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What changed in Spok Holdings, Inc's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Spok Holdings, Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+200 added−232 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-22)

Top changes in Spok Holdings, Inc's 2024 10-K

200 paragraphs added · 232 removed · 176 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

46 edited+4 added−6 removed97 unchanged
Biggest changeAllows users to access the full directory of accurate contact information to send messages/photos/videos to smartphones and other devices and helps to ensure all clinical communications are logged with security, traceability, and reliability. • Spok® Device Preference Engine: Facilitates voice conversations among doctors and caregivers by enabling users to choose the desired communication method based on factors such as message priority.
Biggest changeMobile Communications • Spok Mobile®: Simplifies communications and strengthens care by using smartphones and tablets for secure code alerts, patient updates, results, consult requests, and much more. Allows users to access the full directory of accurate contact information to send messages/photos/videos to smartphones and other devices and helps to ensure all clinical communications are logged with security, traceability, and reliability.
Our principal marketing programs include: • Website development and maintenance, which provides product and Company information, customer support options, paging capabilities, as well as thought leadership and engagement; • Content marketing (e.g., eBriefs, case studies, brochures, videos and infographics) as an underlying foundation of all marketing campaigns or initiatives; • Webinars about customer successes, current industry trends, and our solutions; • Social media involvement to provide information regarding upcoming educational events or new product offerings; • Blog posts to provide information about industry trends and our solutions to customers, prospects, and alliances; and • Participation at trade shows and industry events, such as Healthcare Information and Management Systems Society (HIMSS), College of Healthcare Information Management Executives (CHIME), and other healthcare information technology related shows and conferences; and • Annual customer conferences (virtual) that solicit feedback on our solutions and services. 6 Table of Contents Licenses and Messaging Networks In order to provide our wireless services, we hold licenses to operate on various frequencies in the 900 MHz narrowband.
Our principal marketing programs include: • Website development and maintenance, which provides product and Company information, customer support options, paging capabilities, as well as thought leadership and engagement; • Content marketing (e.g., eBriefs, case studies, brochures, videos and infographics) as an underlying foundation of all marketing campaigns or initiatives; • Webinars about customer successes, current industry trends, and our solutions; • Social media involvement to provide information regarding upcoming educational events or new product offerings; • Blog posts to provide information about industry trends and our solutions to customers, prospects, and alliances; • Participation at trade shows and industry events, such as Healthcare Information and Management Systems Society (HIMSS), College of Healthcare Information Management Executives (CHIME), and other healthcare information technology related shows and conferences; and • Annual customer conferences (virtual) that solicit feedback on our solutions and services. 6 Table of Contents Licenses and Messaging Networks In order to provide our wireless services, we hold licenses to operate on various frequencies in the 900 MHz narrowband.
Licenses granted to us by the FCC have varying terms, generally of up to 10 years, at which time the FCC must approve renewal applications. In the past, FCC renewal applications generally been granted upon showing compliance with the Communications Act of 1934, as amended (the "Communications Act"), and FCC regulations and adequate service to the public.
Licenses granted to us by the FCC have varying terms, generally of up to 10 years, at which time the FCC must approve renewal applications. In the past, FCC renewal applications generally have been granted upon showing compliance with the Communications Act of 1934, as amended (the "Communications Act"), and FCC regulations and adequate service to the public.
We also make available on our website, and in print, if any stockholder or other person so requests, our code of business conduct and ethics entitled "Code of Ethics" which is applicable to all employees and directors, our "Corporate Governance Guidelines" and the charters for all committees of our Board of Directors, including Audit, Compensation and Nominating and Governance.
We also make available on our website, and in print, if any stockholder or other person so requests, our code of business conduct and ethics entitled "Code of Business Conduct and Ethics" which is applicable to all employees and directors, our "Corporate Governance Guidelines" and the charters for all committees of our Board of Directors, including Audit, Compensation and Nominating and Governance.
Our solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging, and for public safety notifications. Spok Care Connect® Suite Contact Center • Spok® Healthcare Console: Provides operators with the information needed to process calls using their computers with just a few keystrokes.
Our solutions are used for contact centers, clinical alerting and notification, mobile communications and messaging, and for public safety notifications. Spok Care Connect® Suite Contact Center • Spok® Console: Provides operators with the information needed to process calls using their computers with just a few keystrokes.
Several states require us to hold a license or otherwise register to provide our wireless services in the jurisdiction, and those states that regulate our services also may require us to obtain prior approval of (1) the acquisition of controlling interests in other paging companies and (2) a change of control.
Several states require us to hold a license or otherwise register to provide our wireless services in the jurisdiction, and those states that regulate our services also may require us to obtain prior approval of (1) the acquisition of controlling interests in other paging companies and (2) a change of control of the Company.
We also offer support services to enhance and refine the customer's experience throughout their relationship with Spok. • Professional Services: We offer a full suite of professional services that are provided by a dedicated group of professional service employees. Our professional services include consultation, implementation, and training services.
We also offer support services to enhance and refine the customer's experience throughout their relationship with Spok. • Professional Services: We offer a full suite of professional services that are provided by a dedicated group of professional service employees. Our professional services projects include consultation, implementation, and training services.
While we will continue to invest in the business, we will do so in a more targeted manner to drive tangible earnings that can be returned to our stockholders. Return capital to our stockholders - We understand that our primary objective is to create long-term stockholder value.
While we will continue to invest in the business, we will do so in a targeted manner to drive tangible earnings that can be returned to our stockholders. Return capital to our stockholders - We understand that our primary objective is to create long-term stockholder value.
Hosted Solution • Spok Care Connect® Hosted Solution: Provides hospitals and healthcare systems with remote access to Spok Care Connect® solutions (currently Spok® Healthcare Console, Spok® Web-Based Directory, Spok® Web-Based On-Call Scheduling and Spok Mobile®) and reduces the burden on information technology resources while providing immediate access to Spok solutions.
Hosted Solution • Spok Care Connect® Hosted Solution: Provides hospitals and healthcare systems with remote access to Spok Care Connect® solutions (currently Spok® Console, Spok® Web Directory, Spok® On-Call Scheduling and Spok Mobile®) and reduces the burden on information technology resources while providing immediate access to Spok solutions.
Software license updates and product support revenue (i.e., Maintenance revenue) represented 27% of total consolidated revenue for each of the years ended December 31, 2023, 2022 and 2021. Sources of Equipment We do not manufacture the messaging devices our customers need to make use of our wireless services or the network equipment we use to provide wireless messaging services.
Software license updates and product support revenue (i.e., Maintenance revenue) represented 27% of total consolidated revenue for each of the years ended December 31, 2024, 2023 and 2022. Sources of Equipment We do not manufacture the messaging devices our customers need to make use of our wireless services or the network equipment we use to provide wireless messaging services.
Operators can quickly and accurately perform directory searches and code calls, as well as messaging and paging by individuals, groups, and roles using the Spok Healthcare Console’s computer telephony integration and directory capabilities. • Spok® Web-Based Directory: Makes employee contact information more accessible and enables staff to send messages quickly right from the directory.
Operators can quickly and accurately perform directory searches and code calls, as well as messaging and paging by individuals, groups, and roles using the Spok Console’s computer telephony integration and directory capabilities. • Spok® Web Directory: Makes employee contact information more accessible and enables staff to send messages quickly right from the directory.
Authenticated users can log on anywhere, anytime to perform a variety of important updates to contact information and on-call schedules, search the directory, and send important messages. • Spok® Web-Based On-Call Scheduling: Keeps personnel, calendars and on-call scheduling information updated, even with thousands of staff, using a secure web portal to maintain and allow password-protected access to the latest on-call schedules and personnel information. • Spok® Speech: Enables the organization to process routine phone requests, including transfers, directory assistance, messaging and paging without live operators and with more ease-of-use than touch-tone menus. • Spok® Call Recording and Quality Management: Records, monitors, and scores operators’ conversations to allow for better management of calls, helping improve customer service.
Authenticated users can log on anywhere, anytime to perform a variety of important updates to contact information and on-call schedules, search the directory, and send important messages. • Spok® Web On-Call Scheduling: Keeps personnel, calendars and on-call scheduling information updated, even with thousands of staff, using a secure web portal to maintain and allow password-protected access to the latest on-call schedules and personnel information. • Spok Voice Connect®: Enables the organization to process routine phone requests, including transfers, directory assistance, messaging and paging without live operators and with more ease-of-use than touch-tone menus. • Spok® Call Recording and Quality Management: Records, monitors, and scores operators’ conversations to allow for better management of calls, helping improve customer service.
This solution can send messages from the cardiology, laboratory and radiology departments by means of encrypted smartphone communications, two-way paging, secure email, secure text, images, annotations, and voice to a variety of endpoints such as workstations, laptops, tablets, smartphones, pagers, and other wireless devices.
This solution can send messages from the radiology departments by means of encrypted smartphone communications, two-way paging, secure email, secure text, images, annotations, and voice to a variety of endpoints such as workstations, laptops, tablets, smartphones, pagers, and other wireless devices.
We will continue to evaluate how best to deploy our capital resources to support sustainable business growth and maximize stockholder value. We expect to continue to pay a quarterly dividend of $0.3125 per share of common stock, or $1.250 annually, in 2024.
We will continue to evaluate how best to deploy our capital resources to support sustainable business growth and maximize stockholder value. We expect to continue to pay a quarterly dividend of $0.3125 per share of common stock, or $1.250 annually, in 2025.
Other regulatory requirements restrict how we may use customer information and prohibit certain commercial electronic messages, even to our own customers. In addition, the FCC’s rules require us to pay other carriers for the transport and termination of some telecommunication traffic.
Other regulatory requirements restrict how we may use customer information and prohibit certain commercial electronic messages, even to our own customers. In addition, the FCC’s rules require us to pay other carriers for the transport and termination of some telecommunications traffic.
This solution automatically delivers messages, collects responses, escalates issues to others, and logs all activities for reporting and analysis purposes. • Spok® Critical Test Results Management: Automates and streamlines the process of delivering critical test results to the appropriate clinicians to help ensure patient safety.
This solution automatically delivers messages, collects responses, escalates issues to others, and logs all activities for reporting and analysis purposes. • Spok® Critical Test Results Notification: Automates and streamlines the process of delivering critical test results to the appropriate clinicians to help ensure patient safety.
By bringing together employees from diverse backgrounds and providing each with an opportunity to develop their skills and actively contribute to our mission, we cultivate an engaged workforce which in turn helps us deliver value to our customers.
By bringing together employees from different backgrounds and providing each with an opportunity to develop their skills and actively contribute to our mission, we cultivate an engaged workforce which in turn helps us deliver value to our customers.
By law, we are permitted to bill our customers for these regulatory costs and we typically do so. Additionally, the Communications Assistance to Law Enforcement Act of 1994, ("CALEA") and certain rules implementing CALEA require some telecommunication companies, including Spok, to design and/or modify their equipment in order to allow law enforcement personnel to "wiretap" or otherwise intercept messages.
By law, we are permitted to bill our customers for these regulatory costs and we typically do so. 13 Table of Contents Additionally, the Communications Assistance to Law Enforcement Act of 1994, ("CALEA"), and certain rules implementing CALEA, require some telecommunication companies, including Spok, to design and/or modify their equipment in order to allow law enforcement personnel to "wiretap" or otherwise intercept messages.
Our wide-ranging customer base allows for low customer revenue concentration and as a result, no single customer accounted for more than 10% of our total revenues in 2023, 2022 or 2021.
Our wide-ranging customer base allows for low customer revenue concentration and as a result, no single customer accounted for more than 10% of our total revenues in 2024, 2023 or 2022.
We monitor discussions at the FCC and FDA on pending changes in regulatory policy or regulations; however, we are unable to predict what changes, if any, may occur in 2024 to regulatory policy or regulations.
We monitor discussions at the FCC and FDA on pending changes in regulatory policy or regulations; however, we are unable to predict what changes, if any, may occur in 2025 to regulatory policy or regulations.
We also sell devices to resellers who lease or resell them to their subscribers and then sell messaging services utilizing our networks. Wireless products and services revenue represented 55%, 56% and 55% of total consolidated revenue for the years ended December 31, 2023, 2022 and 2021, respectively.
We also sell devices to resellers who lease or resell them to their subscribers and then sell messaging services utilizing our networks. Wireless products and services revenue represented 53%, 55% and 56% of total consolidated revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Since 2022, our focus has been and will continue to be on prioritizing generation of cash flow and maximizing revenue in our Spok Care Connect and Wireless products and service lines. Industry Overview The United States healthcare market continues to experience significant change.
