Q2 2024 Spok Holdings Inc Earnings Call

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Operator: Greetings and welcome to the Spok Holdings Q2 2024 earnings results call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. 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, Director of Investor Relations. Thank you, Al; you may begin.

Operator: Greetings and welcome to the Spok Holdings Q4, I'm sorry, Q2, 2024 earnings results call. At this time, all participants are in a listed-only mode. A brief question and answer session will follow a formal presentation.

Speaker Change: Greetings and welcome to the Spok Holdings Q4, uh, I'm sorry.

Speaker Change: Q2 2024 Earnings Results Call At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation.

Operator: 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.

Speaker Change: 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, Investor Relations. Thank you, Al. You may begin.

Al Galgano: It is now my pleasure to introduce your host, Al Galgano, Investor Relations.

Al Galgano: Thank you, Al. You may begin.

Vincent Kelly: Hello, everyone, and welcome to Spok Holdings' second quarter 2024 earnings call. I am joined by Vince Kelly, Chief Executive Officer, Mike Wallace, President of Spok Inc., and Chief Operating Officer, and Calvin Rice, Chief Financial Officer. I want to remind everyone that today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to Spok's future financial and business performance. Such 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.

Al Galgano: Hello, everyone, and welcome to Spok Holdings' second quarter 2024 earnings call. I am joined by Vince Kelly, Chief Executive Officer, Mike Wallace, President of Spok Inc., and Chief Operating Officer, and Calvin Rice, Chief Financial Officer.

Speaker Change: Hello everyone and welcome to Spok Holdings second quarter 2024 earnings call. I am joined by Vince Kelly, Chief Executive Officer, Mike Wallace, President of Spok Inc, and Chief Operating Officer, and Calvin Rice, Chief Financial Officer.

Al Galgano: I want to remind everyone that today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to Spok's future financial and business performance. Such 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 as of the date of this conference call and are not intended to give any assurance as to actual future results.

Speaker Change: I want to remind everyone that today's conference call may include forward-looking statements that are subject to risks and uncertainties relating to Spok's future financial and business performance.

Speaker Change: Such 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.

Speaker Change: 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.

Vincent Kelly: Spok's 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.

Al Galgano: Spok's actual results could differ materially from those anticipated in these forward-looking statements because although these statements are based upon assumptions that the company believes to be reasonable, they are subject to risks and uncertainty. Please review the risk factor section relating to our operations and the business environment, which are contained in our second quarter 2024 form 10-Q and related documents filed with the Securities and Exchange Commission. Please note that Spok 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 you.

Speaker Change: Spok's actual results could differ materially from those anticipated in these forward-looking statements.

Speaker Change: Although these statements are based upon assumptions that the company believes to be reasonable, they are subject to risks and uncertainties.

Vincent Kelly: Please review the risk factor section relating to our operations and the business environment, which are contained in our second quarter 2024 Form 10-Q and related documents filed with the Securities and Exchange Commission.

Speaker Change: Please review the risk factor section relating to our operations and the business environment, which are contained in our second quarter 2024 Form 10-Q and related documents filed with the Securities and Exchange Commission.

Vincent Kelly: Please note that Spok assumes no obligation to update any forward-looking statements from past or present filings and conference calls.

Speaker Change: Please note that Spok assumes no obligation to update any forward-looking statements from past or present filings and conference calls.

Vincent Kelly: With that, I'll turn the call over to Vince. Good afternoon, everyone, and thank you for joining us for our second quarter 2024 earnings call. I'm proud of the performance our team was able to deliver in the second quarter. We made tremendous progress in several key areas and believe that our solid operating platform will generate a successful second half of the year, leading to full-year software book use growth relative to 2023. As I mentioned in our press release, we've started the third quarter off very strong. Software sales are always going to be lumpy, but our trajectory over 12 months is up into the right.

Vincent D. Kelly: Good afternoon, everyone, and thank you for joining us for our second quarter 2024 earnings call. I'm proud of the performance our team was able to deliver in the second quarter.

Speaker Change: With that, I'll turn the call over to Vince.

Vincent D. Kelly: Good afternoon, everyone, and thank you for joining us for our second quarter 2024 earnings call.

Vincent D. Kelly: We made tremendous progress in several key areas and believe that our solid operating platform will generate a successful second half of the year, leading to full-year software bookings growth relative to 2023. As I mentioned in our press release, we started the third quarter off very strong. Software sales are always going to be lumpy, but our trajectory over 12 months is up and to the right. As we entered the quarter, we knew the year-over-year comparison was going to be tough as the second quarter of 2023 included many performance records, in particular, a single sales contract worth almost $4 million.

Vincent D. Kelly: I'm proud of the performance our team was able to deliver in the second quarter.

Vincent D. Kelly: We made tremendous progress in several key areas and believe that our solid operating platform will generate a successful second half of the year.

Vincent D. Kelly: leading to full year software bookings growth relative to 2023. As I mentioned in our press release, we've started the third quarter off very strong. Software sales are always going to be lumpy, but our trajectory over 12 months is up and to the right.

Vincent Kelly: As we move the quarter, we need the year-over-year comparable. It's going to be tough, as the second quarter of 2023 included many performance records, in particular, a single sales contract worth almost $4 million. However, positive takeaways from where we sit moving into the third quarter include, number one, we don't have a lot of competition in our core healthcare context in the space. Number two, we have amazing relationships with the top healthcare systems in the nation who continue to purchase from us on a regular basis. Number three, we continue to invest in and enhance our platforms consistent with what our customers are requesting.

Vincent D. Kelly: As we enter the quarter, we knew the year-over-year comparable was going to be tough, as the second quarter of 2023 included many performance records, in particular a single sales contract worth almost $4 million.

Vincent D. Kelly: However, positive takeaways from where we sit moving into the third quarter include, number one, we don't have a lot of competition in our core healthcare contact center space. Number two, we have amazing relationships with the top health care systems in the nation who continue to purchase from us on a regular basis. Number three.

Vincent D. Kelly: However, positive takeaways from where we sit moving into the third quarter include, number one,

Vincent D. Kelly: We don't have a lot of competition in our core healthcare contact center space.

Vincent D. Kelly: Number two, we have amazing relationships with the top health care systems in the nation who continue to purchase from us on a regular basis.

Vincent D. Kelly: We continue to invest in and enhance our platforms consistent with what our customers are requesting. Number four, in many respects, we're viewed as an indispensable utility. And number five, we're very comfortable with our full-year guidance. We also take this opportunity right up front to remind everyone that our mission remains solidly unchanged, that is, to generate cash and return capital to our shareholders over the long term while responsibly investing in and growing our business.

Vincent D. Kelly: Number three...

Vincent D. Kelly: We continue to invest in and enhance our platforms consistent with what our customers are requesting. Number four, in many respects we're viewed as an indispensable utility. And number five, we're very comfortable with our full year guidance.

Vincent Kelly: Number four, in many respects, was viewed as an indispensable utility, and number five, we're very comfortable with our full-year guidance.

Vincent Kelly: We also take this opportunity right up front to remind everyone that our mission remains solidly unchanged; that is, to generate cash and return capital to our shareholders over the long term, while responsibly investing in growing our business. As we demonstrate to our performance in our strategic pivot more than two years ago, we believe we are on a sustainable path to doing so, and that our cash flow is on a path to grow into our current dividend level and cover it in full on an annual basis. That is our primary focus. Returning capital to shareholders is our legacy, and we feel good about executing a strategy we believe in, and that we've had a lot of success with historically.

Vincent D. Kelly: We also take this opportunity right up front to remind everyone that our mission remains solidly unchanged. That is to generate cash and return capital to our shareholders over the long term while responsibly investing in and growing our business.

Vincent D. Kelly: As we've demonstrated through our performance since our strategic pivot more than two years ago, we believe we are on a sustainable path to doing so and that our cash flow is on the path to grow into our current dividend level and cover it in full on an annual basis. That is our primary focus.

Vincent D. Kelly: As we've demonstrated through our performance since our strategic pivot more than two years ago, we believe we are on a sustainable path to doing so, and that our cash flow is on a path to grow into our current dividend level and cover it in full on an annual basis.

Vincent D. Kelly: Returning capital to shareholders is our legacy, and we feel good about executing a strategy we believe in and that we've had a lot of success with historically. Today, we'll 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, and the order will be as follows.

Vincent D. Kelly: That is our primary focus. Returning capital to shareholders is our legacy, and we feel good about executing a strategy we believe in, and that we've had a lot of success with historically.

Vincent Kelly: Today, we'll 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, and the order will be as follows. We'll begin by providing a review of our company performance for the quarter.

