WidePoint Reports Third Quarter 2018 Financial Results

Revenue up 15%, Fifth Consecutive Quarter of Positive Adjusted EBITDA

MCLEAN, Va., Nov. 14, 2018 (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 third quarter and nine months ended September 30, 2018.

Third Quarter 2018 Operational Highlights: $33.9M in contract actions:

• Secured approximately $5.4 million in new contract awards, $2.8 million in expanded services with existing customers and $10.5 million in option year follow-on contracts with existing customers

• Secured new $12.0 million task order from the U.S. Coast Guard under the U.S. Department of Homeland Security (DHS) Cellular Wireless Management Services (CWMS) Blanket Purchase Agreement, of which up to 6% to 7% of the total task order consists of high margin managed services

• Awarded $1.67 million, five-year contract for mobile communications management services by the Centers for Disease Control and Prevention, of which the majority consists of high margin managed services

• Awarded new, one-year Blanket Purchase Agreement (BPA) task order by DHS Headquarters valued at $1.5 million, of which up to one-third of the task order consists of high margin managed services

Third Quarter 2018 Financial Highlights (results compared to the same year-ago period):

• Revenue increased 15% to $21.3 million

• Gross profit increased 9% to $3.7 million

• Net loss narrowed to $0.1 million

• Adjusted EBITDA, a non-GAAP financial measure, increased to $561,000, marking the company’s fifth consecutive quarter of positive adjusted EBITDA

Nine Month 2018 Financial Highlights (results compared to the same year-ago period):

• Revenue increased 5% to $58.9 million

• Gross profit increased 7% to $10.8 million

• Net loss narrowed to $1.0 million

• Adjusted EBITDA totaled $768,400

Third Quarter 2018 Financial Summary
(in millions, except per share amounts)	September 30, 2018		September 30, 2017
Revenues	$	21.29	$	18.46
Gross Profit	$	3.69	$	3.38
Gross Profit Margin		17.3%		18.3%
Operating Expenses	$	3.75	$	3.66
Loss from Operations	$	(0.06)	$	(0.28)
Net Loss	$	(0.11)	$	(0.31)
Basic and Diluted Earnings per Share (EPS)	$	(0.00)	$	(0.00)
Adjusted EBITDA	$	0.55	$	0.03
Cash and Cash Equivalents	$	3.95	$	5.27
Fiscal Nine Months 2018 Financial Summary
(in millions, except per share amounts)	September 30, 2018		September 30, 2017
Revenues	$	58.92	$	55.96
Gross Profit	$	10.78	$	10.10
Gross Profit Margin		18.3%		18.0%
Operating Expenses	$	11.72	$	12.81
Loss from Operations	$	(0.93)	$	(2.71)
Net Loss	$	(1.04)	$	(2.77)
Basic and Diluted Earnings per Share (EPS)	$	(0.01)	$	(0.03)
Adjusted EBITDA	$	0.77	$	(1.10)

Financial Outlook
For the fiscal year ending December 31, 2018, the company anticipates total revenue in the range of $82.0 million to $83.0 million, representing growth of roughly 9% year-over-year, and EBITDA of $1.6 million as compared to $900,000 in the prior year.

The company’s financial outlook statements are based on current expectations. 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. 

Management Commentary
“The third quarter was another strong period for WidePoint. We now have five straight quarters of positive adjusted EBITDA and we are continuing to build momentum toward achieving GAAP profitability,” said company President and CEO, Jin Kang. “Our performance in Q3 was highlighted by solid topline growth as we successfully expanded relationships with key Federal and enterprise customers. In addition to our strong topline results, we also delivered another sequential improvement in adjusted EBITDA.  

“From a business development standpoint, we continue to execute on our strategy to maintain our customer, upsell and pursue new business. This is evidenced by the substantial orders and large contracts we have recently secured, including the $12 million follow-on order from the U.S. Coast Guard as well as the $20 million in aggregate of new contract orders from various government agencies. These awards highlight WidePoint’s position as the premier provider of Trusted Mobility Management services solutions to the public and private sectors. Looking ahead, our building momentum in the new Federal fiscal year underscores a robust pipeline of significant opportunities.”

Conference Call
WidePoint management will hold a conference call today (November 14, 2018) at 4:30 p.m. Eastern time (1:30 p.m. local time) to discuss these results.

WidePoint President and CEO Jin Kang, Chief Sales and Marketing Officer Jason Holloway, and CFO Kito Mussa will host the conference call, followed by a question and answer period.

U.S. dial-in number: 877-451-6152
International number: 201-389-0879

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 Liolios 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 28, 2018.