Since 2022, our focus has been and will continue to be on prioritizing generation of cash flow and maximizing revenue in our Spok Care Connec t ® and Wireless products and service lines. Industry Overview The United States healthcare market continues to experience significant change.
We believe our intellectual property distinguishes our business from our competition and is integral to our continued success in the area of clinical communication and collaboration solutions. The expiration dates of these trademarks range from 2024 to 2034 and can be extended for 10-year periods upon renewals.
We believe our intellectual property distinguishes our business from our competition and is integral to our continued success in the area of clinical communication and collaboration solutions. The expiration dates of these trademarks range from 2025 to 2035 and can be extended for 10-year periods upon renewals.
As a result of various FCC decisions over the last few years, we no longer pay fees for the termination of traffic originating on the networks of local exchange carriers providing wireline services interconnected with our services. In some instances, we received refunds for prior payments to certain local exchange carriers.
As a result of various FCC decisions, we no longer pay fees for the termination of traffic originating on the networks of local exchange carriers providing wireline services interconnected with our services. In some instances, we received refunds for prior payments to certain local exchange carriers.
With larger organizations like Microsoft Corporation and Oracle Corporation entering the market in which we operate, they may have a competitive advantage through aggressive pricing power, established brand recognition, extensive capital resources, and broader delivery and distribution channels. Human Capital At December 31, 2023 and 2022, we had 384 and 376 full time equivalent ("FTE") employees, respectively.
With larger organizations like Microsoft Corporation and Oracle Corporation entering the market in which we operate, they may have a competitive advantage through aggressive pricing power, established brand recognition, extensive capital resources, and broader delivery and distribution channels. Human Capital At December 31, 2024 and 2023, we had 410 and 384 full time equivalent employees ("FTEs"), respectively.
In addition to these select competitors, substantially larger companies in the electronic medical records space such as Epic Systems Corporation, Cerner Corporation, Athenahealth, Inc. and Allscripts Healthcare Solutions, Inc. may choose to offer software-related solutions similar to our clinical communication and collaboration solutions or may acquire one of our competitors.
In addition to these select competitors, substantially larger companies in the electronic medical records space such as Epic Systems Corporation, Oracle Corporation, Athenahealth, Inc. and Veradigm, Inc. may choose to offer software-related solutions similar to our clinical communication and collaboration solutions or may acquire one of our competitors.
We expect to continue to build our alliance partner relationships to expand and broaden our distribution efforts in 2024.
We continue to build our alliance partner relationships to expand and broaden our distribution efforts.
Manage expenses – With a renewed focus on generating cash flow, it is critical that we manage costs in alignment with our revenue. We will continue to look for ways to reduce our underlying cost structure should revenue continue to decline.
Manage expenses - With our focus on generating cash flow, it is critical that we manage costs in alignment with our revenue. We will continue to look for ways to reduce our underlying cost structure, particularly if revenue declines.
Spok has a council composed of employees and executive sponsors to provide feedback and make recommendations regarding our diversity and inclusion policies and practices. We believe that by promoting and supporting inclusiveness and by leveraging our organization’s diversity, we have a competitive advantage that allows us to innovate and draw from our workforce’s differing perspectives.
Spok has a council composed of employees and executive sponsors to provide feedback and make recommendations regarding our policies and practices regarding employee health, safety and well-being. We believe that by promoting, supporting and leveraging the capabilities and experience of our employees, we have a competitive advantage that allows us to innovate and draw from our workforce’s differing perspectives.
Employee Health, Safety and Well-Being Spok is committed to conducting its business operations in a manner that protects the health and safety of its employees, visitors, contractors and the public, and reduces risks within our work centers.
Our employees are not represented by labor unions or covered by a collective bargaining agreement. Employee Health, Safety and Well-Being Spok is committed to conducting its business operations in a manner that protects the health and safety of its employees, visitors, contractors and the public, and reduces risks within our work centers.
Spok is committed to maintaining a work environment free from discrimination and harassment, and one where employees are treated with dignity and respect. We refuse to accept or tolerate harassment or discrimination against any employee or applicant for employment.
Spok is committed to providing a work environment free from discrimination and harassment, and one where employees are treated with dignity and respect, while only using legally compliant methods for advancing these efforts. We refuse to accept or tolerate harassment or discrimination against any employee or applicant for employment.
Top hospitals rely on Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our headquarters is located at 5911 Kingstowne Village Pkwy, 6th Floor, Alexandria, Virginia 22315, and our telephone number is 800-611-8488. We maintain a website at http://www.spok.com .
Top hospitals rely on Spok products and services to enhance workflows for clinicians, support administrative compliance, and provide a better experience for patients. Our headquarters is located at 3000 Technology Drive, Suite 400 , Plano, Texas 75074, and our telephone number is 800-611-8488. We maintain a website at http://www.spok.com .
Demand for one-way and two-way messaging services declined during these years, and we believe demand will continue to decline for the foreseeable future. As demand for one-way and two-way messaging has declined, we have developed or added service offerings, including our GenA pagers discussed below, in order to optimize our revenue potential and mitigate the decline in our wireless revenues.
As demand for one-way and two-way messaging has declined, we have developed or added service offerings, including our GenA ® pagers discussed below, in order to optimize our revenue potential and mitigate the decline in our wireless revenues. We will continue to evaluate opportunities within our wireless business while providing customers the highest value possible.
Selected competitors for portions of our product portfolio include: • American Software, Inc.. - Enterprise software solutions; • CareCloud, Inc. - Healthcare solutions; • Computer Programs and Systems, Inc. - Healthcare IT solutions; • Domo, Inc. - Cloud-based solutions; • eGain Corporation - Cloud-based solutions; • Health Catalyst, Inc. - Healthcare data and analytics; • HealthStream, Inc. - Healthcare workforce solutions; • Kaltura, Inc. - Cloud-based solutions; • KORE Group Holdings Inc. - Mobile communications solutions; • LiveVox Holdings, Inc. - Healthcare solutions; • NantHealth Inc. - Healthcare solutions; • OptimizeRx Corporation. - Healthcare solutions; • Tabula Rasa Healthcare, Inc. - Healthcare solutions; • UpHealth, Inc. - Healthcare solutions; and • Weave Communications, Inc. - Software solutions.
Selected competitors for portions of our product portfolio include: • Logility Inc. - Enterprise software solutions; • CareCloud, Inc. - Healthcare solutions; • Consensus Cloud Solutions - Cloud-based solutions; • DarioHealth - Healthcare solutions; • Domo, Inc. - Cloud-based solutions; • eGain Corporation - Cloud-based solutions; • Health Catalyst, Inc. - Healthcare data and analytics; • HealthStream, Inc. - Healthcare workforce solutions; • Kaltura, Inc. - Cloud-based solutions; • KORE Group Holdings Inc. - Mobile communications solutions; • LifeMD - Healthcare solutions; • OptimizeRx Corporation. - Healthcare solutions; • Sharecare - Healthcare solutions; • Synchronoss Technologies - Cloud-based solutions; • TruBridge - Healthcare solutions; and • Weave Communications, Inc. - Software solutions.
We will continue to evaluate opportunities within our wireless business while providing customers the highest value possible. Legacy Wireless Services A subscriber to one-way messaging services may select coverage on a local, regional, or nationwide basis to best meet their messaging needs, while two-way messaging is generally offered on a nationwide basis.
Legacy Wireless Services A subscriber to one-way messaging services may select coverage on a local, regional, or nationwide basis to best meet their messaging needs, while two-way messaging is generally offered on a nationwide basis.
Professional services revenue increased in 2023 primarily as a result of improvements in resource utilization. 10 Table of Contents • Software License Updates and Product Support (Maintenance): Software license updates and product support, which is generally referred to as maintenance when sold to customers, is an important offering to customers who utilize our on-premise software solutions.
Professional services revenue increased in 2024, primarily as a result of an increase in the sales of managed services offering, as well as an increase in staffing levels to align with our backlog, which has grown as a result of our operations bookings results. 10 Table of Contents • Software License Updates and Product Support (Maintenance): Software license updates and product support, which is generally referred to as maintenance when sold to customers, is an important offering to customers who utilize our on-premise software solutions.
For example, the FCC requires licensees, including Spok, to pay levies and fees, such as universal service fees, to cover the costs of certain regulatory programs and to promote various other societal goals. These requirements increase the cost of the services we provide.
The FCC’s rules require us to pay a variety of fees that increase our costs of doing business. For example, the FCC requires licensees, including Spok, to pay levies and fees, such as universal service fees, to cover the costs of certain regulatory programs and to promote various other societal goals.
As a global company, Spok strives to create an environment that embraces diversity and fosters inclusion. We recognize the value and contributions of individuals with a wide range of capabilities, experience, and perspectives, and draw upon this diversity to create value for our customers and maintain an effective and engaged workforce.
As a global company, Spok strives to create an environment where everyone feels welcome and has equal access to opportunities, regardless of background. We recognize the value and contributions of individuals with a wide range of capabilities, experience, and perspectives. This creates value for our customers and helps to maintain an effective and engaged workforce.
These foreign ownership restrictions limit the percentage of stockholders’ equity that may be owned or voted, directly or indirectly, by non-United States citizens or their representatives, foreign governments or their representatives, or foreign corporations.
These foreign ownership restrictions limit the percentage of stockholders’ equity that may be owned or voted, directly or indirectly, by non-United States citizens or their representatives, foreign governments or their representatives, or foreign corporations. Our Amended and Restated Certificate of Incorporation permits the redemption of our equity from stockholders where necessary to ensure compliance with these requirements.
In February 2022, our Board of Directors announced a new strategic business plan. In accordance with this plan, in 2022, we discontinued Spok Go and successfully eliminated all associated costs.
We offer our services and products to three major market segments: healthcare, government, and large enterprise, with a greater emphasis on the healthcare market segment. In February 2022, our Board of Directors announced a new strategic business plan. In accordance with this plan, in 2022, we discontinued Spok Go and successfully eliminated all associated costs.
We currently have inventory and network equipment on hand that we believe will be sufficient to meet our wireless and software equipment requirements for the foreseeable future.
We currently have inventory and network equipment on hand that we believe will be sufficient to meet our wireless and software equipment requirements for the foreseeable future. Intellectual Property As of December 31, 2024, we held 82 trademarks and two patents, which we believe are important to protect our intellectual property. We have no pending trademarks or patents.
Our professional services staff uses a branded, consistent methodology that provides a comprehensive phased work plan for both new software installations and/or upgrades. In support of our implementation methodology, we manage the various aspects of the process through a professional services automation tool.
We also offer managed services, which includes the implementation services for all the available upgrades to the software purchased by the customer over the term of the contract. Our professional services staff uses a branded, consistent methodology that provides a comprehensive phased work plan for both new software installations and/or upgrades.
(This website address is for information only and is not intended to be an active link or to incorporate any website information into this Annual Report on Form 10-K for the year ended December 31, 2023 (the "2023 Form 10-K").) We deliver smart, reliable clinical communication and collaboration solutions to help protect the health, well-being, and safety of people in the United States and abroad, on a limited basis, in Europe, Canada, Australia, Asia and the Middle East.
This website address is for information only and is not intended to be an active link or to incorporate any website information into this Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 Form 10-K").
We may also use third-party professional services firms as supplemental resources to implement our solutions for customers as needed. Professional services revenue represented 11%, 9% and 12% of total consolidated revenue for the years ended December 31, 2023, December 31, 2022 and 2021, respectively.
Professional services revenue represented 13%, 11% and 9% of total consolidated revenue for the years ended December 31, 2024, 2023 and 2022, respectively.
Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities; large hotels, resorts and casinos; and well-known manufacturers. We offer our services and products to three major market segments: healthcare, government, and large enterprise, with a greater emphasis on the healthcare market segment.
We develop, sell, and support enterprise-wide systems primarily for healthcare and other organizations needing to automate, centralize, and standardize their approach to clinical and critical communications. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos and well-known manufacturers.
Further details on GenA pagers can be found under "GenA Pagers." Enhance existing software applications - We will continue to invest in the development and enhancement of our Spok Care Connect Suite products and services, although at a significantly reduced rate relative to our total research and development costs over the last several years.
We will integrate and consolidate operations as necessary to ensure the lowest cost operational platform for our consolidated business. Enhance existing software applications - We will continue to invest in the development and enhancement of our Spok Care Connect suite of products and services, at a similar rate consistent to the prior year.
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Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response. We develop, sell, and support enterprise-wide systems primarily for healthcare and other organizations needing to automate, centralize, and standardize their approach to clinical communications.