Vincent D. Kelly: Today, we'll 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, and the order will be as follows. We'll begin by providing a review of our company performance for the quarter. We'll begin by reviewing the agenda for today's call, and the order will be as follows.

Vincent D. Kelly: We'll begin by providing a review of our company performance for the quarter. I'll then turn the call over to Mike Wallace, our President and Chief Operating Officer, to review some of our quarterly sales and operational highlights. Then our Chief Financial Officer, Calvin Rice, will review our second quarter financial highlights and financial guidance for 2024, and I'll come back and wrap up the call and open it up for your questions.

Vincent Kelly: I'll then turn the call over to Mike Wallace, our President and Chief Operating Officer, to review some of our quarterly sales and operational highlights.

Michael W. Wallace: I'll then turn the call over to Mike Wallace, our President and Chief Operating Officer, to review some of our quarterly sales and operational highlights.

Vincent Kelly: Our Chief Financial Officer, Calvin Rice, will review our second quarter financial highlight and financial guidance for 2024. Now come back and wrap up the call and open it up for your questions. As I set up front, I'm proud of what the Folk team has been able to accomplish in the second quarter, and we're positioned for a strong second half. Second quarter highlights include a more than 10% growth in second quarter software operations bookings from the impressive production levels in the first quarter. Continued strong levels of adjusted EBTA, which covered our quarterly dividend and capital expenditure requirements.

Michael W. Wallace: Then our Chief Financial Officer, Calvin Rice, will review our second quarter financial highlights and financial guidance for 2024, and I'll come back and wrap up the call and open it up for your questions.

Vincent D. Kelly: As I said up front, we're proud of what the Spok team has been able to accomplish in the second quarter, and we are positioned for a strong second half. Second quarter highlights include a more than 10% growth in second quarter software operations bookings from the impressive production levels in the first quarter. Continued strong levels of adjusted EBITDA, which covered our quarterly dividend capital expenditure requirements and continued pipeline work providing confidence in our network.

Speaker Change: As I said up front, in part of what the Spok team has been able to accomplish in the second quarter, we are positioned for a strong second half. Second quarter highlights include a more than 10% growth in second quarter software operations bookings from the impressive production levels in the first quarter.

Speaker Change: Continued strong levels of adjusted EBITDA which covered our quarterly dividend and capital expenditure requirements.

Vincent Kelly: Continued pipeline work providing confidence in our network. A resulting increase in cash balances, which we believe hit its low point in the first quarter and will continue to build through the remainder of the year. Healthy levels of software maintenance and continued growth in our services business that bolster software revenue in the second quarter. Improved wireless turns as met unit turn drop below 1% in the second quarter, down significantly from the prior quarter. Continued expansion of our wireless average revenue for you to further reflect the impact of prior pricing actions and sales of our encrypted HIPAA compliant off a numeric Gen A page.

Vincent D. Kelly: A resulting increase in cash balances, which we believe hit its low point in the first quarter and will continue to build through the remainder of the year. Healthy levels of software maintenance and continued growth in our services business that bolstered software revenue in the second quarter. However, improved wireless turns have met unit turn dropped below 1% in the second quarter, down significantly from the prior quarter.

Speaker Change: Continued pipeline work, providing confidence in our network.

Speaker Change: The resulting increase in cash balances, which we believe hit its low point in the first quarter, will continue to build through the remainder of the year.

Speaker Change: Healthy levels of software maintenance and continued growth in our services business that bolsters software revenue in the second quarter.

Speaker Change: Improved wireless terms has met unit turn dropped below 1% in the second quarter, down significantly from the prior quarter.

Vincent D. Kelly: Continued expansion of our wireless average revenue per unit further reflecting the impact of prior pricing actions and sales of our encrypted, HIPAA-compliant, alphanumeric Gen A pager. And continued discipline in expense management as a decline in our overall year-over-year operating expenses was accomplished while still making the necessary investments in product research and development to fuel future growth. In short, we were very pleased with our performance in the second quarter and believe that our results in the first half of the year provide a solid springboard for the second half of 2024.

Speaker Change: Continued expansion of our wireless average revenue per unit further reflecting the impact of prior pricing actions.

Vincent Kelly: And continued discipline and expense management is a decline in our overall year-over-year operating expenses was accomplished while still making the necessary investments and product research and development the fuel future rose. In short, we were very pleased with our performance in the second quarter and believe that our results in the first half of the year provide a solid springboard for the second half of 2024. We maintain our optimism for the year, and we are reiterating our guidance estimates for revenue and adjusted EBTA in 2024. In the second quarter of 2024, we generated over 7 million of adjusted EBTA, which more than covered the 6.3 million we returned to our stockholders.

Speaker Change: and sales of our encrypted, HIPAA-compliant, alphanumeric Gen-A pager. And, continued discipline in expense management as the decline in our overall year-over-year operating expenses was accomplished while still making the necessary investments in product research and development to fuel future growth.

Speaker Change: In short, we were very pleased with our performance in the second quarter and believe that our results in the first half of the year provide a solid springboard for the second half of 2024. We maintain our optimism for the year and we are reiterating our guidance estimates for revenue and adjusted EVTA in 2024.

Vincent D. Kelly: We maintain our optimism for the year, and we are reiterating our guidance estimates for revenue and adjusted EVTA in 2024. In the second quarter of 2024, we generated over $7 million of adjusted EBTA, which more than covered the $6.3 million we returned to our stockholders. However, at the same time, we increased our second quarter research and development investment by $0.3 million, or 11.3%, on a year-over-year basis, and believe we're on track to invest approximately $11.5 million in product research and development expenses in 2024.

Speaker Change: In the second quarter of 2024, we generated over $7 million of adjusted EBITDA, which more than covered the $6.3 million we returned to our stockholders.

Vincent Kelly: However, at the same time, we increased our second quarter research and development investment by 0.3 million, or 11.3%, on a year-over-year basis. And believe our own track to invest approximately 11.5 million in product research and development expenses in 2024. We believe this investment will fuel future software revenue growth and that our extensive experience selling and operating our established communication solutions will create significant value for our stockholders by maximizing revenue and cash flow generation. As I mentioned, Spok has a proud legacy of creating stockover value through free cash led generation, and we intend to continue this track record.

Speaker Change: However, at the same time, we increased our second quarter research and development investment by .3 million, or 11.3%, on a year-over-year basis, and believe we're on track to invest approximately $11.5 million in product research and development expenses in 2024.

Vincent D. Kelly: We believe this investment will fuel future software revenue growth and that our extensive experience selling and operating our established communication solutions will create significant value for our stockholders by maximizing revenue and cash flow generation. As I mentioned, Spok has a proud legacy of creating shareholder value through free cash flow generation, and we intend to continue this track record. In fact, over the last 20 years, Focus has returned a total of nearly $690 million to our stockholders either through our regular quarterly dividend, special dividends, or share repurchase.

Speaker Change: We believe this investment will fuel future software revenue growth, and that our extensive experience selling and operating our established communication solutions will create significant value for our stockholders by maximizing revenue and cash flow generation.

Speaker Change: As I mentioned, Spok has a proud legacy of creating stock over value through free cash flow generation and we intend to continue this track record.

Vincent Kelly: In fact, over the last 20 years, Spokas returned a total of nearly $690 million to our stockholders, even through our regular quarterly dividend, special dividends, or share repurchases. When you take into consideration our current cash balance, distribution of stockholders, share repurchases, debt repayments, and acquisitions, since our inception, Spokas generated more than one billion of free cashflow, or focused on maximizing cash over the long term supports the four major tenants of our strategy.

Speaker Change: In fact, over the last 20 years, Spok has returned a total of nearly $690 million to our Spok holders, either through our regular quarterly dividend, special dividends, or share repurchases.

Speaker Change: When you take into consideration our current cash balance, distributions to stockholders, share repurchases, debt repayments, and acquisitions,

Vincent D. Kelly: When you take into consideration our current cash balance distributions to stockholders, share repurchases, debt repayments, and acquisitions, since our inception, Spok has generated more than $1 billion of free cash flow. Our focus on maximizing cash over the long term supports the four major tenets of our strategy. Those are, number one, continued investment in our wireless and software solutions. Number two, growing our revenue base. Number three, Continued Disciplined Expense Management, and number four, a stockholder-friendly capital allocation plan.

Speaker Change: Since our inception, Spok has generated more than $1 billion of free cash flow. Our focus on maximizing cash over the long term supports the four major tenets of our strategy. Those are, number one, continued investment in our wireless and software solutions.

Vincent Kelly: Those are, number one, continued investment in our wireless software solutions; number two, grow our revenue base; number three, continue difficult expense management; and number four, a stockholder-friendly capital allocation plan. Going forward, we believe our extensive experience, selling and operating, our established green occasion solutions, and world-class customer base will create significant value for stockholders to solid revenue growth, disciplined expense management, and further cashflow generation.

