Methinks
3 weeks ago
https://seekingalpha.com/article/4680599-widepoint-corporation-wyy-q4-2023-earnings-call-transcript
WidePoint Corporation (NYSE:WYY) Q4 2023 Results Conference Call March 26, 2024 4:30 PM ET
Company Participants
Jin Kang - President, CEO and Director
Jason Holloway - Chief Revenue Officer
Robert George - Executive VP and CFO
Conference Call Participants
Scott Buck - H.C. Wainwright
Operator
Good afternoon. Welcome to WidePoint's Fourth Quarter and Full Year 2023 Earnings Conference Call. My name is Matthew, and I'll be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang; Chief Revenue Officer, Jason Holloway; and Chief Financial Officer, Robert George.
Following their remarks, we will open up the call for questions from WidePoint's publishing analysts and major investors. If your questions were not taken today and you'd like additional information, please contact WidePoint's Investor Relations team at wyy@gateway-grp.com.
Before we begin the call, I would like to provide WidePoint's safe harbor statement that includes cautions regarding forward-looking statements made during this call. The matters discussed in this conference call may include forward-looking statements regarding the future events and future performance of WidePoint Corporation that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K filed with the Securities and Exchange Commission.
Finally, I'd like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at www.widepoint.com.
Now I would like to turn the call over to WidePoint's President and CEO, Mr. Jin Kang. Sir, please proceed.
Jin Kang
Thank you, operator, and good afternoon, everyone. Thank you for joining us today to review our financial results for the fourth quarter and full year ended December 31, 2023. This past year was a pivotal one for WidePoint, marked by successful execution of our financial and operational plans and initiatives. We closed out 2023 on a strong note pertaining to both our financials and operations with approximately $106 million in revenue, positioning us at the higher end of our full year 2023 guidance.
Simultaneously, we achieved 26th consecutive quarter of positive adjusted EBITDA, and demonstrate a sequential quarter-over-quarter growth in 2023. Additionally, and more notably, we concluded the fourth quarter free cash flow positive, a trend that we anticipate maintaining throughout 2024 and beyond and something that is vital for the company, especially within this high interest rate environment.
This momentum we anticipate carrying into 2024 is backed by multiple initiatives and developments made throughout fiscal year 2023. First, a robust demand for our solution and services remain evident with the fourth quarter alone, witnessing more than 30 contractual actions amounting to more than $70 million in contract value. These wins include new awards, contract renewals, expansions and extensions in all of our solution lines. As you know from the news headlines, the federal government budget battle is and will be an ongoing issue.
However, we continue to successfully mitigate this risk by proactively engaging with our government counterparts to renew contracts early and ensuring that they are fully funded. Currently, all affected contracts are successfully awarded and carried over into the new year. With this, a significant catalyst for our anticipated growth in 2024 lies in our substantial contract backlog totaling $359 million as of December 31, 2023.
Furthermore, WidePoint continues to solidify its position as the most secure premier choice for trusted mobility management solutions, evidenced by our strong contract renewal and customer retention rates of over 90%. With these initiatives driving our momentum, we confidently forecast double-digit percentage growth in the teens for top line revenues and double-digit percentage growth in the high teens for managed services revenues, in addition to achieving positive free cash flow for the full year 2024.
Another factor driving our growth is the recent completion of the majority of our capital investments made in 2023. With this, we anticipate having minimal capital expenditures for 2024, strengthening our balance sheet, enabling us to concentrate fully on various operational growth initiatives.
More specifically, I'd like to emphasize two previous investments that are in their final phases nearing completion. Last earnings call, we mentioned our Intelligent Technology Management System, or ITMS, was in the FedRAMP in process status. We continue to see positive news on this front throughout the quarter. With ITMS now nearing its final FedRAMP authorized designation, we anticipate certification in the first half of 2024. However, the time lines may change based on general services administration's workload for FedRAMP processing. The good news is that we already have all the necessary authorization to operate or ATOs from our current customer agencies, which attests to our strong cybersecurity posture that places us ahead of our competition.
As a reminder, attaining full FedRAMP certification will uniquely position our ITMS platform and grant WidePoint a substantial competitive edge and competing for new business with the federal government and large enterprises. This certification indicates that our solutions align with federal cybersecurity standards for protecting our customers' data.
Moreover, it will showcase the robust security levels offered by WidePoint solutions to both existing and prospective customers, particularly in commercial sectors and industries where data and system security are paramount. We look forward to announcing the completion of our FedRAMP process and anticipate this to be a significant factor to continue differentiating our solutions and serve as a catalyst to fuel new wins in the near future.
Another investment near completion is in our delivery system, more specifically enhancements to our continuity of operations site or COOP, which we also anticipate completion by the first half of 2024. These COOP site enhancements will further differentiate us from our competitors and provide additional resiliency to our delivery systems. Our enhanced COOP site will have automatic failover capabilities and data replication such that if there is a system outage of our primary operation site, the secondary site will immediately come online to greatly reduce the system recovery time, ensuring that we meet and exceed all of our service level agreements with our customers.
In addition to these investments, we are excited by the potential for artificial intelligence to streamline our everyday business operations. And we are developing a strategy aimed at leveraging AI. The potential to improve our customer service experience by reducing response time, increasing the accuracy of those responses as well as increasing our overall capacity are all being explored.
Furthermore, there's potential to enhance our IT as a service by integrating AI to detect cybersecurity vulnerabilities and enhanced behavior-based security measures. There are other areas of our business that could benefit from the implementation of AI, such as software development, responding to proposals, invoice audits, and leveraging our knowledge base to serve our customers' requirements better.
We are in the process of shifting out the noise from the real AI capabilities. We will share more on this front as we evolve our strategy to meet our business needs. With our investments out of the way, I'd like to highlight just a few of our contract wins achieved recently that we believe will have the potential to grow into substantial revenue generators over the coming years.
At the federal level, we saw roughly $60 million in governmental contracts won in the fourth quarter alone. While we are bound by nondisclosure agreements and unable to disclose specific government clients, Jason will talk to one of our recent federal contract wins, which has the potential to grow into one of our largest federal contracts, second only to our contract with the U.S. Department of Homeland Security. On the commercial side, we have won contracts with a nationwide professional services firm and a major Florida attraction and Research Center, both of which have the potential to grow into a material IT as a service customer over the next 12 months.
On the sales and marketing side, our strategy to expand market presence has proved to be fruitful, especially in a year with challenging macroeconomic headwinds affecting the whole market. Jason will dive deeper into this topic shortly, but we are proud to say that these efforts contributed significantly to WidePoint's success this past fiscal year.
Lastly, the sales of WidePoint's business solutions have maintained their momentum, playing a significant role in the company's growth and reach. WidePoint has shown year-over-year growth, and we anticipate this positive trajectory to persist in 2024 as we continue to grow our sales pipeline. The potential for cross-selling and upselling within WidePoint's comprehensive suite of trusted mobility management solutions creates further avenues for business expansion and advancement. These business solutions remain pivotal in our sustained long-term growth and in fortifying our competitive advantage.