Added
We deliver smart, reliable clinical communication and collaboration solutions to help protect the health, well-being, and safety of people in the United States and abroad, on a limited basis, in Europe, Canada, Australia, Asia and the Middle East. Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization, and public safety response.
Removed
We will integrate and consolidate operations as necessary to ensure the lowest cost operational platform for our consolidated business. The introduction of our GenA pagers in November 2021 was a key initiative that we believe will also help slow our wireless revenue attrition.
Added
Demand for one-way and two-way messaging services declined during these years, and we believe demand will continue to decline for the foreseeable future.
Removed
Mobile Communications • Spok Mobile®: Simplifies communications and strengthens care by using smartphones and tablets for secure code alerts, patient updates, results, consult requests, and much more.
Added
In support of our implementation methodology, we manage the various aspects of the process through a professional services automation tool. We may also use third-party professional services firms as supplemental resources to implement our solutions for customers as needed.
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Intellectual Property As of December 31, 2023, we held 87 trademarks and three patents, as well as three pending trademarks and no pending patents, which we believe are important to protect our intellectual property.
Added
These requirements increase the cost of the services we provide.
Removed
As part of the restructuring of our business in connection with the strategic business plan announced by our Board of Directors in February 2022, we eliminated 176 positions, primarily in research and development, and also in professional services, selling and marketing, and back-office support functions. Our employees are not represented by labor unions or covered by a collective bargaining agreement.
Removed
Our Amended and Restated Certificate of Incorporation permits the redemption of our equity from stockholders where necessary to ensure compliance with these requirements. 13 Table of Contents The FCC’s rules require us to pay a variety of fees that increase our costs of doing business.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

48 edited+7 added−10 removed123 unchanged
Biggest changeOur failure to accurately anticipate or interpret these complex and technical laws 23 Table of Contents and regulations could subject us to civil and/or criminal liability. Such failure could adversely impact our ability to market and sell our software solutions to healthcare customers and have a material adverse impact on our software sales.
Biggest changeThese statutes and related regulations impose numerous requirements 23 Table of Contents regarding the use and disclosure of personal health information with which we and our software solutions must comply. Our failure to accurately anticipate or interpret these complex and technical laws and regulations could subject us to civil and/or criminal liability.
Disruptions or volatility in credit markets may impede our access to capital markets, including higher borrowing costs, less available capital, more stringent terms and tighter covenants, and may limit our ability to finance acquisitions.
Disruptions or volatility in credit markets may impede our access to capital markets, including higher borrowing costs, less available capital, more stringent terms and tighter covenants may limit our ability to finance acquisitions.
Cyberattacks, data breaches or other compromises to our or our critical third parties' systems, data, products or services could have a material adverse effect on our business. We rely heavily on a range of IT Systems for critical business operations.
Cyberattacks, data breaches or other compromises to our or our critical third parties' IT Systems, data, products or services could have a material adverse effect on our business. We rely heavily on a range of IT Systems for critical business operations.
The GDPR imposes several stringent requirements for controllers and processors of personal data and increases our obligations, including, for example, by requiring more robust disclosures to individuals, strengthening the individual data rights regime, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data.
The GDPR imposes several stringent requirements for controllers and processors of Personal Information and increases our obligations, including, for example, by requiring more robust disclosures to individuals, strengthening the individual data rights regime, shortening timelines for data breach notifications, limiting retention periods and secondary use of information, and imposing additional obligations when we contract third-party processors in connection with the processing of personal data.
The application of or changes in regulations could impact our ability to market new or revised software products to our customers. Certain of our software products are regulated by the FDA as medical devices.
Certain of our software products are regulated by the FDA. The application of or changes in regulations could impact our ability to market new or revised software products to our customers. Certain of our software products are regulated by the FDA as medical devices.
We have investigated potential acquisitions and may be unable to successfully integrate such acquisitions into our business and may not achieve all or any of the operating synergies or anticipated benefits of those acquisitions. We continue to evaluate acquisitions of other businesses that we believe will yield increased cash flows, improved market penetration and/or operating efficiencies and synergies.
We have investigated potential acquisitions and may be unable to successfully complete or integrate such acquisitions into our business, and may not achieve all or any of the operating synergies or anticipated benefits of those acquisitions. We continue to evaluate acquisitions of other businesses that we believe will yield increased cash flows, improved market penetration and/or operating efficiencies and synergies.
Such transactions may not generate additional revenue or profit for us, or may take longer than expected to do so, which may adversely affect our business, financial condition, operating results and cash flows. Economic conditions that are largely out of our control may adversely affect our financial condition and statement of operations.
Such transactions may not generate additional revenue or profit for us, or may take longer than expected to do so, which may adversely affect our business, financial condition, operating results and cash flows. Economic conditions that are largely out of our control may adversely affect our financial condition and results of operations.
We rely on data centers and other systems and technologies provided by third parties, and technology systems and electronic networks supplied and managed by third parties, to operate our business. Any major interruption or performance problems with these systems, technologies and networks may adversely affect our business and operating results.
We rely on data centers and other IT Systems and technologies provided by third parties, and technology systems and electronic networks supplied and managed by third parties, to operate our business. Any major interruption or performance problems with these systems, technologies and networks may adversely affect our business and operating results.
For example, we maintained a valuation allowance of $2.3 million at December 31, 2023 and 2022 to reduce net deferred income tax assets as their realization did not meet the applicable more-likely-than-not criterion. If our long-lived assets or goodwill become impaired, we may be required to record significant impairment charges.
For example, we maintained a valuation allowance of $2.3 million at December 31, 2024 and 2023 to reduce net deferred income tax assets as their realization did not meet the applicable more-likely-than-not criterion. If our long-lived assets or goodwill become impaired, we may be required to record significant impairment charges.
We rely on data centers and other systems and technologies provided by third parties. If key third parties are unable to perform services for us because of service interruptions or extended outages, or because those services are no longer available on commercially reasonable terms, our expenses could increase.
We rely on data centers and other IT Systems and technologies provided by third parties. If key third parties are unable to perform services for us because of service interruptions or extended outages, or because those services are no longer available on commercially reasonable terms, our expenses could materially increase.
ITEM 1A. RISK FACTORS The following important factors, among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this 2023 Form 10-K or presented elsewhere by management from time to time.
ITEM 1A. RISK FACTORS The following important factors, among others, could cause our actual operating results to differ materially from those indicated or suggested by forward-looking statements made in this 2024 Form 10-K or presented elsewhere by management from time to time.
In addition, computer viruses, malware (for example, ransomware) or security vulnerabilities in our or our service providers' data, software, products or services, as well as external cyberattacks and data breaches, could expose us to the risks of corruption, loss, and misappropriation of proprietary and confidential information.
In addition, computer viruses, malware (for example, ransomware) or security vulnerabilities in our or our service providers' data, software, products or services, as well as external cyberattacks and data breaches, expose us to the risks of material corruption, loss, and misappropriation of proprietary and confidential information.
If we are unable to use these deferred income tax assets, our financial condition and statement of operations may be materially affected. In addition, a significant portion of our deferred income tax assets relate to net operating losses.
If we are unable to use these deferred income tax assets, our financial condition and results of operations may be materially affected. In addition, a significant portion of our deferred income tax assets relate to net operating losses.
We own and manage certain IT Systems but rely heavily on critical IT Systems that are owned and/or managed by third parties. These IT Systems may be vulnerable to damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, software errors and other events.
We own and manage certain IT Systems but rely heavily on critical IT Systems that are owned and/or managed by third parties. These IT Systems are vulnerable to material damage or interruption from natural disasters, power loss, telecommunication failures, terrorist attacks, software errors and other events.
Accidental or willful cyberattacks, breaches or other unauthorized access events committed or enabled by third parties or by our employees or contractors (for example, due to social engineering or phishing attacks) can impact the security of or disrupt access to our facilities, our systems or the systems of our third-party providers, and the information maintained in such systems.
Accidental or willful cyberattacks, breaches or other unauthorized access events committed or enabled by third parties or by our employees or contractors (for example, due to social engineering or phishing attacks) impact the security and integrity of our facilities, our systems or the systems of our third-party providers, and the information maintained in such systems.
If our ability to utilize these losses is limited, due to Internal Revenue Code ("IRC") Section 382, our financial condition and statement of operations may be materially affected.
If our ability to utilize these losses is limited, due to Internal Revenue Code ("IRC") Section 382, our financial condition and results of operations may be materially affected.
We have investigated potential acquisitions and may not be able to identify an opportunity at favorable terms or have the ability to close on the financing necessary to consummate the transaction. We cannot provide any assurances that we will be successful in finding such acquisitions or consummating future acquisitions on favorable terms.
We have investigated potential acquisitions and may be unable to identify an opportunity at favorable terms or have the ability to close on the financing necessary to consummate the transaction. We cannot provide any assurances that we will be successful in finding such acquisitions or consummating future acquisitions on favorable terms.
In addition, we face the threat to our computer systems, or those of our service providers, of unauthorized access, computer hackers, computer viruses, malicious code, organized cyber-attacks and other security problems and system disruptions (e.g., distributed denial of service (DDoS) attacks, ransomware attacks).
In addition, we face the threat of material compromise to our computer systems, or those of our service providers, of unauthorized access, computer hackers, computer viruses, malicious code, organized cyberattacks and other security problems and system disruptions (e.g., distributed denial of service (DDoS) attacks or ransomware attacks).
In sum, there can also be no assurance that our or our third-party providers’ cybersecurity risk management programs, including relevant policies, processes and controls, will be fully implemented, complied with or effective in protecting IT Systems or Confidential Information that are critical to our business.
There can also be no assurance that our or our third-party providers’ cybersecurity risk management programs, including relevant policies, processes and controls, will be fully implemented, complied with or effective in protecting IT Systems or Confidential Information that are critical to our business from materially adverse events.
Our wireless services depend on connectivity provided by third-party satellite network services that could fail and result in a loss of service to our customers. With respect to our Enterprise Reporting and Management systems and data storage, and other operational needs, we rely on third-party data centers and services for maintaining accessibility, reliability and uninterrupted connectivity, among other things.
Our wireless services depend on connectivity provided by third-party satellite network services where failure would result in a loss of service to our customers. With respect to our Enterprise Reporting and Management systems and data storage, and other operational needs, we rely on third-party data centers and services for maintaining accessibility, reliability and uninterrupted connectivity, among other things.
The number and types of these claims may grow as a result of constant technological change in the segments in which our wireless services and software products compete, the extensive patent coverage of existing technologies, and the rapid rate of issuance of new patents.
The number and types of these claims may grow as a result of constant technological change, including the increased use of artificial intelligence, in the segments in which our wireless services and software products compete, the extensive patent coverage of existing technologies, and the rapid rate of issuance of new patents.
As a further example, the FCC continues to consider changes to the rules governing the collection of universal service fees. The FCC is evaluating a flat monthly charge per assigned telephone number as opposed to assessing universal service contributions based on telecommunication carriers’ interstate and international revenue. There is no timetable for any rulemaking to implement this numbers-based methodology.
As a further example, the FCC has considered changes to the rules governing the collection of universal service fees, including a flat monthly charge per assigned telephone number as opposed to assessing universal service contributions based on telecommunication carriers’ interstate and international revenue. However, there is no timetable for any rulemaking to implement this numbers-based methodology.
System disruptions and security threats to our computer networks, satellite control or telecommunications systems, or to those of our service providers, could have a material adverse effect on our business. The performance and reliability of computer systems, hardware, software and satellite networks and telecommunications systems infrastructure (collectively, “IT Systems”) is critical to our operations.
System disruptions, data compromises and other cybersecurity threats to our computer networks, satellite control, telecommunications systems and other IT Systems, or to those of our service providers, could have a material adverse effect on our business. The performance and reliability of computer systems, hardware, software and satellite networks and telecommunications systems infrastructure (collectively, “IT Systems”) is critical to our operations.
In addition, the GDPR restricts transfers of personal data outside of the European Economic Area and the UK, including to the United States, under certain scenarios. While lawful data transfer mechanisms have been proposed, there remains uncertainty, and we are exposed to potential investigations and enforcement in this area.
In addition, the GDPR restricts transfers of personal data outside of the European Economic Area and the United Kingdom, including to the United States, under certain scenarios. While lawful data transfer mechanisms exist, there remains uncertainty, and we are exposed to potential investigations and enforcement in this area.
Existing privacy-related laws and regulations in the United States and other countries are evolving and are subject to potentially differing interpretations, and various federal and state or other international legislative and regulatory bodies may expand or enact laws regarding privacy and data security-related matters.
