Spok Holdings (NASDAQ: SPOK) reported Q1 EPS of ($0.24). Revenue for the quarter came in at $37.27 million.

Key First-Quarter Operating Highlights:

• Software bookings in the first quarter totaled $15.6 million, up from software bookings of $14.7 million in the prior year quarter. First quarter 2020 bookings included $5.9 million of operations bookings and $9.7 million of maintenance renewals, compared to $6.0 million and $8.7 million, respectively in the first quarter of 2019.
• First quarter 2020 software revenue of $15.9 million, compared to software revenue of $19.2 million in the prior year quarter. Included in first quarter software revenue was $6.2 million of operations revenue and $9.7 million in maintenance revenue, compared to $9.0 million in operations revenue and $10.2 million in maintenance revenue in the first quarter of 2019.
• The revenue renewal rate for software maintenance in the first quarter of 2020 continued to exceed 99 percent.
• The quarterly rate of paging unit erosion was 1.3 percent in the first quarter of 2020, compared to 1.8 percent in the prior quarter and 1.0 percent in the year-earlier period. Net paging unit losses were 12,000 in the first quarter of 2020, compared to 17,000 in the prior quarter and 10,000 in the first quarter of 2019. Paging units in service at March 31, 2020, totaled 926,000, compared to 982,000 at March 31, 2019.
• The quarterly rate of wireless revenue erosion was 1.1 percent in the first quarter of 2020, compared to 0.9 percent erosion in the prior quarter and 2.1 percent in the year-earlier quarter.
• Total paging ARPU (average revenue per unit) was $7.31 in the first quarter of 2020, compared to $7.32 in the year-earlier quarter and $7.33 in the prior quarter.
• Operating expenses in the first quarter of 2020 totaled $41.4 million, compared to $40.6 million in the prior year quarter. Adjusted operating expenses totaled $40.9 million in the first quarter of 2020, compared to $38.3 million in the year-earlier quarter.
• Capital expenses were $1.1 million in the first quarter of 2020, compared to $1.3 million in the year-earlier quarter.
• The number of full-time equivalent employees at March 31, 2020, totaled 620, compared to 591 in the prior year quarter.
• Capital returned to stockholders in the first quarter of 2020 totaled $2.6 million, in the form of the regular quarterly dividend.
• The Company’s cash, cash equivalents and short-term investments balance at March 31, 2020, was $72.2 million, compared to $77.3 million at December 31, 2019.

Management Commentary:

“We were negatively impacted in the first quarter, as the majority of our customer base struggled with the challenges presented by COVID-19,” said Vincent D. Kelly, president and chief executive officer. “We had over 100 meetings scheduled for our annual industry conference, HIMSS, as we were all set to roll out our new cloud native platform, Spok Go®. These meetings included both prospective customers for our Spok Go platform and strategic partners. It has been challenging to get the meetings rescheduled as the world has changed quickly. The pandemic has created an atmosphere of fear and uncertainty and our thoughts and prayers go out to those that have been both directly and indirectly affected by this tragedy. While the situation is fluid and no one is able to predict the duration and severity of this pandemic with a high degree of certainty, let me assure you that, as a company, in the near-term we are positioned to deal with the situation. We have taken the necessary steps to provide for the safety of our customers and employees in order to ensure the continuity of our operations and product development efforts. Spok has a stable revenue base, as approximately 83 percent of our revenues in the first quarter were recurring in nature, coming from either our legacy wireless business or software maintenance contracts. We provide a critical function, which we believe will become even more necessary in this environment, delivering reliable communications and clinical information to care teams when and where it matters most to improve patient outcomes.”

In the first quarter of 2020, Spok returned $2.6 million in capital to stockholders, in the form of its regular quarterly dividend. “We were proud to be able to execute against our capital allocation strategy in the first quarter, which included paying dividends to our stockholders and investing in our product platform and infrastructure,” continued Kelly. “Spok remains committed to paying our regular quarterly dividend. We believe we will be able to achieve this while continuing to support our Spok Care Connect® platform and in the near term investing in the evolution of our cloud-native and integrated communication platform, Spok Go. We are also taking immediate steps to put our operations on a positive free cash flow basis through a combination of furlough and other cost savings initiatives. We are evaluating our investment in development as hospitals represent one of the most impacted sectors of the economy from COVID-19. As part of our evaluation, we are focused on the investment in our cloud-native platform to ensure that shareholders realize the benefit of our investment. We will discuss this more in our outlook and in the coming quarters as we gain greater insight into the impact of COVID-19 on hospitals, including their budgets and perhaps even more importantly, their ability to interact with our sales and professional services teams.”

Business Outlook:

Michael W. Wallace, chief operating officer and chief financial officer, said: “Expense management and strong financial discipline have allowed us to continue to invest in our business. In the first quarter, operating expenses were in-line with the prior quarter, with improvements in several expense categories. Spok’s balance sheet remains strong, with a cash, cash equivalents and short-term investment balance of $72.2 million at March 31, 2020.”

Commenting on the Company’s previously provided financial guidance for 2020, Wallace noted: “Spok has been focused on understanding the impact of the pandemic on our business, particularly given the impact of COVID-19 on the roll-out of our Spok Go software business. Because of the uncertainty surrounding the duration and severity of this crisis and the extremely fluid nature of the situation, we, like many of our peer public companies, believe that it is most prudent to suspend our practice of providing annual guidance for revenues and expenses at this time. We look forward to returning to our normal guidance format after the crisis is over.

For earnings history and earnings-related data on Spok Holdings (SPOK) click here.