Spok Holdings, Inc. Price & Performance (SPOK)

Hello, everyone, and welcome. I am joined today by Vince Kelly, Chief Executive Officer Michael Wallace, Chief Operating Officer and Calvin Rice, Chief Financial Officer. After a brief presentation by management, we will open up the call to your questions. I want to remind everyone that today's conference call may include forward looking statements that are subject to risks and uncertainties. Relating to Spok's future financial and business performance. Such statements may include estimates of revenue, expenses and income as well as other predictive statements or plans, which are dependent upon future events or conditions. These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results. Spok's actual results could differ materially from those anticipated in these forward looking statements. Although these statements are based upon assumptions, that the company believes to be reasonable, they are subject to risks and uncertainties. Please review the Risk Factors section relating to our operations and the business environment, which are contained in our Form 10 ks for 2024 and related documents. Which will be filed with the Securities and Exchange Commission after this call. Please note that Spok assumes no obligation to update any forward looking from past or present filings and conference calls.

With that, I'll turn the call over to Vince. Vince Thank you, Al, and good afternoon. Thank you for joining us for our fourth quarter twenty twenty four earnings call.

Let me preface my comments by saying how proud I am of our Spok team and our ability to end the year strong generating a very impressive performance in 2024 while staying true to our mission. I'm very pleased with the momentum that this team has created We are excited by our prospects and outlook. Since the strategic pivot we announced about three years ago now, our focus has not changed, that is to grow our software revenue, generate cash return capital to stockholders Spok. In 2024, for the third consecutive year, we again accomplished that mission. We returned $26,400,000 of cash to our stockholders while generating in excess of $29,000,000 of adjusted EBITDA. We were also successful on our stated goal driven by double digit growth in our professional services business, and our software operations bookings. Coupled with a continued focus on expense management, Spoke generated $15,000,000 or $0.73 per diluted share of net income and we accomplished this while responsibly investing in our product and service offerings. Spokus struck an excellent balance between making the necessary while continuing to generate cash flow and returning capital to our stockholders Spok. Today, we'll share with you an update on how our strategic business plan is progressing in support of our goals as well as our financial results for the quarter, and full year.

I'll start by reviewing the agenda for today's call. The order will be as follows: First, a review of our strategic focus and goals reporting our progress against those goals, next Michael Wallace, our COO, will provide a review of our sales performance, Then, Calvin Rice, our CFO, will review our fourth quarter and full year 2024 financial highlights as well as a more detailed look at our financial expectations for 2025 Spok, [indiscernible] I will then conclude our prepared remarks with a brief wrap up. And finally, we will open the call up to your questions. In 2024, our team achieved numerous operational financial milestones. Accomplishments were made regarding software revenue growth, particularly in our professional services business and specific as it relates to our managed services offering, reduced wireless net unit term maintaining solid profitability levels, continued expense management Cash flow generation progress on our product roadmap and development, augmenting our sales team, generating record level 6 and 7 figure customer contracts and multiyear engagements G and A page replacements, maintenance contract bookings and retention, and enhancing our industry reputation with continued high customer satisfaction scores. 2024, Spok generated over $34,000,000 of software operations bookings, This was more than a 13% increase from the prior year.

This annual growth was particularly impressive given that the prior year software operations bookings levels included our largest single customer contract ever signed, and our largest ever quarterly bookings level in the second quarter, While we were very happy with our bookings level last year, and believe that we will continue growing our total bookings this year, our focus will be on accelerating our license sales while maintaining momentum in our professional services. Switching to operating expenses. While driving our top line, we also continued to focus on expense management as operating expense levels for the year were virtually unchanged However, our focus on expense management is one of the key drivers generate increased cash flow does not come at the expense of our product platform we continue to make the necessary investments in product development sales and marketing, customer support, and professional services to support the growth of Spok Care Connect and our wireless solutions. In twenty twenty four, Spok invested more than $11,500,000 in product research and development a nearly 10% increase from 2023. Investments such as these are critical to creating a best of breed product platform and to maintaining our solid industry reputation. In 2024, Spok continued to build upon its premier industry reputation, We started the year with our participation at the HIMSS24 Conference where we showcased our top rated clinical communications platform. [indiscernible] Spoke experts demonstrated the power of the new Spoke Care Connect hosted solution and the new reporting dashboards and user capabilities of Spok Messenger.

