Spok Holdings, Inc.

We'll begin by providing a review of our company performance for the quarter. I'll then turn the call over to Michael Wallace, our President and Chief Operating Officer, to review some of our quarterly sales highlights. Then our Chief Financial Officer, Calvin Rice, will review our first quarter financial highlights and financial guidance for 2024. I'll then wrap up the call and open it up for your questions. As a setup front, we're proud of what the SPOKE team has been able to accomplish in the first quarter and believe our results provide a solid springboard for the year ahead. First quarter highlights include a more than 5% year-over-year growth in total revenues, driven by a more than 15% growth in software revenues. Strong year-over-year increases in net income and adjusted EBITDA levels. A 39% year-over-year increase in software operations bookings spoke second highest first quarter bookings level in our history. Year-over-year growth in all categories of software revenue, including maintenance, license, professional services, and hardware. Improved wireless trends as net unit churn again dropped below 2% from the prior quarter. 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 we were able to accomplish all of this while continuing to invest in our products and infrastructure. In short, I believe Spope is doing an excellent job of balancing our goal of returning cash to our stockholders with those investments in order to fuel future growth. In the first quarter of 2024, we generated over $7.5 million of adjusted EBITDA, which more than covered the $6.3 million we returned to our stockholders. However, at the same time, we increased our first quarter research and development investment in our products by half a million dollars or 18.4% on a year-over-year basis and believe we're on track to invest approximately $11 million in product research and development expenses in 2024. We believe this investment will fuel future software revenue growth and our extensive experience selling and operating our established communication solutions will create significant value for stockholders by maximizing revenue and cash flow generation. As I mentioned, Spoke has a proud legacy of creating stockholder value through free cash flow generation, and we intend to continue this track record. In fact, over the last 20 years, Spoke has returned a total of more than $680 million to our stockholders, even through our regular quarterly dividend, special dividends, or share repurchases. When you take into consideration our current cash balance, Distributions to stockholders, share repurchases, debt repayments, and acquisitions. Since our inception, Spoke has generated over $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. Going forward, we believe our extensive experience selling and operating our established communication solutions and world-class customer base will create a 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 tremendous recognition that we received from right at the end of the first quarter, and a major accomplishment by the entire Spoke team. For the seventh consecutive year in a survey of healthcare industry clients by Black Book Market Research on top-rated clinical communications platforms, Spoke received the number one overall survey rank. We're honored by the unwavering trust our healthcare clients have placed in Spoke as their go-to partner for clinical communications. 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. NetSurvey spoke we see the highest honors for customer satisfaction in 12 of the 18 copyrighted key performance indicators BlackBook research measures, including strategic alignment of client goals, innovation, breadth of offerings, account management support, and customer care, and best of breed technology and process improvement. We're particularly honored by this recognition because the research is truly independent, and unlike other rating programs, no participation or subscriber fees are involved. We believe that honors such as these are indicative of the strong industry reputation that we have built. With that, I'll turn the call over to Michael 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. Yet amidst all the progress in creating a solid financial platform and shareholder-friendly capital allocation strategy, we remain true to our mission of being a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes as Spoke enables smarter, faster, clinical communications to our customers. We have over 2,200 healthcare facilities as customers, representing the who's who of hospitals in the United States. We have built our solutions over many years and have longstanding, valuable customer relationships. This is coupled with the financial strength that over 80% of our revenue is reoccurring in nature, and we are a company with no debt, which provides us significant flexibility. In the first quarter, our $7.9 million of software operations bookings included 19 six-figure customer contracts, sustaining the momentum that we saw last year. Most impressively, that included four multi-year engagements, and those six-figure contracts had an average contract size that was up nearly 40% from the prior quarter. We are extremely pleased with this start to 2024. Let me take a few minutes to highlight a few of the customer engagements that we signed last quarter. The first health system serves more than 1.4 million patients and 200,000 health plan members, covering an extensive area of 250,000 square miles. This rural health organization sends over 120,000 messages and handles more than 3,000 codes per month using Spoke Solutions. Through this multi-year commitment, they benefit from three years of steady budgeting, upgrades, a new test system, value-added services, and the flexibility to adopt upgrades as required for CTI dependencies and desired feature functionality enhancements. Next, we secured another contract with a customer who has been with Spoke for almost 20 years. This customer operates across six hospitals with a workforce exceeding 10,000 employees. They use the Spoke CareConnect platform to initiate nearly 400,000 codes annually, dispatching approximately 6 million messages or pages, and oversees nearly 3,000 on-call groups per year. Our multi-year engagement with this health system includes Spoke Smart Suite upgrades, Spoke Smart Suite console licenses, eNotify, Messenger, and Spoke mobile usage for the