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WidePoint Reports Third Quarter 2020 Financial Results

WidePoint Corporation
·12 min read

FAIRFAX, Va., Nov. 16, 2020 (GLOBE NEWSWIRE) -- WidePoint Corporation (NYSE American: WYY), the leading provider of Trusted Mobility Management (TM2) specializing in Telecommunications Lifecycle Management, Identity Management (IdM) and Digital Billing & Analytics solutions, today reported results for the third quarter September 30, 2020.

Third Quarter 2020 and Recent Operational Highlights:

  • Secured more than $11 million in contract wins, exercised option periods, and contract extensions during the third quarter of 2020, approximately $10 million of which is comprised of new business and new extensions

  • Successfully onboarded Virginia Alcoholic Beverage Control Authority (Virginia ABC) after being awarded a new contract for TEM services

  • Number of U.S. Department of Defense digital certificates issued increased 14% sequentially from the second quarter of 2020 and 15% year-over-year from the third quarter of 2019, leading to an increase in high margin Identity Management revenue

  • Responded to the request for proposal and provided oral presentation to the U.S. Department of Homeland Security regarding the Cellular Wireless Managed Services (CWMS) II contract re-compete

  • Effectuated 1-for-10 reverse stock split on November 6, 2020 to better position the Company for long-term success

Third Quarter 2020 Financial Highlights (results compared to the same year-ago period):

  • Revenues increased 94% to $57.5 million

  • Managed Services revenue increased 38% to $12.5 million

  • Gross profit increased 30% to $5.6 million

  • Net income totaled $1.1 million

  • EBITDA, a non-GAAP financial measure, increased 102% to $1.6 million

  • Adjusted EBITDA, a non-GAAP financial measure, increased 82% to $1.7 million

Nine Month 2020 Financial Highlights (results compared to the same year-ago period):

  • Revenues increased 106% to $152.0 million

  • Managed Services revenue increased 37% to $33.8 million

  • Gross profit increased 24% to $15.6 million

  • Net income totaled $2.0 million

  • EBITDA, a non-GAAP financial measure, increased 84% to $3.8 million

  • Adjusted EBITDA, a non-GAAP financial measure, increased 69% to $4.4 million


Third Quarter 2020 Financial Summary

(in millions, except per share amounts)

September 30, 2020

September 30, 2019

(Unaudited)

Revenues

$

57.5

$

29.6

Gross Profit

$

5.6

$

4.3

Gross Profit Margin

9.8

%

14.6

%

Operating Expenses

$

4.5

$

4.0

Income (Loss) from Operations

$

1.1

$

0.3

Net Income (Loss)

$

1.1

$

0.2

Basic and Diluted Earnings per Share (EPS)

$

0.13

$

0.02

EBITDA

$

1.6

$

0.8

Nine Month 2020 Financial Summary

(in millions, except per share amounts)

September 30, 2020

September 30, 2019

(Unaudited)

Revenues

$

152.0

$

73.6

Gross Profit

$

15.6

$

12.6

Gross Profit Margin

10.3

%

17.1

%

Operating Expenses

$

13.1

$

12.0

Income from Operations

$

2.5

$

0.6

Net Income

$

2.0

$

0.3

Basic and Diluted Earnings per Share (EPS)

$

0.24

$

0.03

EBITDA

$

3.8

$

2.0


The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under the “Safe Harbor Statement” below.

Financial Outlook

For the fiscal year ending December 31, 2020, the Company is reiterating its revenue guidance of $185 million to $195 million, which at the midpoint of the range, would represent 87% growth year-over-year. The Company is also reiterating the EBITDA guidance it updated on October 26, 2020 of $4.7 million to $4.9 million, which at the midpoint, is 50% above the Company’s previously issued EBITDA guidance and represents a 69% year-over-year increase compared to fiscal 2019. For fiscal 2020, the Company also anticipates adjusted EBITDA, which excludes stock-based compensation expense, to range between $5.5 million to $5.7 million, which, at the midpoint, represents a 57% year-over-year increase compared to fiscal 2019. The EBITDA forecast takes into consideration the Company’s planned strategic investments in sales and marketing and product development. The Company’s financial outlook is based on current expectations.