At the HIMSS24 conference attendees learned about the SpokCare Connect solution enables hospitals and clinics to access the power of Spok applications remotely with a simple recurring subscription plan. Additionally, Spoke experts discussed how Spoke's Messenger new reporting and dashboard capabilities provide a user friendly way to showcase operational metrics for enterprise communications. This is an intelligent FDA five ten cleared software solution designed to send critical information and updates from an organization's various alert systems such as a nurse call, patient monitoring, to mobile staff on their communications devices. The conference was a true success both in terms of the excitement level generated by Spok's products and the number of new sales leads we were able to add to our pipeline and we look forward to the twenty twenty five HIMSS Conference next month. But don't just take my word on how Spok continues to improve its reputation. In 2024, I believe that there were two key proof points that underscore our premier market position as evidenced by number one, Receiving top honors for the seventh consecutive year in Black Book Market Research's survey of Clinical Communication Solutions Acute Care Hospitals, and number two, having 18 of the 20 adult hospitals and nine of the 10 children's hospitals named to the 2024 U. S. News and World Report Best Hospital Honor Roll as our customers.

Accolades such as these did not come if you don't have a best in class product offering and follow reputation with the customers. Spok has an amazing blue chip customer base and many of those customers have been with us for decades and continue to buy from us. And in July, Spok surpassed a very important milestone as the company marked our ten year anniversary [indiscernible] In 2011, USA Mobility Inc. Acquired Encom Software. In 2014, the company completed its integration creating a single cohesive business and the Stope brand was born. Spoke expanded on the strong legacy of those companies to solve critical communications challenges that help hospitals and health systems improve patient outcomes and support public safety when seconds count and lives are at stake. This is our mission and this is our passion. In short, we executed at a high level and we are confident about the future as we start 2025. Based on our performance in 2024, we are providing our guidance estimates for revenue and adjusted EBITDA generation in 2025. This guidance reflects the team's confidence in being able to continue our strong performance since the pivot in 2022. Calvin will go into more detail regarding our expectations later in the call.

Of course, like last year, we'll review our guidance with you on a quarterly basis and update as appropriate. Before I turn the call over to Mike to review our sales performance, let me briefly summarize the goals that support our critical and important mission Our strategic goal is simple, run the business profitably, generate cash flow and return that capital to our stockholders. Spoke has a proud legacy of creating stockholder value through free cash flow generation and we intend to continue this track record. Since the beginning of our strategic pivot, which started about three years ago, Smoke has returned approximately $77,000,000 or $3.75 per share our stockholders in the form of our regular quarterly dividend. In fact, since we created this company way back in 02/2004, Spok has returned nearly $700,000,000 to our stockholders due to our regular quarterly dividend, special dividends, or share repurchases. In the fourth quarter of twenty twenty four, our history of returning cash to our stockholders continued as we returned $6,300,000 in dividends this continues our legacy of returning capital to shareholders since becoming a public company. And we again expect to pay dividends in excess of 27,000,000 in 2025. Spok remains committed to our dividend policy and returning capital to our stockholders.

When you take into consideration our current cash balance distributions of stockholders, share repurchases, debt repayments and acquisitions. Spok has now generated more than $1,000,000,000 of free cash flow since our creation in 02/2004. Our focus on maximizing cash over the long term supports the four major tenets of our strategy, Those are: Number one, continued investment in our wireless and software solutions Number two, growing our revenue base number three, disciplined expense management and number four, a stockholder friendly capital allocation plan. Going forward, we believe our extensive experience operating our established communication solutions world class customer base, will continue to generate significant value for our stockholders Now, I'll turn the call over to our President and Chief Operating Officer, Michael Walst, talk about our operating accomplishments. Mike, Thanks, Vince, and good afternoon.