We are subject to existing privacy-related laws and regulations in the United States and other countries, which are evolving and are subject to potentially differing interpretations, and various federal and state or other international legislative and regulatory bodies may expand or enact laws regarding privacy and data security-related matters that impact our business.
Any failure by us to comply with data privacy- and protection-related laws and regulations could result in enforcement actions, significant penalties or other legal actions against us or our customers or suppliers.
Any failure by us to comply with data privacy- and protection-related laws and regulations could result in enforcement actions, significant penalties or fines or other legal actions (including class action lawsuits) against us or our customers or suppliers.
Changes in regulatory policy could increase the fees we must pay to the government or to third parties and could subject us to more stringent requirements that could cause us to incur additional capital and/or operating costs. To the extent additional regulatory costs are passed along to customers, those increased costs could adversely impact subscriber cancellations.
Changes in regulatory policy could increase the fees we must pay to the government or to third parties and could subject us to more stringent requirements or otherwise impact our operations potentially causing us to incur additional capital and/or operating costs. To the extent additional regulatory costs are passed along to customers, those increased costs could adversely impact subscriber cancellations.
There can be no assurance that the security and testing measures we take relating to our offerings and operations will prevent all security breaches and data loss that could harm our business or the businesses of our customers and partners.
There can be no assurance that the security and testing measures we take relating to our offerings and operations will prevent all security breaches and data loss that could harm our business or the businesses of our customers and partners or otherwise expose us to privacy-related liability.
Ultimately, after a hearing by the U.S. Court of Appeals for the DC Circuit and disapproval by the Office of Management and Budget (the "OMB") of the information collection requirements of the Back-up Power Order, the FCC indicated that it would not seek to override the OMB’s disapproval.
Ultimately, after a hearing by the United States Court of Appeals for the DC Circuit and 24 Table of Contents disapproval by the Office of Management and Budget (the "OMB") of the information collection requirements of the Back-up Power Order, the FCC indicated that it would not seek to override the OMB’s disapproval.
If the FCC adopts a numbers-based methodology, our attempt to recover the increased contribution costs from our customers could significantly diminish demand for our services, and our failure to recover such increased contribution costs could have a material adverse impact on our business, financial condition and operating results. Certain of our software products are regulated by the FDA.
If the FCC adopts a numbers-based methodology, our attempt to recover the increased contribution costs from our customers could significantly diminish demand for our services, and our failure to recover such increased contribution costs could have a material adverse impact on our business, financial condition and operating results.
Computer programmers and hackers also may be able to develop and deploy viruses, worms, and other malicious software programs that attack our or a critical third party's products or otherwise exploit any security vulnerabilities of such products. We are dependent on the U.S. healthcare provider industry for most of our revenue.
Computer programmers and hackers also may be able to develop and deploy, including through technologies such as artificial intelligence, viruses, worms, and other malicious software programs that attack our or a critical third party's products or otherwise exploit any security vulnerabilities of such products. We are dependent on the United States healthcare provider industry for most of our revenue.
We also routinely transmit and receive proprietary and Confidential Information, including through third parties, which makes that information vulnerable to interception, misuse or mishandling.
We also routinely transmit and receive proprietary and Confidential Information, including through third parties, which makes that information vulnerable to interception, misuse or mishandling that may materially impact our business.
An actual or alleged failure to comply, which could result in negative publicity, reduce demand for our offerings, increase the cost of compliance, require changes in business practices that result in reduced revenue, restrict our ability to provide our offerings in certain locations, result in our customers’ inability to use our offerings and prohibit data transfers or result in other claims, liabilities or sanctions, including fines, and could have an adverse effect on our business, financial condition, operating results and cash flows. 24 Table of Contents Our wireless products are regulated by the FCC and, to a lesser extent, state and local regulatory authorities.
An actual or alleged failure to comply, which could result in negative publicity, reduce demand for our offerings, increase the cost of compliance, require changes in business practices that result in reduced revenue, restrict our ability to provide our offerings in certain locations, result in our customers’ inability to use our offerings and prohibit data transfers or result in other claims, liabilities or sanctions, including fines, and could have an adverse effect on our business, financial condition, operating results and cash flows.
We may not carry business interruption insurance sufficient to protect us from all losses that may result from interruptions in our services as a result of IT Systems and infrastructure failures or cyberattacks, or to cover all contingencies.
We may not carry business interruption insurance sufficient to protect us from all losses that may result from interruptions in our services as a result of IT Systems and infrastructure failures or cyberattacks, or to cover all contingencies. We expend significant resources to protect against the threat of these IT System disruptions.
In addition to personal health information, the Company may handle or have access to personal information in the European Union subject to the General Data Protection Regulation (the "GDPR").
In addition to protected health information, the Company may handle or have access to Personal Information in the European Union or United Kingdom subject to the General Data Protection Regulation or its United Kingdom equivalent (together, the "GDPR").
Changes in regulation could result in increased costs to us and our customers. We are subject to regulation by the FCC and, to a lesser extent, by state and local authorities.
Our wireless products are regulated by the FCC and, to a lesser extent, state and local regulatory authorities. Changes in regulation could result in increased costs to us and our customers and other operational impacts. We are subject to regulation by the FCC and, to a lesser extent, by state and local authorities.
As such, our business is subject to a variety of federal, state and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer and processing of personal data.
As such, our business is subject to a variety of federal, state and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer and processing of Personal Information. A substantial portion of our revenue comes from healthcare customers.
The frequency and scope of cyberattacks has been steadily increasing, and attackers are increasingly sophisticated, using tools and techniques, including artificial intelligence, that we and our service providers may be unable to detect or identify, or that may cause significant delays in our detection or identification.
The frequency and scope of cyberattacks has been steadily increasing, and attackers are increasingly sophisticated, using tools and techniques, including artificial intelligence, to evade detection or cause significant delays in detection and identification.
UNRESOLVED STAFF COMMENTS We had no unresolved SEC staff comments as of February 22, 2024.
UNRESOLVED STAFF COMMENTS We had no unresolved SEC staff comments as of February 27, 2025.
A significant portion of our revenue is derived from healthcare customers, and we are impacted by changes in the healthcare economic environment. The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory, and other economic developments. These developments can have a dramatic effect on the decision-making and spending by our customers for information technology and software.
A significant portion of our revenue is derived from healthcare customers, and we are impacted by changes in the healthcare economic environment. The healthcare industry is highly regulated and is subject to changing political, legislative, regulatory, and other economic developments.
Risks Related to Regulatory Matters We are subject to data privacy and protection-related laws and regulation, and we may encounter issues with privacy and security of personal information. A substantial portion of our revenue comes from healthcare customers.
Risks Related to Regulatory Matters We are subject to data privacy and protection-related laws and regulation, and we may encounter issues with privacy and security of Personal Information.
Our software solutions may handle or have access to personal health information subject in the United States to HIPAA, HITECH and related regulations as well as legislation and regulations in foreign countries. These statutes and related regulations impose numerous requirements regarding the use and disclosure of personal health information with which we and our software solutions must comply.
Our software solutions may therefore handle or have access to personal health information subject in the United States to HIPAA, HITECH and related regulations as well as legislation and regulations in foreign countries.
To date, there has been no Notice of Proposed Rulemaking by the FCC, and we are unable to predict what impact, if any, a revised back-up power rule could have on our business, financial condition, operating results and ability to pay cash dividends to stockholders.
To date, the FCC has not adopted revised back-up power rules applicable to the Company, and we are unable to predict what impact, if any, revised back-up power rules to which the Company is subject could have on our business, financial condition, operating results and ability to pay cash dividends to stockholders.
These facilities are vulnerable to damage from earthquakes, floods, fires, power loss, telecommunications failures and similar events. These facilities may also be subject to theft, vandalism or other security related events.
These facilities are vulnerable to damage from natural disasters and adverse weather, including hurricanes, storms, earthquakes, floods, fires, power loss, telecommunications failures and similar events. These facilities are also at risk of serious theft, vandalism or other security related events.
While we disclaim liability for customer non-compliance with HIPAA and other privacy requirements, there remains some risk we could be held responsible for privacy violations by our customers.
While we offer encrypted pagers to our customers, many customers use wireless devices provided by us that do not encrypt text messages. While we disclaim liability for customer non-compliance with HIPAA and other privacy requirements, there remains some risk we could be held responsible for privacy violations by our customers.
This economic uncertainty can add to the unpredictability of decision-making and lengthen our sales cycle. We are unable to predict the full consequences of this uncertainty on our operations.
These developments can have a dramatic effect on the decision-making and spending by our customers for information technology and software, including our ability to increase prices. This economic uncertainty can add to the unpredictability of decision-making and lengthen our sales cycle. We are unable to predict the full consequences of this uncertainty on our operations.
Once identified, we and our service providers may be unable to investigate or remediate incidents due to attackers taking steps to obfuscate or remove forensic evidence and to circumvent logging tools and counter-measures, rendering us unable to anticipate or implement adequate preventative or restorative measures.
Even once identified, investigation and remediation of an incident is increasingly challenging due to attackers taking steps to obfuscate or remove forensic evidence and to circumvent logging tools and counter-measures, which renders us unable to fully anticipate or implement adequate preventative or restorative measures.
The CCPA and CPRA require covered businesses to, among other things, provide certain disclosures to California consumers and afford such consumers certain privacy rights. The CCPA provides for civil penalties for violations, as well as a private right of action for certain security breaches that may increase security breach litigation.
The CCPA provides for civil penalties for violations, as well as a private right of action for certain security breaches that may increase security breach litigation. The CCPA has spurred similar legislation in many other states, and we expect this trend to continue.
Removed
We may be required to expend significant resources to protect against the threat of these IT System disruptions or to remediate or otherwise alleviate problems caused by such disruptions.
Added
In connection with running our business, we receive, store, use and otherwise process information that relates to individuals and/or constitutes “personal data,” “personal information,” “personally identifiable information,” “protected health information” or similar terms under applicable data privacy laws (collectively, “Personal Information”), including from and about actual and prospective customers, as well as our employees and business contacts.
Removed
For example, as a result of our periodic evaluation of our capitalized software development costs, we recorded an impairment charge of $15.7 million for the year ended December 31, 2021.
Added
Such failure could adversely impact our ability to market and sell our software solutions to healthcare customers and have a material adverse impact on our software sales. In addition, customers may use our wireless services to transmit protected health information subject to HIPAA and other regulatory requirements.
Removed
As part of our business, we (or third parties with whom we contract) may receive, store and process our data, as well as our customers’ and partners’ private data and personal information.
Added
For example, in the United States, we are subject to the California Consumer Privacy Act ("CCPA"), which requires covered businesses to, among other things, provide certain disclosures to California consumers and afford such consumers certain privacy rights.
Removed
The GDPR could limit our ability to use and share personal data or could cause our costs to increase and harm our business, financial condition, operating results and cash flows.
Added
In addition, the FCC’s universal service contribution mechanism has been the subject of several recent court challenges, and the United States Supreme Court has agreed to consider the validity of the methodology on constitutional and other grounds.
Removed
Failure to comply with the requirements of the GDPR and the applicable European Union member states may result in fines of up to €20,000,000 or up to 4% of the total worldwide annual turnover of the preceding financial year, whichever is higher, and other administrative penalties.
Added
The outcome of this case is uncertain, but a decision by the Supreme Court invalidating the FCC’s universal service contribution mechanism could impact our business. As another example, in 2020, the FCC made available for broadband use spectrum in the 900 MHz band that is adjacent to certain frequencies used by us to provide paging services.
Removed
To comply with the data protection rules imposed by the GDPR, we may be required to put in place additional mechanisms that could be onerous and adversely affect our business, financial condition, and operating results.
Added
In early 2025, the FCC proposed to further expand these adjacent bands’ use for broadband services, in part by eliminating 500 KHz guard bands between these frequencies and those in which we operate.
Removed
For example, in the U.S., the state of California enacted the California Consumer Privacy Act ("CCPA"), which came into effect in January 2020, and the California Privacy Rights Act (“CPRA”), which came into effect in January 2023, expanding upon the CCPA.
Added
Although the FCC has tentatively concluded that this proposed band allocation would not result in harmful interference to users in adjacent spectrum bands, we cannot be certain that this expectation will be validated in practice, and any harmful interference resulting from the adoption of this proposal could negatively impact the Company by making its paging services less effective and its affected spectrum licenses less valuable.
Removed
The CPRA imposes additional obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses and disclosure of sensitive personal information.
Removed
The CPRA also creates a new California data protection agency authorized to issue substantive regulations and could result in increased privacy, cybersecurity and data protection enforcement. The CCPA and CPRA have spurred similar legislation in many other states, and we expect this trend to continue.