Management Commentary

“Thanks to the work of our dedicated personnel and the flexibility we built into our organization, we continued to build on the momentum established in the first half of the year and produced record financial results for the third quarter of 2020,” said WidePoint’s CEO, Jin Kang. “For the third quarter, our total revenues increased to $57.5 million, largely driven by our increased work on the U.S. Census 2020 as well as expansions with other federal government customers, and perhaps more importantly, our high margin managed services revenues increased 38% year-over-year. That increase helped drive $1.1 million in net income for the third quarter, which is almost five times greater than our net income in all of fiscal 2019, and our adjusted EBITDA for the quarter increased 82% to $1.7 million. We also strengthened our balance sheet by increasing our cash position by $3.9 million sequentially to $11.4 million.

“The financial success of the quarter is a clear indication of the value WidePoint can generate because of our excellent staff, our flexible organizational structure, and the market’s growing demand for our products that function as a solution for many of the problems faced by large government and commercial enterprises in today’s environment. With 2020 lining up to be a banner year for WidePoint, we believe our company has never been better positioned than it is today, and we look forward to capitalizing on this momentum as we close out the year and move into 2021.”

Conference Call

WidePoint management will hold a conference call today (November 16, 2020) 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 Executive Vice President and CFO Kellie Kim will host the conference call, followed by a question and answer period.

U.S. dial-in number: 844-407-9500
International number: 862-298-0850

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 November 30, 2020.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 38150

About WidePoint

WidePoint Corporation (NYSE American: WYY) is a leading provider of trusted mobility management (TM2) solutions, including telecom management, mobile management, identity management, and digital billing and analytics. 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, 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 is included on the schedules attached hereto.

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2020

2019

2020

2019

(Unaudited)

(Unaudited)

NET INCOME

$

1,067,000

$

183,700

$

2,039,500

$

260,100

Adjustments to reconcile net (loss) income to EBITDA:

Depreciation and amortization

415,700

479,300

1,247,100

1,429,100

Amortization of deferred financing costs

-

1,300

1,700

3,800

Income tax provision (benefit)

12,500

32,300

242,800

126,800

Interest income

(100

)

(100

)

(3,100

)

(4,800

)

Interest expense

69,600

76,800

226,200

227,200

EBITDA

$

1,564,700

$

773,300

$

3,754,200

$

2,042,200

Other adjustments to reconcile net (loss) income to Adjusted EBITDA:

(Recovery) Provision for doubtful accounts

12,300

600

23,500

Gain on sale of assets held for sale

-

-

-

-

Loss on disposal of leasehold improvements

-

-

-

-

Lease account impact on EBITDA

-

-

-

Stock-based compensation expense

160,000

163,400

650,900

536,800

Adjusted EBITDA

$

1,724,700

$

949,000

$

4,405,700

$

2,602,500


Safe Harbor Statement

The information contained in any materials that may be accessed above was, to the best of WidePoint Corporations’ knowledge, timely and accurate as of the date and/or dates indicated in such materials. However, the passage of time can render information stale, and you should not rely on the continued accuracy of any such materials. WidePoint Corporation has no responsibility to update any information contained in any such materials. In addition, you should refer to periodic reports filed by WidePoint Corporation with the Securities and Exchange Commission for information regarding the risks and uncertainties to which forward-looking statements made in such materials are subject. Such risks and uncertainties may cause WidePoint Corporation’s actual results to differ materially from those described in the forward-looking statements.

Investor Relations:

Gateway Investor Relations
Matt Glover or Charlie Schumacher
949-574-3860
WYY@gatewayir.com


WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS


SEPTEMBER 30,

DECEMBER 31,

2020

2019

(Unaudited)

