Spok Holdings, Inc.

lead chair of net income and we accomplished this while responsibly investing in our product and service offerings. Spokas struck an excellent balance between making the necessary investments to fuel future growth while continuing to generate cash flow and returning capital to our stockholders. Today we'll share with you an update on how our strategic business plan is progressing in support of our goals as well as our financial results for the quarter and full year. I'll start by reviewing the agenda for today's call. The order will be as follows. First, a review of our strategic focus and goals, reporting our progress against those goals. Next, Michael Wallace, our COO, will provide a review of our sales performance. Then Calvin Rice, our CFO, will review our fourth quarter and full year 2024 financial highlights, as well as a more detailed look at our financial expectations for 2025 and I will then conclude our prepared remarks with a brief wrap-up. And finally, we will open the call-out to your questions. In 2024, our team achieved numerous operational and financial milestones. Significant accomplishments were made regarding software revenue growth, particularly in our professional services business and specifically as it relates to our managed services offering, reduced wireless net unit term, maintaining solid profitability levels, continued expense management, cash flow generation, progress on our product roadmap and development, augmenting our sales team, generating record level six and seven figure customer contracts and multi-year engagements, Gen A pager placements, maintenance contract bookings and retention, and enhancing our industry reputation with continued high customer satisfaction scores. In 2024, Spoke generated over 34 million of software operations bookings. This was more than a 13% increase from the prior year. This annual growth was particularly impressive given that the prior year software operations bookings levels had included our largest single customer contract ever signed and our largest ever quarterly bookings level in the second quarter. While we were very happy with our bookings level last year, and believe that we will continue growing our total bookings this year. Our focus will be on accelerating our license sales while maintaining momentum in our professional services. Switching to operating expenses. While driving our top line, we also continued to focus on expense management as operating expense levels for the year were virtually unchanged from 2023. However, our focus on expense management is one of the key drivers to generate increased cash flow does not come at the expense of our product platform as we continue to make the necessary investments in product development, sales and marketing, customer support, and professional services to support the growth of Spoke Care Connect and our wireless solutions. In 2024, Spoke invested more than $11.5 million in product research and development, a nearly 10% increase in 2023. Investments such as these are critical to creating a best-of-breed product platform into maintaining our solid industry reputation. In 2024, Spoke continued to build upon its premier industry reputation. We started the year with our participation at the HIMSS 24 Conference, where we showcased our top-rated clinical communications platform. There, Spoke experts demonstrated the power of the new Spoke CareConnect hosted solution and the new reporting dashboards and user capabilities of Spoke Messenger. At the HIMSS 24 conference, attendees learned about the Spoke Care Connect hosted solution, which enables hospitals and clinics to access the power of Spoke applications remotely with a simple recurring subscription plan. Additionally, Spoke experts discussed how Spoke's messenger, new reporting, and dashboard capabilities provide a user-friendly way to showcase operational metrics for enterprise communications. This is an intelligent, FDA 510 cleared software solution designed to send critical information and updates from an organization's various alert systems such as a nurse call and patient monitoring to mobile staff on their communications devices. The conference was a true success both in terms of the excitement level generated by Spoke's products and the number of new sales leads we were able to add to our pipeline. And we look forward to the 2025 HIMSS conference next month. But don't just take my word on how SPO continues to improve its reputation. In 2024, I believe that there were two key proof points that underscore our premier market position as evidenced by number one, receiving top honors for the seventh consecutive year in Black Book Market Research's survey of clinical communication solutions, acute care hospitals. And number two, having 18 of the 20 adult hospitals and nine of the 10 children's hospitals named to the 2024 US News & World Report Best Hospital Honor Roll as our customers. Accolades such as these do not come if you don't have a best-in-class product offering and solid reputation with your customers. Spoke has an amazing blue-chip customer base, and many of those customers have been with us for decades and continue to buy from us. And in July, Spoke surpassed a very important milestone as the company marked our 10-year anniversary branded as Spoke. In 2011, USA Mobility Inc. acquired Amcom Software. In 2014, the company completed its integration, creating a single cohesive business, and the Spoke brand was born. Spoke expanded on