Speaker Change: Number two, grow our revenue base.

Speaker Change: Number three, continued disciplined expense management, and number four, a stockholder-friendly capital allocation plan.

Vincent D. Kelly: Going forward, we believe our extensive experience demonstrating and operating our established communication solutions and world-class customer base will create significant value for stockholders through solid revenue growth, disciplined expense management, and further cash flow generation. Before I turn the call over to Mike, let me take a moment to review what I think is a noteworthy milestone for our team. Earlier this month, we announced that our organization had passed the 10-year anniversary of the renaming of the company to Spok. As you know, in 2014, we completed the integration of our acquisition of Amcom Software, creating a single, cohesive business in Spokeless form.

Speaker Change: Going forward, we believe our extensive experience selling and operating our established communication solutions and world-class customer base will create significant value for stockholders through solid revenue growth, disciplined expense management, and further cash flow generation.

Vincent Kelly: Before I turn the call over to Mike, let me take a moment to review what I think is a noteworthy milestone for our team. Earlier this month, we announced that our organization had passed the 10-year anniversary of the renaming of the company to Spokas. As you know, in 2014, we completed the integration of our acquisition of the income software, creating a single, because he's a business, and Spokas-born. Spokas expanded on the strong legacy of our predecessor companies to solve critical communications challenges that help hospitals and health systems improve patient outcomes and support public safety when seconds count and lives are at stake.

Speaker Change: Before I turn the call over to Mike, let me take a moment to review what I think is a noteworthy milestone for our team. Earlier this month, we announced that our organization had passed the 10-year anniversary of the renaming of the company to Spok.

Speaker Change: As you know, in 2014, we completed the integration of our acquisition of Amcom software, creating a single cohesive business in spokeless form.

Vincent D. Kelly: Spok expanded on the strong legacy of its predecessor companies to solve critical communications challenges to help hospitals and health systems improve patient outcomes and support public safety when seconds count and lives are at stake. For the past several decades, Spok's talented and experienced team has consolidated the paging industry and combined the power of paging with communications software to make a groundbreaking impact in our industry. We continue to invest in our communications platforms, enhancing our solutions, and delivering exceptional products to our customers.

Michael W. Wallace: Spok expanded on the strong legacy of our predecessor companies to solve critical communications challenges to help hospitals and health systems improve patient outcomes and support public safety when seconds count and lives are at stake.

Vincent Kelly: Over the past several decades, Spokas founded an experienced team who consolidated the paging industry and combined the power of paging with communications software to make a groundbreaking impact in our industry. We continue to invest in our communications platforms, enhancing our solutions, and delivering exceptional products to our customers. Today, Spokas is a leader in health care communications, maintains the largest paging network in the United States, has a blue chip customer base of more than 2,200 hospitals, has created a large portfolio of intellectual property via strategic R&D investments, has generated significant shareholder value through casual creation and returning capital to our investors, and is a pioneer in health care communications with the best-in-class product offering.

Michael W. Wallace: Over the past several decades, Spok's talented and experienced team has consolidated the paging industry and combined the power of paging with communication software to make a groundbreaking impact in our industry.

Michael W. Wallace: We continue to invest in our communications platforms, enhancing our solutions, and delivering exceptional products to our customers.

Vincent D. Kelly: Today, Spok is a leader in healthcare communications, maintains the largest paging network in the United States, has a blue chip customer base of more than 2200 hospitals, has created a large portfolio of intellectual property through a strategic R&D investment, has generated significant shareholder value through cash flow creation and returning capital to our investors, and is a pioneer in healthcare communications with a best-in-class product offering. We've built an industry-leading reputation over the years.

Michael W. Wallace: Today, Spok is a leader in healthcare communications, maintains the largest paging network in the United States, has a blue-chip customer base of more than 2,200 hospitals, has created a large portfolio of intellectual property via strategic R&D investments.

Michael W. Wallace: has generated significant shareholder value through cash flow creation and returning capital to our investors and is a pioneer in healthcare communications with a best-in-class product offering.

Vincent Kelly: We've built an industry-leading reputation over the years. Under the Spokas banner, we are recognized as the top clinical communications platform in our industry for seven of the past ten years since we fully integrated our company. We are honored by the unwavering trust our health care clients have placed in Spokas as their go-to partner for clinical communications. We achieve in a securing the top position for seven consecutive years underscores our commitment into delivering critical communication technology that enhances hospital and health system communication, which ultimately enhances patient care and safe further supporting this claim of our recent announcement that for over a decade nearly every hospital named the US News and World Report's best hospital honorable relies on Spok Solutions.

Vincent D. Kelly: Under the Spok banner, we have been recognized as the top clinical communications platform in our industry for seven of the past ten years since we fully integrated our company. We are honored by the unwavering trust our healthcare clients have placed in Spok as their go-to partner for clinical communication. The achievement of securing the top position for seven consecutive years underscores our commitment to delivering critical communication technology that enhances hospital and health system communication, which ultimately enhances patient care and safety.

Michael W. Wallace: We've built an industry-leading reputation over the years. Under the Spok banner, we are recognized as the top clinical communications platform in our industry for seven of the past ten years since we fully integrated our company.

Michael W. Wallace: We are honored by the unwavering trust our healthcare clients have placed in Spok as their go-to partner for clinical communications.

Michael W. Wallace: The achievement of securing the top position for seven consecutive years underscores our commitment to delivering critical communication technology that enhances hospital and health system communication, which ultimately enhances patient care and safety.

Vincent D. Kelly: Further supporting this claim is our recent announcement that for over a decade, nearly every hospital named to US News and World Report's Best Hospital Honor Roll relies on Spok's solutions. For the 2024 and 2025 Honor Rolls, we were pleased to announce that 17 of the 20 adult hospitals on that list use Spok's industry-leading secure healthcare solutions to facilitate care collaboration and support exceptional patient care. Last year, we were also pleased to announce that 7 out of 10 children's hospitals on the honor roll used Spok Solutions, and we anticipate similar participation when the 2024 and 2025 lists are published in a few weeks.

Michael W. Wallace: Further, supporting this claim is our recent announcement that for over a decade, nearly every hospital named to US News & World Report's Best Hospital Honor Roll relies on Spok Solutions.

Vincent Kelly: For the 2024 and 2025 on it all, we were pleased to announce that 17 of the 20 adult hospitals on that list used Spok's interesting leading secure healthcare solutions to facilitate care collaboration and support exceptional patient care. Last year we were also pleased to announce that 7 out of 10 children's hospitals on the honor roll used Spok Solutions, and we anticipate similar participation with a 2024 and 2025 list that's published in a few weeks.

Michael W. Wallace: For the 2024 and 2025 honor roll, we were pleased to announce that 17 of the 20 adult hospitals on that list used Spok's industry-leading secure healthcare solutions to facilitate care collaboration and support exceptional patient care.

Michael W. Wallace: Last year we were also pleased to announce that 7 out of 10 children's hospitals on the honor roll bespoke solutions and we anticipate similar participation when a 2024 and 2025 list is published in a few weeks.

Vincent Kelly: Finally, before turning it over to Mike, I want to share with you that Spok and our related solutions were unaffected by the recent worldwide cross-strike outage. While many of our customers were impacted in their internal systems, Spok was available to help and support them throughout the outage.

Vincent D. Kelly: Finally, before turning it over to Mike, I want to share with you that Spok and our related solutions were unaffected by the recent worldwide CrowdStrike outage. While many of our customers were impacted in their internal systems, Spok was available to help and support them throughout the outage. With that, I'll turn the call over to Mike.

Michael W. Wallace: Finally, before turning it over to Mike, I want to share with you that Spok and our related solutions are available at www.spok.com. Thank you.

Michael W. Wallace: were unaffected by the recent worldwide CrowdStrike outage. While many of our customers were impacted in their internal systems, Spok was available to help and support them throughout the outage. With that, I'll turn the call over to Mike.

Michael Wallace: With that, I'll turn the call over to Mike. Thanks, Vincent. Thank you, everyone, for joining us this afternoon. As Vince pointed out, it was a very strong quarter, and we made tremendous progress in the number of key performance areas. He had amidst all the progress in continuing to build a solid financial platform and shareholder-friendly capital allocation strategy. We remain true to our mission of being a global leader in healthcare communications. It is important to remember we deliver clinical information to care teams when and where it matters most to improve patient outcomes, as Spok enables smarter, faster clinical communications for our customers.

Michael W. Wallace: Thanks, Vincent. Thank you everyone for joining us this afternoon.