Thank you all for joining us for what we believe was another solid quarter and full year results from Spok Spok. We are pleased to report that we have continued to execute on our business plan and in 2024, we generated GAAP net income of $15,000,000 dollars or $0.73 per diluted share was in line with prior year results. And a sharp increase from the breakeven adjusted GAAP net income performance from two years ago. Importantly, we accomplished this bottom line performance while continuing to generate double digit software operations growth. Which drove revenue in 2024 as well as significantly building our professional services, and maintenance backlog levels to more than 62,000,000 growth of nearly 22% and will drive revenue in future periods. On a full year basis, software operations bookings totaled $34,100,000 up more than 13% from prior year levels. Also, reached levels not seen for the past five years and continue on a trajectory of growth following our pivot three years ago. Amidst all the progress in creating a solid financial platform and stockholder friendly capital allocation strategy, remain true to our mission of being a global leader in healthcare communications. We deliver clinical information to care teams when and where it matters most to improve patient outcomes, Aspok enables smarter, faster clinical communications for our customers.

And importantly, we continue to maintain our reputation as a thought leader the healthcare communication space, we continue to see customer satisfaction ratings increase. Book has over 2,200 healthcare facilities as customers. Representing the who's who of hospitals in The United States. We have built our solutions and industry leading reputation over many years have long standing valuable customer relationships.

This is an amazing and valuable asset for Soak.

And these hospitals buy from us regularly and renew maintenance at a high level. Let me take the opportunity to drill down into our software operations bookings in 24. 2024 was certainly a year of milestones, which regard to our software operations bookings. In addition to the solid year over year growth in total bookings of 13.2%, we were able to execute $82.06 and 7 figure customer contracts a 22% increase from our record setting performance in 2023. Additionally, in 2024, we executed 40 multiyear engagements with customers. A third higher than the prior year. Hopefully, this performance gives you a good indication of the momentum that our sales team is generating in the marketplace the confidence we have as we work our way through 2025 with a growing sales pipeline both in terms of size and quality. Supporting our achievements in the fourth quarter of twenty twenty four, were 26 and 7 figure contracts that we were able to close. And this performance is epitomized by the three customer contracts I'm going to discuss today. First, a new logo customer with one of the Midwest most renowned nonprofit multi specialty academic medical centers. Another with one of the top academic medical centers in The U. S. And the final with a regional leader in high quality care and a mission driven physician led integrated health system the Mid Atlantic.

Let me take a few moments to review these agreements. Our first contract from last quarter was a 7 figure new logo contract with the health system headquartered in the Midwest. Comprised of 23 hospitals expand both Ohio and Florida. This organization ranks among the largest most renowned healthcare systems in the world. With over 80,000 caregivers two seventy six outpatient facilities, and a significant international presence. This multiyear transaction includes an enterprise software license for our operator console, and web on call solution And during the first implementation phase, Spok will migrate over 150 operator console work stations from another provider to spoke to support 14 different hospitals and remote workers. Additionally, our Spok Messenger solution was included to facilitate critical alarm traffic including nurse call, Medical Gas, and fire alarms. Spok supports this health system's multiyear strategy to accelerate the meaningful use of to better support patient and provider workflows while also aligning directly with its infrastructure goal, which includes a system wide rollout of Cisco. The second standout customer contract in the fourth quarter is with a large public health system in the Southwest. This prestigious hospital provides care and life saving services to more than 250,000 patients annually, manages over 600,000 operator calls, processes over 2,000,000 pages annually. [indiscernible] from a centralized hybrid call center, Folks secured a five year managed service commitment that will extend our existing partnership into the future, and continue to drive value and critical communication services that are core to this organization's mission and growth.

Spok's multiyear engagements include Spok SmartSuite, [indiscernible] our new Spok Care Connect Enterprise recording, and Spok Messenger and e notify upgrades. Coupled with our value added services that include data integrity, and solution assessments, this health system will become one of the newest members of our premium support units, which will further add an additional layer of value and attention that our clients appreciate. The third customer contract was with a long standing Spok customer for over thirty five years. And is a nationally recognized integrated health system serving parts of the Mid Atlantic. This healthcare system is a regional Mid Atlantic leader with over 23,000 team members supporting nine hospitals. Over two fifty patient care locations, in a multi specialty group in employing over 3,000 physicians. They rely on Spok to streamline their communications for code calls, on call scheduling, alarm routing and enterprise web directory that is heavily integrated with key systems and data. With their commitment to a new multiyear engagement, they benefit from four years of steady budgeting, unlimited upgrades, new SMS messaging to support legacy hardware changes and carrier needs, value added services, and allotment of hours to maintain their proactiveness and patching updates to third party systems.