I will now hand the mic over to Jason, who will dive into the progress made on the sales and marketing front. Jason?
Jason Holloway
Thanks, Jin, and good afternoon, everyone. As Jin stated earlier, our concentrated efforts on capturing additional deals within the sales and marketing front has contributed significantly to WidePoint's performance this past year. This past quarter alone, WidePoint was awarded over $70 million in contract wins, approximately $65 million of which were considered new business wins. This showcases our commitment to continuously drive new business into WidePoint and the trust our current and new customers have for our solutions.
Recently, we closed the deal with a commercial entity to provide a full range of managed telecom solutions on behalf of its U.S. government end customer. This deal is approximately $20 million with a 3-year base period and two 1-year option periods. As Jin mentioned, although we cannot disclose this client's name, we are proud to state this contract can become one of our most significant. Additional information can be found in our SEC Form 8-K filed January 2024. We remain committed to advancing these sales and marketing initiatives into 2024. The strong results this past year have prompted us to develop a new internal plan to allocate additional resources and budget towards enhancing our staff and capabilities to secure additional high-margin contracts like the one mentioned just now.
Specifically, we look to add an additional senior-level commercial sales resource and established federal business development resource with a proven track record within the D.C. area and a vendor partner manager for the expansion of strategic partners. With ample funding and guidance from new senior staff members, we are confident in carrying this momentum into fiscal year 2024 to garner more contracts.
On the K-12 side, we continue to accelerate our market penetration. We recently engaged with an expert within the K-12 sector to facilitate our partnership program aimed at integrating WidePoint's IAM solutions into existing offerings for numerous sector entities. I also want to note that our identity and access management pipeline is equivalent to our managed mobility pipeline in terms of the number of opportunities. As Jin mentioned earlier, we have a robust contract backlog of $359 million in value. A large part of this backlog and success seen this year can be attributed to our flagship contract with DHS, the cellular wireless management services 2.0 contract.
Based on our current contract run rate, we are nearing the contract ceiling of $500 million. As such, we are working closely with DHS to review options for continuing to perform under this contract. With the additional resources and staff, we will increase our investments in the sales and marketing efforts as we look to win additional impactful contracts like this for WidePoint's financial growth.
Lastly, I wanted to recognize the IT authorities team. As you know, we acquired IT authorities in 2021. Even though the integration took a little longer than expected due to challenges faced during the COVID pandemic and external macro headwinds, the team has been closing deals at a pretty rapid pace. They have been working extremely hard, and we are excited about their tremendous momentum in 2024.
With that, I will hand the call over to Bob.
Robert George
Thank you, Jason, and thanks to everyone for joining us today. I'd also like to express my gratitude to the entire WidePoint team on how they executed in 2023, a year where WidePoint saw significant improvements in both top line revenue and free cash flow. Now I'm pleased to share the details of our fourth quarter and full year 2023 financial results.
Revenues for the quarter were $28.3 million, up 21% from the same quarter last year. Revenues for the year were $106 million, an increase of 13% from last year. Now I'll provide a further breakdown of our fourth quarter and full year revenues. I'm pleased to say that period-over-period, we saw increases across all our revenue categories. Our carrier services revenue for the quarter was $15.7 million, an increase of 14% from the same quarter last year.
Our carrier services revenue for the full year was $58.3 million, an increase of 9% from last year. The increase is due to growth in contracting activity with our federal customers where we pay carrier invoices on their behalf, the telecommunication devices that we manage. While pass-through, Pan Carrier invoices is a federal customer requirement in an area where we differentiate our services and provide editable savings to our customers.
Our managed and billable services revenues for the quarter were $4.4 million, a 23% increase from the same quarter last year. Our managed and billable services revenue for the year were $31 million, a 10% increase from last year. The increase in fourth quarter and full year were related to increased professional services being utilized by our TLM customers and new projects in our identity and access management customers.
Our reselling and other services revenues for the fourth quarter were $8.1 million, an increase of 37% from the same quarter last year. Our reselling and other services revenues for the year were $16.8 million, a 33% increase from last year. The increase in both the quarter and full year was a result of selling third-party software for recording and storing text messages to our federal customers, which is now required under an expansion of the Federal Records Act and also selling an identity management solution to a new federal customer.
I do want to highlight that reselling and other services are transactional in nature and the amount and timing of revenue grew very significantly from quarter-to-quarter. Gross profit for the fourth quarter was $4 million or 14% of revenues compared to $3.6 million or 15% of revenues in 2022. Gross profit for the year was $15.6 million or 15% of revenues compared to $14.6 million and 15% of revenues last year.
In the fourth quarter, the more significant metric of gross profit percentage, excluding carrier services, was 32% compared to 37% in the same period last year. For the full year, gross profit percentage, excluding carrier services, was 33% compared to 36% in the same period last year. The lower gross margin percentage, excluding carrier services in both the fourth quarter and the year relate to increased depreciation and amortization related to our delivery platforms that have substantially reached completion and are beginning to be amortized and the previous noted increases in reselling and other services, which have a lower gross margin profile.
Accordingly, our gross margin percentage will vary from period to period based on our revenue mix. In the fourth quarter, general and administrative expenses were $4.2 million or 15% of revenue compared to $3.6 million or 15% of revenue in the same period of '22. Much of the dollar increase relates to an increase in noncash share-based compensation expense compared to the same period last year. General and administrative expenses for the year were $15.9 million or 15% of revenue compared to 14.7% and 15% of revenue in 2022. We expect to see general and administrative costs as a percentage of revenue to continue to trend lower in the future.
Our net loss for the fourth quarter was $1.3 million or a loss of $0.15 per share compared to a net loss of $8.9 million and a loss of $1.02 per share in the same period last year. The difference in the net loss between the fourth quarter of 2023 and 2022 is predominantly related to a noncash valuation allowance placed on our net operating loss carryforwards of $8.5 million taken in the fourth quarter of 2022. Our net loss for the full year was $4 million compared to a net loss of $23.6 million in 2022. The principal difference in the net loss from 2023 compared to 2022 was the noncash goodwill charge of $16.3 million taken in the second quarter of 2022 and the noncash valuation allowance placed on our net operating loss carry forwards in the fourth quarter of 2022.
Moving to our balance sheet. I am excited to share the successful results of our cash management efforts over the past year. Although during the year, we invested approximately $1.1 million to substantially complete our delivery platform we still finished 2023 with $6.9 million in cash and no bad debt. Further, we reduced our days sales outstanding, or DSO, from 83 days in 2022 to 76 days in 2023. Our free cash flow, which we define as adjusted EBITDA minus capital investments was just over $200,000 in the fourth quarter, and we expect to continue to be free cash flow positive throughout 2024.
