Spok Holdings, Inc. · NASDAQ:SPOK
Spok — Investor Presentation (October 2023)
31 slides from Spok's investor presentation, Oct 30, 2023
Slide 1: Investor Presentation October 2023
Investor Presentation October 2023
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement Statements contained herein or in prior press releases which are not historical fact, such as statements regarding our future operating and financial performance, are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation
Slide 3: Our Mission & Investment Highlights
Our Mission & Investment Highlights
Slide 4: Strategic Goal: Run the business profitably and generate cash
Strategic Goal: Run the business profitably and generate cash Returning capital to shareholders is our goal as well as our legacy ▪ Nearly $670 million returned to stockholders since 2004 ▪ 2022 capital return - $25 million ▪ 2023 capital return forecast - $25.6 million Focus on maximizing cash over
Slide 5: Key Investment Highlights
Key Investment Highlights Significant Annual Free Cash Flow Generation and Strong Balance Sheet Substantial cash flow being returned to shareholders through considerable quarterly dividend, no debt Software Operations Bookings Momentum, Large Identified Pipeline Expanding software pipeline convertin
Slide 6: Continuing History of Service and Commitment
6 Continuing History of Service and Commitment Leader in healthcare communications - A clinical communications & collaboration solution provider. Significant experience integrating to critical hospital contact centers, EHRs and many other core healthcare information systems. We continue to invest in
Slide 7: Our Plan
Our Plan Growth in value and return of capital 7 Long-term objective • Growing cash flow while stabilizing our top line with growth in software revenue Short-term energy focus 1. Software Bookings: Achieve plan and show YoY growth 2. Product Roadmap Progress: Demonstrable benefit to the business and
Slide 8: Healthcare responds to fiscal challenges
8 Healthcare responds to fiscal challenges Changes in economic conditions Fiscal alignment of healthcare IT strategy ⚫ Staff Shortages (Nursing, IT and others) ⚫ High Labor Costs ⚫ Higher Capital Cost / Reduced Capital Spending ⚫ High Inflation ⚫ Economic Recession ⚫ Thinner Margins ⚫ Tighter IT Bud
Slide 9: Spok responds to fiscal challenges
9 Spok responds to fiscal challenges New product release cadence Provide 3- or 5-year managed maintenance & services agreement ⚫ Limit costly major upgrades to a 3- to 4-year cycle ⚫ Deliver product enhancements releases twice/year with minor in-place upgrades ⚫ Perform benefit realization assessmen
Slide 10: Spok Earns Top Client Satisfaction Scores for Sixth Consecutive Year
10 Spok Earns Top Client Satisfaction Scores for Sixth Consecutive Year Overall rank Vendor Total No. 1 criteria ranks 1 Spok 11 2 Tiger Connect 2 3 Epic Secure Chat 3 4 Vocera 2 5 AT&T 1 6 Qlik 1 © 2023 Black Book Research LLC | Published: February 2023, Secure Clinical Communications Platforms
Slide 11: Longstanding Customer Relationships
Customer Software Wireless Tenure 11 Longstanding Customer Relationships… 5 21 -- -- -- 30 44 29 27 30 32 37 14 Rochester Customer Software Wireless Tenure 10 27 22 20 20 16 -- -- -- 18 20 13 16 Top 22 adult hospitals (2023-2024) Rank Custome
Slide 12: Spok Leadership Team
Spok Leadership Team Sharon Woods Keisling Corporate Secretary and Treasurer Renee Hall Chief Compliance Officer VP of Human Resources Tim Tindle Chief Information Officer Vince Kelly Chief Executive Officer Mike Wallace President and Chief Operating Officer Mick Ling Vice President of Maintenance R
Slide 13: Business Strategy
::: Business Strategy
Slide 14: Overall Strategy
Overall Strategy Critical Communications Purpose Built Over Time Evolution of Spok • Acquiring new customers by further penetrating the hospitals domestically with significant opportunity outside the U.S. • Continuing to expand relationships within the existing customer base with additional R&D spen
Slide 15: Software Strategy
Software Strategy • With Spok Care Connect, the contact center is the base, with products like Messenger and Spok Mobile® sold as accessories to our contact center solution, which are all on-premise solutions Wireless Integration Spok Care Connect… …Product Direction • With the pivot from Spok Go, r