And the flexibility to adopt upgrades as required for CTI and OS dependencies or desired feature functionality enhancements. This is a growing health system that is engaged in bringing on its newest site existing STO client into this multiyear engagement. As you can see, Spok continues to consistently deliver effective communication solutions to hospitals and healthcare systems. Our fourth quarter success underscores our steadfast dedication to offering unparalleled communication solutions to our clients. We are confident that our software solutions will continue to bring positive change to healthcare institutions nationwide. With that said, I'd like to turn the call over to our Chief Financial Officer, Calvin Rice. Calvin? Thanks, Mike, and good afternoon, everyone.

I would now like to take a few minutes and provide a recap of our fourth quarter and full year 2024 financial performance which we reported earlier today. As always, I encourage you to review our 10 ks when filed as it includes significantly more information about our business operations and financial performance than we will cover on this call. Turning to our income statement, In 2024, GAAP net income totaled $15,000,000 or $0.73 diluted share compared to net income of $15,700,000 or $0.77 per diluted share in 2023. In 2024, were 137,700,000.0 down from revenue of $139,000,000 in 2023. Wireless revenue of $73,500,000 for the year was down from revenue of $76,000,000 in the prior year. However, this was partially offset by growth in software revenue to $64,100,000 in 2024, driven by a nearly 22% increase in professional services revenue and the success of our managed services offering we had discussed in our last earnings call. With respect to wireless revenue, 2024 performance continues to be primarily driven by improvement in revenue per unit or ARPU, which saw growth of $0.26 on a year over year basis. Much of this increase was driven by previous pricing actions into a less extent incremental pass through taxes and fees.

We did see an improvement in net unit churn as net units and service declined in 2024 by roughly 5.9% from the prior year as compared to a 6.4% decline in 2023. While we are happy with the year over year decline in the net unit churn rate, and it was still within the 4% to 6% we've seen over the last five to seven years, we believe that the improvement in the rate would have been even greater had several of the new additions that were anticipated in Q4 not been delayed. While timing of new wireless placements is sometimes difficult to foresee on an individual basis, we have seen modest improvement as we begin 2025. We are confident in our ability to execute in 2025 and in line with the last several years, we expect our net unit churn to range from 4% to 6%. We expect demand for our wireless services will continue to decline on a secular base However, we remain focused on pricing and other initiatives like the Jene pager to further offset revenue loss through Pager unit decline. These initiatives are unlikely to completely offset revenue decline realized from unit loss on an annual basis this is further reflected in our updated financial guidance, which I will walk through shortly Turning to software revenue in 2024.

License and hardware revenue of $9,000,000 was down from $11,400,000 in 2023.

Maintenance revenue totaled $37,200,000 and was up slightly from the [indiscernible] As we have discussed in previous quarterly calls, we expect our product development efforts will lead to further growth of our operations bookings and increased software license sales in the coming years, and maintenance revenue along with it.

As previously mentioned, growth in professional services revenue was a key driver in the annual growth of software revenue in 2024. Professional services revenue, of $17,900,000 in 2024 was up 21.6% from revenue of $14,700,000 in 2023. We are seeing further sustained improvement in resource utilization delivering on our internal initiatives to better align total resources with our backlog and driving a higher rate of margin and net cash flow. We hired additional service professionals in 2024 to meet our current back needs and to support our expanding professional services As discussed in our last earnings call, based on the RAP [indiscernible] Our professional services revenues are now broken out between one projects our traditional fixed bid engagements where revenues are recognized as work is performed, and two, [indiscernible] an all you can eat offering where customers are provided implementation and upgrade services across the length of their contract, which is typically three years, where revenues are recognized ratably Managed services has become a more significant component of professional service is revenue. Managed services revenue totaled $3,300,000 or 18.2% of professional services revenue in 2024. This is up from $1,400,000 or less than 10% of professional services revenue in 2023.