Additionally, we have entered into a new revolving credit facility with Old Dominion National Bank, which is further described in our Form 10-K filed prior to this call. The facility provides us with an additional $4 million of potential borrowing capacity. We believe our cash on hand, credit facility and expected free cash flow generated in 2024 will be sufficient to fund our anticipated growth and allow us to pursue the strategic initiatives outlined by Jin and Jason earlier.
This completes my financial summary. For a more detailed analysis of our financial results, please refer to our Form 10-K, which was filed prior to this call.
So with that, I will turn the call back over to Jin.
Jin Kang
Thank you, Bob and Jason. Our efforts and results this past year show significant year-over-year improvement seen, and we anticipate carrying this momentum into 2024 and beyond. As Bob mentioned, we are well equipped with ample cash to pursue the different initiatives Jason and I mentioned earlier. Additionally, I want to reiterate that AI will be a big disruptor for the foreseeable future, and we are taking careful aim to shift through all the noise and hype to implement elements of AI that will have the greatest impact on our business. We look to forming strategic relationships with leaders in the field of AI and especially those with existing tools to deepen our solutions and operational capabilities. We also continue to look out for strategic M&A opportunities that provide synergistic opportunities and value to WidePoint.
Given that we are well funded, we have the resources necessary to pursue any opportunities that arise. Though as of now, I do not have any significant development to report in this front.
On a separate note, I'd like to touch on our ESG initiatives. Specifically, WidePoint has developed a robust device recycling program that includes conserving precious resources and minimizing electronic waste, while committing to reducing carbon emission through energy-efficient practices.
WidePoint is also participating in efforts to preserve green space by converting unused property around one of our office locations into a revolting area. Through these ESG initiatives, WidePoint is dedicated to environmental stewardship and sustainable business practice for a greener future. Looking ahead into fiscal year 2024, we expect revenue to range between $120 million and $133 million and adjusted EBITDA range between $2.1 million and $2.4 million.
Additionally, we expect free cash flow to range between $2 million and $2.3 million. We are proud of the significant steps taken this year to enhance our financial health through a series of strategic initiatives and investments made this past year. As evidenced by our positive cash flow in Q4 2023 and improving margins projected for 2024, especially with our managed services. WidePoint is at a turning point and with a solid foundation and clear vision in place and the management team to execute our growth plan, we remain steadfast in our commitment to driving sustainable growth and creating long-term value for our shareholders, employees and communities we serve.
With that said, we are ready to take questions from our analysts and major shareholders. Operator, will you please open the call for questions.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question is coming from Scott Buck from H.C. Wainwright. Your line is live.
Scott Buck
Jin, I'm curious with the 2024 guide and the contracts that you guys have in place, can you give us a little idea of maybe what what's already in the bag, I guess, for '24 versus what you might have to go out and still earn to reach your guided revenue level?
Jin Kang
In terms of our guidance on the top line, I would say, 60%, 65% of that is in the bag. And we also have things that we have a fairly high confidence in. And so in terms of what we call percentage win RP win, and so 65%, 70% in the bag, and we have the other portions of it at a very high win percentage. So we feel pretty confident to be able to hit within the guidance provided.
Scott Buck
And how should we think about the cadence of revenue through the year?
Jin Kang
The cadence of revenue should be like it was in 2023, we should see sequential improvements as we had throughout the year. There may be some lumpiness in like the end of the first quarter, beginning of second quarter because there are some onetime value-added resale stuff that comes in. And depending on the timing of that, it could be lumpy, but we still see sequential improvements in revenue and profitability quarter-over-quarter.
Scott Buck
And then turning to OpEx. Besides the -- some of the investments you're making on the sales side, can you support the growth you're expecting with the existing cost infrastructure? Or are there other places where you need to spend a little bit more to help support that?
Robert George
Scott, this is Bob George. In terms of infrastructure, we don't see a whole lot of more spending. I mean we do have inflation adjustments in our forecast, but no significant spend on anything in the OpEx side, a little bit more on the sales and marketing side, which I think we talked about in terms of strategic hires, but nothing significant.
Scott Buck
And then last one for me. Jin, you talked about M&A a little bit in your prepared remarks. I'm just curious if we could dive in there a little bit more, and you could talk about what kind of criteria you would be looking at to potentially get a deal done?
Jin Kang
Yes. In terms of our M&A and potential acquisition is that, that's kind of on back burner, I mean we're not -- we're spending most of our priority and our time in growing organically. But we are, every now and then out there kicking the tires, looking at opportunities. And what we're looking for in terms of capabilities are companies that either do the same thing that we do and essentially buying their customers and moving them onto our delivery infrastructure and eliminating the redundancies and making those deals immediately accretive or looking for companies that potentially can deepen our capabilities like those companies that have specific capabilities in artificial intelligence that could help us deepen our capabilities. And so those are the types of capabilities that we're looking for, and we are also looking for companies that are stable and profitable. And we don't want to look for companies that are sort of pre-revenues, if you will, because that may endanger our financial performance.
So we're looking for safe bets, singles and doubles. We're not swinging for the fences when we're looking for these opportunities.
Great. Thank you. Operator, any additional questions?
Question-and-Answer Session
Operator
[Operator Instructions] While the queue is being populated, I'll proceed with previously submitted questions. Question on the U.S. federal government budget. Now that President Biden has signed for the fiscal year 2024 budget into law. What does that mean for WidePoint?
Jin Kang
Thank you for that question. As you know, the ink is barely dry on the budget bill. And so there are very few details on the federal budget and especially the department homeland security budget. However, what we do know is that our contract is considered essential services and contract funding was approved by all of our -- approved for all of our current task orders. And as such, we expect our contract to be fully funded, and it will be business as usual for us. We will inform you of any material changes to the status of our contract with the Department of Homeland Security and our federal government agencies by issuing press releases as necessary. The status of our contracts with all of our customers are essentially very similar to that of our DHS contract. And again, we'll keep you all informed we have press release as if anything material happens.
Operator
A follow-up question on the U.S. federal government budget. There has been a lot of discussions specific to the Department of Homeland Security budget and potential budget cuts to. Can you provide some additional color as to how the new budget impacts WidePoint and specifically to your contract with DHS?
Jin Kang
Right. And as I said, the ink is barely dry. But we have heard in the news that the budget of the DHS 1 was 1 of the sticking points. We have very few details about the HSS budget. However, we can tell you that all of our current task orders with DHS are fully funded. There is also some good news on our DHS contract front that we can share. As you know, the contract has a ceiling of $500 million. And I'm happy to report that based on our current contract run rate and funding commitments on our task orders with DHS we are nearing the contract ceiling. So we are in communication with our counterparts at DHS to chart a course forward for the remainder of the contract period until the end of 2025. The likely course of action will be to raise the contract ceiling or recompete the contract earlier or maybe even extend the contract for a few more years. These are all potential options that will help WidePoint as we learn more, we will provide additional detail. But suffice it to say that it is good news that we are running up against the contract ceiling.