the strong legacy of those 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. This is our mission, and this is our passion. In short, we executed at a high level and we are confident about the future as we start 2025. Based on our performance in 2024, we are providing our guidance estimates for revenue and adjusted EVTA generation in 2025. This guidance reflects the team's confidence in being able to continue our strong performance since the pivot in 2022. Calvin will go into more detail regarding our expectations later in the call. Of course, like last year, we'll review our guidance with you on a quarterly basis and update as appropriate. Before I turn the call over to Mike to review our sales performance, let me briefly summarize the goals that support our critical and important mission. Our strategic goal is simple. Run the business profitably, generate cash flow, and return that capital to our stockholders. Spoke as a proud legacy of creating stockholder value through free cash flow generation, and we intend to continue this track record. Since the beginning of our strategic pivot, which started about three years ago, Spokas returned approximately $77 million or $3.75 per share to our stockholders in the form of our regular quarterly dividend. In fact, since we created this company way back in 2004, Spokas returned nearly $700 million to our stockholders due to our regular quarterly dividend, special dividends, or share repurchases. In the fourth quarter of 2024, our history of returning cash to our stockholders continued as we returned $6.3 million in dividends. This continues our legacy of returning capital to shareholders since becoming a public company. And we again expect to pay dividends in excess of $27 million in 2025. Spoke remains committed to our dividend policy and returning capital to our stockholders. When you take into consideration our current cash balance distribution to stockholders, share repurchases, debt repayments, and acquisitions, Spoke has now generated more than $1 billion of free cash flow since our creation in 2004. 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, disciplined expense management, and number four, a stockholder-friendly capital allocation plan. Going forward, we believe our extensive experience operating our established communication solutions and world-class customer base will continue to generate significant value for our stockholders. Now, I will turn the call over to our President and Chief Operating Officer, Michael Wallace, who will talk about our operating accomplishments. Mike? 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and full year of results from SPOKE. We are pleased to report that we have continued to execute on our business plan. And in 2024, we generated gap net income of 15 million or 73 cents per diluted share, which was in line with prior year results and a sharp increase from the break even adjusted gap net income performance from two years ago. Importantly, we accomplished this bottom line performance while continuing to generate double digit software operations growth which drove revenue in 2024, as well as significantly building our professional services and maintenance backlog levels to more than 62 million, growth of nearly 22%, and will drive revenue in future periods. On a full year basis, software operations bookings totaled 34.1 million, up more than 13% from prior year levels. Also, total 2024 software operations bookings reached levels not seen for the past five years and continue on a trajectory of growth following our pivot three years ago. Amidst all the progress in creating the solid financial platform and stockholder-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 for our customers. And importantly, we continue to maintain our reputation as a thought leader in the healthcare communication space if we continue to see customer satisfaction ratings increase. Spoke has over 2,200 healthcare facilities as customers, representing the who's who of hospitals in the United States. We have built our solutions and industry-leading reputation over many years and have longstanding valuable customer relationships. This is an amazing and valuable asset for Spoke. And these hospitals buy from us regularly and renew maintenance at a high level. Let me take the opportunity to drill down into our software operations bookings in 2024. 2024 was certainly a year of milestones with regard to our software operations bookings. In addition to the solid year-over-year growth and total bookings of 13.2%, we were able to execute 82 six- and seven-figure customer contracts. a 22% increase from our record-setting performance in 2023. Additionally, in 2024, we executed 40 multi-year engagements with customers, a third higher than the prior year. Hopefully, this performance gives you a good indication of the momentum that our sales team is generating in the marketplace and the confidence we have as we work our way through 2025 with a growing sales pipeline, both in terms of size and quality. Supporting our achievements in the fourth quarter of 2024 were 20 six and seven-figure contracts that we were able to close. And this performance is epitomized by the three customer contracts I'm going to discuss today. First, a new logo customer with one of the Midwest's most renowned nonprofit multi-specialty academic medical centers. Another with one of the top academic medical centers in the U.S. And the final with a regional leader in high-quality care and a