Michael W. Wallace: As Vince pointed out, it was a very strong quarter, and we made tremendous progress in a number of key areas. Yet, amidst all the progress and continuing to build a solid financial platform and shareholder-friendly capital allocation, we remain true to our mission of being a global leader in healthcare communication. It is important to remember that we deliver clinical information to care teams when and where it matters most to improve patient outcomes, as Spok enables smarter, faster clinical communications for our customers.

Michael W. Wallace: Thanks Vince, and thank you everyone for joining us this afternoon. As Vince pointed out, it was a very strong quarter, and we made tremendous progress in a number of key performance areas.

Michael W. Wallace: Yet amidst all the progress in continuing to build a solid financial platform and shareholder-friendly capital allocation strategy.

Michael W. Wallace: We remain true to our mission of being a global leader in healthcare communications.

Speaker Change: It is important to remember we deliver clinical information to care teams when and where it matters most to improve patient outcomes as Spok enables smarter, faster clinical communications for our customers.

Michael Wallace: As Vince noted, we have over 2,200 healthcare facilities as customers representing the who's who hospitals in the United States. We have built our solutions over many years and have long-standing, valuable customer relationships. This has coupled with the financial strength that more than 80 percent of our revenue is reoccurring in nature, and we are a company with no debt, which provides a significant flexibility. In the second quarter, our $8.7 million of software operations bookings included 18-6 and one seven-figure customer contracts, sustaining the momentum that we saw last year. Most impressively, second quarter software operations bookings included 14 multi-year engagements, and those six and seven-figure contracts had an average contract size that was up nearly 14 percent in the prior quarter, so we are extremely pleased with the first six months of 2024.

Michael W. Wallace: As Vince noted, 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 relations. This is coupled with the financial strength that more than 80% of our revenue is recurring in nature, and we are a company with no debt, which provides significant flexibility. In the second quarter, our $8.7 million in software operations bookings included 18 six-figure and one seven-figure customer contracts, sustaining the momentum that we saw last year. Most impressively, second quarter software operations bookings included 14 multi-year engagements, and those six and seven-figure contracts had an average contract size that was up nearly 14% in the prior quarter.

Speaker Change: As Vince noted, we have over 2,200 healthcare facilities as customers, representing the who's who of hospitals in the United States.

Vincent D. Kelly: We have built our solutions over many years and have long-standing, valuable customer relationships.

Vincent D. Kelly: This is coupled with the financial strength that more than 80% of our revenue is reoccurring in nature, and we are a company with no debt, which provides us significant flexibility.

Vincent D. Kelly: In the second quarter, our $8.7 million of software operations bookings included 18 six-figure and one seven-figure customer contracts.

Vincent D. Kelly: Sustaining the momentum that we saw last year.

Vincent D. Kelly: Most impressively, second quarter software operations bookings included 14 multi-year engagements and those six and seven figure contracts had an average contract size that was up nearly 14% from the prior quarter. So we are extremely pleased with the first six months of 2024.

Michael W. Wallace: So we are extremely pleased with the first six months of 2020. Now, let me take a few minutes to highlight a couple of the customer engagements that we signed in the second quarter. The first is a three-year agreement with a three hospital, 1200 bed health system located in the southwest part of the United States. As an EPIC Forward organization, this organization plans to use as many EPIC modules as possible.

Michael Wallace: Now let me take a few minutes to highlight a couple of the customer engagements that we signed in the second quarter. The first is a three-year agreement with a three-hospital 1,200 bed health system located in the southwestern part of the United States. As an Epic forward organization, this organization plans to use as many Epic modules as possible. However, the organization immediately noticed gaps in its unified communication strategy and identified Spok as a strong, stable vendor that offers a unified platform that works well with Epic. Focused on improving patient safety and provider satisfaction, their CEO and CIO task their unified communications team to standardize and simplify their environment across the health system.

Vincent D. Kelly: Now, let me take a few minutes to highlight a couple of the customer engagements that we signed in the second quarter.

Vincent D. Kelly: The first is a three-year agreement with a three-hospital, 1,200-bed health system located in the southwestern part of the United States.

Vincent D. Kelly: As an EPIC Forward organization, this organization plans to use as many EPIC modules as possible.

Michael W. Wallace: However, the organization immediately noticed gaps in the unified communication strategy and identified Spok as a strong, stable vendor that offers a unified platform that works well with Epic. Focused on improving patient safety and provider satisfaction, their CEO and CIO task their unified communications team to standardize and simplify their environment across the health system. Spok Care Connect, our fully integrated healthcare communication platform, will be used for operator services, enterprise-wide web directory, on-call scheduling, medical and safety code procedures, nurse call, and patient monitoring notifications, as well as secure code messaging to patients.

Vincent D. Kelly: However, the organization immediately noticed gaps in its unified communication strategy and identified Spok as a strong, stable vendor that offers a unified platform that works well with Epic.

Speaker Change: Focused on improving patient safety and provider satisfaction, their CEO and CIO tasks their unified communications team to standardize and simplify their environment across the health system.

Michael Wallace: Spok Care connects our fully integrated healthcare communication platform will be used for operator services, enterprise-wide web directory, on-call scheduling, medical and safety code procedures, nurse call, and patient monitoring notifications, as well as secure code messaging and patients. through this multi-year commitment, this organization also opted in the benefits from managed professional services, multiple value added services, and annual maintenance and support.

Speaker Change: Spok Care Connect, our fully integrated healthcare communication platform, will be used for operator services, enterprise-wide web directory, on-call scheduling, medical and safety code procedures, nurse call, and patient monitoring notifications, as well as secure code messaging and paging.

Michael W. Wallace: Through this multi-year commitment, this organization also opted to benefit from managed professional services, multiple value-added services, and annual maintenance and support. The second customer agreement I'd like to highlight was with the only hospital on a British Overseas Territory in the North Atlantic. This 350-bed hospital with approximately 1,800 employees serves over 64,000 visitors annually.

Speaker Change: Through this multi-year commitment, this organization also opted in to benefit from managed professional services, multiple value-added services, and annual maintenance and support.

Michael Wallace: The second customer agreement I'd like to highlight was with the only hospital on a British Overseas Territory in the North Atlantic Ocean. This 350 bed hospital with approximately 1,800 employees serves over 64,000 visitors annually. Spok has been their critical communication partner since 2014. They leverage the full Spok Care Connect suite of products. Spok Care Connect is used for the hospital's operator services, enterprise-wide web directory, on-call scheduling. Spok e-notify for incident management and Spok Mobile for medical and safety code procedures and secure code messaging. Similar to the contract previously discussed, this multi-year engagement also included managed professional services, multiple value-added services, and annual maintenance and support.

Speaker Change: The second customer agreement I'd like to highlight was with the only hospital on a British Overseas Territory in the North Atlantic Ocean.

Speaker Change: This 350-bed hospital with approximately 1,800 employees serves over 64,000 visitors annually.

Michael W. Wallace: Spok has been their critical communication partner since 2014, and they leverage the full Spok Care Connect suite of products. Spok Care Connect is used for the hospital's operator services, enterprise-wide web directory, on-call scheduling, Spok eNotify for incident management, and Spok Mobile for medical and safety code procedures and secure code messaging. Similar to the contract previously discussed, this multi-year engagement also included managed professional services, multiple value-added services, and annual maintenance and support. On a final note, I'd like to give recognition to our wireless team and their ability to quickly jump into action to mitigate the impact of the recent Hurricane Baron. The storm came ashore on the morning of July 8th with 75 miles per hour winds and much higher.

Speaker Change: Spok has been their critical communication partner since 2014, and they leverage the full Spok Care Connect suite of products.

Speaker Change: Spok Care Connect is used for the hospital's operator services, enterprise-wide web directory, on-call scheduling, Spok eNotify for incident management, and Spok Mobile for medical and safety code procedures and secure code messaging.

Speaker Change: Similar to the contract previously discussed, this multi-year engagement also included managed professional services, multiple value-added services, and annual maintenance and support.

Michael Wallace: On a final note, I'd like to give recognition to our wireless team and their ability to quickly jump into action to mitigate the impact of the recent hurricane Baron. The storm came on shore the morning of July 8th, the 75 mile an hour winds and much higher gusts. Luckily, the storm was moving quickly headed north where it weakened. While there was less isolated flooding, a number of our transmitters were down, and our team of texts quickly mobilized into action. Our team was able to quickly get those transmitters back online, and we experienced no customer escalations.

Speaker Change: On a final note, I'd like to give recognition to our wireless team and their ability to quickly jump into action to mitigate the impact of the recent Hurricane Barron.

Speaker Change: The storm came on shore the morning of July 8th with 75 mile an hour winds and much higher gusts.