Operator
You mentioned in your remarks that you have won another contract with the federal government that may grow into 1 of your largest government contracts, except for your DHS contract. Can you please provide additional details on this contract?
Jin Kang
Sure. We did talk a little bit about that, and Jason talked about it as well, but we can tell you that we did win a material new contract with a Quasi federal government entity as we -- and we also mentioned that we team with one of our strategic partners to win this contract. I'm happy to report that the implementation is going well, and we are already in talks with the end customer who is interested in the optional services that we offered in our proposal. As we upsell these optional services, we should see a material increase in the contract value. We will provide additional details as they become available. But suffice it to say that we are very excited about this opportunity as well as our new strategic partnership, and we will name the end customer and the strategic partner as we are allowed to, and we should be doing that through a press release coming up shortly.
We also have identified several opportunities that we are already pursuing with this strategic partner. And I will mention that we displaced one of our main competitors to win this Quasi government organizations business. And so we feel pretty good about our future prospects there.
Operator
You mentioned in your comments that your capital investments are largely completed and that WidePoint will be free cash flow positive. If so, what is your plan for capital allocation?
Jin Kang
Yes, I can confirm that our CapEx was materially completed at the end of Q4 2023. Also in Q4, we experienced free cash flow of approximately $300,000 and see this trend continuing for the foreseeable future. We should see our cash balance grow throughout 2024. The management team is weighing various options, along with input from our -- input and guidance from our Board to including increased investment in sales and marketing, strategic hires stock repurchase program, among others. As we validate our forecast and analyze our options, we will be forthcoming with additional information on that front.
Operator
You mentioned in your comments that your sales pipeline is large and growing. Can you quantify or provide some additional color on this front?
Jason Holloway
Yes, sure. I can take that. So we've seen a substantial increase in our pipeline due to recent wins and material contracts. So those closures, they've created new opportunities in the IAM and MMS arena within the same markets. Specifically, our IAM pipeline has filled up tremendously due to recent -- due to the recent transportation sector win we announced in Q4. On the MMX front, with our recent wins and displacing our direct competitors, as Jin mentioned earlier, that has paved the way through our systems integrator partnerships to get a number of new opportunities.
And lastly, as I stated in my prepared remarks, IT authorities has been on a role of closing new deals, and this is largely due to a successful channel partner program created to help supplement boots on the street while keeping overhead costs at a minimum.
Operator
At this time, this concludes our question-and-answer session. If your question was not taken, please contact WidePoint's IR team at wyy@gateway-grp.com. I'd now like to turn the call back over to Mr. Jin Kang for his closing remarks.
Jin Kang
Thank you, operator. We appreciate everyone taking the time to join us today. As the operator mentioned, if there were any questions we did not address today, please contact our IR team. You can find their full contact information at the bottom of today's earnings release. Thank you again, and have a great evening.
Operator
Thank you for joining us today for WidePoint's fourth quarter and full year 2023 conference call. You may now disconnect.
Read more current WYY
Methinks
2 months ago
WidePoint Shares Strong 2023 Preliminary Results and Announces Strategic Priorities for 2024
https://feeds.issuerdirect.com/news-release.htm
FAIRFAX, VA / ACCESSWIRE / February 13, 2024 / WidePoint Corporation (NYSE American:WYY), the innovative technology Managed Solution Provider (MSP) specializing in Identity & Access Management (IAM), Telecommunications and Managed Mobility Services (MMS), Analytics & Billing as a Service (ABaaS), and IT as a Service (ITaaS), today announced positive operational and financial results for 2023 and shared its priorities for a robust 2024.
Preliminary Fourth Quarter and Full Year 2023 Results
Based on preliminary, unaudited financial results, WidePoint anticipates meeting its revenue guidance of $103 million to $108 million for the full year 2023. Highlights and preliminary financial results for the fourth quarter and full year 2023 include:
Full year 2023 Revenues of approximately $106 million
26th consecutive quarter of positive Adjusted EBITDA
Sequential quarter-over-quarter growth in Adjusted EBITDA for 2023
Cashflow positive in Q4 2023 (Cashflow is defined as Adjusted EBITDA less capital expenditures)
Ended 2023 with approximately $6.9 million in cash and cash equivalents, with no bank debt
2023 Operational and Product Development Highlights
In 2023, WidePoint strategically enhanced its product development initiatives to strengthen and broaden operational capabilities. Milestones and achievements include:
The Intelligent Telecommunications Management System (ITMS) has reached the In-Process status under FedRAMP
Opened two new locations for issuing Identity & Access Management credentials
Offered credential issuance for ECA and NFI PIV-I Credentials and ECA Medium Hardware Credentials in Columbus, Ohio, Fairfax, Virginia, and Hampton, Virginia
ECA credentials issued at more than 18,000 unique enterprises including Fortune 500 companies, small businesses, colleges and universities, private and public research organizations, healthcare organizations, and banks and financial institutions
The Unified Communication Analytics Application is now in the Microsoft Marketplace
2024 Financial Outlook
Building upon a robust fourth quarter marked by material new contract awards in Q4, WidePoint sustains its momentum with a substantial federal contract backlog totaling $359 million as of December 31, 2023. Fueled by this backlog and strong demand, WidePoint forecasts double-digit percentage growth in the high teens for both top-line revenue and managed services revenue, in addition to being cash flow positive for the full year 2024.
Management Commentary
"This past year was pivotal for WidePoint, as evidenced by our strong financial performance and strategic operational achievements of organic growth," said WidePoint CEO Jin Kang. "Not only do we expect to reach the higher end of our revenue guidance, but we also achieved cash flow positivity by the year's end and anticipate continuing this trend throughout 2024. Our continued focus on sales and marketing initiatives has yielded fruitful results with a robust pipeline. The consistent renewal rates of contracts underscore our unwavering commitment to protecting our customers' privacy through our enterprise solutions. The performance seen this past year prompted us to increase investments in sales and marketing efforts to sustain our positive momentum into 2024. Additionally, pipelines for all our business solutions have created synergistic opportunities for cross-selling and upselling, further propelling WidePoint's overall growth trajectory. We also see customers reengaging with us as the COVID pandemic recedes. Customers are focusing more resources on mobile security and increasingly, understanding the value of WidePoint's most secure IAM solutions and our zero-trust security model. The prioritization on security and a growing understanding about the differentiation of WidePoint's solutions are providing additional tailwinds for our business."
2024 Outlook and Strategic Priorities
WidePoint's capital investments made throughout 2023 have for the most part been completed and the company does not expect to see material capital expenditures in 2024. The completion of key capital investments, including establishment of hybrid issuance capabilities, and the successful deployment of the Unified Communication Analytics Application, now in the Microsoft Marketplace, are pivotal drivers anticipated to fuel the company's long-term growth. Additionally, the investment in the Intelligent Technology Management System continues to yield positive results as ITMS nears its final FedRAMP Authorized designation, as well as our hot COOP site nearing completion; both projected for completion in the first half of 2024.
