WidePoint Reports Third Quarter 2024 Financial Results

WidePoint Corporation

Wed, Nov 13, 2024, 2:05 PM 11 min read

Won $15.2 million in contract awards and renewals during the third quarter of 2024, of which $1.4 million were IT as a Service contracts
Awarded two MobileAnchor Digital Credential contracts for the quarter from federal defense and civilian agencies
Certified and successfully deployed new proprietary MobileAnchor Digital Credential solution into two Federal Agencies
29^th consecutive quarter of positive Adjusted EBITDA¹
Fourth consecutive quarter ending free cash flow positive

Third Quarter 2024 Financial Highlights:

Revenues were $34.6 million, a 35% increase from the same quarter last year
Adjusted EBITDA¹ , a non-GAAP financial measure, was $574,000, a 149% improvement from the same quarter last year
Gross margin was 14%, and gross margin excluding carrier services revenue increased to 38% from 35% in the same period last year
Net loss improved to ($425,200) compared to ($921,100) from the same period last year, or a loss of ($0.04) per diluted share
Free cash flow¹ , a non-GAAP financial measure, was $511,000, or an improvement of 120% compared to the same period last year
As of September 30, 2024, cash was $5.6 million with no bank debt

Nine Months 2024 Financial Highlights:

Revenues were $104.9 million, a 35% increase from the same quarter last year
Adjusted EBITDA, a non-GAAP financial measure, was $1.9 million, a 424% increase from the same quarter last year
Gross margin was 14%, and gross margin excluding carrier services revenue was 33%
Net loss improved to ($1.6) million or a loss of ($0.17) per diluted share from ($2.7) million in the same period last year
Free cash flow, a non-GAAP financial measure, was $1.9 million compared to ($590,000) from the same period last year

¹^{Free cashflow and Adjusted EBITDA are non-GAAP financial measures. See below for the definition of such measures and a reconciliation to GAAP.}

Management Commentary

"The third quarter showcased a significant development across our technological capabilities with the successful deployment of our proprietary derived digital credential for mobile devices, MobileAnchor," said WidePoint's CEO Jin Kang. "Since its launch in late July, demand for MobileAnchor has been strong, as we closed two new contracts this quarter. MobileAnchor opens an additional high-growth opportunity for WidePoint and will be a key part of our sales and marketing strategy, helping us secure managed services work under the Spiral 4 contract. It also strengthens WidePoint's positioning for the upcoming CWMS 3.0 recompete and SEWP VI contracts. Our sales and marketing team, PMO model, and ongoing technological innovation continue to drive our robust sales pipeline. As we approach year-end, we are on trending towards the higher end of our annual guidance and are confident in carrying our growth momentum into 2025."

Third Quarter 2024 Financial Summary

	THREE MONTHS ENDED
(In millions except per share amounts)	SEPTEMBER 30,
	2024			2023
	(Unaudited)
Revenue	$	34.6		$	25.7
Gross profit		4.7			3.9
Gross profit margin		14	%		15	%

Operating expenses		5.1			4.7
Loss from operations		(0.5	)		(0.8	)
Loss per share	$	(0.04	)	$	(0.10	)
EBITDA		0.4			(0.1	)
Adjusted EBITDA		0.6			0.2

Nine-Month 2024 Financial Summary

	NINE MONTHS ENDED
(In millions except per share amounts)	SEPTEMBER 30,
	2024			2023
	(Unaudited)
Revenue	$	104.9		$	77.8
Gross profit		14.3			11.6
Gross profit margin		14	%		15	%

Operating expenses		15.8			14.1
Loss from operations		(1.6	)		(2.4	)
Loss per share	$	(0.17	)	$	(0.31	)
EBITDA		1.0			(0.2	)
Adjusted EBITDA		1.9			0.4

Conference Call

WidePoint's management will host the conference call today (November 13, 2024) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

U.S. dial-in number: 888-506-0062
International number: 973-528-0011
Access Code: 392210

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Group at (949) 574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company's website .

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through Wednesday, November 27, 2024.

Toll-free replay number: 877-481-4010

International replay number: 919-882-2331

Replay ID: 51501

About WidePoint

WidePoint Corporation (NYSE American: WYY) is a leading technology Managed Solution Provider (MSP) dedicated to securing and protecting the mobile workforce and enterprise landscape. WidePoint is recognized for pioneering technology solutions that include Identity and Access Management (IAM), Mobility Managed Services (MMS), Telecom Management, Information Technology as a Service (ITaaS), Cloud Security, and Analytics & Billing as a Service (ABaaS). For more information, visit widepoint.com .

