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WidePoint Reports Second Quarter 2022 Financial Results

WidePoint Corporation

FAIRFAX, VA / ACCESSWIRE / August 15, 2022 / WidePoint Corporation (NYSE American:WYY), the innovative technology Managed Solution Provider (MSP) specializing in Identity and Access Management (IAM), Telecommunications and Managed Mobility Services (MMS), Analytics & Billing as a Service (ABaaS), and IT as a Service (ITaaS), reported results for the second quarter ended June 30, 2022.

Second Quarter 2022 and Recent Operational Highlights:

  • Revenue double digit growth compared to same periods last year

  • IT Authorities awarded new MSP contract by a leading U.S. beverage bottler for three years with a total contract value of $2.6 million

  • Soft-ex Communication launched its Three Analyst platform with Three UK, a connectivity company that covers 99% of the UK mobile users with its combined 3G and 4G networks

  • Executed more than $53.2 million in contract actions during the second quarter of 2022

  • Awarded a $73.4 million task order award from the U.S. Coast Guard under the U.S. Department of Homeland Security (DHS) Cellular Wireless Management Services 2.0 BPA

  • Increased working capital line of credit to $7.0 million

Second Quarter 2022 Financial Highlights:

  • Revenues grew 16% to $23.1 million

  • Managed Services revenue increased to $6.7 million

  • Gross margin was 14%

  • Net loss totaled $(13.8) million, or a loss of $(1.58) per diluted share which reflects a $16.3 million goodwill impairment charge recorded during the second quarter

  • Adjusted EBITDA, a non-GAAP financial measure, was $6,000

Six Month 2022 Financial Highlights:

  • Revenues grew 12% to $45.5 million

  • Managed Services revenue decreased by $0.9 million to $14.0 million

  • Gross margin was 16%

  • Adjusted EBITDA, a non-GAAP financial measure, was $350,000

  • Net loss totaled $(14.2) million, or a loss of $(1.62) per diluted share which reflects a $16.3 million goodwill impairment charge recorded during the second quarter

  • As of June 2022, cash and cash equivalents equaled $7.2 million

Management Commentary

"It has been encouraging times here at WidePoint, as we see macroeconomic headwinds subside and are recognizing customer opportunities that have been pushed to the right from the past several quarters," said WidePoint CEO, Jin Kang. "Our business development pipeline has significantly increased, and we expect to recognize these deals over the coming months. Additionally, in order to ensure we're operating in the most efficient manner, we've recently made strategic organizational shifts within our corporate infrastructure to further streamline and consolidate roles and responsibilities with the goal of enhancing internal communications, improving synergies, minimizing costs, and increasing our profits. We remain steadfast and diligent in executing our plan for profitable growth through organic and inorganic means and are confident in our corporate trajectory and our ability to capture the momentum we're generating."

Second Quarter 2022 Financial Summary

June 30

June 30

( In millions, except per per share amounts)

2022

2021

(unaudited)

Revenue

$

23.1

$

20.0

Gross Profit

3.3

3.9

Gross Profit Margin

14

%

20

%

Operating Expenses

20.9

4.0

(Loss) income from Operations

(17.6

)

(0.1

)

Net (loss) Income

(13.8

)

(0.2

)

Basic Earnings per Share (EPS)

(1.58

)

(0.02

)

Diluted Earnings per Share (EPS)

(1.58

)

(0.02

)

Adjusted EBITDA

$

0.006

$

0.5

Six Month 2022 Financial Summary

June 30

June 30

( In millions, except per per share amounts)

2022

2021

(unaudited)

Revenue

$

45.5

$

40.6

Gross Profit

7.2

8.7

Gross Profit Margin

16

%

21

%

Operating Expenses

25.5

8.1

(Loss) income from Operations

(18.3

)

0.6

Net (loss) Income

(14.2

)

0.4

Basic Earnings per Share (EPS)

(1.62

)

0.04

Diluted Earnings per Share (EPS)

(1.62

)

0.04

Adjusted EBITDA

$

0.4

$

1.8

Financial Outlook

For the full year 2022, the company expects revenues to range between $92 million - $98 million and Adjusted EBITDA to range between $2.5 million - $3.5 million. However, it is guiding toward the lower end of its adjusted EBITDA range.

Share Repurchase Program

WidePoint has currently paused the repurchase program to preserve its cash balance, as it looks to invest back into the technology and prepare for potential acquisitions. Longer-term, the company still intends to leverage the buyback program when deemed appropriate.

Conference Call

WidePoint management will hold a conference call today (Monday, August 15, 2022) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

WidePoint's President and CEO Jin Kang, Executive Vice President and Chief Sales and Marketing Officer Jason Holloway, and CFO Bob George will host the conference call, followed by a question and answer period.

U.S. dial-in number: 888-506-0062
International number: 973-528-0011
Access Code: 228203

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 Investor Relations 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 Monday, August 29, 2022.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 46176

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 and Adjusted EBITDA, 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 is provided below:

THREE MONTHS ENDED

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2022

2021

2022

2021

(unaudited)

NET (LOSS) INCOME (1)

$

(13,759,000

)

$

(205,000

)

$

(14,152,000

)

$

381,000

Adjustments to reconcile net (loss) income to EBITDA

Depreciation and amortization

581,000

374,000

1,132,000

744,000

Income tax (benefit) provision

(3,241,000

)

73,000

(3,291,000

)

96,000

Interest income

(4,000

)

-

(11,000

)

(3,000

)

Interest expense

63,000

69,000

126,000

140,000

EBITDA

(16,360,000

)

311,000

(16,196,000

)

1,358,000

Other adjustments to reconcile EBITDA to Adjusted EBITDA

Provision for doubtful accounts

-

(24,000

)

-

(24,000

)

Goodwill impairment charge

16,277,000

-

16,277,000

Stock-based compensation expense

89,000

244,000

269,000

427,000

Adjusted EBITDA

$

6,000

$

531,000

$

350,000

$

1,785,000

(1) Net loss includes a non-cash reduction of expenses for the change in the fair value of contingent consideration of $ 301,000 and $666,000 in the three and six-month periods ended June 30, 2022, respectively.

