Management mentioned customers seeking shorter terms and longer closing times. Is this related to the increase in cancelable backlog, indicating market uncertainty?

Management confirmed that the trends are related, with customers desiring more flexibility due to uncertainty, particularly in hospital budgets and Medicare/Medicaid reimbursements. Despite this, they are not overly concerned as their products tend to be sticky once integrated, making them difficult to unwind. “So, my comments regarding why we took revenue down a little bit, especially on the software side, actually dovetails exactly with what you're seeing from the standpoint of more customers where we have signed deals where they have a termination for convenience essentially.”

For the large 6 and 7-digit contracts, what are the top 2-3 reasons customers choose Spok over larger alternatives?

Management attributed their success to the sheer breadth and depth of their enterprise offering, including their contact center, alerting (Messenger), mobile (Spok Mobile) products, and extensive integrations (Epic, PBXs). They highlighted their deep integration into healthcare workflows, years of legacy expertise, and ability to empower critical functions like code calls and on-call scheduling, making them hard to replace. “It's the sheer breadth and depth of our enterprise offering, all the different things we do from the contact center to our alerting project, which is Messenger to our mobile product, which is Spok Mobile, to our many integrations, our Epic integration, our integration with their PBXs through our CTI expertise.”

SPOK

Spok Holdings (SPOK) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Health Care· Jul 29, 2026

Source: earnings call transcript

Executive summary

Spok Holdings Q2 FY26 — Record Adjusted EBITDA and Strategic Asset Monetization

Spok Holdings delivered a strong second quarter, marked by significant sequential growth in software bookings and record adjusted EBITDA, reflecting the success of its strategic pivot towards software revenue and disciplined expense management. The company continues to prioritize cash generation and capital return to stockholders, while strategically monetizing non-core assets and investing in its product platform. Despite some market headwinds impacting deal closure times, management remains confident in its long-term growth trajectory and commitment to its dividend policy.

Highlights

Software operations bookings increased nearly 92% sequentially.
Generated record adjusted EBITDA levels, more than covering dividend and capital obligations.
Software revenue increased over 3% year-over-year, driven by double-digit growth in managed services and license sales.
Adjusted operating expenses decreased nearly 8% from the prior year.
Closed the sale of certain narrowband spectrum licenses for $8 million in cash.

Concerns

GAAP net income decreased to $4.1 million ($0.20 per diluted share) in Q2 FY26 from $4.6 million ($0.22 per diluted share) in Q2 FY25.
Deals are taking longer to close and customers are increasingly favoring shorter terms over multiyear agreements, leading to a slight lowering of the revenue guidance midpoint.
Cash balances declined in the first half of the year due to typical working capital needs, including incentive plan payments and prepaid annual renewals.

Guidance & targets

Category	Target	Timeline	Confidence
Full-year 2026 Total Revenue	$132.5 million to $139.5 million high materiality	FY26 · 2026	High
Full-year 2026 Wireless Revenue	$67 million to $70 million medium materiality	FY26 · 2026	High
Full-year 2026 Software Revenue	$65.5 million to $69.5 million medium materiality	FY26 · 2026	High
Full-year 2026 Adjusted EBITDA	$28 million to $32 million high materiality	FY26 · 2026	High
Exit 2026 Cash and Cash Equivalents	$26 million to $29 million medium materiality	FY26 · 2026	High
2026 Dividend Payments	in excess of $27 million high materiality	FY26 · 2026	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Wireless Year-over-year revenue decline from lower units in service was partially mitigated by pricing actions. ARPU remained consistent with prior year levels. Reduction in wireless units in service showed an 84 basis point improvement from the prior quarter. Average Revenue Per Unit (ARPU): $8.20Wireless units in service reduction: <2% YoYWireless units in service reduction improvement: 84 bps QoQ	—	—	—	—
Software Software revenue increased over 3% year-over-year. License revenue grew to $3.6 million from $2.4 million in the prior year. Managed professional services revenue was up 53% year-over-year. License revenue: $3.6MManaged professional services revenue: $2.3M	—	>3%	—	—

Deals & partnerships

Sensus USA Sale of certain narrowband spectrum licenses and 2-way paging inventory. $8 million cash

The transaction was approved by the FCC and closed on July 20. Spok has 180 days after closing to clear the spectrum, expected to be completed in Q3 FY26.

Risks & headwinds

Deal closure times and contract terms near-term

Deals are taking longer to close; customers increasingly favoring shorter terms over multiyear agreements.