Removed
In addition, customers may use our wireless services to transmit patient health information subject to HIPAA and other regulatory requirements. While we offer encrypted pagers to our customers, many customers use wireless devices provided by us that do not encrypt text messages.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

3 edited+1 added−2 removed5 unchanged
Biggest changeThe Cybersecurity Program includes, but is not limited to, the following processes that collectively help management to stay informed about and monitor the prevention, detection, mitigation and remediation of risks and incidents: 25 Table of Contents • Risk assessment program to assess, track and address security risks. • Incident Response Plan to identify, evaluate, remediate and report incidents, as appropriate. • Security testing by external third-party providers to identify potential threats and vulnerabilities. • Reviews of critical third-party connections, including a security assessment and restrictions based on the third-party's risk profile. • Security training for employees and contractors, including alerts for new security developments, as warranted.
Biggest changeAs part of the enterprise risk management program, our Cybersecurity Program shares similar methodologies, reporting channels and governance processes to other areas across the Company. 25 Table of Contents The Cybersecurity Program includes, but is not limited to, the following processes that collectively help management to stay informed about and monitor the prevention, detection, mitigation and remediation of risks and incidents: • Risk assessment program to assess, track and address security risks. • Incident Response Plan to help identify, evaluate, remediate and report incidents, as appropriate. • Security testing by external third-party providers to identify potential threats and vulnerabilities. • Reviews of critical third-party connections, including a security assessment and restrictions based on the third-party's risk profile. • Security training for employees and contractors, including alerts for new security developments, as warranted.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Item 1A.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See "Item 1A. Risk Factors".
Executive management, including Chief Information Officer (CIO)/Chief Information Security Officer (CISO) and VP Technology Operations, has overall responsibility for assessing and managing key cybersecurity risks; implementation of the Cybersecurity Program is led by key information technology and security management members, including the CIO/CISO who have over a combined four decades of experience, specialized training, and various certifications in information technology and cybersecurity strategy, tools and governance.
Executive management, including our Chief Information Officer (CIO)/Chief Information Security Officer (CISO) and VP Technology Operations, has overall responsibility for assessing and managing key cybersecurity risks; implementation of the Cybersecurity Program is led by key information technology and security management members, including the CIO/CISO and VP Technology Operations, who have specialized training, and various certifications in information technology and cybersecurity strategy, tools and governance.
Removed
As part of the enterprise risk management program, our Cybersecurity Program shares similar methodologies, reporting channels and governance processes to other areas across the Company.
Added
The CIO/CISO has over two decades of experience directing security programs, controls, policies and operationalizing them specific to the healthcare industry. The VP Technology Operations has over a decade of experience managing the Cybersecurity Program, SOC2 audits and security controls and policies.
Removed
“Risk Factors –Cyberattacks, data breaches or other compromises to our or our critical third parties' systems, data, products or services could have a material adverse effect on our business.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−1 removed0 unchanged
Biggest changeAt December 31, 2023, we owned three small parcels of land in three states in the United States. At December 31, 2023, we leased transmitter sites on commercial broadcast towers, buildings and other fixed structures, some of which are free of charge, in approximately 2,646 locations throughout the United States.
Biggest changeAt December 31, 2024, we leased transmitter sites on commercial broadcast towers, buildings and other fixed structures, some of which are free of charge, in approximately 2,521 locations throughout the United States. These leases are for our active transmitters and are for various terms and provide for periodic lease payments at various rates.
At December 31, 2023, we leased facility space, i ncluding our corporate headquarters, sales offices, technical facilities, warehouse and storage facilities in 42 locations in 24 states in the United States and o ne facility in the Middle Eas t. The total leased space is approximately 89,000 square feet.
At December 31, 2024, we leased facility space, i ncluding our corporate headquarters, sales offices, technical facilities, warehouse and storage facilities in 39 locations in 23 states in the United States. The total leased space is approximately 51,000 square feet. At December 31, 2024, we owned three small parcels of land in three states in the United States.
These leases are for our active transmitters and are for various terms and provide for periodic lease payments at various rates. At December 31, 2023, we had 3,215 active transmitters on leased sites which provide service to our customers.
At December 31, 2024, we had 3,048 active transmitters on leased sites which provide service to our customers.
Removed
ITEM 2. PROPERTIES In March 2021, we relocated our corporate headquarters to a commercial property located in Alexandria, Virginia, consisting of approximately 26,000 square feet of space under a lease. In September 2023, we exercised an early termination option for the lease and reduced the lease term by two years, with a revised end date of September 30, 2024.
Added
ITEM 2. PROPERTIES In October 2024, we relocated our corporate headquarters to our existing office and facility in Plano, Texas upon the termination of the Alexandria, Virginia lease in September 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

11 edited+0 added−0 removed9 unchanged
Biggest changeDecember 31, 2018 2019 2020 2021 2022 2023 Spok Holdings, Inc. $ 100.00 $ 95.83 $ 91.66 $ 80.88 $ 83.40 $ 174.01 NASDAQ Composite 100.00 136.69 198.10 242.03 163.28 236.17 S&P Composite 1500 Health Care Technology Index 100.00 131.54 151.00 177.70 151.48 110.22 Purchases of Equity Securities by the Issuer and Affiliated Purchasers No common stock was repurchased by the Company (excluding the purchase of common stock for tax withholdings) during the three months ended December 31, 2023. 28 Table of Contents Repurchased shares of our common stock are accounted for as a reduction to common stock and additional paid-in-capital in the period in which the repurchase occurs.
Biggest changeDecember 31, 2019 2020 2021 2022 2023 2024 Spok Holdings, Inc. $ 100.00 $ 95.65 $ 84.40 $ 87.03 $ 181.58 $ 203.66 NASDAQ Composite 100.00 144.92 177.06 119.45 172.77 223.87 S&P Composite 1500 Health Care Technology Index 100.00 118.47 140.91 109.81 118.85 130.27 Purchases of Equity Securities by the Issuer and Affiliated Purchasers No common stock was repurchased by the Company (excluding the purchase of common stock for tax withholdings) during the three months ended December 31, 2024. 28 Table of Contents Repurchased shares of our common stock are accounted for as a reduction to common stock and additional paid-in-capital in the period in which the repurchase occurs.
Based on publicly available information and after considering any direct knowledge we may have, our combined cumulative change in ownership was an insignificant amount as of December 31, 2023 and 2022. ITEM 6. [RESERVED]
Based on publicly available information and after considering any direct knowledge we may have, our combined cumulative change in ownership was an insignificant amount as of December 31, 2024 and 2023. ITEM 6. [RESERVED]
This cash dividend of approximately $6.3 million is expected to be paid from available cash on hand. 27 Table of Contents Performance Graph We began trading on the NASDAQ National Market ® on November 17, 2004.
This cash dividend of approximately $6.4 million is expected to be paid from available cash on hand. 27 Table of Contents Performance Graph We began trading on the NASDAQ National Market ® on November 17, 2004.
The stock performance depicted on the chart represents historical stock performance and is not necessarily indicative of future stock price performance. *$100 invested on 12/31/18 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
The stock performance depicted on the chart represents historical stock performance and is not necessarily indicative of future stock price performance. *$100 invested on 12/31/2019 in stock or index, including reinvestment of dividends. Fiscal year ending December 31.
The chart assumes that on December 31, 2018 $100 was invested in our common stock and in each of the indices. The comparisons assume that all cash distributions were reinvested.
The chart assumes that $100 was invested in our common stock and in each of the indices on December 31, 2019. The comparisons assume that all cash distributions were reinvested.
The chart below compares the relative changes in the cumulative total return of our common stock for the period of December 31, 2018 to December 31, 2023, against the cumulative total return of the NASDAQ Composite Index ® and the S&P Composite 1500 Health Care Technology Index for the same period.
The chart below compares the relative changes in the cumulative total return of our common stock for the period of December 31, 2019 to December 31, 2024, against the cumulative total return of the NASDAQ Composite Index ® and the S&P Composite 1500 Health Care Technology Index for the same period.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our sole class of common equity is our $0.0001 par value common stock, which is listed on the NASDAQ National Market ® and is traded under the symbol "SPOK." 26 Table of Contents Holders of Common Stock As of February 16, 2024, there were 2,712 holders of record of our common stock.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information Our sole class of common equity is our $0.0001 par value common stock, which is listed on the NASDAQ National Market ® and is traded under the symbol "SPOK." Holders of Common Stock 26 Table of Contents As of February 21, 2025, there were 2,607 holders of record of our common stock.
Dividends The Company declared dividends totaling $26.2 million, $25.8 million, and $10.2 million during the years ended December 31, 2023, 2022, and 2021, respectively.
Dividends The Company declared dividends totaling $26.8 million, $26.2 million and $25.8 million during the years ended December 31, 2024, 2023 and 2022, respectively.
The chart indicates the dollar value of each hypothetical $100 investment based on the closing price as of the last trading day of each fiscal year from December 31, 2018 to December 31, 2023.
The chart indicates the dollar value of each hypothetical $100 investment based on the closing price as of the last trading day of each fiscal year from December 31, 2019 to December 31, 2024.
The following table details information on our dividends declared and cash distributions since the formation of the Company in 2005 through the year ended December 31, 2023: (Dollars in Thousands) Dividends Declared Per Share Amount Total Payment (1) Year Prior to 2019 $ 19.275 $ 477,331 2019 0.500 9,819 2020 0.500 9,771 2021 0.500 10,025 2022 1.250 25,011 2023 1.250 25,642 $ 23.275 $ 557,599 (1) The total payment reflects the cash distributions paid in relation to common stock, vested RSUs and vested shares of restricted stock.
The following table details information on our dividends declared and cash distributions since the formation of the Company in 2005 through the year ended December 31, 2024: (Dollars in Thousands) Dividends Declared Per Share Amount Total Payment (1) Year Prior to 2020 $ 19.775 $ 487,150 2020 0.500 9,771 2021 0.500 10,025 2022 1.250 25,011 2023 1.250 25,642 2024 1.250 26,381 $ 24.525 $ 583,980 (1) The total payment reflects the cash distributions paid in relation to common stock, vested RSUs and vested shares of restricted stock.
On February 21, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 15, 2024, and a payment date of March 29, 2024.
On February 26, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 14, 2025, and a payment date of March 31, 2025.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+11 added−37 removed48 unchanged
Biggest changeFor a discussion and analysis of the year ended December 31, 2022, compared to the year ended December 31, 2021, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023: (Dollars in thousands) 2023 Change 2022 Change 2021 Revenue: Wireless revenue $ 75,968 $ 346 0.5 % $ 75,622 $ (3,204) (4.1) % $ 78,826 Software revenue 63,057 4,145 7.0 % 58,912 (4,415) (7.0) % 63,327 Total revenue 139,025 4,491 3.3 % 134,534 (7,619) (5.4) % 142,153 Operating expenses: Cost of revenue (exclusive of items shown separately below) 26,818 (1,449) (5.1) % 28,267 (4,203) (12.9) % 32,470 Research and development 10,549 (3,076) (22.6) % 13,625 (3,889) (22.2) % 17,514 Technology operations 25,843 (1,569) (5.7) % 27,412 (1,432) (5.0) % 28,844 Selling and marketing 16,350 54 0.3 % 16,296 (4,787) (22.7) % 21,083 General and administrative 33,168 (4,628) (12.2) % 37,796 (5,735) (13.2) % 43,531 Severance and restructuring 573 (6,756) (92.2) % 7,329 7,009 2,190.3 % 320 Depreciation, amortization and accretion 4,496 925 25.9 % 3,571 (6,875) (65.8) % 10,446 Capitalized software development impairment — — — % — (15,663) (100.0) % 15,663 Total operating expenses 117,797 (16,499) (12.3) % 134,296 (35,575) (20.9) % 169,871 Operating income (loss) 21,228 20,990 8,819.3 % 238 27,956 (100.9) % (27,718) Interest income 1,099 507 85.6 % 592 272 85.0 % 320 Other (expense) income (2) (169) (101.2) % 167 101 153.0 % 66 Income (loss) before income taxes 22,325 21,328 2,139.2 % 997 28,329 (103.6) % (27,332) (Provision for) benefit from income taxes (6,659) (27,518) (131.9) % 20,859 15,707 304.9 % 5,152 Net income (loss) $ 15,666 $ (6,190) (28.3) % $ 21,856 $ 44,036 (198.5) % $ (22,180) Supplemental Information FTEs 384 8 2.1 % 376 (187) (33.2) % 563 Active transmitters 3,215 (110) (3.3) % 3,325 (143) (4.1) % 3,468 31 Table of Contents Revenue We offer a focused suite of unified clinical communications and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.
