitals across 21 states and is committed to achieving cost savings through vendor consolidation and enterprise standardization.

Identified our spoke care connect platform is the national standard solution, but their hospitals paving the way for our partnership.

Our engagement with this health system includes the medical operator console.

Messenger managed professional services premium maintenance and support and value added services at 37 of their locations.

They asserted that our single communications platform allows them to achieve enterprise wide efficiency and improve patient care, while supporting their national standards.

We're excited about the prospects of expanding our support with this customer by expanding into other locations.

Another of our standout new contracts last quarter. It was one of our largest enterprise messenger customers a partnership that has been thriving for more than 13 years. This large east coast Health Care Center is 21 hospitals and 3200 beds.

In January of this year, we displaced the secure messaging messaging competitor at two locations a significant achievement. This demonstrates the effectiveness of our spoke mobile solutions.

In June of 2023 we further solidified our position in the industry by replacing another competitors contact center solution software for the organization's enterprise call Center. This is made possible through a multiyear engagement that included the deployment of our new spoke mobile and web directory.

With the deployment of 800 spoke mobile licenses and our enterprise Smart web they have access to secure and efficient communication channels, what's more our commitment to ensuring a smooth and successful deployment has earned us praise from our partners, we offer value added services, including workflow analysis and launch support.

To guarantee that our partners derive maximum value from our solutions.

This is just another example of our unwavering commitment to providing unmatched communication solutions to our clients.

We're pleased with the start of 2023 and it believes that reflects the dedication of our sales team and their ability to adapt to the shifting business environment for health care I T.

However, while our sales pipeline continues to develop in terms of size and quality I'd like to caution you about the nature of quarterly software license sales well, we're very pleased with the historic level of second quarter operations bookings. We believe it's more appropriate to look at bookings on a 12 month basis, a full year basis better normalizes both <unk>.

Positive and negative timing anomalies that can arise out of the sales cycle, we do not spend a great deal of time analyzing the sales performance of an individual quarter as opposed to viewing it in the broader context of our anticipated annual results.

We believe looking at growth in software operations bookings over an annual period is more reflective of the momentum that we're generating is most appropriate for investors as well.

With that said, we expect 2023 software operations bookings growth in the mid to upper teens for the full year.

On a final note I'd like to comment on our recent Investor relations activity and our goal of better communicating spokes investment thesis to the financial community.

At the beginning of the year, we've attended five investor conferences, and sponsored our own Investor day event in Dallas. Each of these presentations has been archived on our Investor Relations website, and we invite you to view. These presentations, we will continue to look for opportunities to tell our story to the investment community and focus on investor marketing activities.

We know the ultimate attraction come as a result of our business execution.

Also towards the end of the second quarter spoke was included in the Russell 2000 index.

On her to again be part of the Russell 2000 Index I believe this reflects what the spoke team has accomplished over the past year with our focus on generating cash flow and returning capital to stockholders. It is rewarding to see the efforts tough choices and hard work by our team pay off we look forward to continued success and believe our.

Extensive experience operating our established communication solutions will create additional value for our stockholders with that said I'd like to turn the call over to our Chief Financial Officer, Calvin Rice Calvin.

Thanks, Vince and good morning, everyone.

I would like to take a few minutes and provide a recap of our second quarter 2023 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.

Turning to our income statement in the second quarter of 2023, GAAP net income totaled $4.7 million or 23 cents per diluted share compared to net income of $1 9 million or 10 cents per diluted share in the similar 2022 period.

For the second quarter of 2023 total GAAP revenue was $36 5 million compared to $33 7 million in the second quarter of 2022.

Revenue for the quarter consisted of wireless revenue of $18 9 million, which was up 0.0 point $2 million or 1% from the prior year.

And software revenue of $17 6 million up 17, 2% from last year, reflecting the significant year over year increase in license revenue.

With respect to wireless revenue second quarter, 2023 totaled $18 9 million up on a year over year basis. This performance continues to be primarily driven by improvement in average revenue per unit or are too, which saw growth of 30 cents on a quarterly basis year over year.

This improvement is a result of the previously discussed pricing actions taken in late 2022.

<unk> of our higher priced Gen eight pager and increases and pass through fees, which account for roughly 45% of the RPM growth.

We also continued to see historically low levels of net unit churn as net units in service declined by less than three 5% on a trailing 12 month basis.

While we believe the demand for our wireless services will continue to decline on a secular basis as reflected in declining Patria units in service. We are hopeful that our focus on pricing and other initiatives like the G&A pagers will continue to further offset revenue lost through pager unit decline.