We remain optimistic by the prospects of this service offering and will continue to provide updates on our progress in the future. Full year 2024 adjusted totaled $113,400,000 dollars up less than 1% from the prior year. Cost of revenue increased primarily due to the aforementioned increase in professional services bookings, and the related hiring to support those services Increases in research and development reflected our continued investment in our product and services platform with reductions in technology operations driven by our normal practice of cost reduction in relationship to declining wireless revenues. Selling and marketing costs benefited from a one time item of approximately $900,000 in the second quarter when we began to amortize a subset of our commissions expense that had historically been expensed as incurred. While general and administrative costs were generally flat to the prior year. Adjusted EBITDA was $29,200,000 in 2024, down from $30,300,000 in 2023, generally reflecting lower consolidated revenue. Though down from the prior year, Spok continues to generate healthy levels of adjusted EBITDA at over 21% margin in 2024. We continue to operate a highly profitable business funding a strong dividend delivering on our promises made in 2022 to shift our primary focus towards Finally, we ended 2024 with $29,100,000 in cash and cash equivalents, which grew from $23,900,000 in the quarter, but was down from $32,000,000 at the end of twenty twenty three.

Moving on to guidance for 2025. We have provided estimates for revenue and adjusted EBITDA. As a reminder, the figures I'm going to discuss today are in In 2025, we expect total revenue to range from 1 and $34,000,000 to $142,000,000 The midpoint of our guidance reflects consolidated revenue generally in line with 2024 results, but with a higher mix of software revenue while the high end of our guidance reflects nearly 3% annual growth. Included in the 2025 guidance expect wireless revenue to range between $69,000,000 to $72,000,000 Software revenue is expected to range from $65,000,000 to $70,000,000 in 2025 with a midpoint implying total software revenue growth of more than 5% and more than 9% annual growth at the high end of the guidance range. Lastly, our adjusted EBITDA guidance for 2025 is $27,500,000 to $32,500,000 The midpoint reflects minor improvement over 2024 while the high end represents over 10% growth largely expected to be driven by a greater mix of higher margin software license book With that said, I will now turn the call back over to Vince.

Thanks, Calvin. And look, before we open the call up to your questions, let me say again how proud I am of our entire Spok team and the results we posted for 2024. It's their efforts and dedication which provides confidence for our outlook and guidance for another strong year in 2025. From a business configuration and strategy perspective, we believe we are strongly positioned to grow our franchise while returning capital to our shareholders. We have a long term organic growth engine in Spok Care Connect, We maintain a source of strong recurring revenue in our wireless service line, We run the largest paging offering in the world integrated with our software operations. We have enhanced our paging platform and user devices serve our core healthcare customer base. We believe with these two assets going for us, our best financial results are ahead of us and Spok's future is bright. I'd also like to take this opportunity to thank our stockholders for their continued support and want to assure you that our primary focus remains on generating cash increasing stockholder value. We're committed to our current dividend and capital allocation policy. I believe that today we have provided you an appreciation for some of the great things that are happening in Spok and the market opportunities that lay ahead of us.

While we have shared our initial guidance with you for 2025, we will work to exceed those expectations and we will update you each quarter. We started the year off strong and we very much look forward to speaking with you again in two months when we report our first quarter results in late April. That concludes our prepared remarks. So at this point, I'll ask the operator to open as time allows. [indiscernible] Thank you.

We will now be conducting a question and answer session.

For participants using speaker equipment, may be necessary to pick up your handset before pressing the start The first question comes from the line of Kyle Bosser with B. Riley Securities.

Please go ahead.

Great. Thank you. Hi, everyone. Thanks for all the updates. Today. Great progress. Maybe I'll start with software operations bookings. I think there are 26 and 7 figure contracts and for the year is up 13%. Is great. Can you talk a little bit about some of the key attributes of this growth? Mean, is it winning contracts from competitors or adding new offerings within existing accounts or greenfield opportunities from from new clients that are innovating their operations, if you will. So I guess that's the first part of the question is kind of key attributes of the growth. And then how should we think about the metric of six and seven figure going forward? I mean, 20 ish a decent number or reasonable?