WidePoint uses adjusted EBITDA 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 and (iii) depreciation and amortization. Adjusted EBITDA excludes certain amounts included in EBITDA. WidePoint is not providing a quantitative reconciliation of adjusted EBITDA in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. In this regard, WidePoint does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income, due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation. Because certain deductions for non-GAAP exclusions used to calculate projected net income may vary significantly based on actual events, WidePoint is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income at this time. The amounts of these deductions may be material and, therefore, could result in projected GAAP net income being materially less than is indicated by estimated adjusted EBITDA (non-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, the ability to achieve expected benefits from the acquisition of ITA, the ability to achieve the financial outlook included herein, the impact of the COVID-19 pandemic on our business and operations; the impact of any supply chain interruptions; our ability to successfully execute our strategy; our ability to sustain profitability and positive cash flows; our ability to gain market acceptance for our products; our ability to win new contracts, execute contract extensions and expansion of services of 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 retain key personnel; and the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 28, 2022. 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.

Investor Relations:

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

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

JUNE 30,

DECEMBER 31,

2022

2021

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

7,192,085

$

6,479,980

Accounts receivable, net of allowance for doubtful accounts

of $45,023 and $62,988 in 2022 and 2021, respectively

12,424,600

12,536,584

Unbilled accounts receivable

7,883,179

10,937,415

Other current assets

2,789,387

3,194,009

Total current assets

30,289,251

33,147,988

NONCURRENT ASSETS

Property and equipment, net

1,152,890

841,133

Lease right of use asset, net

5,059,331

6,273,211

Intangible assets, net

6,360,252

6,228,886

Goodwill

5,811,578

22,088,578

Deferred tax assets, net

8,295,569

5,127,482

Other long-term assets

2,787,302

1,782,060

Total assets

$

59,756,173

$

75,489,338

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

14,691,477

$

10,263,015

Accrued expenses

9,810,349

12,344,426

Deferred revenue

1,963,276

2,280,894

Current portion of lease liabilities

634,479

794,175

Current portion of contingent consideration

-

358,000

Total current liabilities

27,099,581

26,040,510

NONCURRENT LIABILITIES

Lease liabilities, net of current portion

5,015,198

6,025,691

Contingent consideration, net of current portion

380,000

1,347,000

Deferred revenue, net of current portion

367,503

400,142

Total liabilities

32,862,282

33,813,343

Commitments and contingencies (Note 17)

-

-

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; 8,725,476 and 8,842,026 shares

issued and outstanding, respectively

8,726

8,842

Additional paid-in capital

100,934,729

101,424,922

Accumulated other comprehensive loss

(381,275

)

(241,586

)

Accumulated deficit

(73,668,289

)

(59,516,183

)

Total stockholders' equity

26,893,891

41,675,995

Total liabilities and stockholders' equity

$

59,756,173

$

75,489,338

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

SIX MONTHS ENDED

JUNE 30,

JUNE 30,

2022

2021

2022

2021

(Unaudited)

REVENUES

$

23,057,354

$

19,983,420

$

45,493,781

$

40,634,263

COST OF REVENUES (including amortization and depreciation of

$306,938, $120,250, $594,456, and $239,333, respectively)

19,737,710

15,991,159

38,277,412

31,926,123

GROSS PROFIT

3,319,644

3,992,261

7,216,369

8,708,140

OPERATING EXPENSES

Sales and marketing

562,623

533,528

1,137,792

1,015,827

General and administrative expenses (including share-based

compensation of $89,385, $243,821, $269,126 and $426,663, respectively)

3,817,316

3,267,587

7,562,545

6,575,249

Goodwill impairment

16,277,000

-

16,277,000

$

-

Depreciation and amortization

274,088

253,857

538,449

504,748

Total operating expenses

20,931,027

4,054,972

25,515,786

8,095,824

(LOSS) INCOME FROM OPERATIONS

(17,611,383

)

(62,711

)

(18,299,417

)

612,316

OTHER INCOME (EXPENSE)

Interest income

4,158

192

10,728

2,567

Interest expense

(62,826

)

(69,290

)

(126,347

)

(140,306

)

Other income

669,990

2

971,003

2,498

Total other income (expense)

611,322

(69,096

)

855,384

(135,241

)

(LOSS) INCOME BEFORE INCOME TAX (BENEFIT) PROVISION

(17,000,061

)

(131,807

)

(17,444,033

)

477,075

INCOME TAX (BENEFIT) PROVISION

(3,240,852

)

72,924

(3,291,927

)

96,382

NET (LOSS) INCOME

$

(13,759,209

)

$

(204,731

)

$

(14,152,106

)

$

380,693

BASIC EARNINGS PER SHARE

$

(1.58

)

$

(0.02

)

$

(1.62

)

$

0.04

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

8,696,111

9,072,281

8,739,043

9,033,905

DILUTED EARNINGS PER SHARE

$

(1.58

)

$

(0.02

)

$

(1.62

)

$

0.04

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

8,696,111

9,072,281

8,739,043

9,191,532

SOURCE: WidePoint Corporation



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