Good morning, and welcome to Spok's third quarter investor call. Today's call is being recorded. On line today, we have Vince Kelly, President and Chief Executive Officer; and Mike Wallace, Chief Financial Officer. At this time, for opening comments, I will turn the call over to Mr. Wallace. Please go ahead.

Good morning. Thank you for joining us for our third quarter 2019 investor update. Before we discuss our operating results, 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 in which we compete contained in our 2018 Form 10-K; our third quarter 2019 Form 10-Q, which we expect to file later today; and related documents filed with the Securities and Exchange Commission. Please note that Spok assumes no obligation to update any forward-looking statements for past or present conference calls. With that, I'll turn the call over to Vince.

Thanks, Mike, and good morning. I'll be speaking with you today regarding our third quarter operating results. We believe we have established a solid base as we prepare to demonstrate our new innovative Cloud Native, an integrated communication platform, to our customer base next week at our annual user conference, Connect 19. Our third quarter results were encouraging as we saw strong performance momentum in a number of key operating metrics with both sequential and year-over-year improvements. I will provide more color on our results and progress, then our CFO, Mike Wallace, will cover our financial performance. I'll come back later to discuss our capital allocation plans and outlook, and then we'll take your questions. Here's a brief overview of our results for the quarter and the first 9 months of 2019. Throughout the third quarter, we continue to see improvements in both wireless unit and revenue trends as well as a record level for our software revenue backlog. Third quarter performance was supported by continued strong software maintenance renewals and improved operating expense levels. Plus, our sales team turned in a strong operations bookings result, beating plan for the quarter. Spok also returned $14 million of capital to our stockholders through the first 9 months of the year in the form of dividends and share repurchases and enhanced our product offerings through our continued investments in our integrated communication platform, Spok Care Connect. We continue our substantial investment in our development team and are leveraging our decades of experience in critical health care communication to deliver a Cloud Native platform that will bring the latest in communication technology to the market. Our teams remain on target to meet our development goals for the year. Early in the quarter, we were excited to announce that for the seventh consecutive year,…

Thanks, Vince. Let me give you a little more detail on our financial performance in the third quarter. I would again encourage you to review our third quarter 2019 Form 10-Q, which we expect to file later today as it contains far more information about our business operations and financial performance than we will cover on this call. As Vince noted, we believe that our performance in the third quarter of 2019 has helped to form a solid base as we prepare to fully introduce our improved Cloud Native and integrated communication platform to our customer base next week at our annual user conference. Key drivers of our financial performance during the quarter were a second consecutive quarter of more than $20 million in software bookings that resulted in a record high backlog level; software maintenance revenue renewal rates, which continue to exceed 99%; stable ARPU rates; and strong performance in gross additions and disconnects impacting units and service, which resulted in the continued positive trends in wireless [ revenue attrition ]. Lastly, continued disciplined operating expense management has also allowed us to absorb the impacts of our planned investments in product research and development expenses. Over the next few minutes, I will review key areas, which drove our third quarter financial performance. They include, first, a review of certain factors impacting third quarter revenue; second, selected items, which influenced third quarter expenses; and thirdly, a brief review of the balance sheet and cash flow statement; and finally, I will review our financial guidance for the remainder of 2019. As usual, if you have specific questions about these items or any of our quarterly financial results, I will be happy to address them during the Q&A portion of this morning's call. With respect to revenue for the third quarter of…

Thanks, Mike. Before we open up the call for your questions, I'd like to comment briefly on a couple of items. First, I want to update you on our current capital allocation strategy. And second, I want to review our key goals and business outlook. With respect to our current capital allocation strategy, our overall goal is to achieve sustainable, profitable business growth while maximizing long-term stockholder value. Towards that end, the allocation of capital remains a primary area of focus. Our multifaceted capital allocation strategy includes dividends and share repurchases as well as key strategic investments that include augmenting our product development and operating platform infrastructure. Our strategy also includes the potential for acquisitions that are both strategic in nature and that are accretive to earnings. However, as we have said before, after looking at a lot of opportunities over the past several years, we've made the decision essentially to build versus buy. This is not to say we would never do an acquisition in the future, but for now, none are currently targeted. As we have outlined in the past, we are undergoing a transition from a wireless company to a provider of software solutions and believe that financial flexibility over the long term is important to the success of our strategy. Spok is laser-focused on delivering the next generation of our software platform, and we believe that our cloud-based and fully integrated communication platform will be a game changer in our chosen markets. I'm happy to report that we're on track with our development efforts and rollout plans and look forward to taking advantage of what we believe is a large market opportunity for this technology. Our capital allocation policy for the remainder of the year includes our recurring quarterly dividend of $0.125 per share and capital…