mission-driven physician-led integrated health system in the mid-Atlantic. Let me take a few moments to review these agreements. Our first contract from last quarter was a seven-figure new logo contract with the health system headquartered in the Midwest, comprised of 23 hospitals that span both Ohio and Florida. This organization ranks among the largest and most renowned healthcare systems in the world, with over 80,000 caregivers 276 outpatient facilities, and a significant international presence. This multi-year transaction includes an enterprise software license for our operator console and web on-call solution. And during the first implementation phase, Spoke will migrate over 150 operator console workstations from another provider to Spoke to support 14 different hospitals and remote workers. Additionally, our Spoke Messenger solution was included to facilitate critical alarm traffic, including nurse call, medical gas, and fire alarms. SPOKE supports this health system's multiyear strategy to accelerate the meaningful use of technology to better support patient and provider workflows while also aligning directly with its infrastructure goal, which includes a system-wide rollout of Cisco. The second standout customer contract in the fourth quarter is with a large public health system in the Southwest. This prestigious hospital provides care and life-saving services to more than 250,000 patients annually, manages over 600,000 operator calls, and processes over 2 million pages annually utilizing Spoke Smart Suite from a centralized hybrid call center. Spoke secured a five-year managed service commitment that will extend our existing partnership into the future and continue to drive value and critical communication services that are core to this organization's mission and growth. Spoke's multi-year engagement includes Spoke Smart Suite and web upgrades, our new Spoke CareConnect enterprise reporting, and Spoke Messenger and eNotify upgrades. Coupled with our value-added services that include data integrity and solution assessments, this health system will become one of the newest members of our premium support service, which will further add an additional layer of value and attention that our clients appreciate. The third customer contract was with a long-standing Spoke customer of over 35 years and is a nationally recognized integrated health system serving parts of the mid-Atlantic. This healthcare system is a regional mid-Atlantic leader with over 23,000 team members supporting nine hospitals, over 250 patient care locations, and a multi-specialty group employing over 3,000 physicians. They rely on Spoke to streamline their communications for code calls, on-call scheduling, alarm routing, and enterprise web directory that is heavily integrated with key systems and data. With their commitment to a new multi-year engagement, they benefit from four years of steady budgeting, unlimited upgrades, new SMS messaging to support legacy hardware changes and carrier needs, value-added services, and allotment of hours to maintain their proactiveness in patching updates with third-party systems, and the flexibility to adopt upgrades as required for CTI and OS dependencies or desired feature functionality enhancements. This is a growing health system that is engaged in bringing on its newest site, an existing Spoke client, into this multi-year engagement. As you can see, Spoke continues to consistently deliver effective communication solutions to hospitals and healthcare systems. Our fourth quarter success underscores our steadfast dedication to offering unparalleled communication solutions to our clients. We are confident that our software solutions will continue to bring positive change to healthcare institutions nationwide. With that said, I'd like to turn the call over to our Chief Financial Officer, Calvin Rice. Calvin?

Thanks, Mike, and good afternoon, everyone. I would now like to take a few minutes and provide a recap of our fourth quarter and full year 2024 financial performance, which we reported earlier today. As always, I encourage you to review our 10-K 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 2024, GAAP net income totaled 15 million or 73 cents per diluted share compared to net income of 15.7 million or 77 cents per diluted share in 2023. In 2024, total gap revenues were $137.7 million, down from revenue of $139 million in 2023. Wireless revenue of $73.5 million for the year was down from revenue of $76 million in the prior year. However, this was partially offset by growth in software revenue to $64.1 million in 2024, driven by a nearly 22% increase in professional services revenue and the success of our managed services offering we had discussed in our last earnings call. With respect to wireless revenue, 2024 performance continues to be primarily driven by improvement in average revenue per unit, or ARPU, which saw growth of 26 cents on a year-over-year basis. Much of this increase was driven by previous pricing actions and, to a lesser extent, incremental pass-through taxes and fees. We did see an improvement in net unit churn as net units and service declined in 2024 by roughly 5.9% from the prior year as compared to a 6.4% decline in 2023. While we are happy with the year-over-year decline in the net unit churn rate, and it was still within the 4 to 6% we've seen over the last 5 to 7 years, We believe that the improvement in the rate would have been even greater had several of the new additions that were