Toll-free replay number: 844-512-2921
International replay number: 412-317-6671
Replay ID: 13684462

About WidePoint

WidePoint Corporation (NYSE American: WYY) is a leading provider of technology-based management solutions, including telecom management, mobile management, access management and identity management. 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,
			2018				2017				2018				2017
			(Unaudited)
NET LOSS			$	(110,000	)		$	(314,600	)		$	(1,044,400	)		$	(2,769,000	)
Adjustments to reconcile net loss to adjusted EBITDA:
Depreciation and amortization				353,100				388,400				1,114,900				1,108,000
Income tax provision (benefit)				24,800				17,200				45,700				32,700
Interest income				(900	)			(2,000	)			(6,300	)			(11,600	)
Interest expense				21,600				23,500				71,500				45,900
Other (expense) income				–				1,500				–				(1,800	)
Provision for doubtful accounts				(300	)			–				(6,100	)			31,200
Gain on sale of assets held for sale				–				–								(66,700	)
Loss on disposal of leasehold improvements				–				–								172,500
Severance and exit costs				–				–								187,500
Stock-based compensation expense				272,800				(81,400	)			593,100				138,000
Adjusted EBITDA			$	561,100			$	32,600			$	768,400			$	(1,133,300	)

Safe Harbor Statement
The information contained in any materials that may be accessed above was, to the best of WidePoint Corporation’s 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.

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

	SEPTEMBER 30,				DECEMBER 31,
	2018				2017
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	3,950,106			$	5,272,457
Accounts receivable, net of allowance for doubtful accounts
of $96,846 and $107,618 in 2018 and 2017, respectively		8,022,377				8,131,025
Unbilled accounts receivable		7,803,572				8,131,448
Other current assets		963,649				767,944
Total current assets		20,739,704				22,302,874
NONCURRENT ASSETS
Property and equipment, net		1,058,786				1,318,420
Intangibles, net		3,284,626				3,671,506
Goodwill		18,555,578				18,555,578
Other long-term assets		145,477				44,553
Total assets	$	43,784,171			$	45,892,931
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	6,080,686			$	7,266,212
Accrued expenses		9,064,369				9,796,350
Deferred revenue		2,689,038				2,348,578
Current portion of capital leases		105,712				101,591
Current portion of other term obligations		107,109				203,271
Total current liabilities		18,046,914				19,716,002
NONCURRENT LIABILITIES
Capital leases, net of current portion		151,037				232,109
Other term obligations, net of current portion		64,006				78,336
Deferred revenue		410,310				264,189
Deferred tax liability		393,975				392,229
Total liabilities		19,066,242				20,682,865
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; 84,062,446 and 83,031,595 shares
issued; 83,762,446 and 83,031,595 shares
outstanding, respectively		83,763				83,032
Additional paid-in capital		94,814,580				94,200,237
Accumulated other comprehensive loss		(185,317	)			(122,461	)
Accumulated deficit		(69,995,097	)			(68,950,742	)
Total stockholders’ equity		24,717,929				25,210,066
Total liabilities and stockholders’ equity	$	43,784,171			$	45,892,931

WIDEPOINT CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS 

	THREE MONTHS ENDED								NINE MONTHS ENDED
	SEPTEMBER 30,								SEPTEMBER 30,
	2018				2017				2018				2017
	(Unaudited)
REVENUES	$	21,294,360			$	18,463,872			$	58,918,317			$	55,956,617
COST OF REVENUES (including amortization and depreciation
of $248,009, $318,461, $802,174, and $895,088, respectively)		17,609,287				15,087,567				48,134,084				45,859,532
GROSS PROFIT		3,685,073				3,376,305				10,784,233				10,097,085
OPERATING EXPENSES
Sales and marketing		387,407				532,714				1,366,989				1,709,892
General and administrative expenses (including share-based
compensation of $272,737, ($81,043), $593,075 and
$138,036, respectively)		3,257,262				3,046,148				10,037,904				10,668,368
Product development		–				11,342				–				219,141
Depreciation and amortization		104,914				69,935				312,763				212,874
Total operating expenses		3,749,583				3,660,139				11,717,656				12,810,275
LOSS FROM OPERATIONS		(64,510	)			(283,834	)			(933,423	)			(2,713,190	)
OTHER (EXPENSE) INCOME
Interest income		936				1,971				6,339				11,564
Interest expense		(21,644	)			(13,985	)			(71,531	)			(36,402	)
Other income (expense)		2				(1,541	)			3				1,758
Total other expense		(20,706	)			(13,555	)			(65,189	)			(23,080	)
LOSS BEFORE INCOME TAX PROVISION		(85,216	)			(297,389	)			(998,612	)			(2,736,270	)
INCOME TAX PROVISION		24,795				17,212				45,743				32,723
NET LOSS	$	(110,011	)		$	(314,601	)		$	(1,044,355	)		$	(2,768,993	)
BASIC LOSS PER SHARE	$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.03	)
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING		83,177,804				82,946,847				83,100,832				82,878,287
DILUTED LOSS PER SHARE	$	(0.00	)		$	(0.00	)		$	(0.01	)		$	(0.03	)
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		83,177,804				82,946,847				83,100,832				82,878,287

CONTACT: Investor Relations:
Liolios
Matt Glover or Tom Colton
949-574-3860
[email protected]