WidePoint Reports Third Quarter 2019 Financial Results

39% Increase in Revenues Drives Positive Net Income and Ninth Consecutive Quarter of Positive Adjusted EBITDA


FAIRFAX, Va., Nov. 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 Digital Billing & Analytics solutions, today reported results for the third quarter ended September 30, 2019.

Third Quarter 2019 and Recent Operational Highlights:

  • Received $14.7 million in recent contract awards for Telecom Expense Management (TEM) and Mobility Managed Services (MMS)

  • Successfully completed an address canvassing project with CDW-G for 2020 U.S. Census project

  • Announced $2.5 million share repurchase program

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

  • Revenues increased 39% to $­­29.6 million

  • Gross profit increased 17% to $4.3 million

  • Net income totaled $184,000

  • Adjusted EBITDA, a non-GAAP financial measure, increased to $949,000, marking the company’s ninth consecutive quarter of positive adjusted EBITDA, and in line with forecast

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

  • Revenues increased 25% to $73.6 million

  • Gross profit increased 17% to $12.6 million

  • Net income totaled $260,000

  • Adjusted EBITDA totaled $2.6 million

Third Quarter 2019 Financial Summary

      
(in millions, except per share amounts)September 30, 2019  September 30, 2018 
    
 (Unaudited)
Revenues$  29.6  $  21.3 
Gross Profit$  4.3  $  3.7 
Gross Profit Margin15% 17%
Operating Expenses$  4.0  $  3.7 
Income (Loss) from Operations$  0.3  $  (0.1)
Net Income (Loss)$  0.2  $  (0.1)
Basic and Diluted Earnings per Share (EPS)$  0.00  $  0.00 
Adjusted EBITDA$  0.9  $  0.6 


Nine Month 2019 Financial Summary

      
(in millions, except per share amounts)September 30, 2019 September 30, 2018
      
 (Unaudited)
Revenues$  73.6  $  58.9 
Gross Profit$  12.6  $  10.8 
Gross Profit Margin17% 18%
Operating Expenses$  12.0  $  11.7 
Income (Loss) from Operations$  0.6  $  (0.9)
Net Income (Loss)$  0.3  $  (1.0)
Basic and Diluted Earnings per Share (EPS)$  0.00  $  (0.01)
Adjusted EBITDA$  2.6  $  0.8 


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
“In the third quarter of 2019, we continued building on the momentum we generated in the first half of the year by growing the topline to drive towards consistent bottom-line profitability,” said WidePoint’s CEO, Jin Kang. “From a financial perspective, the quarter was highlighted by a 39% increase in revenues, positive net income, and our ninth consecutive quarter of positive Adjusted EBITDA.

“Operationally, we secured $14.7 million in recent awards during the third quarter, which include contract expansions and renewals with current customers as well as new contract wins. The expansions indicate that our cross-selling and upselling initiatives continue to be effective; the new wins demonstrate our ability to expand our solutions into new markets with new partners; and the renewals prove that we continue to benefit from high-retention rates with our satisfied customers. We also successfully completed an address canvassing project with CDW-G for the 2020 U.S. Census, and we stand well positioned to effectively execute this program when it fully ramps up at the start of the new year.

“Overall, due to our ability to successfully execute on our strategic initiatives and the financial success we have reaped as a result, we believe that we are well positioned to finish the year in a position of strength and to continue accelerating growth and driving towards sustainable profitability over the long-run.”

Conference Call
WidePoint management will hold a conference call today (November 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: 844-407-9500
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 21, 2019.

Toll-free replay number: 877-481-4010
International replay number: 919-882-2331
Replay ID: 56430

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 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 NINE MONTHS ENDED
  SEPTEMBER 30, SEPTEMBER 30,
  2019 2018 2019 2018
             
  (Unaudited) (Unaudited)
NET INCOME (LOSS)$  183,700  $  (110,000) $  260,100  $  (1,044,400)
Adjustments to reconcile net (loss) income to EBITDA:           
 Depreciation and amortization  479,300    353,100    1,429,100    1,114,900 
 Amortization of deferred financing costs  1,300    -    3,800    14,800 
 Income tax provision (benefit)  32,300    24,800    126,800    45,700 
 Interest income  (100)   (900)   (4,800)   (6,300)
 Interest expense  76,800    21,600    227,200    56,700 
EBITDA $  773,300  $  288,600  $  2,042,200  $  181,400 
Other adjustments to reconcile net (loss) income to Adjusted EBITDA:           
 Provision for doubtful accounts  12,300    (300)   23,500    (6,100)
 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  163,400    272,800    536,800    593,100 
             