This is further reflected in our updated financial guidance, which I will walk through shortly.

Turning to second quarter software revenue license and hardware revenue was an all time high of $4 6 million in the second quarter up more than 87% from the second quarter of 2022.

This performance is a direct result of the previously discussed record high operations bookings this quarter.

Maintenance revenue totaled $9 1 million and was up from revenue of $8 9 million in the prior quarter and in line with the prior year quarter.

As we have discussed in previous quarterly calls as we continue to reorient our focus back on our spoke of care connect software products. Our expectation is for maintenance revenue to be flat to down slightly on a year over year basis, giving gross churn and uplift levels remaining consistent with prior quarters as.

As we continue to make progress on our product roadmap. We spoke care connect we expect bookings will continue to grow in the coming years and maintenance revenue along with it.

Given the nature of maintenance revenue higher license sales will work through revenue on a lagging basis. So we look first to stabilizing that revenue decline and then beginning to grow it.

Professional services revenue was a healthy $3 8 million versus $3 3 million in the second quarter of 2022 and up from $3 2 million in the first quarter of 2023.

We continue to see significant improvement in resource utilization delivering on our internal initiatives to better align total resources with our backlog and driving a higher rate of net cash flow, despite having roughly nine less billable resources as compared to the second quarter of 2022.

Second quarter, adjusted operating expenses, which excludes depreciation amortization and accretion and severance and restructuring cost totaled $28 9 million compared to $30 million in the prior year period.

The decline in cost is primarily the result of our restructuring efforts undertaken early last year and completed in late 2022.

However, the year over year benefit of these efforts will be less profound in the second half of 2023 as the majority of our cost savings were achieved in the first half of 2022.

With that said, please keep in mind that future investments in certain areas, such as sales and marketing and professional services will likely be necessary from time to time to support the anticipated growth of our spoke care connect and wireless solutions.

And lastly, as Vince pointed out earlier in the call adjusted EBITDA was a record high $8 5 million in the second quarter up over 81% from $4 7 million in the same quarter of 2022.

Reflecting the progress made to date with our strategic pivot in fact through the first six months of 'twenty twenty-three adjusted a bit has exceeded $15 4 million a nearly five fold increase from 2022.

While we love to see these results I want to highlight a point that Vince made earlier, which is that some of this was effectively pulled in from what we had previously anticipated in Q3 and Q4.

While this certainly has had a positive impact on our expected results for the year for the full year investors should look to our revised annual financial guidance for 2023 to better understand this quarter within the context of our full year performance, which I'll be discussing in more detail next.

Our performance in the second quarter in terms of the strengthening software operations bookings robust backlog levels improvement in wireless trends and strong adjusted a bit though has led us to increase our expectations across all categories for the full year. However, I would again encourage investors to consider the second quarter performance.

Within the broader context of our full year guidance as we would not expect to see adjusted a bit that at these levels in the second half of the year, Although we still expect second half adjusted EBITDA to be strong on a relative basis.

As a reminder, the figures I'm going to discuss today are included in our guidance table in the earnings release.

In 2023, we now expect total revenue to be in the range of $134 5 million to $137 5 million.

A 1.75 million increase from the previous guidance mid point.

More importantly, as Vince pointed out this represents the first time in the company's history that we expect to grow consolidated revenue from the prior year and the low end of our guidance reflects that with a 2.2% annual growth rate at the high end of our revised guidance.

Included in the revised guidance, we expect wireless revenue to range between $74 5 million to $75 5 million a $750000 increased from the previous guidance midpoint as we expect recent trends will continue to improve as I discussed earlier.

Software revenue is expected to range from $60 million to $62 million with the midpoint, implying total software revenue growth of nearly 4% from prior year levels.

Lastly, based on the improving trends in our performance in the second quarter, our revised adjusted EBITDA guidance for 2023 is $25 million to $28 million.

A $1 million increase from the previous guidance midpoint.

But that said I will now turn the call back over to Vince.

Thank you Calvin.

We open the call up for your questions I want to comment briefly on a couple of items.

First with respect to our current capital allocation strategy.

Our overall goal is to generate cash to return to shareholders by producing sustainable profitable business growth.

The allocation of capital remains a primary area of focus that our board is constantly reviewing our multifaceted capital allocation strategy. Currently includes dividends as well as key strategic investments that augment our product development operating platform and infrastructure.

Our strategy also includes the potential for acquisitions that are both strategic in nature and that are accretive to earnings. However, as I've mentioned in prior quarters. Our main focus is on the development and enhancement of our software solutions versus acquiring additional functionality at the present time.