Michael W. Wallace: Luckily, the storm was moving quickly headed north where we were. While there was less isolated flooding, a number of our transmitters were down, and our team of techs quickly mobilized into action. Our team was able to quickly get those transmitters back online, and we experienced no customer escalation. It is the responsiveness and customer support that our Spok team demonstrates every day that has gained us the industry-leading reputation that Vince spoke about and makes our wireless business an incredible franchise.

Speaker Change: Luckily, the storm was moving quickly headed north where it weakened.

Speaker Change: While there was less isolated flooding, a number of our transmitters were down and our team of techs quickly mobilized into action.

Speaker Change: Our team was able to quickly get those transmitters back online and we experienced no customer escalations.

Michael Wallace: It is a responsiveness and customer support that our spoke team demonstrates every day that has gained us the industry-leading reputation that's been spoke about and makes our wireless business an incredible franchise. I'd like to thank our team for their efforts and dedication to creating strong customer loyalty for Scope.

Speaker Change: It is the responsiveness and customer support that our Spok team demonstrates every day that has gained us the industry-leading reputation that Vince spoke about and makes our wireless business an incredible franchise.

Michael W. Wallace: I'd like to thank our team for their efforts and dedication to creating strong customer loyalty for Spok. I will now turn the call over to Calvin Rice, our Chief Financial Officer, to briefly review the second quarter financial performance.

Speaker Change: I'd like to thank our team for their efforts and dedication to creating strong customer loyalty for Spok.

Calvin Rice: I will now turn the call over to Calvin Rice, our Chief Financial Officer, to briefly review the second quarter financial performance. Calvin? Thanks, Mike, and good afternoon, everyone. I would now like to take a few minutes and provide a recap of our second quarter 2024 financial performance, which we reported today.

Calvin C. Rice: I will now turn the call over to Calvin Rice, our Chief Financial Officer, to briefly review the second quarter financial performance.

Calvin C. Rice: Thanks, Mike. And good afternoon, everyone.

Calvin C. Rice: Calvin

Calvin C. Rice: Thanks, Mike, and good afternoon, everyone.

Calvin C. Rice: I would now like to take a few minutes and provide a recap of our second quarter 2024 financial performance, which we reported today. 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.

Calvin Rice: I encourage you to review our 10 human files 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 and the second quarter of 2024, GAAP net income total 3.4 million, or 17 cents per diluted share, compared to net income of 4.7 million, or 23 cents per diluted share in 2023. And the second quarter of 2024 total gap revenue was 34 million compared to total revenue of 36.5 million, and the prior year revenue for the quarter consisted of wireless revenue of 18.3 million and software revenue of 15.7 million compared to 18.9 million and 17.6 million in the prior year, respectively.

Calvin C. Rice: I would now like to take a few minutes and provide a recap of our second quarter 2024 financial performance, which we reported today. I encourage you to review our 10-Q when it is 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 for the second quarter of 2024. Gap net income totaled $3.4 million, or $0.17 per diluted share, compared to net income of $4.7 million, or $0.23 per diluted share, in 2023.

Calvin C. Rice: Turning to our income statement, in the second quarter of 2024, GAAP net income totaled $3.4 million, or $0.17 per diluted share, compared to net income of $4.7 million, or $0.23 per diluted share in 2023.

Calvin C. Rice: In the second quarter of 2024, total gap revenue was $34 million compared to total revenue of $36.5 million in the prior year. Revenue for the quarter consisted of wireless revenue of $18.3 million and software revenue of $15.7 million, compared to $18.9 million and $17.6 million in the prior year, respectively. With respect to wireless revenue, we saw a significant improvement in quarterly net unit churn for the second quarter in a row, at 0.8%, down from 1.6% in the prior quarter.

Calvin C. Rice: In the second quarter of 2024, total GAAP revenue was $34 million compared to total revenue of $36.5 million in the prior year.

Calvin C. Rice: Revenue for the quarter consisted of wireless revenue of $18.3 million and software revenue of $15.7 million compared to $18.9 million and $17.6 million in the prior year respectively.

Calvin Rice: With respect to wireless revenue, we saw significant improvement in quarterly net unit trend for the second quarter and a row at 0.8%, down from 1.6% in the prior quarter. RPU increased 31 cents or 4.1% from the prior year. Primarily driven by continued pricing actions undertaken in late 2023 and, to a lesser extent, continued sales of our new Gen A page. While we believe the demand for our wireless services will continue to decline on a secular basis, as reflected in declining pager units and service. We are hopeful that our focus on pricing and other initiatives like the Gen A page will continue to further offset revenue lost through pager unit decline.

Calvin C. Rice: With respect to wireless revenue, we saw significant improvement in quarterly net unit churn for the second quarter in a row at 0.8%, down from 1.6% in the prior quarter.

Calvin C. Rice: ARPU increased 31 cents, or 4.1%, from the prior year, primarily driven by continued pricing actions undertaken in late 2023 and, to a lesser extent, continued sales of our new Gen A page. While we believe the demand for our wireless services will continue to decline on a secular basis, as reflected in declining pager units in service, we are hopeful that our focus on pricing and other initiatives like the Gen A pager will continue to further offset revenue lost through pager unit decline.

Calvin C. Rice: ARPU increased 31 cents or 4.1% from the prior year.

Calvin C. Rice: primarily driven by continued pricing actions undertaken in late 2023 and to a lesser extent continued sales of our new Gen A pager.

Calvin C. Rice: While we believe the demand for our wireless services will continue to decline on a secular basis as reflected in declining pager units in service, we are hopeful that our focus on pricing and other initiatives like the Gen A pager will continue to further offset revenue lost through pager unit decline.

Calvin Rice: Turning to second quarter software revenue, license and hardware revenue totaled $2 million in the second quarter of 2024, compared to $4.6 million in the same period of 2023. As Vince previously touched on in the second quarter of 2023, we sold the largest single contract in Spokes history, where it's almost $4 million, including license revenue of nearly $1.8 million, of which the majority would have fallen to the bottom line. In addition to this, we were able to pull forward a number of sales from the third and fourth quarters in 2023, leading to a highly successful quarter.

Calvin C. Rice: Turning to second quarter software revenue, license, and hardware revenue totaled $2 million in the second quarter of 2024, compared to $4.6 million in the same period of 2023. As Vince previously touched on, in the second quarter of 2023, we sold the largest single contract in Spokes history, worth almost $4 million, including license revenue of nearly $1.8 million, of which the majority would have fallen to the bottom line.

Calvin C. Rice: Turning to second quarter software revenue, license and hardware revenue totaled $2 million in the second quarter of 2024, compared to $4.6 million in the same period of 2023.

Calvin C. Rice: As Vince previously touched on, in the second quarter of 2023, we sold the largest single contract in Stokes history worth almost $4 million, including license revenue of nearly $1.8 million, of which the majority would have fallen to the bottom line.

Calvin C. Rice: In addition to this, we were able to pull forward a number of sales from the third and fourth quarters of 2023, leading to a highly successful quarter. However, we do not expect to replicate the same quarterly success this year, just given the quarterly timing of our sales expectations for 2024. However, I would like to point out that Vince also mentioned the expectation of bookings growth on a full year basis, and we expect that to translate to a stronger second half in terms of license and hardware revenues on a comparable basis.

Vincent D. Kelly: In addition to this, we were able to pull forward a number of sales from the third and fourth quarters in 2023, leading to a highly successful quarter.

Calvin Rice: We did not expect to replicate the same quarterly success this year, just given the quarterly timing of our sales expectations for 2024. However, I would like to point out that Vince also mentioned the expectation of bookings growth on a full-year basis, and we expect that to translate to a stronger second half in terms of license and hardware revenues on a comparable basis. Professional services revenue was a healthy $4.3 million versus $3.8 million in the second quarter of 2023, up nearly 12% from the prior year period and over 17% for the first half. Much of this continued to be driven by an increase in personnel over the last 12 months.

Speaker Change: We did not expect to replicate the same quarterly success this year, just given the quarterly timing of our sales expectations for 2024.

Speaker Change: However, I would like to point out that Vince also mentioned the expectation of bookings growth on a full year basis, and we expect that to translate to a stronger second half in terms of license and hardware revenues on a comparable basis.

Calvin C. Rice: Professional services revenue was a healthy 4.3 million versus 3.8 million in the second quarter of 2023, up nearly 12% from the prior year period and over 17% for the first half. Much of this continued to be driven by an increase in personnel over the last 12 months.

Speaker Change: Professional services revenue was a healthy $4.3 million versus $3.8 million in the second quarter of 2023, up nearly 12% from the prior year period and over 17% for the first half.

