• Revenue: $36 million for Q2 2024, a 35% increase from the same period in 2023.

• Six-Month Revenue: $70 million, a 35% increase from the same period in 2023.

• Adjusted EBITDA: $811,000 for Q2 2024, a 479% increase from the same period last year.

• Six-Month Adjusted EBITDA: Approximately $1.4 million, a 764% increase from the same period last year.

• Free Cash Flow: $800,000 for Q2 2024, sequentially improving from $566,000 in Q1 2024.

• Net Loss: $500,000 for Q2 2024, compared to a net loss of $842,000 in the same period last year.

• Cash Position: $4 million at the end of Q2 2024, down from $6.9 million at December 31, 2023.

• Gross Profit: $4.9 million for Q2 2024, 14% of revenue.

• Carrier Services Revenue: $20.4 million for Q2 2024, an increase of $6.2 million from the same period in 2023.

• Managed Services Revenue: $9.2 million for Q2 2024, a 25% increase from the same period in 2023.

• Reselling and Other Services Revenue: $5.2 million for Q2 2024, an increase of $1.5 million from the same period last year.

• Warning! GuruFocus has detected 3 Warning Signs with WYY.

Release Date: August 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• WidePoint Corp (WYY) reported a 35% year-over-year increase in revenue for the second quarter, reaching $36 million.

• The company achieved its 28th consecutive quarter of positive adjusted EBITDA, with a significant 479% increase from the same period last year.

• WidePoint Corp (WYY) has secured a $2.7 billion Spiral 4 contract, positioning it among major players in the wireless and telecommunication services sector.

• The company has a strong federal contract backlog of approximately $320 million, indicating a healthy pipeline of future revenue.

• WidePoint Corp (WYY) is making strategic investments in technology, such as the MobileAnchor Digital Credential solution, which enhances its competitive edge in the cyber identity market.

Negative Points

• WidePoint Corp (WYY) reported a net loss of $500,000 for the second quarter, although this was an improvement from the previous year.

• The company's cash position decreased significantly to $4 million from $6.9 million at the end of 2023, primarily due to new customer implementations impacting billings.

• Gross profit margin slightly decreased to 14% from 15% in the same period last year, influenced by revenue mix and increased depreciation and amortization.

• There are delays in the FedRAMP certification process, which could impact the company's competitive positioning in future contract bids.

• The company faces challenges with billing processes for new customers, leading to increased days sales outstanding (DSOs) and impacting cash flow.

Q & A Highlights

Q: Can you provide more details on the CWMS 3.0 contract, including its timeline and value? A: Jin Kang, President and CEO, explained that the CWMS 3.0 contract is expected to be awarded by the end of 2025. The contract is projected to be a 10-year agreement with a value between $1.2 billion and $1.5 billion. The increase in the contract ceiling for CWMS 2.0 was to accommodate task orders and ensure a smooth transition to 3.0.

Q: What is the official end date for the CWMS 2.0 contract, and what measures are in place if there are delays in awarding 3.0? A: Jin Kang stated that the CWMS 2.0 contract officially ends on November 19, 2025. The government has options to extend the contract if necessary, including issuing task orders beyond the official end date and implementing bridge contracts to ensure continuity.

Q: What is the status of the SEWP VI contract, and is WidePoint bidding as a prime contractor? A: Jin Kang confirmed that WidePoint is bidding as a prime contractor for the SEWP VI contract, which is a 10-year, $60 billion government-wide acquisition contract. WidePoint aims to leverage its differentiated product set to secure a significant portion of this contract.

Q: Can you explain the MobileAnchor product and its significance? A: Jason Holloway, Chief Revenue Officer, described MobileAnchor as a digital credential solution that eliminates the need for a smart card by deploying credentials directly onto mobile devices. This innovation enhances security and positions WidePoint ahead of competitors in the cyber identity sector.

Q: What caused the decline in cash balance, and how is it being addressed? A: Robert George, Chief Financial Officer, explained that the decline in cash was due to new customer implementations affecting billings. The company is working to resolve these issues and expects to normalize its cash position by the end of the year. Unbilled receivables are being addressed, and once approved, payments are received promptly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.