We believe the cost of acquisitions and the integration of disparate functionality, it's much less efficient and ultimately limiting relative to our current business focus with the internal build approach. We are taking for example, we believe that there is an untapped potential to integrate artificial intelligence or AI into our product offering while wearing.

The very early stages of exploring the future potential from these applications. We believe there could be tremendous opportunity for AI powered solutions to transform health care with opportunities, including disease diagnosis and monitoring clinical workflow augmentation and hospital optimization, we intend to enhance our solid industry leading rep.

Mutation by integrating these technologies into our product suite.

And from an operational perspective.

Though in the very early stages, we intend to explore AI as a tool to drive further efficiencies and increase the scale of our financial platform.

Before I open the call up for your questions I'd like to thank our shareholders for their patience and support during our pivot.

I'd also like to thank them for their participation in our annual meeting earlier. This week as we reported each of the items of business, which included the election of six nominees as directors to the board ratification and appointment of grant Thornton as our independent registered public accounting firm for the year ending December 31 2023.

Non binding advisory vote to approve the 2022 named executive officer compensation or say on pay.

The nonbinding advisory vote on the frequency of future say on pay votes and approval for the amendment and restatement of the company's Twenty-twenty equity incentive Award plan.

All of these pass with an overwhelming majority for a full review of the final voting results. Please see our disclosures in our quarterly report on 10-Q on Form 10-Q, we filed with the SEC.

So at this point I'll ask the operator to open the call for your questions, we'd actually limit your initial questions to one and a follow up and after that we'll take additional questions as time allows.

Operator.

Thank you.

I will be conducting a question answer session.

If you would like to ask a question. Please press star one on your telephone keypad.

Confirmation tone will indicate that your line is in the question queue.

You May press Star two.

A question from the queue.

For participants using speaker equipment it may be.

Sorry to pick up your handset before pressing the star.

One moment please.

Questions.

Thank you.

And our first question is from Eric Martin M D with Lake Street capital markets.

Please proceed with your question.

Yeah, congrats on the quarter as well as the outlook, it's really great to see both segments of the business and growth mode. I wanted to start with the wireless side here. This.

You know, we've got the offset with the decline in units being offset by little bit better or how should we think about the you know the.

Packed price increases this year and what to expect next year.

Yeah, Eric Thanks, Thanks for the compliment by the way in and for your good questions with respect to wireless you should expect about the same impact you know we did it did a price increase late last year to about 70% of our subscriber base, we couldnt do a 100% because of the long term contracts on some of them and we had great success, we didn't.

Get any real push back and we didn't see any increase in churn we'll do it again this year, we'll we'll monitor it very closely I think you're also seeing a dynamic where the churn itself is slowing down because the customers that are that are still left using pagers really value the pagers for their functionality and utility so it gets.

More sticky as it gets slightly smaller if that makes sense to you that combined with the fact that these price increases aren't big numbers, you know what you pay for a page or even with the price increase is miniscule to what you would pay for let's say one of our competitors' mobile apps I mean, it's not even in the same ballpark and by the way the pagers going to work when the mobile App doesn't work. So it you know.

I I don't expect any.

Any major negative consequences in terms of the Pagings churn for 2024, and I would expect kind of more of the same.

Okay, and then shifting over to the software side, just to really blow out quarter, there with the software ops bookings.

I heard you loud and clear we shouldn't anticipate this.

To infinity and beyond but you know this the pipeline here have we every rung the pipeline right now what what are we looking at for Q3 Q4 and beyond is there still you still have you still see a lot of potential both in the installed base as well as new logos.

Great Great question and thanks for it well first of all obviously, we had a monster quarter I mean, there's no other way to put it we had some deals I think I mentioned at the end of last quarter that that we had thought we'd get in the first quarter that slipped into the second quarter. So that that kind of got us off to a really good start in the second quarter and then our team is motivated to to hear.

You know they're motivated to win they pulled in some deals in the third quarter. They pulled in some deals in the fourth quarter and about all the deals that we had slated for the second quarter came in so all that combined to make a really really good and strong result, the pipeline continues to grow and it's growing with extremely high quality qualified leads.

So we're not concerned about that at all we do think it's better to look at it on a year over year basis, and we do think we're going to show a year over year growth.

And in the 18 19, 20% range and software operations bookings for 2023, and you know that would be our plan going forward as well we will give guidance on 2024, when we report the fourth quarter in late February but yeah. I don't expect it's going to you know, we're not going to do worse.