Biggest changeFor a discussion and analysis of the year ended December 31, 2023, compared to the year ended December 31, 2022, please refer to Management's Discussion and Analysis of Financial Condition and Results of Operations included in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024: (Dollars in thousands) 2024 Change 2023 Change 2022 Revenue: Wireless revenue $ 73,523 $ (2,445) (3.2) % $ 75,968 $ 346 0.5 % $ 75,622 Software revenue 64,130 1,073 1.7 % 63,057 4,145 7.0 % 58,912 Total revenue 137,653 (1,372) (1.0) % 139,025 4,491 3.3 % 134,534 Operating expenses: Cost of revenue (exclusive of items shown separately below) 28,430 1,612 6.0 % 26,818 (1,449) (5.1) % 28,267 Research and development 11,548 999 9.5 % 10,549 (3,076) (22.6) % 13,625 Technology operations 24,306 (1,537) (5.9) % 25,843 (1,569) (5.7) % 27,412 Selling and marketing 15,851 (499) (3.1) % 16,350 54 0.3 % 16,296 General and administrative 33,301 133 0.4 % 33,168 (4,628) (12.2) % 37,796 Severance and restructuring 1,104 531 92.7 % 573 (6,756) (92.2) % 7,329 Depreciation and accretion 4,148 (348) (7.7) % 4,496 925 25.9 % 3,571 Total operating expenses 118,688 891 0.8 % 117,797 (16,499) (12.3) % 134,296 Operating income 18,965 (2,263) (10.7) % 21,228 20,990 8,819.3 % 238 Interest income 1,153 54 4.9 % 1,099 507 85.6 % 592 Other (expense) income (86) (84) 4,200.0 % (2) (169) (101.2) % 167 Income before income taxes 20,032 (2,293) (10.3) % 22,325 21,328 2,139.2 % 997 (Provision for) benefit from income taxes (5,067) 1,592 (23.9) % (6,659) (27,518) (131.9) % 20,859 Net income $ 14,965 $ (701) (4.5) % $ 15,666 $ (6,190) (28.3) % $ 21,856 Supplemental Information FTEs 410 26 6.8 % 384 8 2.1 % 376 Active transmitters 3,048 (167) (5.2) % 3,215 (110) (3.3) % 3,325 30 Table of Contents Revenue We offer a focused suite of unified clinical communications and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.
We develop, sell and support enterprise-wide systems for healthcare, government, large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos, and well-known manufacturers.
We develop, sell and support enterprise-wide systems for healthcare, government, and large enterprise and other organizations needing to automate, centralize and standardize their approach to clinical communications and collaboration. Our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos and well-known manufacturers.
We maintained a valuation allowance of $2.3 million related to Federal Foreign Tax Credits and certain state net operating losses and state tax credits, as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets prior to expiration.
We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses and state tax credits, as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration.
This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of our deferred income tax assets will be realized in future periods.
This assessment is required to determine whether, based on all available evidence, it is "more likely than not" (meaning a probability of greater than 50%) that all or some portion of our deferred income tax assets will be realized in future periods.
We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets prior to expiration.
We maintained a valuation allowance of $2.3 million related to federal foreign tax credits and certain state net operating losses as we do not believe current projections of future taxable income will be sufficient to utilize those tax assets and credits prior to expiration.
Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our statements of operations.
Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our Consolidated Statements of Operations.
This classification consists primarily of payroll and related expenses, outside service expenses, taxes, licenses and permit expenses, and facility rent expenses. • Depreciation, Amortization and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories.
This classification consists primarily of payroll and related expenses, outside service expenses, taxes, licenses and permit expenses, and facility rent expenses. • Depreciation and Accretion. These are expenses that may be associated with one or more of the aforementioned functional categories.
The estimated control premium is based on a review of current and past market information published by a third-party resource, assessment of the Company's future projected discounted cash flows and other relevant information if available. Our methods, assumptions, and estimates used in assessing goodwill in a quantitative form remained materially unchanged in 2023.
The estimated control premium is based on a review of current and past market information published by a third-party resource, assessment of the Company's future projected discounted cash flows and other relevant information if available. Our methods, assumptions, and estimates used in assessing goodwill in a quantitative form remained materially unchanged in 2024.
We did not qualify for the research and development tax credits in 2023. We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence, and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies.
We did not qualify for the research and development tax credits in 2024. We assess the recoverability of our deferred income tax assets, which represent the tax benefits of future tax deductions, based on available positive and negative evidence, and by considering the adequacy of future taxable income from all sources, including prudent and feasible tax planning strategies.
With the successful completion of the restructuring plan and our ongoing efforts to stabilize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods. In February 2022, the Board of Directors authorized a share repurchase program of up to $10 million of the Company's common stock.
With the successful completion of the restructuring plan and our ongoing efforts to maximize revenue and optimize costs, we anticipate positive cash flow generation will continue in future operating periods. In February 2022, the Board of Directors authorized a share repurchase program of up to $10 million of the Company's common stock.
Further enhancements are expected to provide additional avenues for license sales which generate new maintenance revenue and help to reduce levels of gross churn. 34 Table of Contents Operating Expenses Our operating expenses are presented in functional categories. Certain of our functional categories are especially important to overall expense control and management.
Further enhancements are expected to provide additional avenues for license sales, which generate new maintenance revenue and help to reduce levels of gross churn. 33 Table of Contents Operating Expenses Our operating expenses are presented in functional categories. Certain of our functional categories are especially important to overall expense control and management.
Contracts which include goods or services related to our software solutions and subscriptions are generally sold with multiple promises, and therefore, will often include multiple performance obligations. Material performance obligations related to the sale of our software solutions include software licenses, professional services, hardware and maintenance.
Contracts which include goods or services related to our software solutions and subscriptions are generally sold with multiple promises, and therefore, will often include multiple performance obligations. Material performance obligations related to the sale of our software solutions include software licenses, professional services - projects, professional services - managed services, hardware and maintenance.
Impairment of Goodwill, Long-Lived Assets and Intangible Assets Subject to Amortization We are required to evaluate the carrying value of our goodwill, long-lived assets and intangible assets subject to amortization. 43 Table of Contents Goodwill is not amortized but is evaluated for impairment at least annually, or when events or circumstances suggest a potential impairment has occurred.
Impairment of Goodwill and Long-Lived Assets We are required to evaluate the carrying value of our goodwill, long-lived assets and intangible assets subject to amortization. Goodwill is not amortized but is evaluated for impairment at least annually, or when events or circumstances suggest a potential impairment has occurred.
In addition, subscribers either contract to use a messaging device that we own and provide for an additional fixed monthly fee or they own the device used, after either purchasing it either from us or from another vendor. 32 Table of Contents We offer exclusive one-way (T5) and two-way (T52) alphanumeric pagers, which are configurable to support unencrypted or encrypted operation.
In addition, subscribers either contract to use a messaging device that we own and provide for an additional fixed monthly fee or they own the device used, after either purchasing it either from us or from another vendor. We offer exclusive one-way (T5) and two-way (T52) alphanumeric pagers, which are configurable to support unencrypted or encrypted operation.
As part of this evaluation, for the year ended December 31, 2023, the Company did not identify any probable losses. Related Parties Refer to Note 13, "Related Parties" in the Notes to Consolidated Financial Statements for further discussion on our related party transactions. Inflation Inflation has not had a material effect on our operations to date.
As part of this evaluation, for the year ended December 31, 2024, the Company did not identify any probable losses. Related Parties Refer to Note 12, "Related Parties" in the Notes to Consolidated Financial Statements for further discussion on our related party transactions. Inflation Inflation has not had a material effect on our operations to date.
We also sell devices to resellers who lease or resell such devices to their subscribers and then sell messaging services utilizing our networks. A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs, while two-way messaging is generally offered on a nationwide basis.
We also sell devices to resellers who lease or resell such devices to their subscribers and then sell messaging services utilizing our networks. 31 Table of Contents A subscriber to one-way messaging services may select coverage on a local, regional or nationwide basis to best meet their messaging needs, while two-way messaging is generally offered on a nationwide basis.
Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (on-going maintenance), is presented as software revenue in our statements of operations.
Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (ongoing maintenance), is presented as software revenue in our Consolidated Statements of Operations.
The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. We maintain the majority of our cash and cash equivalents in accounts with major U.S. and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits.
The available cash and cash equivalents consist of cash in our operating accounts and cash invested in interest-bearing funds managed by third-party financial institutions. We maintain the majority of our cash and cash equivalents in accounts with major United States and multi-national financial institutions, and the majority of our deposits at these institutions exceed insured limits.
We recorded no impairment of goodwill for the years ended December 31, 2023, 2022 and 2021. Quarterly, we assess whether circumstances exist which suggest that the carrying value of long-lived and amortizable intangible assets (asset groups) may not be recoverable.
We recorded no impairment of goodwill for the years ended December 31, 2024, 2023 and 2022. Quarterly, we assess whether circumstances exist which suggest that the carrying value of long-lived assets (asset groups) may not be recoverable.
We provide a valuation allowance when we consider it "more likely than not" that a deferred income tax asset will not be fully recovered. The assessment of our deferred income tax assets requires significant judgment, however, our methods, assumptions, and estimates used in assessing the need for a valuation allowance remained materially unchanged in 2023.
We provide a valuation allowance when we consider it "more likely than not" that a deferred income tax asset will not be fully recovered. The assessment of our deferred income tax assets requires significant judgment, however, our methods, assumptions, and estimates used in assessing the need for a valuation allowance remained 39 Table of Contents materially unchanged in 2024.
Similar to our quarterly assessment of goodwill, significant judgment is required in the determination of a triggering event given the qualitative nature of the assessment. We did not identify any triggering events for long-lived assets in 2023. We did not record any impairment of long-lived assets or definite-lived intangible assets for the years ended December 31, 2023 and 2022.
Similar to our quarterly assessment of goodwill, significant judgment is required in the determination of a triggering event given the qualitative nature of the assessment. We did not identify any triggering events for long-lived assets in 2024. We did not record any impairment of long-lived assets for the years ended December 31, 2024 and 2023.
The strategic business plan included a renewed focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. These restructuring efforts were completed during the fourth quarter of 2022.
Since then, the strategic business plan includes a focus on our existing and established business, including the Spok Care Connect Suite and our wireless service offerings. The restructuring efforts were completed during the fourth quarter of 2022.
Maintenance revenue is generated from our ongoing support of our software solutions or related hardware, typically for a period of one year after project completion. 33 Table of Contents To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition.
Maintenance revenue is generated from the ongoing support of our software solutions or related hardware, typically contracted for a period of between one and three years. 32 Table of Contents To a large degree, software revenue corresponds to our backlog of performance obligations ready to deliver at some point in the future, and any delays in implementation may affect the timing of revenue recognition.
This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations, amortization of intangible assets, amortization of capitalized software development costs, and accretion of asset retirement obligations. 35 Table of Contents The following is a review of our operating expense categories for the years ended December 31, 2023 and 2022.
This classification generally consists of depreciation from capital expenditures or other assets that are core to our ongoing operations and accretion of asset retirement obligations. 34 Table of Contents The following is a review of our operating expense categories for the years ended December 31, 2024 and 2023.
While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets. To date, we have experienced no loss or lack of access to cash in our operating accounts.
While we monitor daily the cash balances in our operating accounts and adjust the cash balances as appropriate, these cash balances could be impacted if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.
On February 21, 2024, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 15, 2024 and a payment date of March 29, 2024. This cash dividend of approximately $6.3 million is expected to be paid from available cash on hand.
On February 26, 2025, the Board of Directors declared a regular quarterly cash dividend of $0.3125 per share of common stock, with a record date of March 14, 2025 and a payment date of March 31, 2025. This cash dividend of approximately $6.4 million is expected to be paid from available cash on hand.
The following reflects the impact of subscribers and ARPU on the change in wireless revenue: Units in Service as of December 31, Revenue for the Year Ended December 31, Change Due To: (Units and Dollars in Thousands) 2023 2022 Change 2023 2022 Change ARPU Units Paging revenue 765 817 (52) $ 73,135 $ 73,323 $ (188) $ 3,449 $ (3,637) As demand for one-way and two-way messaging has declined, we have developed or added service offerings such as encrypted paging and Spok Mobile with a pager number in order to increase our revenue potential and mitigate the decline in our wireless revenue.