Yes, Kyle. Let me take that one. Our the answer to your first question is it's a little bit of everything. You have to go back to 2022 when we made the pivot in the first quarter and we kind of stood down spoke go and we said, hey, we're going forward with Care Connect Suite. We're going to start enhancing it We're investing in it. Our R and D now is going into Care Connect suite. During the course of 2024, we started doing a lot of work on it from a product roadmap perspective and really saw some success there in terms of delivering things like a new UI on Spok, Care Connect reporting package, the whole contact center look and feel was upgraded. And that really happened kind of as the year progressed and late in the year. And because of that roadmap and because of that progress we were making, we had good success finding multiyear engagements Customers look at us like we're a utility, we just work, but they want to know are we enhancing our platform or are we taking them into the future, are we doing things like adding Agentic AI and making it easier for them to interface CTI up to the UCaaS, CCaaS folks in the cloud, etcetera.

So it was our success was across the spectrum of some new customers, some takeaways from competitors, a lot of existing customers renewing and re upping for multiyear engagements. And then some incremental sales to existing customers who just wanted to add some more functionality and some more of our solutions in that Care Connect suite that circle, if you will, that we have on our website. And so I really think we've positioned ourselves quite well with those investments for 2025 and we're seeing that. We were just talking with our Board today. As a matter of fact, we look at our pipeline and we look at the top deals in our pipeline [indiscernible] The top deals in our pipeline, they're all over $500,000 piece. I mean, it just fills over a page and a half. And two years ago, it was probably not uncommon to see a $100,000 deal, dollars $120,000.50000 deal. So the size of the deals are getting larger. And it's the opportunity as we deliver more functionality in the consoles and we do more of this opportunity, We'll shift more toward new business and more license than what we've seen in the past. And that's something that we're looking forward to in 2020 So it was a little bit of everything last year, and now we're looking to expand our license for us and our license efforts this year because that begets more maintenance revenue and it's just very profitable.

Got it. I appreciate that. That's helpful. And maybe my second question, on the EBITDA guidance, so great to see. It looks like it was about 100 basis points above what we were thinking. So nice leverage. Can you talk a bit more about kind of the key contributors for this earnings leverage Sounds like a greater mix of software sales will help, but also curious about the expense reduction that you'll focus on as well? Go ahead, Calvin.

Yes, sure. I'll take that one. Hey, Kyle. Yes, so I think you pointed out a lot of that leverage going in $25,000,000 is really going to be focused on the software and the top line. Line. We've made that pivot about three years ago at this point. A lot of that leverage on the operating expense side has been factored in. And from this point forward, we're really looking to grow that top line and the software license component comes with significant [indiscernible] with much of that dropping to the bottom line. So that's really going to be the critical focus for us into 2025 and beyond.

Yes.

And I think also just adding on to that, we've seen our churn go down on the software side, which is very encouraging because that that makes us much more profitable. And Mike has done a phenomenal job with our professional services group and all the managed service contracts that we sold in making us more efficient in terms of professional services our billing rate, our utilization, that combined with the churn going down, just made that whole maintenance portion of our revenue stream much more profitable on the professional services component that you see in the income statement, much more profitable. So that's something that's also helping our bottom line. The margins in the software business are improving.

Okay, great. Appreciate that. Sounds great and excited to see the progress continue this year. Thanks for the guidance and the update. Thank you, Kyle. Thank you. Next question comes from the line of John Dixon with Artemis Investment Group.

Please go ahead. [indiscernible] Vince. Can you all hear me fine?

We hear you, yes.

All right.

I noticed that you guys actually moved your headquarters from Virginia down to Plano.

Can you kind of expound on why that occurred?

What prompted you guys to make that change?

Sure. We've basically closed all of our real estate from a cost perspective except for two locations Plano, we've got a small location up in Bedford New Hampshire where we have some CTI testing. And it's just to save on cost. It's just that simple. Before we closed that other offices, and consolidate everything to Plano. Think we had about half the company before the pandemic, about half the company was essentially working out of an office anyway because we've got technicians and sales people spread out all over the country. And we've gotten very good at operating like that. So just yes, we're trying to drive every cost we can out of the business make some margin, generate some cash, give it back to our shareholders as long as it doesn't negatively impact the business. And we're finding that we can get our work done We're a business, so we know somebody is contributing or not contributing. We are very good at looking at productivity of people across the board in various categories. And getting out the bad actors and bringing in new actors where you need to. So we're finding it's very effective. Now we need that office in Plano.