[Operator Instructions] Our first question comes from Vivian Zhang with Diamond Equity Research. Vivian Zhang;Diamond Equity Research;Research Associate: My question is can you update us on the type of acquisition opportunities you are seeing in the future and what kinds of acquisitions investors can anticipate?

Okay. Well, thanks for the question. In terms of acquisitions, we've looked at a lot of companies in clinical communications space over the last 3 to 4 years. We've looked at over 70, actually. Most of them shared common characteristics. They're very small, they don't have critical mass and they're what we would consider point solutions. At Spok, we're offering an integrated communications platform. Now we don't have any in our targets right now. We continue, obviously, to get information memorandums and get asked to take a look at companies, and we do so because every time you do, you learn something. But right now, unless it would be a service line that we think we're not able to build quickly ourselves or partner with somebody to integrate to, I don't think there's an acquisition anytime in the near term for Spok. That could change. It could change next year. Our main focus right now is getting our new Cloud Native platform out there. It's already being received very well by the large customers that we've shown it to. We've had huge medical institutions and teaching institutions look at what we're doing and say, "When can I have it?" And so we think our time and our resources is best suited focusing on delivering that to the market and not doing acquisitions. So again, I don't want to say never because you never want to say never. But I think for now, for the balance of 2019 and probably for the totality of 2020, we're not going to be doing an acquisition. I hope that answers your question.

Our next question comes from Scott Williams with Palogic.

Mike, the midpoint of the fourth quarter guide on software implies pretty large growth over '18 and '17. Why do you retain confidence in that number?

Yes. It's a good question. We decided that what we would do is keep the ranges that we set out at the beginning of the year. I think it's fairly evident from our results through the third quarter that while we expect to hit that range, fundamentally, we expect to be probably at the lower end of that range, between $75 million and $85 million. But without changing the range, we decided to simply leave it as previously stated.

Okay. Vince, do you expect revenue growth in the software segment in 2020?

Absolutely. Yes. We're going to give you guidance in February when we release earnings, but we absolutely expect not only revenue growth, but pretty significant operations bookings growth as well, both from selling our legacy solutions, which is essentially our 1.9 upgrade and selling our new Care Connect platform. And we'll have a lot more color on all of that because I know you guys hungry for that. We have a lot more color on all of that in February when we give you our guidance. We've been at this a long time. You know what? Now is the time to show the results. So we hear you loud and clear, and you're going to see it.

[Operator Instructions] Our next question comes from Paul Dwyer with Punch. Paul Dwyer;Punch & Associates Investment Management, Inc.;Analyst: Just one quick question for you. On the share repurchase authorization, it sounded like you did not re-up the authorizations. Does that imply you'll be out of the market and not buying back stock in Q4?

Yes, that's what it implies. We did not -- we have -- we used it up, the basket, the $10 million basket that we had, we used up and completely exhausted in the third quarter. We look at that basket and the potential repurchase shares once a quarter at our quarterly Board meeting, and so we did not renew it for the fourth quarter. Again, we'll look at it when we meet in February. We'll get it again and see what we think.

[Operator Instructions]

Operator, I don't see anyone else in the queue. So we're going to sign off now. I want to just thank everyone for joining us this morning. We look forward to speaking with you again after we release our fourth quarter and full year results in February. And everyone, have a great day.

Thank you. Ladies and gentlemen, this concludes today's teleconference. You may now disconnect.