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$

11,372,902

$

6,879,627

Accounts receivable, net of allowance for doubtful accounts

of $119,248 and $126,235 in 2020 and 2019, respectively

31,469,534

14,580,928

Unbilled accounts receivable

15,041,634

13,976,958

Other current assets

1,099,773

1,094,847

Total current assets

58,983,843

36,532,360

NONCURRENT ASSETS

Property and equipment, net

619,773

681,575

Operating lease right of use asset, net

6,299,131

5,932,769

Intangibles, net

2,076,320

2,450,770

Goodwill

18,555,578

18,555,578

Other long-term assets

874,906

140,403

Total assets

$

87,409,551

$

64,293,455

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

30,954,163

$

13,581,822

Accrued expenses

17,348,047

14,947,981

Deferred revenue

2,270,783

2,265,067

Current portion of operating lease liabilities

580,483

599,619

Current portion of other term obligations

-

133,777

Total current liabilities

51,153,476

31,528,266

NONCURRENT LIABILITIES

Operating lease liabilities, net of current portion

6,097,949

5,593,649

Deferred revenue, net of current portion

382,814

363,560

Deferred tax liability

2,100,446

1,868,562

Total liabilities

59,734,685

39,354,037

Commitments and contingencies

-

-

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; 8,458,734 and 8,386,145 shares

issued and outstanding, respectively

84,587

83,861

Additional paid-in capital

95,919,199

95,279,114

Accumulated other comprehensive loss

(187,435

)

(242,594

)

Accumulated deficit

(68,141,485

)

(70,180,963

)

Total stockholders’ equity

27,674,866

24,939,418

Total liabilities and stockholders’ equity

$

87,409,551

$

64,293,455


WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2020

2019

2020

2019

(Unaudited)

(Unaudited)

REVENUES

$

57,506,561

$

29,616,940

$

151,955,707

$

73,626,995

COST OF REVENUES (including amortization and depreciation of

$130,559, $233,033, $432,327, and $698,192, respectively)

51,888,205

25,302,919

136,314,439

61,002,387

GROSS PROFIT

5,618,356

4,314,021

15,641,268

12,624,608

OPERATING EXPENSES

Sales and marketing

500,015

406,683

1,431,930

1,215,556

General and administrative expenses (including share-based

compensation of $160,056, $163,451, $650,924 and $536,828, respectively)

3,684,344

3,372,269

10,887,952

10,070,383

Depreciation and amortization

285,181

246,293

814,813

730,905

Total operating expenses

4,469,540

4,025,245

13,134,695

12,016,844

INCOME FROM OPERATIONS

1,148,816

288,776

2,506,573

607,764

OTHER (EXPENSE) INCOME

Interest income

94

40

3,119

4,761

Interest expense

(69,582

)

(78,066

)

(227,889

)

(230,983

)

Other income

118

5,324

458

5,324

Total other expense

(69,370

)

(72,702

)

(224,312

)

(220,898

)

INCOME BEFORE INCOME TAX PROVISION

1,079,446

216,074

2,282,261

386,866

INCOME TAX PROVISION

12,483

32,364

242,783

126,816

NET INCOME

$

1,066,963

$

183,710

$

2,039,478

$

260,050

BASIC EARNINGS PER SHARE

$

0.13

$

0.02

$

0.24

$

0.03

BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING

8,450,843

8,423,435

8,409,114

8,401,405

DILUTED EARNINGS PER SHARE

$

0.13

$

0.02

$

0.24

$

0.03

DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING

8,527,309

8,427,183

8,463,561

8,405,152

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2020

2019

2020

2019

(Unaudited)

(Unaudited)

NET INCOME

$

1,067,000

$

183,700

$

2,039,500

$

260,100

Adjustments to reconcile net (loss) income to EBITDA:

Depreciation and amortization

415,700

479,300

1,247,100

1,429,100

Amortization of deferred financing costs

-

1,300

1,700

3,800

Income tax provision (benefit)

12,500

32,300

242,800

126,800

Interest income

(100

)

(100

)

(3,100

)

(4,800

)

Interest expense

69,600

76,800

226,200

227,200

EBITDA

$

1,564,700

$

773,300

$

3,754,200

$

2,042,200

Other adjustments to reconcile net (loss) income to Adjusted EBITDA:

(Recovery) Provision for doubtful accounts

12,300

600

23,500

Gain on sale of assets held for sale

-

-

-

-

Loss on disposal of leasehold improvements

-

-

-

-

Severance and exit costs

-

-

-

-

Lease account impact on EBITDA

-

-

-

Stock-based compensation expense

160,000

163,400

650,900

536,800

Adjusted EBITDA

$

1,724,700

$

949,000

$

4,405,700

$

2,602,500