WidePoint Reports Second Quarter 2019 Financial Results

26% Increase in Revenues and 14% Increase in Gross Profit Drives Eighth Consecutive Quarter of Positive Adjusted EBITDA


FAIRFAX, Va., Aug. 14, 2019 (GLOBE NEWSWIRE) -- WidePoint Corporation (NYSE American: WYY), the leading provider of Trusted Mobility Management (TM2) specializing in Telecommunications Lifecycle Management, Identity Management and Bill Presentment & Analytics solutions, today reported results for the second quarter ended June 30, 2019.

Second Quarter 2019 and Recent Operational Highlights:

  • Awarded $5.3 million in federal government contract renewals and modifications

  • Soft-ex, a WidePoint subsidiary, awarded $6.0 million contract renewal with a global communications service provider to deliver both cloud and onsite telecom solutions to government and multinational corporations

  • Secured more than $1.3 million in Trusted Mobility Management (TM2) contracts, the majority of which are high-margin, commercial contracts

  • Received Authority to Operate (ATO) from a major customer to implement WidePoint’s Intelligent Telecommunications Management System (ITMS™), which represents the second significant step toward achieving a FedRAMP certification

Second Quarter 2019 Financial Highlights (results compared to the same year-ago period):

  • Revenues increased 26% to $22.1 million

  • Gross profit increased 14% to $4.1 million

  • Net loss totaled $(308,000)

  • Adjusted EBITDA, a non-GAAP financial measure, increased to $0.6 million, marking the company’s eighth consecutive quarter of positive adjusted EBITDA, and in line with forecast

Six Month 2019 Financial Highlights (results compared to the same year-ago period):

  • Revenues increased 17% to $44.0 million

  • Gross profit increased 17% to $8.3 million

  • Net income totaled $76,000

  • Adjusted EBITDA totaled $1.6 million

Second Quarter 2019 Financial Summary

      
(in millions, except per share amounts)June 30, 2019  June 30, 2018 
 (Unaudited) 
Revenues$  22.1  $  17.5 
Gross Profit$  4.1  $  3.5 
Gross Profit Margin18% 20%
Operating Expenses$  4.2  $  4.0 
Income (Loss) from Operations$  (0.2) $  (0.4)
Net Income (Loss)$  (0.3) $  (0.5)
Basic and Diluted Earnings per Share (EPS)$  0.00  $  (0.01)
Adjusted EBITDA$  0.6  $  0.1 

Six Month 2019 Financial Summary

      
(in millions, except per share amounts)June 30, 2019  June 30, 2018 
 (Unaudited) 
Revenues$  44.0  $  37.6 
Gross Profit$  8.3  $  7.1 
Gross Profit Margin19% 19%
Operating Expenses$  8.0  $  8.0 
Income (Loss) from Operations$  0.3  $  (0.9)
Net Income (Loss)$  0.1  $  (0.9)
Basic and Diluted Earnings per Share (EPS)$  0.00  $  (0.01)
Adjusted EBITDA$  1.6  $  0.2 

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, 2019, the company is reiterating its revenue guidance of $90.0 million to $93.0 million, representing growth of 8% to 12%. The company is also reiterating its adjusted EBITDA guidance of $2.75 million to $3.5 million, which represents an improvement compared to fiscal 2018. The increase in adjusted EBITDA reflects the company’s strategic investments in sales and marketing and product development to accelerate growth, as well as a $400,000 increase due to new Financial Accounting Standards Board (FASB) guidance regarding the treatment of capital lease. The company’s financial outlook is based on current expectations.

Management Commentary
“The second quarter was a continuation of the strong performance we established at the start of the year as we delivered another solid period of financial results, expanded several contracts with current customers, and continued to improve upon our already industry-leading credentials,” said WidePoint’s CEO, Jin Kang. “From a financial perspective, the quarter was highlighted by a 26% increase in revenues, a 14% increase in gross profit, and our eighth consecutive quarter of positive adjusted EBITDA.

“Operationally, we successfully re-secured and expanded several contracts with current customers in both the government and commercial sectors. These contract expansions and the positive effects they have on our financial results show that our cross-selling and upselling strategies continue to be an effective means of increasing our topline as we simultaneously remain conscientious of their effects on our bottom-line. Additionally, we received an ATO from a major customer to implement ITMS™, which is a major step toward ultimately receiving a FedRAMP certification.

“Overall, we remain confident that we will be able to continue to execute on our primary strategic initiatives throughout the course of the year to accelerate growth, improve margins, and drive higher profitability in the long-run.”

Conference Call
WidePoint management will hold a conference call today (August 14, 2019) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

WidePoint President and CEO Jin Kang, Chief Sales and Marketing Officer Jason Holloway, and President and CEO of Soft-ex Communications and WidePoint Interim CFO Ian Sparling will host the conference call, followed by a question and answer period.

U.S. dial-in number: 844-369-8770
International number: 862-298-0840

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 August 21, 2019.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 51160

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 bill presentment 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 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 loss to Adjusted EBITDA is included on the schedules attached hereto.