The following reflects the impact of subscribers and ARPU on the change in wireless revenue: Units in Service as of December 31, Revenue for the Year Ended December 31, Change Due To: (Units and Dollars in Thousands) 2024 2023 Change 2024 2023 Change ARPU Units Paging revenue 720 765 (45) $ 70,958 $ 73,135 $ (2,177) $ 2,306 $ (4,483) As demand for one-way and two-way messaging has declined, we have developed or added service offerings such as encrypted paging and Spok Mobile with a pager number in order to increase our revenue potential and mitigate the decline in our wireless revenue.
The following provides the effective tax rate reconciliation for the years ended December 31, 2023, 2022 and 2021, respectively (See Note 10, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion on our income taxes): (Dollars in thousands) 2023 2022 2021 Income (loss) before income taxes $ 22,325 $ 997 $ (27,332) Income taxes computed at the federal statutory rate $ 4,688 21.0 % $ 209 21.0 % $ (5,740) 21.0 % State income taxes, net of federal benefit 1,343 6.0 % 121 12.1 % (1,513) 5.5 % Change in valuation allowance — — % (21,850) (2,191.6) % 2,070 (7.6) % Research and development and other tax credits — — % (88) (8.8) % (808) 3.0 % Excess executive compensation 405 1.8 % 231 23.1 % 272 (1.0) % Other 223 0.9 % 518 52.0 % 567 (2.1) % Provision for (benefit from) income taxes $ 6,659 29.8 % $ (20,859) (2,092.2) % $ (5,152) 18.8 % The provision for income taxes changed by $27.5 million for the year ended December 31, 2023, compared to 2022 primarily due to a reduction of the valuation allowance in 2022, as well as an increase in both federal and state income taxes stemming from higher income in 2023.
The following provides the effective tax rate reconciliation for the years ended December 31, 2024, 2023 and 2022, respectively (See Note 9, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion on our income taxes): (Dollars in thousands) 2024 2023 2022 Income before income taxes $ 20,032 $ 22,325 $ 997 Income taxes computed at the federal statutory rate $ 4,207 21.0 % $ 4,688 21.0 % $ 209 21.0 % State income taxes, net of federal benefit 886 4.4 % 1,343 6.0 % 121 12.1 % Change in valuation allowance — — % — — % (21,850) (2,191.6) % Research and development and other tax credits — — % — — % (88) (8.8) % Excess executive compensation 609 3.0 % 405 1.8 % 231 23.1 % Other (635) (3.2) % 223 0.9 % 518 52.0 % Provision for (benefit from) income taxes $ 5,067 25.3 % $ 6,659 29.8 % $ (20,859) (2,092.2) % The provision for income taxes decreased by $1.6 million for the year ended December 31, 2024, compared to 2023, primarily due to a decrease in both federal and state income taxes stemming from lower income in 2024.
Refer to Note 1, "Organization and Significant Accounting Policies" and Note 10, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion. Liquidity and Capital Resources 39 Table of Contents Cash and Cash Equivalents At December 31, 2023, we held cash, cash equivalents and short-term investments of $32.0 million.
Refer to Note 1, "Organization and Significant Accounting Policies" and Note 9, "Income Taxes" in the Notes to Consolidated Financial Statements for further discussion. Liquidity and Capital Resources Cash and Cash Equivalents At December 31, 2024, we held cash and cash equivalents of $29.1 million.
Revenue Recognition We review each contract to determine whether to account for the various promises as one or more performance obligations. The assessment and determination of performance obligations for a given contract requires significant judgment. Wireless service contracts are generally considered to be a single promise and therefore accounted for as a single performance obligation.
The assessment and determination of performance obligations for a given contract requires significant judgment. Wireless service contracts are generally considered to be a single promise and therefore accounted for as a single performance obligation.
Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment (to be used in conjunction with the software), and post-contract support (ongoing maintenance), is presented as software revenue in our Statement of Operations. Our software is licensed to end users under an industry standard software license agreement.
Revenue generated by the sale of our software solutions, which includes software license, professional services (installation, consulting and training), equipment procured by us from third parties (to be used in conjunction with our software) and post-contract support (ongoing maintenance), is presented as software revenue in our Consolidated Statements of Operations.
We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and repurchases of our common stock.
To date, we have experienced no loss or lack of access to cash in our operating accounts. 36 Table of Contents We intend to use our cash on hand to provide working capital, to support operations, to invest in our business, and to return value to stockholders through cash dividends and repurchases of our common stock.
Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization and public safety response. Our product offerings are capable of addressing a customer’s clinical communications needs. We develop, sell and support enterprise-wide systems for healthcare and other organizations needing to automate, centralize and standardize their approach to clinical communications.
Our product offerings are capable of addressing a customer’s clinical communications needs. We develop, sell and support enterprise-wide systems for healthcare and other organizations needing to automate, centralize and standardize their approach to clinical communications.
This repurchase authority allows us, at management’s discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors. In September 2023, we exercised an early termination option for the lease of our corporate headquarters in Alexandria, Virginia.
This repurchase authority allows us, at management’s discretion, to selectively repurchase shares of our common stock from time to time in the open market depending upon market price and other factors.
Refer to Note 4, "Revenue, Deferred Revenue and Prepaid Commissions," in the Notes to Consolidated Financial Statements for additional information on our wireless and software revenue streams.
Our software is licensed to end users under an industry standard software license agreement. Refer to Note 3, "Revenue, Deferred Revenue and Prepaid Commissions," in the Notes to Consolidated Financial Statements for additional information on our wireless and software revenue streams.
Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer. For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s).
For software licenses, revenue is not recognized until the related license(s) has been made available to the customer and the customer can begin to benefit from its right to use the license(s). Our software licenses represent a right to use Spok’s Intellectual Property ("IP") as it exists at a point in time at which the license is granted.
Returned approximately $25.6 million of capital to stockholders in the form of cash dividends. 30 Table of Contents Results of Operations The following table is a summary of our Consolidated Statements of Operations for the years ended December 31, 2023, 2022 and 2021, and the discussion that follows compares the year ended December 31, 2023 to the year ended December 31, 2022.
Results of Operations The following table is a summary of our Consolidated Statements of Operations for the years ended December 31, 2024, 2023 and 2022, and the discussion that follows compares the year ended December 31, 2024 to the year ended December 31, 2023.
Maintenance Revenue We have seen modest improvement in our gross maintenance revenue churn alongside increasing operational bookings which drive new maintenance revenue. Given these dynamics, we believe annual maintenance revenue is likely to remain flat or increase marginally, as we continue to enhance our existing software solutions.
Given these dynamics, we believe annual maintenance revenue is likely to remain flat or increase marginally, as we continue to enhance our existing software solutions.
The increase in wireless revenue for the year ended December 31, 2023, as compared to the same period in 2022, reflects an increase in product revenue, primarily driven by the secular decrease in our wireless units in service, from approximately 817 thousand units as of December 31, 2022 to approximately 765 thousand units as of December 31, 2023.
Wireless revenue decreased for the year ended December 31, 2024, as compared to 2023, reflective of the secular decrease in our wireless units in service, from approximately 765 thousand units as of December 31, 2023 to approximately 720 thousand units as of December 31, 2024.
Our wireless, professional, maintenance, and subscription services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work. As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation.
Discounts are generally allocated proportionately based on the relative SSP of the identified performance obligations for a given contract. Our wireless, professional, maintenance, and subscription services are generally recognized over time due to a customer's simultaneous receipt and consumption of the benefit as we perform the work.
Actual results could differ significantly from those estimates. We believe that the following discussion addresses the Company’s most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company’s financial condition and results of operations.
We believe that the following discussion addresses the Company’s most critical accounting estimates, which are those that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the Company’s financial condition and results of operations. 38 Table of Contents Revenue Recognition We review each contract to determine whether to account for the various promises as one or more performance obligations.
Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at December 31, 2023, should be adequate to meet anticipated cash requirements for the short term (next 12 months) and long term (beyond 12 months). 40 Table of Contents The following table sets forth information on our net cash flows from operating, investing, and financing activities for the periods stated: For the Year Ended December 31, (Dollars in thousands) 2023 2022 2021 Net cash provided by operating activities $ 26,184 $ 6,456 $ 7,968 Net cash (used in) provided by investing activities (3,417) 11,257 (225) Net cash used in financing activities (26,677) (26,221) (11,753) Operating Activities As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements.
The following table sets forth information on our net cash flows from operating, investing, and financing activities for the periods stated: For the Year Ended December 31, (Dollars in thousands) 2024 2023 2022 Net cash provided by operating activities $ 28,922 $ 26,184 $ 6,456 Net cash (used in) provided by investing activities (3,209) (3,417) 11,257 Net cash used in financing activities (28,537) (26,677) (26,221) Operating Activities As discussed above, we are dependent on cash flows from operating activities to meet our cash requirements.
In instances where SSP is not directly 42 Table of Contents observable, we determine the SSP using information that may include contractually stated prices, market conditions, costs, renewal contracts, list prices and other observable inputs.
In instances where SSP is not directly observable, we determine the SSP using information that may include contractually stated prices, market conditions, costs, renewal contracts, list prices and other observable inputs. A discount is present if the total transaction price is less than the sum of the estimated SSPs of the goods or services promised in the contract.
Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.
Commitments and Contingencies In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.
The decreases in bad debt were driven by improvements in collections on aging receivables for the year ended December 31, 2023. Depreciation, Amortization and Accretion For the year ended December 31, 2023, compared to 2022, depreciation, amortization and accretion expenses increased by $0.9 million, primarily due to increases in asset retirement cost and pager depreciation.
Depreciation and Accretion For the year ended December 31, 2024, compared to 2023, depreciation and accretion expenses decreased by $0.3 million, primarily due to decreases in asset retirement cost and pager depreciation.
The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided. Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance, or subscription services.
As we transfer control over time, we recognize revenue based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires significant judgment and is based on the nature of the products or services to be provided.
There were no changes to previously issued total cash flows for any of the impacted periods. Overview and Highlights We offer a focused suite of unified clinical communication and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions.
Overview and Highlights We offer a focused suite of unified clinical communication and collaboration solutions that include call center applications, clinical alerting and notifications, one-way and advanced two-way wireless messaging services, mobile communications and public safety solutions. Our customers rely on Spok for workflow improvement, secure texting, paging services, contact center optimization and public safety response.
While our primary market has been the healthcare industry with a focus on prominent hospitals, our solutions can also be found in 29 Table of Contents large government agencies; leading public safety institutions; colleges and universities; large hotels, resorts and casinos; and well-known manufacturers.
While our primary market has been the healthcare industry with a focus on prominent hospitals, our solutions can be found in prominent hospitals, large government agencies, leading public safety institutions, colleges and universities, large hotels, resorts and casinos and well-known manufacturers. 29 Table of Contents Revenue generated by wireless messaging services (including voice mail, personalized greetings, message storage and retrieval, equipment, maintenance plans and/or equipment loss protection to both one-way and two-way messaging subscribers is presented as wireless revenue in our Consolidated Statements of Operations.
We will continue to focus on optimizing costs to allow us to prioritize cash flow generation and the return of capital to stockholders.
These actions allowed us to better align costs and, as a result, continue to return capital to stockholders in the form of quarterly dividends of $0.3125 per share in 2024. We will continue to focus on optimizing costs to allow us to prioritize cash flow generation and the return of capital to stockholders.
As we reach certain minimum frequency commitments, as outlined by the FCC, we may be unable to continue our efforts to rationalize and consolidate our networks.
The number of active transmitters, which directly affects our telecommunications and site rent expenses, declined 5.2% from December 31, 2023 to December 31, 2024. As we reach certain minimum frequency commitments, as outlined by the FCC, we may be unable to continue our efforts to rationalize and consolidate our networks.
The table below details total revenue for the periods stated: (Dollars in thousands) 2023 Change 2022 Change 2021 Wireless revenue: Paging revenue $ 73,135 $ (188) (0.3) % $ 73,323 $ (2,522) (3.3) % $ 75,845 Product and other revenue 2,833 534 23.2 % 2,299 (682) (22.9) % 2,981 Wireless revenue 75,968 346 0.5 % 75,622 (3,204) (4.1) % 78,826 Software revenue: License 8,721 1,519 21.1 % 7,202 1,285 21.7 % 5,917 Professional services 14,694 2,129 16.9 % 12,565 (4,596) (26.8) % 17,161 Hardware 2,675 464 21.0 % 2,211 (56) (2.5) % 2,267 Operations revenue 26,090 4,112 18.7 % 21,978 (3,367) (13.3) % 25,345 Maintenance 36,967 33 0.1 % 36,934 (1,048) (2.8) % 37,982 Software revenue 63,057 4,145 7.0 % 58,912 (4,415) (7.0) % 63,327 Total revenue $ 139,025 $ 4,491 3.3 % $ 134,534 $ (7,619) (5.4) % $ 142,153 Wireless Revenue Wireless revenue consists of two primary components: paging revenue and product and other revenue.