And that and who knows we might even do better sales is always going to be lumpy and software and you know second quarter was one of those good lumps to get but I think for the entire year youre going to see that kind of 18, 19, and 20% year over year software operations bookings growth.

Okay.

Hey, Eric I want to say one other thing about that that we don't you know we don't talk a lot about publicly we tell our board and everything but when when we're reporting software operations bookings, where we're reporting the sales bookings value and that's essentially the.

<unk> that we used to pay commission store salespeople et cetera. So for instance, the two deals we gave as examples one was for $3 9 million that was the sales booking value that deal is actually worth over $5 1 million to the company because that deals are multi year engagement. This got year, two and year three of maintenance associated with it so the value to the company as we can.

Now locked that customer up for three years, and they're going to continue paying us maintenance in year, two and year, three which we don't we don't pay commission on but that's a much more valuable deal that the second deal. We talked about was the $1 $1 million deal on sales booking value, but that deal is actually a three and a half almost $3 6 million dollar total booking.

Value to the company because of the extra maintenance that we're getting on it going forward and into that very large customer and a number of them are like that if you looked at our top 26 deals a sales booking value on those is only right around $12 million, but the booking value to the company. When you counted that contractual obligation that's customers to pass mate.

Since in your two and year three is about 19 million. So it's all good news and that's gonna resolved ultimately by the way and lower churn on maintenance right. Because you know you block this customers and long term. So yeah. It's all hitting in the you know like I said, we're firing on all cylinders right now and I expect that to continue.

Yeah, just one follow up on the two examples that you gave the $3 9 million dollar contract with the 140 Hospital health care system.

Can you help me understand I assume you had some installed base there, but did they put out an RFP for an enterprise wide.

And you picked up new locations or was this a new logo, where the locations that you won was.

Just here for you first entree into this customer actually a great question and glad you asked it and Mike in carbon can weigh in but my perspective from working closely with the sales team on this stuff is that you know every time, we go into one of these customers the conversation with the customer starts out yeah, I don't have any money budgets tight.

Not spend anything I've been told to extract cost, we gotta save money I need help from my vendors et cetera.

And you know what we remind the salespeople on a regular basis is that the truth of the matter is human nature of these people you have people do like to buy.

And they like to buy from people they like.

And they like people that help them with very complicated problems. So if you're a CIO of a hospital right now you've got your CFO your CEO everybody's kind of beating on you to save money, we sit down with them with our value added services team and our sales team we bring in a group of people. We look at their very complicated workflows, we look at the very complex.

Integration and the number of solutions that they've got to work with we analyze it very closely and we say here's what your spending here's what you're doing you can eliminate these three vendors go through consolidated enterprise solution from spoke save a lot of money. This particular customer is on an edict to go to a national command and control system and they have about 100.

Third 40 hospitals. This deal is only for about 25% of that basis, starting with the first 37 proof of concept to get that to work and then there is potential to get all the rest of them and so what's happening is.

And I don't want to.

Make you think all of a sudden the spigot is wide open and hospitals are buying like crazy because they are as tight as they've been but they're buying from us because we have a huge incumbency, we have huge experience and we actually know how to work with them and show them, how they actually save money by maybe they're paying a little more to spoke but overall, they're paying a lot less and they have a very.

<unk> budget line going in the next three years, because they know exactly what they're going to pay for maintenance they've seen our product roadmap. They know what theyre going to get for it and then if you think about it you know three years from now that gives us another opportunity to go back there and we keep doing that across our base year. After year. After year, you know, we're farming that garden and it's gonna start yielding a law.

At a really nice crops for us and this was one of the big examples this year, so hopefully that extra color helps.

Yeah I appreciate it thanks for taking my question.

Yeah.

Okay.

Thank you.

A reminder, if he would like to add.

A quick question. Please press star one on your Tele.

Hum.

Our next question is from.

Who is a private investor. Please proceed with your question.

Hey, congrats to Vince and Mike Calvin in Alan's team on a great quarter.

My first question is.

From moving on from this book, though is there any learning as you were working from the past few years on spoke goal that you can carry on to the care connect and had the product.

Great question. The answer is absolutely massive learnings and massive leverage that we can use for what we did with the smoke go going into spoke care connect.

We are creating essentially a service oriented architecture that will bridge a lot of common services between our specific console solutions, where we are the industry leader by far and that's going to make us much more efficient, it's going to make our customers much more efficient and it's actually going to reduce the amount of professional.

Services I think yeah operating expense are lower margin.

Business, it will actually reduce that over the long term and in let us get more efficient will be able to charge less for our solutions and make more if you think about it we will have higher margins. So absolutely yeah. It's yeah.