    THREE MONTHS ENDED  SIX MONTHS ENDED 
    JUNE 30,  JUNE 30, 
    2019  2018  2019  2018 
    (Unaudited)  (Unaudited) 
NET (LOSS) INCOME$  (307,800) $  (472,200) $  76,300  $  (934,400)
Adjustments to reconcile net (loss) income to EBITDA:           
 Depreciation and amortization  477,100  368,600    949,800  762,000 
 Amortization of deferred financing costs  1,200  7,000    2,500  14,800 
 Income tax provision (benefit)  66,500  14,700    94,500  20,900 
 Interest income  (200) (2,100)   (4,700) (5,400)
 Interest expense  74,200  23,900    152,900  49,900 
               
EBITDA $  311,000  $  (60,100) $  1,271,300  $  (92,200)
Other adjustments to reconcile net (loss) income to Adjusted EBITDA:           
 Provision for doubtful accounts  3,600  -    11,200  (5,800)
 Stock-based compensation expense  284,100  195,900    320,300  320,300 
               
Adjusted EBITDA$  598,700  $  135,800  $  1,602,800  $  222,300 
               

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

 JUNE 30,  DECEMBER 31, 
 2019  2018 
      
ASSETS  
CURRENT ASSETS     
Cash and cash equivalents$  5,422,065  $  2,431,892 
Accounts receivable, net of allowance for doubtful accounts      
of $117,120 and $106,733 in 2019 and 2018, respectively  7,868,097  11,089,315 
Unbilled accounts receivable  11,259,905  9,566,170 
Other current assets  1,254,269  1,086,686 
      
Total current assets  25,804,336  24,174,063 
      
NONCURRENT ASSETS     
Property and equipment, net  658,074  1,012,684 
Operating lease right of use asset, net  5,827,822  - 
Intangibles, net  2,826,141  3,103,753 
Goodwill  18,555,578  18,555,578 
Other long-term assets  142,952  209,099 
      
Total assets$  53,814,903  $  47,055,177 
      
LIABILITIES AND STOCKHOLDERS' EQUITY  
      
CURRENT LIABILITIES     
Accounts payable$  6,575,453  $  7,363,621 
Accrued expenses  12,369,314  10,716,438 
Deferred revenue  2,065,446  2,072,344 
Current portion of operating lease liabilities  420,932  107,325 
Current portion of other term obligations  36,049  192,263 
      
Total current liabilities  21,467,194  20,451,991 
      
NONCURRENT LIABILITIES     
Operating lease liabilities, net of current portion  5,534,028  122,040 
Other term obligations, net of current portion  -  73,952 
Deferred revenue  381,261  466,714 
Deferred tax liability  1,581,020  1,523,510 
      
Total liabilities  28,963,503  22,638,207 
      
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; 110,000,000 shares     
  authorized; 84,775,186 and 84,112,446 shares     
issued and outsanding, respectively  84,776  84,113 
Additional paid-in capital  95,299,274  94,926,560 
Accumulated other comprehensive loss  (201,772) (186,485)
Accumulated deficit  (70,330,878) (70,407,218)
      
Total stockholders’ equity  24,851,400  24,416,970 
      
Total liabilities and stockholders’ equity$  53,814,903  $  47,055,177 



WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 THREE MONTHS ENDED  SIX MONTHS ENDED 
 JUNE 30,  JUNE 30, 
  2019   2018   2019   2018 
 (Unaudited)
REVENUES$  22,093,153  $  17,544,338  $  44,010,055  $  37,623,957 
COST OF REVENUES (including amortization and depreciation of           
 $232,968, $258,201, $465,159, and $554,165, respectively)  18,036,409  13,997,185    35,699,468  30,524,797 
               
GROSS PROFIT  4,056,744  3,547,153    8,310,587  7,099,160 
               
OPERATING EXPENSES           
 Sales and marketing  415,462  444,945    808,873  979,582 
 General and administrative expenses (including share-based           
  compensation of $284,111, $195,934, $373,377 and $320,338, respectively)  3,563,405  3,427,301    6,698,114  6,780,642 
 Depreciation and amortization  244,064  110,463    484,612  207,849 
               
   Total operating expenses  4,222,931  3,982,709    7,991,599  7,968,073 
               
(LOSS) INCOME FROM OPERATIONS  (166,187) (435,556)   318,988  (868,913)
               
OTHER (EXPENSE) INCOME           
 Interest income  259  2,077    4,721  5,403 
 Interest expense  (75,372) (23,937)   (152,917) (49,887)
 Other income  (9) 3    -  1 
               
   Total other expense  (75,122) (21,857)   (148,196) (44,483)
               
(LOSS) INCOME BEFORE INCOME TAX PROVISION  (241,309) (457,413)   170,792  (913,396)
INCOME TAX PROVISION  66,452  14,758    94,452  20,948 
               
NET (LOSS) INCOME$  (307,761) $  (472,171) $  76,340  $  (934,344)
               
BASIC EARNINGS (LOSS) PER SHARE$  (0.00) $  (0.01) $  0.00  $  (0.01)
               
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING  83,990,722  83,081,597    83,902,077  83,061,707 
               
DILUTED EARNINGS (LOSS) PER SHARE$  (0.00) $  (0.01) $  0.00  $  (0.01)
               
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING  83,990,722  83,081,597    83,965,994  83,061,707