Speaker Change: Much of this continued to be driven by an increase in personnel over the last 12 months.

Calvin C. Rice: As I've mentioned in previous earnings calls, we expect an ongoing need to increase services personnel to match the pace of our growth and professional services backlog as our software operations bookings continue to expand. We've also seen managed services perform very well. This is something we've briefly touched on in the past, but as sales of this service have grown, we believe some additional discussion and details may be useful to investors. This is a service offering within our professional services that is typically bundled with maintenance and sold like a renewal. This service offering provides customers with all necessary implementation and training services for any Spok software products they own over their multi-year term, which is typically three years.

Calvin Rice: As I have mentioned in previous earnings calls, we expect an ongoing need to increase services personnel to match the pace of our growth and professional services backlog, and as our software operations bookings continue to expand.

Speaker Change: As I have mentioned in previous earnings calls, we expect an ongoing need to increase services personnel to match the pace of our growth and professional services backlog as our software operations bookings continue to expand.

Calvin Rice: We've also seen managed services perform very well. This is something we've briefly touched on in the past, but as sales of this service have grown, we believe some additional discussion in detail may be useful to investors. This is a service offering within our professional services that is typically bundled with maintenance and sold like a renewal. This service offering provides customers with all necessary implementation and training services for any spoke software products they own over their multi-year term, which is typically three years. This provides the customer with a known cost over that term and avoids sales delays we have faced in the past when upgrades were made available, but they were not accounted for in the customer's fiscal budget.

Speaker Change: We've also seen managed services perform very well. This is something we've briefly touched on in the past, but as sales of this service has grown, we believe some additional discussion and details may be useful to investors.

Speaker Change: This is a service offering within our professional services that is typically bundled with maintenance and sold like a renewal.

Speaker Change: This service offering provides customers with all necessary implementation and training services for any Spok software products they own over their multi-year term, which is typically three years.

Calvin C. Rice: This provides the customer with a known cost over that term and avoids sales delays we have faced in the past when upgrades were made available, but they were not accounted for in the customer's fiscal budget. While managed services are likely to be cost prohibitive for our smaller customers, we are excited about the opportunity given that revenue is more predictable, being evenly amortized over the term, and in our limited experience, has seen higher margins in relation to our traditional fixed-bid engagement. Over the next several quarters, I expect we'll begin to provide additional details to investors with regard to managed services on a more regular basis.

Speaker Change: This provides the customer with a known cost over that term and avoids sales delays we have faced in the past when upgrades were made available, but they were not accounted for in the customer's fiscal budget.

Calvin Rice: While managed services are likely to be cost prohibitive to our smaller customers, we are excited about the opportunity given that revenue is more predictable, being evenly amortized over the term and, in our limited experience, has seen higher margins in relation to our traditional fixed bid engagements.

Speaker Change: While managed services are likely to be cost prohibitive to our smaller customers, we are excited about the opportunity given that revenue is more predictable, being evenly amortized over the term, and in our limited experience, has seen higher margins in relation to our traditional fixed bid engagements.

Calvin Rice: Over the next several quarters, I expect we'll begin to provide additional details to investors with regards to managed services on a more regular basis. Adjusted operating expenses, which excludes depreciation, accretion, and severance and restructuring costs, totaled 28.1 million for the second quarter compared to 28.9 million in the prior year period. We incurred a one-time benefit of approximately 0.9 million in selling and marketing; excluding this one-time benefit, but adjusted operating expenses would have generally been in line with the prior year period. While we have historically amortized the majority of our commission's expense and proportion to the related revenue, there has always been a small indirect component that has been expensed as incurred under an ASC 606 practical experience.

Speaker Change: Over the next several quarters I expect we'll begin to provide additional details to investors with regards to managed services on a more regular basis.

Calvin C. Rice: Adjusted operating expenses, which excludes depreciation, accretion, and severance and restructuring costs, totaled $28.1 million for the second quarter compared to $28.9 million in the prior year period. Additionally, we incurred a one-time benefit of approximately $0.9 million in selling and marketing. Excluding this one-time benefit, adjusted operating expenses would have generally been in line with the prior year period. However, we have historically amortized the majority of our commissions expense in proportion to the related revenue. There has always been a small indirect component that has been expensed as incurred under an ASC-606 practical expedient.

Speaker Change: Adjusted operating expenses, which excludes depreciation, accretion, and severance and restructuring costs, totaled $28.1 million for the second quarter compared to $28.9 million in the prior year period.

Speaker Change: We incurred a one-time benefit of approximately $0.9 million in selling and marketing.

Speaker Change: Excluding this one-time benefit, adjusted operating expenses would have generally been in line with the prior year period.

Speaker Change: While we have historically amortized the majority of our commission's expense in proportion to the related revenue, there has always been a small indirect component that has been expensed as incurred under an ASC 606 practical expedient.

Calvin Rice: With the significant growth of multi-year engagements, commissions relating to revenue extending beyond a 12-month period has also grown. While these amounts are not currently material to our financial statements, going forward, these costs will be expensed and aligned with their related revenue counterpart in the same manner as the majority of our commissions have been. These were generally offset by lower costs and technology operations as we continued to manage costs in relation to our declining wireless revenues and general administrative costs, which benefited from payable bad debt and savings from the cancellation of our Virginia lease. As a reminder, the expenses related to our Virginia lease will continue to impact severance and restructuring costs through the end of September, at which point we'll start seeing actual cash savings.

Calvin C. Rice: With the significant growth of multi-year engagements, commissions relating to revenue extending beyond a 12-month period have also grown. While these amounts are not currently material to our financial statements, going forward, these costs will be expensed in alignment with our related revenue counterpart in the same manner as a majority of our commissions have. Year over year, revenue cost of revenue increased primarily due to the aforementioned hiring and service as did research and development costs to support the ongoing investment in our product platform.

Speaker Change: With the significant growth of multi-year engagements, commissions relating to revenue extending beyond a 12-month period has also grown.

Speaker Change: While these amounts are not currently material to our financial statements, going forward these costs will be expensed in alignment with our related revenue counterpart in the same manner as the majority of our commissions have been.

Speaker Change: Year-over-year cost of revenue increased primarily due to the aforementioned hiring and services.

Speaker Change: as did research and development costs to support the ongoing investment in our product platform.

Calvin C. Rice: These were generally offset by lower costs in technology operations as we continued to manage costs in relation to our declining wireless revenues and general and administrative costs, which benefited from favorable bad debt and savings from the cancellation of our Virginia lease. As a reminder, the expenses related to our Virginia lease will continue to impact severance and restructuring costs through the end of September, at which point we'll start seeing actual cash savings. Adjusted EBITDA in the second quarter totaled $7 million, as compared to $8.5 million in the prior year period.

Speaker Change: These were generally offset by lower costs in technology operations as we continued to manage costs in relation to our declining wireless revenues and general and administrative costs, which benefited from favorable bad debt and savings from the cancellation of our Virginia lease.

Speaker Change: As a reminder, the expenses related to our Virginia lease will continue to impact severance and restructuring costs through the end of September , at which point we'll start seeing actual cash savings.

Calvin Rice: A just a bit in the second quarter totaled 7 million as compared to 8.5 million in the prior year period. This dynamic is more a reflection of the highly successful second quarter we had in 2023, stemming from strong bookings that led to significant license revenue. Our second quarter results in 2024 are generally in line with our expectations for the year, and we believe our robust pipeline has a position for a strong second half long financial guidance in a minute. We ended the second quarter with 23.9 million in cash, which grew from 23.3 million in the first quarter based on our current outlook.

Speaker Change: Adjusted EBITDA in the second quarter totaled $7 million as compared to $8.5 million in the prior year period. This dynamic is more a reflection of the highly successful second quarter we had in 2023 stemming from strong bookings that led to significant license revenue.

Calvin C. Rice: This dynamic is more a reflection of the highly successful second quarter we had in 2023, stemming from strong bookings that led to significant license revenue. Our second quarter results in 2024 are generally in line with our expectations for the year, and we believe our robust pipeline has us positioned for a strong second half. More on financial guidance in a minute. We ended the second quarter with $23.9 million in cash, which grew from $23.3 million in the first quarter.

Speaker Change: Our second quarter results in 2024 are generally in line with our expectations for the year, and we believe our robust pipeline has us positioned for a strong second half. More on financial guidance in a minute.

Speaker Change: We ended the second quarter with $23.9 million in cash, which grew from $23.3 million in the first quarter. Based on our current outlook,

Calvin C. Rice: Based on our current outlook, we anticipate annual free cash flow in the range of $25 to $27 million and expect to exit 2024 with cash balances between $28 and $30 million. On a final note, as you have probably already seen in today's press release, based on our performance in the first half of the year, we are reiterating our financial guidance for 2024. This year, we expect total revenue to range from $136 million to $144 million, with wireless revenue ranging between $72 million to $75 million, and software revenue ranging between $64 million to $69 million, and adjusted EBITDA to range from $27.5 to $32.5.