Slide 16: Wireless Strategy
Wireless Strategy Spok continues to maximize Wireless cash flow by pursuing a strategy of simultaneously minimizing churn and revenue erosion while maximizing margins through network cost reduction efforts Network Rationalization Plan The Company has ongoing efforts to manage network capacity and to
Slide 17: Focus on Healthcare
61% H e a l t h c a r e Other Large Enterprise Government 2012 17 Focus on Healthcare 85% H e a l t h c a r e Government Large Enterprise Other 2023 Percentage of revenue
Slide 18: Spok Care Connect Market Size
18 Spok Care Connect Market Size 4.2 billion By 2030 (2023 $1.9B) Total Addressable Market 11.6 CAGR from 2023 to 2030 Growth Rate Largest Market 30% 570 million In 2023 North America Market Size
Slide 19: Spok Care Connect Competitive Positioning
Spok Care Connect Competitive Positioning KEY VALUE PROPOSITIONS ✓ Strategic partner that solves enterprise challenges from one platform allowing the right message to get to the right person on the right device ✓ Source of truth, especially in complex IDNs, for the directory and on-call schedules ✓
Slide 20: Spok Care Connect Operations Bookings
Spok Care Connect Operations Bookings Historical Bookings performance highlights potential Company places focus on Spok Go Selling and Marketing efforts Strategic Pivot reorients focus on Core Product offerings and future growth $33.2 $35.1 $45.1 $38.6 $33.6 $38.9 $39.5 $36.5 $27.3 $21.2 $24.7 0 5 1
Slide 21: Highly Profitable Reoccurring Maintenance Revenue
Spok Care Connect Highly Profitable Reoccurring Maintenance Revenue Post acquisition of Amcom, expansion of reoccurring maintenance attributable to growth in license sales and focus on Spok Care Connect Company places focus on Spok Go Selling and Marketing efforts While revenue is flat in the near t
Slide 22: Financials
::: Financials
Slide 23: Third Quarter 2023 Financial Results
23 Third Quarter 2023 Financial Results For the Three Months Ended September 30, For the Nine Months Ended September 30, 2023 2022 2023 2022 Total Revenue $35.4 $33.7 $105.1 $101.3 Wireless $19.0 $19.1 $56.9 $56.6 Software $16.5 $14.7 $48.2 $44.7 Adjusted EBITDA (1) $8.4 $6.7 $23.8 $9.3 • Year-to-da
Slide 24: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights • Company executing on strategic business plan generating $4.5 million of GAAP net income, and $8.4 million of adjusted EBITDA • Third Quarter software operations bookings contribute to a strong year, up more than 38% on a year-to-date basis • Wireless average revenue p
Slide 25: Balance Sheet
25 Balance Sheet • Exceptionally clean and simple balance sheet • No debt • Common stock only • $27.3 million of cash and equivalents • Significant deferred tax assets to shield income from taxes for many years
Slide 26: 2023 Financial Outlook
2023 Financial Outlook 26 Prior Guidance Current Guidance From To From To Total Revenue: $134.50 $137.50 $136.25 $139.25 Wireless Revenue $74.50 $75.50 $75.25 $76.25 Software Revenue $60.00 $62.00 $61.00 $63.00 Adjusted EBITDA(1) $25.0 $28.0 $27.5 $29.0 (Dollars in millions) (1) Adjusted EBITDA repr
Slide 27: Capital Allocation
::: Capital Allocation
Slide 28: Capital Allocation
Capital Allocation Return of Capital • Higher $1.25 annual dividend since February 2022 • Opportunistic capital deployment for shareholder value via share repurchase authorization – current basket of $10.0 million M&A • Not a current focus/priority • Will be opportunistic for potential to leverage o
Slide 29: History of Adjusted FCF generation and return of capital
29 History of Adjusted FCF generation and return of capital • Since the 2004 merger, Spok has generated over $1 billion in cumulative free cash flow. • Both our Wireless and Software businesses drive significant FCF and allow for the continued investment in our software business. 29 0 200 400 600 80
Slide 30: Wrap-Up
Wrap-Up Enormous customer base and strong relationships with leading healthcare providers Largest wireless paging network in the country with 785,000 units in service No debt, $27.3 mm cash balance, significant deferred tax assets, funding 95%+ of dividend from free cash flow, substantial dividend y
Slide 31: Thank you
::: Thank you