Non-GAAP Financial Measures

WidePoint uses a variety of operational and financial metrics, including non-GAAP financial measures such as EBITDA, Adjusted EBITDA, and Free cashflow, to enable it to analyze its performance and financial condition. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. A reconciliation of GAAP Net income to EBITDA and Adjusted EBITDA and Free cashflow is provided below:

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2024			2023			2024			2023
	(Unaudited)						(Unaudited)
NET LOSS	$	(425,200	)	$	(921,100	)	$	(1,577,900	)	$	(2,714,700	)
Adjustments to reconcile net income to EBITDA:
Depreciation and amortization		821,700			788,100			2,562,000			2,328,200
Income tax provision (benefit)		(18,700	)		13,300			(45,000	)		68,400
Interest income		(59,800	)		(27,700	)		(161,000	)		(39,100	)
Interest expense		52,900			69,100			184,000			184,800

EBITDA	$	370,900		$	(78,300	)	$	962,100		$	(172,400	)
Other adjustments to reconcile net (loss) income to Adjusted EBITDA:
Stock-based compensation expense		202,600			299,800			986,300			535,400

Adjusted EBITDA	$	573,500		$	226,500		$	1,948,400		$	386,858

Capital expenditures		(62,701	)		(617,771	)		(80,702	)		(976,429	)

Free cashflow	$	510,799		$	(391,271	)	$	1,867,698		$	(589,571	)

WidePoint uses EBITDA, Adjusted EBITDA and Free cashflow as supplemental non-GAAP measure of performance. WidePoint defines EBITDA as net income excluding (i) interest expense, (ii) provision for or benefit from income taxes, (iii) depreciation and amortization, and (iv) Impairment charges. Adjusted EBITDA excludes certain amounts included in EBITDA such as stock based compensation expense. WidePoint defined Free cashflow as Adjusted EBITDA less capital expenditures. Management believes that adjustments for certain non-cash or other items and the exclusion of certain pass-through revenue and expenses should enhance stockholders' ability to evaluate the Company's performance, as such measures provide additional insights into the factors and trends affecting its business. Therefore, the Company excludes these items from its GAAP financial measures to calculate these unaudited non-GAAP measures. These unaudited non-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for GAAP.

Safe Harbor Statement

This press release contains forward-looking statements concerning our business, operations and financial performance and condition as well as our plans, objectives and expectations for our business operations and financial performance and condition that are subject to risks and uncertainties. All statements other than statements of historical fact included herein are forward-looking statements. You can identify these statements by words such as "aim," "anticipate," "assume," "believe," "could," "due," "estimate," "expect," "goal," "intend," "may," "objective," "plan," "potential," "positioned," "predict," "should," "target," "will," "would" and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates, forecasts and projections about our business and the industry in which we operate and our management's beliefs and assumptions. These statements are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. All forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those that we expected, including, our ability to sustain profitability and positive cash flows; our ability to win new contracts, execute contract extensions and expand scope of services on existing contracts; our ability to compete with companies that have greater resources than us; our ability to penetrate the commercial sector to expand our business; our ability to identify potential acquisition targets and close such acquisitions; our ability ; our ability to mitigate the impact of inflation; and the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on March 31, 2024.

The forward-looking statements included herein are made only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

WidePoint Investor Relations:

Gateway Group, Inc.
Matt Glover or John Yi
949-574-3860
WYY@gateway-grp.com

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30,			DECEMBER 31,
	2024			2023
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash	$	5,636,057		$	6,921,160
Accounts receivable, net of allowance for credit losses
of $48,889 and $81,359, respectively		8,498,243			8,219,793
Unbilled accounts receivable		24,784,036			16,618,639
Other current assets		2,020,459			1,083,671
Total current assets		40,938,795			32,843,263

NONCURRENT ASSETS
Property and equipment, net		588,753			780,800
Lease right of use asset		3,536,001			4,045,222
Intangible assets, net		5,554,997			7,336,348
Goodwill		5,811,578			5,811,578
Other long-term assets		489,700			483,288

Total assets	$	56,919,824		$	51,300,499

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable	$	9,990,672		$	12,633,658
Accrued expenses		25,063,136			16,175,702
Current portion of deferred revenue		2,655,617			2,009,343
Current portion of lease liabilities		593,280			638,258
Total current liabilities		38,302,705			31,456,961

NONCURRENT LIABILITIES
Lease liabilities, net of current portion		3,699,456			4,114,516
Contingent consideration		6,900			6,900
Deferred revenue, net of current portion		944,056			1,027,770