Calvin Rice: We anticipate annual free cash flow in the range of 25 to 27 million and expect to exit 2024 with cash balances between 28 and 30 million. On a final note, as you have probably already seen in today's press release based on our performance in the first half of the year, we are reiterating our financial guidance for 2024. This year, we expect total revenue to range from 136 million to 144 million, with wireless revenue ranging between 72 million to 75 million and software revenue ranging between 64 million to 69 million, and adjusted a bit to range from 27.5 to 32.5 million.

Speaker Change: We anticipate annual free cash flow in the range of $25 to $27 million and expect to exit 2024 with cash balances between $28 and $30 million.

Speaker Change: On a final note, as you have probably already seen in today's press release, based on our performance in the first half of the year, we are reiterating our financial guidance for 2024.

Speaker Change: This year, we expect total revenue to range from $136 million to $144 million with wireless revenue ranging between $72 million to $75 million and software revenue ranging between $64 million to $69 million.

Vincent Kelly: With that said, I will now turn the call back over to Events. Thank you, Calvin. I'd like to again point out how proud I am of the strong performance our team was able to deliver in the second quarter, and again believe these results position us well for the remainder of the year. We believe we are strongly positioned to grow our franchise value while returning capital to stockholders. We have a long-term organic growth engine, and our software solutions to spoke care connect, and we maintain a source of strongly current revenue in our wireless service line. We run the largest paging offering in the world integrated with our software operations, and we've enhanced our paging platform and user devices to serve our core healthcare customer base.

Speaker Change: and adjusted EBITDA to range from $27.5 to $32.5 million.

Vincent D. Kelly: Thank you, Calvin. I'd like to again point out how proud I am of the strong performance our team was able to deliver in the second quarter and, again, believe these results position us as well for the remainder of the year. We believe we are strongly positioned to grow our franchise value while returning capital to stock. We have a long-term organic growth engine in our software solutions through Spok Care Connect, and we maintain a source of strong recurring revenue in our wireless service. We run the largest paging offering in the world, integrated with our software operations, and we've enhanced our paging platform and user devices to serve our core healthcare customer base.

Speaker Change: With that said, I will now turn the call back over to Vince.

Vincent D. Kelly: Thank you Calvin. I'd like to again point out how proud I am of the strong performance our team was able to deliver in the second quarter and again believe these results position us well for the remainder of the year.

Vincent D. Kelly: We believe we are strongly positioned to grow our franchise value while returning capital to stockholders.

Vincent D. Kelly: We have a long-term organic growth engine in our software solutions through Spok Care Connect, and we maintain a source of strong recurring revenue in our wireless service line.

Vincent D. Kelly: We run the largest paging offering in the world, integrated with our software operations, and we've enhanced our paging platform and user devices to serve our core healthcare customer base.

Vincent Kelly: We believe these two assets going for us are best financial results or ahead of us and spoke future is bright.

Vincent D. Kelly: We believe with these two assets going for us, our best financial results are ahead of us, and Spok's future is bright. Before I open the call up for your questions, I'd like to thank our shareholders for their support during our pivot. I'd also like to thank them for their participation in our annual meeting yesterday. As we reported, each of the items of business, which included, number one, the election of six nominees to our board of directors, number two, the ratification of the appointment of Grant Thornton, LLP, as our independent registered public accounting firm for the year ending December 31st, 2024, and number three, a non-binding advisory vote to approve 2023 named executive officer compensation, or SEOM, pay, all passed with an overwhelming majority.

Vincent D. Kelly: We believe with these two assets going for us, our best financial results are ahead of us, and Spok's future is bright.

Vincent Kelly: Before I open a call up to your questions, I'd like to thank our shareholders for their support during our pivot. I'd also like to thank them for their participation in our annual meeting yesterday. As we reported, each of the items of business, which included number one, the election of six nominees to our board of directors. Number two, the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2024. Number three, a non-binding advisory vote to approve 2023 named executive officer compensation, or say on peg.

Vincent D. Kelly: Before I open the call up for your questions, I'd like to thank our shareholders for their support during our pivot.

Vincent D. Kelly: I'd also like to thank them for their participation in our annual meeting yesterday. As we reported, each of the items of business, which included, number one, the election of six nominees to our board of directors,

Vincent D. Kelly: Number two, the ratification of the appointment of Grant Thornton, LLP, as our independent registered public accounting firm for the year ending December 31st, 2024. And number three, a non-binding advisory vote to approve 2023 named executive officer compensation, or SEOMPAY.

Vincent Kelly: All pass with an overwhelming majority. For a full review of the final voting results, please see our disclosures in a quarterly report on Form 10-Q filed with the SEC.

Vincent D. Kelly: All pass with an overwhelming majority.

Vincent D. Kelly: For a full review of the final voting results, please see our disclosures in our quarterly report on Form 10-Q filed with the SEC. We appreciate your interest in Spok, and we look forward to updating everyone again next quarter when we report third quarter results in October .

Vincent Kelly: We appreciate your interest in Spok, and we look forward to updating everyone again next quarter when we report third quarter results in October.

Vincent D. Kelly: For a full review of the final voting results, please see our disclosures in our quarterly report on Form 10-Q, filed with the SEC. We appreciate your interest in Spok, and we look forward to updating everyone again next quarter when we report third-quarter results in October. Operator, you may now open the call to questions. Thank you. We will now be conducting a question and answer session.

Operator: Operator, you may now open the call up to questions. Thank you. Well, now we can do a question and answer session.

Operator: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

Speaker Change: Operator, you may now open the call up to questions.

Operator: If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we pull for questions. Thank you.

Speaker Change: Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.

Speaker Change: A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue.

Operator: One moment, please, while we poll for questions. Thank you. Our first question is from Eric Martinuzzi with Lake Street. Please proceed with your question.

Eric Martinuzzi: Our first question is from Eric Martinuzzi with Lake Street.

Vincent Kelly: Please proceed with your questions. Thanks for taking my questions. Congrats on a solid quarter here. Just wanted to ask about the first of all on the software side. It looked like pretty consistent performance as far as the 19 deals over 600,000 in Q1, and you had the 19 over 600, actually 18 over six and one over seven. With that in line with your expectations, going into the quarter because there's a recall, you talked about having had a phenomenal April. Just wondering how things played out in May and June. Yeah, it was in line with our expectations.

Speaker Change: Thank you. Our first question is from Eric Martinuzzi with Lake Street. Please proceed with your question.

Eric Martinuzzi: Hey, thanks for taking my question. So congrats on a solid quarter here. Just wanted to ask about the first of all, on the software side, it looked like pretty consistent performance as far as the 19 deals over 600,000 in Q1, and you had the 19 over 600, actually 18 over 6, and 1 over 7. Was that in line with your expectations going into the quarter? Because, as I recall, you talked about having had a phenomenal April, just wondering how things would play out in May and June.

Eric Martinuzzi: Thanks for taking my questions. Congrats on a solid quarter here. Just wanted to ask about, first of all, on the software side,

Eric Martinuzzi: It looked like pretty consistent performance as far as the 19 deals over 600,000 in Q1 and you had the 19 over 600, actually 18 over 6 and 1 over 7. Was that in line with your expectations going into the quarter? Because as I recall, you talked about having had a phenomenal April , just wondering how things played out in May and June .

Vincent D. Kelly: Yeah, it was in line with our expectations there. We had some of the deals that had a higher component of licensed software in the deal slip into the third quarter, whereas we had one of them closed almost in the very first week of July. But in general, it was in line. The license part has been a little bit lumpy, but we have a very large Q3 and Q4 pipeline where we think we're going to be more than offsetting the second quarter shortfall in the license business.

Vincent Kelly: There we had some of the deals that had a higher component of license software in the deal slip into the third quarter than we had one of them close almost in the very first week of July. But in general, it was in line that the license part has been a little bit lumpy, but we have a very large Q3 and Q4 pipeline where we think we're going to be more than offsetting the second quarter shortfall in the license there.

Speaker Change: Yeah, it was it was in line with our expectations there. We had some of the deals that had a higher component of license

Speaker Change: in the deal slip into the third quarter. Then we had one of them close almost in the very first week of July . But in general, it was in line. The license part has been a little bit lumpy, but we have a very large Q3 and Q4 pipeline where we think we're going to be.