The table below details total revenue for the periods stated: (Dollars in thousands) 2024 Change 2023 Change 2022 Wireless revenue: Paging revenue $ 70,958 $ (2,177) (3.0) % $ 73,135 $ (188) (0.3) % $ 73,323 Product and other revenue 2,565 (268) (9.5) % 2,833 534 23.2 % 2,299 Wireless revenue 73,523 (2,445) (3.2) % 75,968 346 0.5 % 75,622 Software revenue: License 7,648 (1,073) (12.3) % 8,721 1,519 21.1 % 7,202 Professional services - projects 14,616 1,311 9.9 % 13,305 1,721 14.9 % 11,584 Professional services - managed services 3,259 1,870 134.6 % 1,389 408 41.6 % 981 Hardware 1,382 (1,293) (48.3) % 2,675 464 21.0 % 2,211 Operations revenue 26,905 815 3.1 % 26,090 464 2.1 % 21,978 Maintenance 37,225 258 0.7 % 36,967 33 0.1 % 36,934 Software revenue 64,130 1,073 1.7 % 63,057 497 0.8 % 58,912 Total revenue $ 137,653 $ (1,372) (1.0) % $ 139,025 $ 843 0.6 % $ 134,534 Wireless Revenue Wireless revenue consists of two primary components: paging revenue and product and other revenue.
Financing Activities For the years ended December 31, 2023 and 2022, net cash used in financing activities was $26.7 million and $26.2 million, respectively, primarily due to cash distributions to stockholders of $25.6 million and $25.0 million, respectively. Commitments and Contingencies In the ordinary course of our operations, we enter into certain contractual obligations.
Investing Activities For the years ended December 31, 2024 and 2023, net cash used in investing activities was $3.2 million and $3.4 million, respectively, primarily due to capital expenditures. 37 Table of Contents Financing Activities For the years ended December 31, 2024 and 2023, net cash used in financing activities was $28.5 million and $26.7 million, respectively, primarily due to cash distributions to stockholders of $26.4 million and $25.6 million, respectively.
As projects progress, the EAC is periodically updated and reviewed to ensure the timing of revenue recognition is appropriate. The creation, maintenance and review of a project's EAC requires significant judgment to determine an appropriate number of hours over which the remaining project is expected to be completed.
The creation, maintenance and review of a project's EAC requires significant judgment to determine an appropriate number of hours over which the remaining project is expected to be completed. Our software licenses and hardware are generally recognized at a point in time when we have transferred control to the customer.
Severance and Restructuring For the years ended December 31, 2023 and 2022, severance and restructuring expenses were $0.6 million and $7.3 million, respectively, The expenses incurred in 2022 were related to the restructuring program announced in February 2022.
Severance and Restructuring For the years ended December 31, 2024 and 2023, severance and restructuring expenses were $1.1 million and $0.6 million, respectively, primarily due to expenses related to the early termination of the lease of our corporate headquarters in Alexandria, Virginia.
We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services. For professional services, we leverage an input methodology based on the number of hours worked on a project versus the total expected hours necessary to complete the project.
Generally, we use the time-elapsed measure of progress for performance obligations that include wireless, maintenance, professional services - managed services, or subscription services. We believe this method best depicts the simultaneous transfer and consumption of the benefit based on our performance as these services are generally considered standby services.
Refer to Note 1, "Organization and Significant Accounting Policies" and Note 7, "Goodwill, Capitalized Software Development and Intangible Assets, Net" in the Notes to Consolidated Financial Statements for further discussion. 38 Table of Contents Interest Income, Other Income (Expense) and Income Tax (Benefit) Expense Interest Income Interest income increased by $0.5 million for the year ended December 31, 2023, compared to 2022, primarily due to an increase in interest earned on the Company's cash balances and short-term investments, driven by higher interest rates from macroeconomic events.
Interest Income and Provision for (Benefit from) Income Taxes Interest Income Interest income increased by $0.1 million for the year ended December 31, 2024, compared to 2023, primarily due to an increase in interest earned on the Company's cash balances, driven by higher interest rates from macroeconomic events. 35 Table of Contents Provision for (Benefit from) Income Taxes The effects of foreign taxes are immaterial for all periods presented.
ARPU was $7.71 in 2023, as compared to $7.34 in 2022. Excluding pass-through items, ARPU increased by $0.29, as compared to the same period in 2022, as a result of the price increases.
These decreases were partially offset by an increase in ARPU as a result of price increases initiated in September 2024. ARPU was $7.97, as compared to $7.71 for the same period in 2023.
Revenues are recognized proportionally as hours are incurred. This is a significant area of judgment as it requires an estimate at completion ("EAC") for each contract. Our initial EAC is primarily based on prior experience also taking into consideration any specific facts and circumstances for a given contract.
Our initial EAC is primarily based on prior experience also taking into consideration any specific facts and circumstances for a given contract. As projects progress, the EAC is periodically updated and reviewed to ensure the timing of revenue recognition is appropriate.
We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
The following table provides the Company's significant commitments and contractual obligations as of December 31, 2024: Payments Due by Period (Dollars in thousands) Total Less than 1 year 1 to 3 years 3 to 5 years More than 5 years Operating lease obligations $ 10,548 $ 3,479 $ 4,285 $ 1,794 $ 990 Unconditional purchase obligations 4,896 2,189 2,632 75 — Total contractual obligations $ 15,444 $ 5,668 $ 6,917 $ 1,869 $ 990 We do not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses. For the year ended December 31, 2023, net cash provided by operating activities was $26.2 million, an increase of $19.7 million compared to 2022.
Cash from operations varies depending on changes in various working capital items, including deferred revenues, accounts payable, accounts receivable, prepaid expenses and various accrued expenses. Our operating cash results primarily from cash received from our customers, offset by cash payments we make for products and services, operating expenses and income taxes.
We recorded an impairment charge of $15.7 million related to capitalized software development for the year ended December 31, 2021 based on a triggering event identified in the fourth quarter of 2021. Recent Accounting Pronouncements Refer to Note 2, "Recent Accounting Standards," in the Notes to Consolidated Financial Statements for a summary of recent and pending accounting standards.
There were no remaining amortizable intangible assets at December 31, 2024 and 2023. Recent Accounting Pronouncements Refer to Note 2, "Recent Accounting Standards," in the Notes to Consolidated Financial Statements for a summary of recent and pending accounting standards.
Site rent costs decreased as a result of a reduction in the number of active transmitters, resulting from our network rationalization efforts. The number of active transmitters, which directly affects our telecommunication and site rent expenses, declined 3.3% from December 31, 2022 to December 31, 2023.
Technology Operations Technology operations expenses decreased by $1.5 million, or 5.9%, for the year ended December 31, 2024, compared to 2023. The decrease was driven by reduction in the number of active transmitters, resulting from our network rationalization efforts.
Investing Activities For the year ended December 31, 2023, net cash used in investing activities was $3.4 million, primarily due to capital expenditures. For the year ended December 31, 2022, net cash provided by investing activities was $11.3 million, primarily due to the sale and purchase of U.S. treasury securities offset by capital expenditures.
For the years ended December 31, 2024 and 2023, net cash provided by operating activities was $28.9 million, and $26.2 million, respectively, primarily due to an increase in cash received from customers, partially offset by cash payments for cost of revenues and operating expenses.
Removed
We have revised the Consolidated Balance Sheet as of December 31, 2022, Consolidated Statement of Stockholders' Equity for the years ended December 31, 2022 and 2021, as well as the relevant footnotes, and other financial information as applicable, included herein to reflect the reduction in opening retained earnings and a corresponding increase to deferred revenue, as described in Note 1, to correct an immaterial error related to the understatement of deferred revenue of approximately $1.0 million.
Added
Operations Revenue Software operations revenue increased during 2024 when compared to 2023, primarily as a result of higher professional services revenue, resulting from increased sales of our managed services offering as well as targeted hiring efforts over the last 12 months, as we aligned staffing levels with our backlog, which had grown as a result of our operations bookings results.
Removed
As a result of the implementation of the plan, we eliminated 176 positions, primarily in research and development, and also in professional services, selling and marketing, and back-office support functions. These actions allowed us to better align costs and, as a result, continued to return capital to stockholders in the form of quarterly dividends of $0.3125 per share in 2023.
Added
This increase was partially offset by decreases in license and hardware revenue, driven by lower sales. Maintenance Revenue We have seen modest improvement in our gross maintenance revenue churn alongside increasing operational bookings, which drive new maintenance revenue.
Removed
Further details related to costs incurred as a part of the restructuring can be found in Note 3 "Restructuring" in the Notes to Consolidated Financial Statements. 2023 Highlights Total revenue grew for the first time in the Company's history, increasing by $4.5 million, or 3.3%, compared to 2022, as a result of renewed focus on our existing and established businesses, including the Spok Care Connect Suite and our wireless services offerings.
Added
Cost of Revenue Cost of revenue increased by $1.6 million, or 6.0%, for the year ended December 31, 2024, compared to 2023 . This increase was primarily driven by the need for additional professional services personnel to better align staffing levels with our backlog.
Removed
Total operating expenses continued to decline, as the benefits from the restructuring of our business initiated in 2022 extended into 2023, decreasing by $16.5 million, or 12.3%, compared to 2022.
Added
This increase was partially offset by lower hardware costs resulting from lower hardware sales as compared to 2023. Research and Development Research and development expenses increased by $1.0 million, or 9.5%, for the year ended December 31, 2024, compared to 2023. This increase was driven by our continued effort to invest in the enhancement of our software solutions.
Removed
Launched the Spok Care Connect Hosted Solution in early 2024, which is geared towards hospitals under 200 beds, alongside significant progress made in the continued enhancement of the Spok Care Connect Suite.
Added
Selling and Marketing Selling and marketing expenses decreased by $0.5 million, or 3.1%, for the year ended December 31, 2024, compared to 2023,. The decrease in commissions is primarily due to the amortization of certain commissions expenses, which were previously expensed as incurred under an ASC 606 practical expedient.
Removed
Revenue generated by wireless messaging services (including voice mail, personalized greeting, message storage and retrieval), equipment, maintenance plans and/or equipment loss protection for both one-way and two-way messaging subscribers is presented as wireless revenue in our Statement of Operations.
Added
With the growth in multi-year contracts over the last two years, more related revenue continues to extend beyond the 12-month period allowed for under this practical expedient. As a result, the associated commission expenses are now amortized in alignment with the related revenue, resulting in lower expenses compared to 2023.
Removed
Product revenue includes one-time fees when customers cancel our services and is highly variable as the fees are charged to customers when pagers are disconnected and the customer is unable to return the units.
Added
This resulted in a one-time benefit of approximately $0.9 million, as commissions expense was adjusted to account for the deferral of certain items that had been previously expensed. General and Administrative General and administrative expenses increased by $0.1 million, or 0.4%, for the year ended December 31, 2024, compared to 2023. Expenses were largely in line with 2023.
Removed
The increase in product revenue was partially offset by a marginal decrease in paging revenue primarily due to the decrease in the units in service noted above, offset by continued increase in ARPU resulting from price increases initiated in the third quarter of 2023 and general increases in Universal Service Fund ("USF") fees, which are effectively pass-through items that have corresponding costs associated with them.
Added
Based on current and anticipated levels of operations, we anticipate that net cash provided by operating activities, together with the available cash on hand at December 31, 2024, should be adequate to meet anticipated cash requirements for the short term (next 12 months) and long term (beyond 12 months).
Removed
Operations Revenue Software operations revenue increased during 2023 when compared to 2022, primarily as a result of higher license, professional services and hardware revenue. License and hardware revenue increases were driven by higher operations bookings as compared to 2022. Professional services revenue increased primarily as a result of improved resource utilization.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk At December 31, 2023, we had no outstanding borrowings or associated debt service requirements. Foreign Currency Exchange Rate Risk We conduct a limited amount of business outside the United States.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Interest Rate Risk At December 31, 2024, we had no outstanding borrowings or associated debt service requirements. Foreign Currency Exchange Rate Risk We conduct a limited amount of business outside the United States.
The financial impact of transactions billed in foreign currencies is immaterial to our financial results and, consequently, we do not have any material exposure to the risk of foreign currency exchange rate fluctuations. 44 Table of Contents
The financial impact of transactions billed in foreign currencies is immaterial to our financial results and, consequently, we do not have any material exposure to the risk of foreign currency exchange rate fluctuations. 40 Table of Contents

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