anticipated in Q4 not been delayed. While timing of new wireless placements is sometimes difficult to foresee on an individual basis, we have seen modest improvement as we begin 2025. We are confident in our ability to execute in 2025, and in line with the last several years, we expect our net unit churn to range from 4 to 6%. We expect demand for our wireless services will continue to decline on a secular basis as reflected in declining pager units in service. However, we remain focused on pricing and other initiatives like the GEN-A pager to further offset revenue loss through pager unit decline. These initiatives are unlikely to completely offset revenue decline realized from unit loss on an annual basis. This is further reflected in our updated financial guidance, which I will walk through shortly. Turning to software revenue in 2024, license and hardware revenue of $9 million was down from $11.4 million in 2023. Maintenance revenue totaled $37.2 million and was up slightly from the prior year. As we have discussed in previous quarterly calls, we expect our product development efforts will lead to further growth of our operations bookings and increased software license sales in the coming years and maintenance revenue along with it. As previously mentioned, growth and professional services revenue was a key driver in the annual growth of software revenue in 2024. Professional services revenue of $17.9 million in 2024 was up 21.6% from revenue of $14.7 million in 2023. We are seeing further sustained improvement in resource utilization, delivering on our internal initiatives to better align total resources with our backlog and driving a higher rate of margin and net cash flow. We hired additional service professionals in 2024 to meet our current backlog needs and to support our expanding professional services opportunities, and we expect to continue doing so into 2025. As discussed in our last earnings call, based on the rapid success of our managed services offering, we have now begun separately reporting revenue from this category. Our professional services revenues are now broken out between, one, projects, our traditional fixed bid engagements where revenues are recognized as work is performed, and two, managed services, an all-you-can-eat offering where customers are provided implementation and upgrade services across the length of their contract, which is typically three years, where revenues are recognized ratably over the term of the engagement. Managed services has become a more significant component of professional services revenue. Managed services revenue totaled 3.3 million or 18.2% of professional services revenue in 2024. This is up from 1.4 million or less than 10% of professional services revenue in 2023. We remain optimistic by the prospects of this service offering and will continue to provide updates on our progress in the future. Full year 2024 adjusted operating expenses, which excludes depreciation, amortization, and accretion, and severance and restructuring costs, totaled $113.4 million, up less than 1% from the prior year. Cost of revenue increased primarily due to the aforementioned increase in professional services bookings and the related hiring to support those services. Increases in research and development reflected our continued investment in our product and services platform with reductions in technology operations driven by our normal practice of cost reduction in relationship to declining wireless revenues. Selling and marketing costs benefited from a one-time item of approximately $0.9 million in the second quarter when we began to amortize a subset of our commission's expense that had historically been expensed as incurred. while general and administrative costs were generally flat to the prior year. Adjusted EBITDA was $29.2 million in 2024, down from $30.3 million in 2023, generally reflecting lower consolidated revenue. Though down from the prior year, SPO continues to generate healthy levels of adjusted EBITDA at over 21% margin in 2024. We continue to operate a highly profitable business, funding a strong dividend and delivering on our promises made in 2022 to shift our primary focus towards profitability. Finally, we ended 2024 with $29.1 million in cash and cash equivalents, which grew from $23.9 million in the third quarter, but was down from $32 million at the end of 2023. Moving on to guidance for 2025, we have provided estimates for revenue and adjusted EBITDA as a reminder the figures i'm going to discuss today are included in our guidance table in the earnings release in 2025 we expect total revenue to range from 134 million to 142 million the midpoint of our guidance reflects consolidated revenue generally in line with 2024 results but with a higher mix of software revenue while the high end of our guidance reflects nearly 3% annual growth. Included in the 2025 guidance, we expect wireless revenue to range between 69 million to 72 million. Software revenue is expected to range from 65 million to 70 million in 2025, with a midpoint implying total software revenue growth of more than 5% and more than 9% annual growth at the high end of the guidance range. Lastly, our adjusted EBITDA guidance for 2025 is $27.5 million to $32.5 million. The midpoint reflects minor improvement over 2024, while the high end represents over 10% growth, largely expected to be driven by a greater mix of higher margin software license bookings. With that said, I will now turn the call back over to Ben.