organization's 7,000 licenses. As an existing Spoke customer, the health system also opted for two value-added services, data integrity and workflow analysis, which will help our partner derive maximum value from their Spoke solutions. Another customer contract is with a longstanding Spoke partner of over 20 years to support their clinical communication needs across the organization's growing enterprise. This health system covers about 80 specialties to more than 100,000 hospitalized patients, nearly 370,000 emergency room cases, and oversees approximately 3 million outpatient visits per year. As a Spoke console client, this multi-year engagement encompasses extensive use of the Spoke Care Connect platform. including Spoke Console, Web Directory, Spoke Mobile, encrypted paging, Messenger eNotify, and EHR ADT integration with Epic, which will expand to a new state-of-the-art facility opening next year. Additionally, this agreement includes two of our value-added services. And last, we executed a strategic three-year agreement focusing on the expansion and optimization of a customer Spoke Care Connect environment, Their flagship hospital has over 24,000 employees staffing more than 1,400 beds. Our partnership includes MediCall console upgrades, the expansion of the health systems all-in-one device initiative powered by Spoke Mobile to a total of 2,000 users, and our AI-powered interactive voice response system, Spoke Voice Connect. In addition, this customer also opted for various value-added services to help them drive maximum value from our solutions. On a final note, I would also like to highlight our successful participation in the HINSS24 conference in March. There, we showcased our top-rated clinical communication platform. Spoke solution experts also demonstrated the power of the new Spoke Care Connect hosted solution and the new reporting dashboards and user capabilities of Spoke Messenger. The event attracted more than 10,000 healthcare leaders from around the globe. We were very pleased with the customer, prospect, and partner meetings we participated in at this year's conference. Events such as these are critical to our success as they provide a referral source for further growth to our sales pipeline. I will now turn the call over to Calvin Rice, our Chief Financial Officer, to briefly review the first 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 first 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. Turning to our income statement, in the first quarter of 2024, GAAP net income totaled $4.2 million, or 21 cents per diluted share, compared to net income of $3.1 million, or 15 cents per diluted share, in 2023. For the first quarter of 2024, total GAAP revenue was $34.9 million, up from prior quarter revenue of $34 million and compared to revenue of $33.2 million in the first quarter of 2023. Revenue for the quarter consisted of wireless revenue of $18.6 million, which was down 2.3% from the prior year, and software revenue of $16.3 million, up 15.3% from last year. With respect to wireless revenue, we saw improvement in quarterly net unit churn at 1.6% in the first quarter, down from 2.5% in the prior quarter, and a 30-cent increase in ARPU, or 4% from the prior year. The increase in ARPU was primarily driven by the success of our pricing actions undertaken in late 2023, and to a lesser extent, continued sales of our new Gen A pagers. While we believe the demand for our wireless services will continue to decline on a secular basis, as reflected in our declining pager units and service, we are hopeful that our focus on pricing and other initiatives like the Gen A pager will continue to further offset revenue loss through pager unit decline. Turning to first quarter software revenue, maintenance revenue totaled $9.3 million and was up from the prior year quarter by approximately 3.8%. Given the nature of maintenance revenue, Higher license sales will work through revenue on a lagging basis, and we are beginning to see the positive impact on maintenance revenue from software operations booking levels over the past several quarters. Professional services revenue was a healthy 4 million versus 3.2 million in the first quarter of 2023. Much of this was driven by an increase in personnel in the second half of 2023 and continuing into the first quarter, with 16 additional hires over the last nine months. As software operations bookings continue to expand, we expect an ongoing need to increase services personnel to maintain pace with our growth in the professional services backlog. We generally expect new personnel to be fully billable in roughly three months from the time they are hired. So there's some margin impact in the very short term, but nothing that would present a meaningful impact on a calendar year basis. License and hardware revenue totaled $3 million, up from $2 million in the same period of 2023. Again, this results from the strong levels of software operations bookings we continue to see. First quarter adjusted operating expenses, which excludes depreciation, accretion, and severance and restructuring costs, totaled $28.5 million in the first quarter, compared to $27.2 million in the prior year period. While year-over-year expenses were up $1.3 million, Nearly half of the increase was due to about $0.6 million increase in spokes cost of revenue, primarily due to the aforementioned hiring and services and directly related to the $2.2 million increase in software revenue. The remainder was driven by increased investment in our software products for research and development, as well as selling and marketing. Adjusted EBITDA totaled $7.5 million, a 9.2% increase from adjusted EBITDA in the same quarter of 2023, a reflection of our strong top-line results to begin the year. I'd also like to address our cash balances, which were just over $23 million at the end of the first quarter. As we have mentioned in the past, cash disbursements in the first quarter are traditionally the peak of what we experience in a given calendar year, and this quarter was no different. Based on our current outlook, we fully expect to exit 2024 with cash balances substantially higher than where we ended the first quarter. On a final note, as you've probably already seen in today's press release, based on our performance in the first quarter, 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 million to $32.5 million. With that said, I will now turn the call back over to Vince.