Vincent D. Kelly: Yeah, I wanted to just kind of underline that point you just made because we're looking at software operations bookings, 16%, at least at the six month point, we're down 16%, and obviously we had the big win in Q2 a year ago. Are you continuing to back that double-digit growth for the full year 2024 on software operations bookings? And then, shifting over to the wireless side, I did see the churn, at least quarter on quarter, 0.8%. That's terrific!

Vincent Kelly: Yeah, I wanted to just kind of underline that point you just made because we're looking at software operations, bookings, a 16 percent, at least at the six-month point, we're down to 16 percent. Obviously, we had a big win in Q2 a year ago. Are you continuing to back that double-digit growth for the full-year 2024 on the software operations bookings? Absolutely.

Speaker Change: More than offsetting the second quarter shortfall in the license there.

Speaker Change: Yeah, I wanted to just kind of underline that point you just made because we're looking at software operations bookings.

Speaker Change: 16%, at least at the six-month point, we're down 16%, and obviously we had the big win in Q2 a year ago. Are you continuing to back that double-digit growth for the full year 2024 on the software operations bookings?

Calvin Rice: All right, and then shifting over to the wireless side, I did see the churn, at least a quarter on quarter, 0.8 percent. That's terrific. On a full-year basis, we're down; the term was about 7 percent. That was for, basically, the Q2, as well as the first half of 2024.

Calvin C. Rice: On a full year basis, we're down. The churn was about 7%, and that was for basically Q2 as well as the first half of 2024. What's the expectation for the back half? Are we looking more like 0.8% or are we going to be creeping back up based on what you see in customer behavior?

Speaker Change: Absolutely.

Speaker Change: Okay.

Speaker Change: All right, and then shifting over to the wireless side, I did see, you know, the churn.

Speaker Change: at least a quarter on quarter, 0.8%. That's terrific. On a full year basis, we're down, you know, the churn was about 7%.

Speaker Change: and that was for basically the Q2 as well as the first half of 2024. What's the expectation for the back half? Are we looking more like 0.8% or are we going to be creeping back up based on what you see in customer behavior?

Calvin Rice: What's the expectation for the back half? Are we looking more like 0.8 percent, or are we going to be creeping back up based on what you see in customer behavior?

Calvin C. Rice: Yeah, hey, this is Calvin. You know, yeah, we were really pleased with the second quarter. I would say it'd be tough to continue expecting 0.8%. I mean, that's a phenomenal number. I would definitely take it if we could get it, but I'd still expect full year to be in line with what we've been saying over the last couple quarters. That four, four and a half, 5% number will probably end the year in about that full range, maybe slightly better.

Calvin Rice: Yeah, hey, Aaron, this is Calvin. We were really pleased with second quarter. I would say it'd be tough to continue expecting 0.8 percent. That's a phenomenal number. I would definitely take it if we could get it, but I'd still expect full-year to be online with what we've been saying over the last couple of quarters.

Speaker Change: Yeah, hey Eric, this is Calvin. You know, yeah, we were really pleased with second quarter. I would say it would be tough to continue expecting 0.8%. I mean, that's a phenomenal number. I would definitely take it if we could get it. But I'd still expect full year to be in line with what we've been saying over the last couple quarters. You know, that 4, 4.5%, 5% number will probably end the year in about that full range, maybe slightly better.

Calvin Rice: That four, four and a half, five percent number will probably end the year, and about that full range may be slightly better. Okay.

Calvin Rice: And then on the wireless R-Poo, it wasn't a huge step down, but I did notice a sequential step down, which I thought was strange as given, you know, we've got a price increase and then we had, you know, we've got the next gen, the Gen A page rolling out. What's behind that, looks like about a nickel for a unit on the R-Poo step down Q1 to Q2? Yeah, sure.

Calvin C. Rice: And then on the wireless ARPU, it wasn't a huge step down, but I did notice a sequential step down, which I thought was strange, just given, you know, we've got a price increase, and then we had, you know, we've got the next gen, the Gen A pagers rolling out. What's behind that? Looks like about a nickel per unit on the ARPU step down from Q1 to Q2.

Speaker Change: Okay.

Speaker Change: And then on the wireless ARPU, it wasn't a huge step down, but I did notice a sequential step down, which I thought was strange, just given, you know, we've got, we had a price increase, and then we had, you know, we've got the next gen.

Eric Martinuzzi: The Gen A pager is rolling out. What's behind that? It looks like about a nickel per unit on the ARPU step down Q1 to Q2.

Calvin C. Rice: Yeah, sure. So from an RP perspective, you know, we kind of look at that in three trunks. One is kind of that standard component. The other part is a kind of pass-through component. And the third part, albeit pretty small, is a variable component. And that's going to be based on, believe it or not, things like overcharges. And typically, we don't see a move from one quarter to the next that's going to impact RP on a larger scale because, generally, there are offsets, but really, it's coming from that, that variable piece. So there's nothing to worry about from that expectation. We've got price increases going through again here, similar to last

Calvin Rice: So from an R-Poo perspective, you know, we kind of look at that in three trunks. One is kind of that standard component. The other part is the kind of pass-through component. And the third part, albeit pretty small, is a variable component. And that's going to be based on, believe it or not, things like overcharges still. And typically, we don't see a move from one quarter to the next. It's going to impact R-Poo on the larger scale because generally there's all sets, but really it's coming from that variable piece. So nothing to worry about from that expectation.

Speaker Change: Yeah, sure. So, from an RPU perspective, you know, we kind of look at that in three trunks. One is kind of that standard component. The other part is the kind of pass-through component. And the third part, albeit pretty small, is a variable component. And that's going to be based on, believe it or not, things like overcharges still. And typically, we don't see a move from one quarter to the next that's going to impact RPU on the larger scale, because generally there's offsets, but really it's coming from that.

Calvin Rice: We've got price increases going through, again here, similar to last year in the middle of the third quarter. And so we expect that to start benefiting us here in the next couple of months. Yeah, we also have a very large, we have a couple very large Gen A page or sale deals doing up here for the third quarter and the fourth quarter, too. And that will have a positive impact on R-Poo as well. Okay, so the expectation is the sequential sequence we hire through the remainder of the year? Yeah, that's right. Okay, all right.

Speaker Change: That variable piece. So nothing to worry about from that expectation. We've got price increases going through again here, similar to last year in the middle of the third quarter. And so we expect that to start benefiting us here in the next couple months.

Calvin C. Rice: Yeah, we also have a couple of very large ones. We have a couple of very large ones

Speaker Change: Yeah, we also have a couple of very large, we have a couple of very large Gen A pager sale deals queuing up here for the third quarter and the fourth quarter too, and that will have a positive impact on our poo as well.

Calvin C. Rice: Okay, so the expectation is sequentially higher through the remainder of the year. Yeah, that's right. Okay, all right. And then that last question for me. The cash was up nicely here.

Speaker Change: Okay, so the expectation is a sequential, sequentially higher through the remainder of the year.

Calvin C. Rice: Q2 versus Q1. You said we would finish out the year at $28 to $30 million. Is that correct? That is correct. Okay. All right. That's it for me. Thanks. Thanks, Eric.

Calvin Rice: And then last question for me, the cash was up nicely here, Q2 versus Q1. You said we finished out the year at 28 to 30 million dollars. Is that correct? That is correct. Okay, all right.

Speaker Change: Yeah, that's right

Speaker Change: Okay, all right, and then that last question for me, the cash was up nicely here, Q2 versus Q1, you said we finish out the year at 28 to 30 million dollars, is that correct?

Eric Martinuzzi: That's it for me. Thanks. Thanks, Eric.

Speaker Change: That is correct.

Speaker Change: Okay. All right. That's it for me. Thanks.

Operator: As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. Thank you.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. Thank you. There are no further questions at this time. I would like to hand the floor back over to Vincent Kelly for any closing comments.

Eric Martinuzzi: Thanks, Eric.

Speaker Change: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad.

Operator: There are no further questions at this time.

Vincent Kelly: I would like to hand the floor back over to Vincent Kelly for any closing comments. Okay, shareholders, thank you again very much for your support. We look forward to updating you again here at the end of next quarter in October when we report our third quarter results.

Speaker Change: Thank you. There are no further questions at this time. I would like to hand the floor back over to Vincent Kelly for any closing comments.

Vincent D. Kelly: Okay shareholders, thank you again very much for your support. We look forward to updating you again here at the end of next quarter in October when we report our third quarter results. Everyone have a great day and a great evening.

Vincent D. Kelly: Okay shareholders, thank you again very much for your support. We look forward to updating you again here at the end of next quarter in October when we report our third quarter results. Everyone have a great day and a great evening.

Vincent Kelly: Everyone have a great day and a great evening.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your.

Operator: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.