In 2023, WidePoint made significant progress in strengthening its sales and marketing efforts, deploying a robust strategy to expand its market presence. Despite facing challenging macro-economic headwinds, the company strategically maneuvered through these obstacles by concentrating its efforts on capturing higher margin contracts. This targeted approach enabled WidePoint to sustain its competitive advantage while mitigating the effects of external economic fluctuations.
In 2024, WidePoint remains committed to advancing its sales and marketing initiatives, with plans to allocate additional resources and budget toward enhancing its staff and capabilities. Specifically, WidePoint will seize the current momentum gained in Q4 2023 by adding an additional senior level commercial sales resource, an established Federal Business Development resource with a proven track record within the D.C. area, and a Vendor-Partner Manager for the expansion of strategic partners in 2024. WidePoint remains dedicated to safeguarding its customers' right to privacy through the application of its TM2 solutions, notably the IAM solutions to uphold the highest standards of security and confidentiality for its customers. Cybersecurity has never been more critical and WidePoint is positioned to tackle this epidemic of security breaches through the convergence of WidePoint Managed Mobility Services (MMS) and Identity and Access Management (IAM). Adoption of a Zero Trust environment for the B2B and D2C world is not an optional feature, it is a must, and WidePoint's IAM solution is the basis for Zero Trust.
Within the K-12 sector, WidePoint continues to seize opportunities, having collaborated with various school districts conducting pilots across three states. The company recently engaged with a subject matter expert within K-12 to facilitate a partnership program aimed at integrating WidePoint's IAM solutions into existing offerings for numerous K-12 entities, accelerating market penetration. WidePoint remains committed to enhancing the overall solutions provided during the pilot phase to ensure readiness for market launch through this partnership program to protect the most at-risk demographic of our population.
All of WidePoint's business solutions continue to contribute significantly to the company's overall success. As such, all of the business solutions experienced growth year-over-year and see this trend continuing throughout 2024. Each business solution is an integrated layer in WidePoint's full set of TM2 solutions that provides opportunities for cross-selling and upselling to spur on additional growth. These business solutions continue to play a crucial role in strengthening WidePoint's competitive edge and unlocking additional pathways for business growth and development.
Further details and discussion of operational and financial results will be included in the fourth quarter and fiscal year 2023 earnings release and conference call.
Methinks
5 months ago
WidePoint Corporation (WYY) Q3 2023 Earnings Call Transcript
Nov. 14, 2023 7:23 PM ETWidePoint Corporation (WYY)1 Comment
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WidePoint Corporation (NYSE:WYY) Q3 2023 Earnings Conference Call November 14, 2023 4:30 PM ET
Company Participants
Jin Kang - President and CEO
Jason Holloway - Chief Revenue Officer
Robert George - Chief Financial Officer
Conference Call Participants
Scott Buck - H.C. Wainwright
Operator
Good afternoon. Welcome to WidePoint's Q3 2023 Earnings Conference Call. My name is Paul, and I will be your operator for today's call.
Joining us for today's presentation are WidePoint's President and CEO, Jin Kang; Chief Revenue Officer, Jason Holloway; and Chief Financial Officer, Robert George.
Following the remarks, we will open up the call for questions from WidePoint's Publishing Analysts and Major Investors. If your questions were not taken today and you would like additional information, please contact WidePoint's Investor Relations team at wyy@gateway-grp.com.
Before we begin the call, I would like to provide WidePoint's Safe Harbor statement that includes cautions regarding the forward looking statements made during this call. The matters discussed in this conference call may include forward looking statements regarding future events and the future performance of WidePoint Corporation that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-Q filed with the Securities and Exchange Commission.
Finally, I would like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at www.widepoint.com.
Now, I would like to turn the call over to WidePoint's President and CEO, Mr. Jin Kang. Sir, please proceed.
Jin Kang
Thank you, operator, and good afternoon to everyone. Thank you for joining us today to review our financial results for the third quarter ended September 30, 2023.
I am pleased to share the progress we've made over the past several months. As we concluded the third quarter on a high note, thanks to the continued dedication and hard work of our entire team. We have experienced consistent sequential improvements quarter-over-quarter underlying our continued growth and resilience, as we also surpassed the results of Q3 2022 and have achieved positive adjusted EBITDA for the 25th consecutive quarter, highlighting our consistent profitability and operational strength. We anticipate this positive trend will persist into the fourth quarter and into 2024, something Bob will go into deeper later in this call.
Our revenue remains within the guidance range of $103 million to $108 million, a reflection of our steady and disciplined approach to managing our business. Although, we do expect that our adjusted EBITDA is trending toward the lower end of the range due to various sales opportunities having pushed into Q4, but I'm happy to report that several of these opportunities have already successfully closed. This bodes well for Q4 and full year 2024. To further quantify our forecast, we expect free cash flow to be approximately $3.5 million more than in 2022. The action that we've taken in the past 12 months to be prudent with our capital in conjunction with the overall proactive nature of our team. Another significant catalyst contributing to our strong position is the fact that the majority of our capital investments have been successfully closed. As a result, we anticipate only minimal capital expenses in the fourth quarter and throughout 2024, reflecting our disciplined approach to managing our resources.
Additionally, we believe there will be no material non-cash adjustments for the current year, which will both lead to an optimized adjusted EBITDA and bottom line. An example I wanted to share where all investments have been completed is our Intelligent Technology Management System or ITMS, which is still in the FedRAMP in process status. We anticipate hearing back from General Services Administration in the next couple of months, and I look forward to realizing this important milestone.
Beyond that, other capital investment projects that we've mentioned before such as our hot COOP site improvements, soft certificate issuance and remote issuance of certificates have all been materially completed. Although, we are encouraged by some of the trends and preliminary results we are seeing, I must shed lights on some of the macroeconomic factors we are witnessing and the way we're mitigating those uncontrollable variables.
Despite the interest rates, as lofty as they are, WidePoint remains well prepared for the foreseeable future, effectively managing our cash balance. We closed Q3 with a healthy reserve of approximately $8.4 million. As you know, the Federal Government is currently embroiled in budget debates and a potential government shutdown is looming. However, we have a long history of successfully navigating such challenging environments, and we'll continue to mitigate these risks.
Next, despite some large tech companies implementing layoffs, the labor market remains extremely competitive. We are diligently managing this situation, albeit with potential additional staffing costs. However, we intend to offset this risk by focusing on higher margin managed services revenue. All that said, the supply chain challenges that were prevalent have fortunately now largely subsided, and we are all well equipped to manage them effectively.
On an operational note, it has been encouraging to witness customers reengaging with us in both the commercial and federal government sectors. A contract with the FCC, an agency within the Department of Transportation, implementation of Cox Communication and MCPC ProMedica are major successful engagements that are going well. Additionally, we successfully signed contracts with The Federal Emergency Management Agency and a major beverage bottling company for telecom and IT as our service solutions, respectively, in Q4. We will be providing additional updates on these and other awards in press releases soon. We have several material opportunities that we see on the horizon that we hope to win before the end of the year. Some of these opportunities did slip to the right into Q4 due to the previously discussed macroeconomic factors, but we remain keen on doing everything we can to get these deals across the finish line.