Yeah, we did a heck of a job we created an amazing product we've created an amazing solution that had some just.

World Class state of the art technology behind it, but we rolled out our timing rolling it out and in the midst of a global pandemic was was not the greatest though we did have to reboot, we were spending about $20 million a year on that solution and we weren't getting a return and we didn't see in the in the near term, where we could really make that that mom.

It'll work so we had to make the decision about 18 months ago, we made the change and so we're still using some of that architecture and some of those learnings and what we're doing with our care connect suite and it's going great.

That's great to hear my second question is I remember in the Investor presentation, you show such insights companies clients only have the solution and some of it on the wireless our software is there any new athletes on the cross selling enhanced incentive and whether actually there is a benefit to us both solution in terms of internal controls.

Our ability and integrations.

Absolutely you know, we we use we have something we call spoke mobile with pager after whats that up to Calvin $6 million to $7 million a year. So we're already making $6 million to $7 million a year by taking our customers that they'd have spoke mobile and also allowing them to receive the message on the pagers and vice versa and that's growing.

And we have some other things that we're gonna be announcing in the second half of this year latter part of this year along that line that I think will be even more exciting, but we're very focused on that we do separate ourselves for us we have a specific discrete wireless salesforce and a specific discrete software salesforce, but their teammates and they often bring each other.

Into opportunities and that's one of the reasons for our success this year.

Thank you My last question is I know that you're not in the final destination or finished yet but can you take me a little bit more unlike the motto side optimism and.

So that's that was like two years ago, while you're still in the tranches spoke go and then last year when you make the decision to pivot and today right so give or take.

Ill comment of color on the Sox side, Yeah, Yeah, hi, thank.

Thank you for the question.

You're very perceptive and warms my heart to hear that question.

We we kind of Mike Kalb and myself, our executive management team. Our board we went through a lot over the past couple of years and we had to make some tough decisions, but this team never gave up.

I can't tell you how high morale in the company right now it's do the roof are voluntary turnover are voluntary employee churn is the lowest it's ever been.

People are happy they like being on a winning team they see us continuing to post these numbers and they see what our customers are doing I mean, we got an email from one of these customer examples we gave you.

From the person that was in charge of making decision we got an email from them talking about just how complex. It was to do this stuff that we're doing and how good our people were helping them do it I shared it with our board. It was so yeah heartwarming and we shared it internally with our entire employee base and we're just we're in a really good place right now.

We made some tough decisions and we were in a situation where you know last quarter, we were able to up our guidance pretty significantly on revenue and adjusted EBITDA. We've upped our guidance again this quarter on revenue and adjusted EBITDA. We are now a growth company, we're gonna grow year over year on revenue and adjusted EBITDA.

You know, we're just and we're looking forward to sharing our third quarter results with you guys on our fourth quarter results were just in a good place right now and when I finish this call. We're sending a note out to the employees about the great quarter that we just had so they're they're all in on the on the the good news too and we're just it's it's a good I mean, Mike Calvin.

Guys want to add to that no I think.

You articulated it perfectly.

Big pivot from from 18 months ago. It was very difficult to make the moves we did with Spokeo, we parted ways with a lot of our our fine colleagues.

The company that is here today.

A comment that I'd make a lot as were rolling all in the same direction that may seem obvious but to get an entire company absolutely focused in rowing in the same direction.

Really critical yeah, I mean, we gave a draft business plan to our board yesterday just to review we were not finalized with it we'll finalize it at the end of the quarter at the end of the third quarter, but.

Efficacy improvement in outlook to the one that we gave them a year ago in terms of our long term financial projections and forecast. So you know when youre in an environment like that compared to the environment. We were in when we were struggling with spoke go and had actavis quite frankly, you now knocking on the door and and all that kind of a distraction. None of that's there everything is positive and that build.

It sounds synergy and it built some momentum as I'm sure you're well aware, but thank you for the question.

Thanks, Vince and Mike Congrats again.

Yeah.

Okay, operator that looks like that was the last question in the queue. We really appreciate everybody's participation and like I said earlier, we appreciate your patience, while we've gone through this pivot you know when we get to the end of this year.

We're gonna have returned $50 million in cash to our shareholders over the course of the last 24 months, our stock is going to be at a higher price and our outlook is going to be much improved so spokes in a good place right now and in a lot of that is credit to you as investors for believing with us and sticking with us and we're happy to be back in the Russell and.

We look forward to sharing our third quarter results with you. Thank you very much.

Thank you ladies and gentlemen. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.

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