It's a large facility for us. Do a lot of inventory management out of there. So but we even took that office and we cut it in half literally. In half to save money. So we're just we're trying to drive costs out of the business everywhere we can possibly drive out costs. Well, that sounds great, Vince.

One of my other questions really goes back to the gentleman from B. Riley as it relates to your bookings, I know I've seen this repeatedly because we've been invested with you now for about three years. 80% of your revenue is really recurring. So is that is that a good metric to assume that about 80% of your bookings [indiscernible] is coming from [indiscernible] current customers.

Mike, why don't you take that one?

Yes. It's a good question, John. And yes, the metrics that we've talked about historically somewhere around 15% to 20% of our operations bookings are what you would consider to be new logos. So 100% new customers that we do not have today. Historically, again, about 80% of our bookings tend to be in our installed base with either add on type functionality, upgrades, things like that. But when we mentioned the the 80% recurring aspect of our revenue what we're really referring to there is the entirety of our wireless business, which sort of by definition is recurring on a monthly basis. And then the software maintenance component, on the software side where we know well in advance, we know what our backlog is related to maintenance. So those two combined make up about 80% of our revenue. So when we start every year we essentially know where 80% of our revenue is coming from. A little bit of apples and oranges, but I think your question is is spot on.

Yes. One easy way to look at it is, if you look at our P and L, just attached to the press release, you would take all of the wireless revenue that's reoccurring And then you would look at the software revenue and you would take the maintenance component, which is obviously the largest portion of our software revenue, that's reoccurring. Add those two together and that's where you're getting your 80 plus percent from.

Awesome. Well, that sounds really good. And I just want reemphasize to you guys, we're investors not really analysts. I just want reemphasize to you and your team, we're very appreciative of what you've done. Being a part of your company has been a really good ride. Over the last three years and just want to tell you thank you. Well, thank you for your support and get ready to collect another dividend here in the not too distant future because we've approved it today and it's announced it this afternoon. It's going to be paid, I think, on March 31.

Well, we look forward to it. And like I said, you're a great company. We're very impressed with you and plan to stay with you. So thank you.

Thank you. Thank you.

As there are no further questions, ladies and gentlemen, we have reached the end of question and answer session. I would now like to turn the floor over to we have one more question. Do we on ticket? [indiscernible] Sure.

It's from the line of George Milas with MGH Management. Please go ahead.

Great.

Thanks a lot everybody.

Just squeezing at the end there.

Congratulations on continued really good results.

I have two questions. One of them maybe is a little complicated.

But it's about the product roadmap.

And Finsh, you talked about sort of good progress on the road product roadmap in 2024. Can you give us a little bit of sense of that? What are you trying to accomplish and what are the timelines you're trying to achieve? Yes.

So we have a new UI on the Spok Operator console. So instead of having kind of an an older software, older look and feel that it's had for many, many years, It's all completely new UI, completely state of the art. Completely updated and it's much easier sale now going in with that. That clean look. Our operator console, which is the core of our business, has always had by far the most functionality in the industry, George, in terms of healthcare specific workflows. Operator workflows that work at hospitals how that hospital functions, when they're setting up a code team, a code blue, when they're calling a code red, etcetera. How they contact everybody, We've always had that functionality, but they're hitting a lot of like function keys and stuff that the operators had memorized over the years. We've completely changed that. And built a new eye. And the new eye has hooks in it, [indiscernible] which makes them a lot more efficient going forward in the future. Think of ways for them to save money. We also did a major update on our Care Connect reporting the old reporting package was not Really that good to be honest with you and customers have been asking for a lot of things for many, many years.

We've got that done this year. That's done completed.

We're out there selling it now. Selling it in the first quarter, seeing some really good results from it quite frankly. Care Connect contact center, that is complete. It's out there. We came and we've updated our SaaS hosting and our managed hosting platform that's out there. We've got some more coming here in the first quarter.