Again, we continue to garner all this traction in tandem with operating efficiently as a leaner and tight organization, following our reduction in force at the end of 2022, and as evidenced by our ability to renew materially all of our contracts up for renewal, our customers continue to value our solutions and services.
In some cases, we have been able to expand the scope of work, which speaks to the robust nature of our offerings, in addition to the relentless efforts from our team to continuously cross sell and up-sell our solutions. We will maintain focus on scaling the growth of our Federal Government and commercial customers.
I will now hand the mic over to Jason, who will further elaborate on these topics and provide some color on the sales and marketing front. Jason?
Jason Holloway
Thanks, Jin, and good afternoon, everyone. As Jin stated, we continue to build momentum and are seeing the results of hard work in closing the higher margin deals. As you may have seen, we had a press release in which we closed an identity and access management deal with an agency within the Department of Transportation totaling $1.7 million. You may have also seen on the Federal Procurement Database System web portal that we closed another deal under our CWMS two contract with Department of Homeland Security, namely Federal Emergency Management Agency or FEMA. The award is approximately $60 million over a three year period of performance with a one-year base period and two one-year option periods. Additional details can be found on our filed SEC Form 8-K.
I am also proud to announce that we also won a new contract with the SEC, with a total contract value of $3.2 million and Soft-ex, our operations in Dublin, Ireland, recently announced a win with CSG as well as an Irish telecom agency. Soft-ex is also targeting opportunities in the B2C market for Cox Communications. Our pipeline remains robust. We look to finish 2023 strong with additional potential material contracts.
We continue to make positive progress within the K-through-12 Arena. Jin and I hosted an event in which very influential K-through-12 District IT leaders were in attendance. Along with piloting our soft search solution, we are also exploring wireless PIV-I credential readers in which the user can connect using a Bluetooth connection to the device. In parallel, IT Authorities continues to build its pipeline as well and is making headway in closing the number of exciting deals. Not only will this immediately benefit our top line, but it presents the broader WidePoint Organization with incremental cross sell and up sell opportunities looking ahead. Please stay tuned for additional IT authority updates in the near term.
Additionally, we continue to work closely with our systems integrators, and we believe that our tremendous past performance in both the federal and commercial space will close additional opportunities in which the systems integrators are reaching out to WidePoint for assistance in closing. Our marketing efforts continue to grow with the targeted campaigns with increased social media presence. Given the remote work environment, we see positive results from the increased social media efforts. We will continue to stay laser focused and continue to close higher margin deals.
With that, I will hand the call over to Bob.
Robert George
Thank you, Jason. Good afternoon, everyone. I'm pleased to share the details of our third quarter 2023 financial results. For the third quarter, our revenue was $25.7 million, an increase of $0.4 million or 2% from the $25.3 million reported for the same period last year. Revenues for the nine months period ended September 30, 2023 were $77.8 million, an increase of $7 million or 8% from the $70.8 million in the same period last year.
Now I'll provide a further breakdown of our third quarter and nine months revenues. In the third quarter, our carrier services revenue was $14.6 million, an increase of $0.5 million from $14.1 million in the same period in 2022. For the nine months ended September 30, 2023, our carrier services revenue was $42.5 million, an increase of $3 million from the $39.5 million in the same period in 2022. The increase for both three and nine month results is due to increased contracting activity within our federal customers.
In the third quarter, our managed services revenue is $8.1 million and remained relatively constant from period to period. For the nine months ended September 30, 2023, our managed services revenue was $21.8 million, which is also relatively consistent from period to period. In the third quarter, billable services fees were $1.6 million, an increase of $0.7 million from the $0.9 million in the same period in 2022. For the nine months ended September 30, 2023, billable services fees were $4.7 million, an increase of $1.7 million from the $3 million in the same period last year. For both the three and nine month periods, the increase in billable services fees was a result of more billable positions on our federal contracts and increased billable implementation services in our Soft-ex subsidiary.
In the third quarter, reselling and other services was $1.4 million, a decrease of $1.4 million from the $2.8 million in the same period last year. For the nine months ended September 30, 2023, reselling and other services was $8.8 million, an increase of approximately $2 million from the $6.8 million in the same period last year. The decrease for the three month results was due to the timing of reselling opportunities near the government fiscal year end that moved into the fourth quarter. The increase in the nine month result was due to the resale of new capabilities provided by a third party partner for several federal customers. We do want to highlight that reselling and other services are transactional in nature and the amount and timing of revenue could vary significantly from quarter-to-quarter.
Gross profit for the three month period ended September 30, 2023 was $3.8 million or 15% of revenues compared to $3.8 million, also 15% of revenues in 2022. Gross profit for the nine month period ended September 30, 2023 was $11.6 million or 15% of revenues as compared to $11 million or 16% of revenues in 2022. The more significant metric of gross profit percentage excluding carrier services was 37% in the third quarter 2023 compared to 34% in the same period last year. The increase in the third quarter of 2023 was due to two new contracts in our identity management business, which are high margin contracts. For the nine month period ended September 30, 2023, gross profit percentage excluding carrier services was 34% compared to 35% in the same period last year. The lower gross margin percentage excluding carrier services is related to the increased depreciation and amortization related to capital investments and our delivery platforms reaching completion and beginning to be amortized. We note that our gross profit percentage will vary from quarter-to-quarter due to our revenue mix.
In the third quarter, general and administrative expenses are $4 million or 15% of revenues compared to $3.6 million or 14% of revenues in the same period of 2022. The increase primarily relates to an increase in noncash share based compensation expense compared to the same period last year. General and administrative expenses for the nine month period ended September 30, 2023 are $11.7 million or 15% of revenue as compared to $11.2 million or 16% of revenues in 2022. We expect to see general administrative costs as a percentage of revenue lower in the future.
For the third quarter of 2023, our net loss is $921,000 compared to a net loss of $541,000 in the same period last year. The difference in net loss between the third quarter of 2023 and 2022 is predominantly related to increased depreciation and amortization related to our delivery platforms reaching completion and beginning to be amortized. Net loss for the nine month period ended September 30, 2023 was $2.7 million compared to a net loss of $14.7 million in the same period last year. The principal difference in the net loss from the nine month period in 2023 compared to the same period in 2022 was the noncash goodwill charge of $16.3 million that was taken in the second quarter of 2022 and to a lesser extent the increased amortization expenses previously mentioned.
Moving to our balance sheet. I'm encouraged about where WidePoint stands from a liquidity perspective as we've done an exceptional job to manage our cash and because of our access to the $4 million receivables factory facility. With that said, we ended the quarter with $8.5 million cash, which was in part due to a large advance payment from a customer for a three-year contract and tables management in preparation for the potential federal government shutdown, although that shutdown was averted.