Adjusted EBITDA$  949,000  $  561,100  $  2,602,500  $  768,400 


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, 
 2019  2018 
        
 (Unaudited)
ASSETS      
CURRENT ASSETS     
Cash and cash equivalents$  7,099,617  $  2,431,892 
Accounts receivable, net of allowance for doubtful accounts     
of $125,496 and $106,733 in 2019 and 2018, respectively  6,952,068    11,089,315 
Unbilled accounts receivable  13,265,684    9,566,170 
Other current assets  856,274    1,086,686 
      
Total current assets  28,173,643    24,174,063 
      
NONCURRENT ASSETS     
Property and equipment, net  581,667    1,012,684 
Operating lease right of use asset, net  5,690,692    - 
Intangibles, net  2,640,164    3,103,753 
Goodwill  18,555,578    18,555,578 
Other long-term assets  141,702    209,099 
      
Total assets$  55,783,446  $  47,055,177 
      
LIABILITIES AND STOCKHOLDERS' EQUITY      
      
CURRENT LIABILITIES     
Accounts payable$  6,108,178  $  7,363,621 
Accrued expenses  14,465,322    10,716,438 
Deferred revenue  2,185,581    2,072,344 
Current portion of operating lease liabilities  499,739    107,325 
Current portion of other term obligations  62,402    192,263 
      
Total current liabilities  23,321,222    20,451,991 
      
NONCURRENT LIABILITIES     
Operating lease liabilities, net of current portion  5,339,380    122,040 
Other term obligations, net of current portion  -    73,952 
Deferred revenue, net of current portion  367,065    466,714 
Deferred tax liability  1,607,629    1,523,510 
      
Total liabilities  30,635,296    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 outstanding, respectively  84,776    84,113 
Additional paid-in capital  95,462,725    94,926,560 
Accumulated other comprehensive loss  (252,183)   (186,485)
Accumulated deficit  (70,147,168)   (70,407,218)
      
Total stockholders’ equity  25,148,150    24,416,970 
      
Total liabilities and stockholders’ equity$  55,783,446  $  47,055,177 



WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 THREE MONTHS ENDED  NINE MONTHS ENDED 
 SEPTEMBER 30,  SEPTEMBER 30, 
 2019  2018  2019  2018 
            
 (Unaudited)
REVENUES$  29,616,940  $  21,294,360  $  73,626,995  $  58,918,317 
            
COST OF REVENUES (including amortization and depreciation of 
    $233,033, $248,009, $698,192, and $802,174, respectively)
  25,302,919    17,609,287    61,002,387    48,134,084 
GROSS PROFIT  4,314,021    3,685,073    12,624,608    10,784,233 
            
OPERATING EXPENSES           
Sales and marketing  406,683    387,407    1,215,556    1,366,989 
General and administrative expenses (including share-based 
     compensation of $163,451, $272,737, $536,828 and $593,075, respectively)
  3,372,269    3,257,262    10,070,383    10,037,904 
Depreciation and amortization  246,293    104,914    730,905    312,763 
Total operating expenses  4,025,245    3,749,583    12,016,844    11,717,656 
            
INCOME (LOSS) FROM OPERATIONS  288,776    (64,510)   607,764    (933,423)
            
OTHER (EXPENSE) INCOME           
Interest income  40    936    4,761    6,339 
Interest expense  (78,066)   (21,644)   (230,983)   (71,531)
Other income  5,324    2    5,324    3 
Total other expense  (72,702)   (20,706)   (220,898)   (65,189)
            
INCOME BEFORE INCOME TAX PROVISION  216,074    (85,216)   386,866    (998,612)
INCOME TAX PROVISION  32,364    24,795    126,816    45,743 
            
NET INCOME (LOSS)$  183,710  $  (110,011) $  260,050  $  (1,044,355)
            
BASIC EARNINGS (LOSS) PER SHARE$  0.00  $  (0.00) $  0.00  $  (0.01)
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING  84,234,354    83,177,804    84,014,053    83,100,832 
            
DILUTED EARNINGS (LOSS) PER SHARE$  0.00  $  (0.00) $  0.00  $  (0.01)
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING  84,271,825    83,177,804    84,051,524    83,100,832