We've got from the CCAS type players, we've got I think one, two, three have been certified in terms of their CTI interfacing with our console. Remember, it's a huge CCaaS or UCaaS player wants to sell into a hospital, they have to basically come through Spok. We're the dominant player there. So they got to interface with us to work for that hospital function. They don't want to own our space or try to do our hospital workflows. But they need to be able to communicate with the operators. If you think about a hospital, George, that had 100 employees, maybe 60 have more in the EHR, and 40 of them weren't.

So So that other 40 is the backbone that makes the hospital work and those are the people that use Spok Care Connect. And So We've Put A Lot Of Effort Into Modernizing That Interfacing With The Cloud Providers, Interfacing Quite Frankly With The EHRs To Make Those EHRs Even More Valuable To The Hospital. So We're Seeing Good Good Uptake On That. And Then We're Updating Our Web Product. Our Web Product Is Widely Used Across The United States. It's probably more used the operator console.

And we're doing the same new look and feel on that as well as our products. So you'll be able to do everything on all three platforms that right now you might have to go to a different platform to to use. All that is converging with the whole new modern look and feel. So those are things that we delivered that we were working on all during 2024. A lot of it has been recently delivered either in the fourth quarter of 'twenty four or the last month and a half. We've done on our Messenger product, which is our kind of machine to machine alerting product that connects everything. We've got over 200 integrations on that. We've turned in critical test result notification for radiology. We've updated the SMS service capabilities of that. We've come up with a facilities bundle. A lot of these hospitals might have a an alarm on a door or an alarm in a you know blood lab work that goes below a certain temperature or above a certain temperature, they need to know. There's a lot of alarms inside hospitals that need to be managed and we've created a facilities bundle that you can bill kind of as a SaaS type revenue model That's out delivered.

Our teams out there selling it now. There's messaging and clinical workflow bundles that we've got coming soon. We've updated our Spok Voice Connect. We've going to replace the IVR with what we call virtual agent that can do call routing. A lot of people are doing that right now, but we're going to add it in the hospital context center context. AI names and prompts, that's out there. And we've got a major project in that regard coming later on in the year, second half of twenty twenty five. So a lot of progress on the product development side. [indiscernible] It's hard to take note. There's so much going on.

Okay, great. And does that is that what gives you some confidence that license sales should pick up in 2025.

Yes, it does. That gives me the confidence as well as the pipeline to we've built, give me confidence. Our pipeline keeps growing and its qualified leads and we're seeing great success with it. We also created a new business development George, and we really it's got, I think, seven people in I don't have a ton of people in it, but we only had two new hires. We reallocated some other people inside the company to it. And they've already started making some some great traction. As a matter of fact, we just had one huge hospital system that we've been chasing for years.

This new business development team got in there showed them everything we can do and talked to them about what we're planning to do and the CIO said, I want all of it and we're going to meet with that CIO next week in HIMSS. So that kind of stuff gives you confidence. The morale of the company is really high right now. We're hitting our numbers. We beat our numbers in January. Real strong February. A lot of these investments takes time to do product development. You got to listen to the Murphy lives inside of software, so there's always something coming up. But we're just making progress across the board and it's going to help us. And that license is very profitable and it creates maintenance revenue I think from a perspective of the future, I'm feeling pretty good. We're obviously not going to grow like NVIDIA, but relative to ourselves, I think we're going we're going to get stronger. And our customers, again, they look at us like we're a utility account on us to work, And we're going to show them that not only can we continue to work, we can work better and we can interface a lot of the modern things that are coming down the pipe in terms of this AgenTek AI.

Sounds good. Okay. Good luck in 2025.

You very much. Thank you, George. Thanks for your question. Okay, folks. I think that was the last question. I just want to thank everybody for their participation and all our shareholders for your support. This is going to wrap up the fourth quarter conference call.

We are going to talk to you in about two months with our first quarter We're really looking forward to that. So everyone have a great day, have a great week and we'll be back to you real soon with another update.

Thank you. This concludes our today's teleconference. You may disconnect your lines at this time. Thank you for your participation.