This completes my financial summary.
For a more detailed analysis of our financial results, please reference our Form 10-Q, which was filed on November 14.
So with that, I will turn the call back over to Jin.
Jin Kang
Thank you, Bob, and thank you, Jason.
I am proud that our efforts show that we are headed in the right direction as our financial performance has shown significant improvement and the bulk of our capital investments are now in the rear view mirror. In terms of strategic growth initiatives, we have formed key teaming agreements with products and solution providers that are poised to fuel our growth by enhancing our offerings and expanding our market reach. In parallel with this effort is our strategy to continue teaming with large systems integrators and other strategic partners as we look to scale our growth engine.
Additionally, in line with the trends observed in previous quarters, we have remained actively engaged in evaluating various M&A prospects that have the potential to enhance our current business operations. As of now, I don't have any significant developments to report, but rest assured that we will promptly inform our stakeholders should a promising opportunity materialize. Our team remained focused on continuing to execute our plan for organic growth.
We will not be offering specific guidance for 2024 at this time. There are numerous uncertainties that make it challenging to provide a clear outlook. Factors such as the ever changing federal budget landscape make it difficult to determine the timing of new awards. Additionally, inflation and the result in increased labor costs continued to pose a challenge for us in determining our costs. We are also faced with uncertainty regarding pending awards for material contracts. However, we are optimistic that we will eclipse our 2023 financial performance in 2024. Rest assured, we remain committed to providing updates as soon as we can offer a more accurate and reliable outlook for the future.
In conclusion, our company's performance continued to demonstrate its resilience and adaptability, and we remain dedicated to navigating the challenges ahead with a strategic and forward thinking approach. We appreciate the trust and support of our investors and shareholders as we work to deliver long term value and sustainable growth.
With that said, we are ready to take questions from our analysts and major shareholders. Operator, will you please open the call for questions?
Question-and-Answer Session
Operator
Certainly, at this time, we'll be conducting a question and answer session. [Operator Instructions].
We did have a question coming from Scott Buck from H.C. Wainwright. Scott, your line is live.
Scott Buck
Hi, good afternoon guys. Thanks for taking my questions. Jin, I'm curious, you talked about expanding kind of the scope of some of the contracts at renewal, have you guys been able to move pricing at all or has that been pretty stagnant?
Jin Kang
The pricing has been pretty stagnant, however, we did have some successes in adjusting some of our contractual pricing in our TLM business, and we're continuing to work with DHS and the General Services Administration to increase the unit price for our managed services. We're quoting the current inflationary situation and so far we've seen the government be a little bit more receptive to our plight. So I'm hopeful that we can get some price increases for both our managed services and our professional services rates.
Scott Buck
Great, that's helpful. And second, could you give us a little more color on how you see the K-12 opportunity? And then maybe how you guys can potentially accelerate your involvement there?
Jin Kang
Yes. So - so as Jason said, we did have a fairly large group of folks that came in and listened to our sales pitch and we pitched to them several new potential solutions, with our identity management solution and we have a new development - couple of new developments in that front but before I steal Jason's thunder here. Jason, if you want add - talk a little bit about the new development, our Bluetooth and also the - our ability to issue soft search with our new teaming partner.
Jason Holloway
Sure. No problem. Hey, Scott, how are you doing? So, as we stated on the call, we - we did - we did host this event and what we've been doing over the time that we've been working with K-12, we've gotten - we have a number of pilots that are active. We've gotten a lot of significant feedback from them in terms of how to make the deployment of our identity and access management solution a whole lot easier for them. So what we did is, we went into a development project and came out with soft search. So that this way we're going more digital on the student side, so that - that way we're not issuing a lot of the smart cards that have the - the chip that's inserted. So they wanted more of a digital solution because they are handing out a lot of the Chrome, the Chrome workbooks and tablets and things like that. So we did go in successfully develop that.
And then the second thing we did is for the IT group and the teachers and all of the other staff members, they didn't really want to have the smart cards plugged into the dongles that go into the side of their laptops. They wanted to be able to walk around freely and potentially jump from machine to machine. So what we're doing now as part of the pilot program is we've gone to a Bluetooth reader in which you can insert that smart card credential what we call the PIV-I for them, and that gives them that capability of wirelessly connecting to these various machines. We're using it in house at Y point successfully now, and that's going well.
And then - and then overall strategically what we've been doing is we are - we are positioning ourselves inside of K-12 to get more at the legislative level so that we can get - we can be a part of a bigger cyber security or security spending budget for these schools, so - and in order to do that we've been having to get the feedback from the K-12 schools, so that we can meet certain criteria so that we can be elevated and take advantage of again a lot of these state program to where we don't have to go and deal with individual budgets of K-12 schools. So hopefully this helps a little bit.
Scott Buck
That's - that's great color. I appreciate that. And then just last one from me. Jin, if you could kind of walk us through what your M&A criteria is, what are you looking for in a transaction?
Jin Kang
Well, we are looking for companies that are either horizontal and vertical integration opportunities, companies that - in terms of horizontal, we're looking for companies that do the same thing that we do. Stable companies that do the same thing that we do and we can move them onto our delivery platform and we remove the redundancies to make the deal immediately accretive. We're also looking for those companies that have specific intellectual properties or capabilities that's going to deepen our capabilities and increase our depth of service. But, we are going to be concentrating more on organic growth and we're not going to spend too much time looking around for these out of the blue M&A opportunities, because I think it's critically important for us now that we are turning the corner here that we concentrate on organic growth. But we're not going to say no if somebody shows up with the right profile of a company that adds depth to our company or adds breadth of customers to our company as well.
Just to allow - enhance what Jason had said about K-12, we do have several pilot programs going and we now have the capability for mass issuance to make the whole process of issuing digital certificates easier and more convenient. And he also talked - he already talked about the Bluetooth that's going to make the form factor much more palatable for the K-12 community. And so we see a lot of good things happening there. We'll be rolling out the Bluetooth capability here in the next week or so and we'll see what kind of acceptance we get.
Scott Buck
Perfect. I appreciate the time guys. Thank you very much.
Jin Kang
Great. Thank you, Scott. I think we did receive an email question earlier. So, Bob, did you want to discuss that about gross margins.
Robert George
May need your help.
Jin Kang
Yes.
Robert George
Okay. The email question was during the call you noted that your gross margin percentage excluding carrier services revenues was 35% in the nine month period in 2022 and 34% in the nine months of 2023, what is driving the apparent margin compression?
Good question. The recent gross margin excluding the carrier services is approximately 100 basis points lower in 2023 compared to the nine months in 2022, it's a result of the increased noncash depreciation and amortization expenses in that period. The increase is a result of our investments in our delivered platforms being placed in the service during 2023 and the D&A and cost of sales for the nine months ended was $961,000 and $1.5 million in the nine months ended 2023. This represents the entire difference in the 100 basis points of decreased margin. Including this item, cash margins are consistent from ’22 and are higher or - on higher revenues excluding care services. Also I'd like to highlight that we are have no debt other than long term leases, which are offset by right to use asset, as the accounting standards require. That's all I have on that.