Mitigation:Building a more cautious approach into guidance; products tend to be sticky once integrated.

Hospital budget pressure and technology uncertainty balance of '26 and into '27

Uncertainty with Medicare and Medicaid reimbursements; consistently tight hospital budgets.

Mitigation:Aligning total resources with backlog; increasing managed services mix (higher margin profile).

Working capital needs impacting cash balances H1 FY26

Cash balances declined in H1 due to typical working capital needs (short-term incentive plans, prepaid annual renewals, long-term incentive plans).

Mitigation:Anticipate cash balances will grow in H2, given working capital needs are behind and continued expectation of driving significant free cash flow; cash contribution from spectrum sale.

What to watch in Q3 FY26

Spectrum clearing completion

Q3 FY26

Current In progress

Target Completion of clearing

Why it matters

Ensures full realization of the $8 million spectrum sale proceeds and strategic asset monetization.

Spok has 180 days after closing to clear the spectrum. We expect to complete the clearing this quarter.

Find out whether SPOK delivers this. Inve re-checks your case every morning.

Q&A highlights

What drove the 92% sequential jump in bookings, in terms of deal numbers and size, and was any of it pulled forward from Q3?

Management stated that bookings are inherently lumpy, and the Q2 jump was due to securing two very large deals, which they refer to as "elephant hunting." They noted that such large deals don't occur every quarter.

“Well, I think we've said in the past on these calls, bookings is always going to be lumpy. We happen to pull in a couple of really big whales in the second quarter.”

asked by Joseph France · answered by Vincent Kelly

2 min read 5 chapters

Detailed narrative

Strategic Pivot & Capital Allocation

Spok Holdings remains focused on its strategic pivot initiated a few years ago, aiming to increase software revenue, generate cash, and return capital to stockholders. Since the beginning of this pivot in 2022, the company has returned approximately $118.7 million, or nearly $5.63 per share, to stockholders through regular quarterly dividends.

The company emphasizes its commitment to its dividend policy, expecting to pay over $27 million in dividends in 2026, and highlights its legacy of generating nearly $1.1 billion in free cash flow since 2004, with about two-thirds returned to shareholders.

Q2 Sales Performance & Customer Wins

The second quarter saw a nearly 92% sequential increase in software operations bookings, driven by securing 14 six-figure and one seven-figure new customer contracts. Notable wins include an agreement with a Midwest-headquartered customer, expanding Spok solutions to 85 additional locations and unifying operations with the Spok Care Connect platform.

Another significant engagement was with a prestigious academic health system, modernizing their clinical communication platform with additions like Spok Messenger, Spok Mobile, and Epic chat integration, leveraging Spok's deep integration and legacy expertise in healthcare workflows.

Operational Efficiencies & AI Implementation

Spok achieved a nearly 8% year-over-year reduction in adjusted operating expenses, primarily due to the strategic realignment announced in April. The company is also implementing artificial intelligence to drive further operational efficiencies, focusing on accelerating product development timelines, reducing time to market for Care Connect suite capabilities, and other internal uses.

Despite these cost-saving measures, Spok increased its investment in product research and development by nearly 10% in the first half of 2026, totaling over $6.7 million, to maintain a best-in-class product platform.

Asset Monetization (Spectrum Sale)

Spok successfully closed the sale of certain narrowband spectrum licenses and 2-way paging inventory to Sensus USA on July 20, following FCC approval. The transaction generated $8 million in cash consideration, with the majority paid at closing. This sale is strategically important for monetizing the asset base and creating stockholder value without impacting 2-way subscribers, who are being transferred to alternative frequencies.

The company expects no federal tax on the gain due to its approximately $30 million in deferred tax assets (DTAs).

Financial Highlights & Guidance Update

Q2 FY26 GAAP net income was $4.1 million ($0.20 per diluted share), while adjusted net income (excluding one-time impacts) was $5.3 million ($0.25 per diluted share). Wireless ARPU remained consistent with prior year levels at $8.20, partially offsetting revenue decline from a less than 2% reduction in wireless units.

Software license revenue increased to $3.6 million from $2.4 million YoY, and managed professional services revenue grew 53% YoY to $2.3 million. Due to longer deal closing times and customer preference for shorter terms, the midpoint of full-year 2026 revenue guidance was slightly lowered to $136 million, but the adjusted EBITDA midpoint remains unchanged at $30 million, reflecting benefits from strategic realignment cost reductions.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.