Total liabilities		43,071,712			36,623,070

Commitments and contingencies (Note 14)		-			-

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares
authorized; 2,045,714 shares issued and none outstanding		-			-
Common stock, $0.001 par value; 30,000,000 shares
authorized; 9,485,508 and 8,893,220 shares
issued and outstanding, respectively		9,487			8,894
Additional paid-in capital		102,878,731			102,151,381
Accumulated other comprehensive loss		(314,286	)		(334,899	)
Accumulated deficit		(88,725,820	)		(87,147,947	)

Total stockholders' equity		13,848,112			14,677,429

Total liabilities and stockholders' equity	$	56,919,824		$	51,300,499

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED						NINE MONTHS ENDED
	SEPTEMBER 30,						SEPTEMBER 30,
	2024			2023			2024			2023
	(Unaudited)
REVENUES	$	34,620,433		$	25,733,657		$	104,868,483		$	77,770,195
COST OF REVENUES (including amortization and depreciation of
$562,389, $528,298, $1,793,416, and $1,538,883, respectively)		29,928,067			21,838,836			90,617,004			66,155,797

GROSS PROFIT		4,692,366			3,894,821			14,251,479			11,614,398

OPERATING EXPENSES
Sales and marketing		530,391			490,037			1,702,210			1,553,887
General and administrative expenses (including share-based
compensation of $202,584, $299,847, $986,325 and $535,417, respectively)		4,352,980			3,977,709			13,344,232			11,719,042
Depreciation and amortization		259,980			259,804			768,626			789,331

Total operating expenses		5,143,351			4,727,550			15,815,068			14,062,260

LOSS FROM OPERATIONS		(450,985	)		(832,729	)		(1,563,589	)		(2,447,862	)

OTHER (EXPENSE) INCOME
Interest income		59,882			27,681			161,033			39,122
Interest expense		(52,911	)		(69,095	)		(183,979	)		(184,783	)
Other (expense) income, net		99			(33,663	)		(36,306	)		(52,721	)

Total other (expense) income, net		7,070			(75,077	)		(59,252	)		(198,382	)

LOSS BEFORE INCOME TAX (BENEFIT) PROVISION		(443,915	)		(907,806	)		(1,622,841	)		(2,646,244	)
INCOME TAX (BENEFIT) PROVISION		(18,705	)		13,308			(44,968	)		68,422

NET LOSS	$	(425,210	)	$	(921,114	)	$	(1,577,873	)	$	(2,714,666	)

EARNINGS PER SHARE, BASIC AND DILUTED	$	(0.04	)	$	(0.10	)	$	(0.17	)	$	(0.31	)

WEIGHTED-AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED		9,485,508			8,893,220			9,263,492			8,809,644

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	NINE MONTHS ENDED
	SEPTEMBER 30,
	2024			2023
	(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,577,873	)	$	(2,714,666	)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Deferred income tax expense		103,000			-
Depreciation expense		779,972			794,344
Provision for credit losses		21,584			39,979
Amortization of intangibles		1,782,070			1,533,870
Share-based compensation expense		986,325			535,417
Loss on disposal of fixed assets		-			3,211
Changes in assets and liabilities:
Accounts receivable and unbilled receivables		(8,627,232	)		1,208,899
Inventories		(71,644	)		(271,869	)
Other current assets		(864,123	)		(198,992	)
Other assets		(6,412	)		27,161
Accounts payable and accrued expenses		6,237,759			(504,739	)
Income tax payable		(68,342	)		29,780
Deferred revenue and other liabilities		551,938			1,352,781

Net cash (used in) provided by operating activities		(752,978	)		1,835,176

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment		(80,702	)		(166,210	)
Capitalized hardware and software development costs		-			(810,219	)
Proceeds from beneficial interest in sold receivables		259,125			469,104

Net cash provided by (used in) investing activities		178,423			(507,325	)

CASH FLOWS FROM FINANCING ACTIVITIES
Advances on bank line of credit		4,600,000			6,493,284
Repayments of bank line of credit advances		(4,600,000	)		(6,493,284	)
Principal repayments under finance lease obligations		(456,825	)		(420,139	)
Withholding taxes paid on behalf of employees on net settled restricted stock awards		(258,382	)		(3,628	)

Net cash used in financing activities		(715,207	)		(423,767	)

Net effect of exchange rate on cash		4,659			23,100

NET (DECREASE) INCREASE IN CASH		(1,285,103	)		927,184

CASH, beginning of period		6,921,160			7,530,864

CASH, end of period	$	5,636,057		$	8,458,048

SOURCE: WidePoint Corporation

View the original press release on accesswire.com

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