Jin Kang
Okay, great. Thank you. Operator, are there other questions?
Operator
There were no other questions at this time. This concludes our question and answer session. If your question was not taken, please contact WidePoint's IR team at wyy@gateway-grp.com. I'd now like to turn the call back over to Mr. Jing Kang for his closing remarks.
Jin Kang
Thank you, operator. We appreciate everyone taking the time to join us today. As the operator mentioned if there were any questions that we did not address today, please contact our IR team. You can find their full contact information at the bottom of today's earnings release. Thank you again and have a great evening.
Operator
Thank you for joining us today for WidePoint's Third Quarter 2023 Conference Call. [Operator Closing Remarks].
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8 months ago
WidePoint Corporation (WYY) Q2 2023 Earnings Call Transcript
Aug. 15, 2023 5:34 PM ETWidePoint Corporation (WYY)
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WidePoint Corporation (NYSE:WYY) Q2 2023 Earnings Call Transcript August 15, 2023 8:00 AM ET
Company Participants
Jin Kang - Chief Executive Officer & President
Jason Holloway - Chief Revenue Officer
Robert George - Chief Financial Officer
Conference Call Participants
Operator
Good afternoon. Welcome to WidePoint’s Second Quarter 2023 Earnings Conference Call. My name is John, and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang; Chief Revenue Officer, Jason Holloway; and Chief Financial Officer, Robert George. Following their remarks, we will open up the call for questions from WidePoint publishing analysts and major investors. If your questions were not taken today and you would like additional information, please contact WidePoint's Investor Relations team at wyy@gateway-grp.com.
Before we begin the call, I would like to provide WidePoint's safe harbor statement that includes cautions regarding forward-looking statements made during this call. The matters discussed in this conference call may include forward-looking statements regarding future events and the future performance of WidePoint Corporation. That involves risk and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-Q filed with the Securities and Exchange Commission.
Finally, I would like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at www.widepoint.com.
Now, I would like to turn the call over to WidePoint's President and CEO, Mr. Jin Kang. Sir, please proceed.
Jin Kang
Thank you, operator, and good afternoon to everyone. Thank you for joining us today to review our financial results for the second quarter ended June 30, 2023. I’m pleased to share that WidePoint has been executing our strategic plan as we have seen anecdotal evidence of our business steadily improving. And this has, of course, been supported by our financial performance being modestly ahead of our internal forecast. The kicker here is that, we've been seeing general improvements within our business, even though we are operating with a leaner team following our recent reduction in force initiative. This has led to our 24th consecutive quarter of positive adjusted EBITDA, which is an accomplishment we're hoping to continue going forward and a milestone we're proud of.
A big contributing factor to our ability to operate optimally has to do with our team always looking to make system and processes more efficient. In parallel with the reduction in force, our way of operating efficiently has led WidePoint in becoming a lean and lean corporate organization. We're continuing to meet or exceed customer service level agreements and are renewing materially all of our customers that are up for contract renewals and in some cases, even expanding the scope of services we provide. This is a testament of our robust technological solutions and most certainly the team behind the scenes. In particular, we continue to see growth in the mobility and cyber security sectors and remain steadfast in our trusted mobility management solutions.
One intriguing point to note is that, businesses are still leveraging the remote working model and appears that for a good chunk of them the model is here to stay. From our vantage point, it is quite encouraging as that trend will continue to provide tailwinds for WidePoint and more opportunities for us to capitalize on. That said, there are a flurry of unpredictable macroeconomic trends that could potentially impact our operations. First, as you all may have heard in the news, the Federal Government is again royal in the budget debate and is facing possible government shutdown, which could hamper our operations in that sector. We continue to carefully navigate this environment as we have done for many years, and we will continue to mitigate any risks.
Second, the labor market still remains very tight despite many large tech companies executing layoffs. We are managing this situation but may see some staffing cost increases as we strive to maintain our key personnel. We will mitigate this risk by concentrating our sales effort to capture higher margin managed services revenue. Lastly, supply chain challenges still exist and have been affecting our mobile and accessories fulfillment business. With that said, the encouraging piece of news is that, this challenge has been largely manageable. Thanks to our team's ability to remain nimble.
Although there is the possibility of the delivery timeline pushing to the right, we are confident that our staff can react swiftly and mitigate those supply chain risks. Despite these macro variables, as you may know, we have remained laser focused on controlling the controllables and a major part of that narrative has been the investment we have been making back into our business. After the past several quarters of making strategic investments back into our business, I am pleased to share that we see the light at the end of the tunnel as we expect the majority of our capital expenditures to conclude by the end of the year. One of the bigger programs has, of course, been our intelligent technology management system or ITMS achieving FedRAMP in process status. We're in the latter innings of dealing with the final government entities, which are reviewing our status as we expect this to be completed by the end of the year.
Next, our coop site improvement have largely been completed and is in the testing phase. Furthermore, as we said we would on the last call, remote issuance of certificates also known as soft search, along with our remote vetting process have been completed and will allow WidePoint flexibility in modes of certificate issuance that will result in increased higher margin revenues. Additionally, as we also mentioned on the last call, the development of a hybrid issuance capability which will allow our clients to retain their personally identifiable information or PII in their possession has been completed as well. We are already issuing identity certificates using this new capability. As a result of some of these investments, we've become a stickier solution provider for a number of our preexisting clients, but we've also won a number of incremental deals from net new customers as well.
I'd like to now hand the mic over to Jason so he can talk about some of the activities going on within the sales and marketing front. Jason?
Jason Holloway
Thank you, Jin and good afternoon everyone. While the execution of our sales and marketing strategy continues as planned, I want to focus my remarks today on three topics. First, Q2 Awards. As we reported on July 11, in the second quarter of 2023 WidePoint saw more than 80 contractual actions across our business units, including new awards, renewals, contract extensions and exercise option periods, totaling approximately $46 million in contract value. These wins encompass our managed mobility service, analytics and billing as a service, identity and access management and information technology as a service solutions.
Second, pipeline. Q2 saw increased interest from both government and commercial entities in all of our technology management as a service solutions. We have numerous meaningful new opportunities in the works that we look forward to closing and reporting on in the months ahead. And third, there's a demand for a more secure future. As many of you know, in the United States the first half of 2023 was nonstop news headlines about cyber breaches, ransomware attacks and cyber-crime. With 2,200 cyber-attacks per day, a cyber-attack happening every 39 seconds on average, and a data breach costing an average of $9.44 million, cyber-crime is predicted to cost $8 trillion in the United States by the end of the year. And this is not to even mention the threat to human security and lives posed by cyber-attacks and identity and access management failure.
New solutions and partnerships are needed to more effectively guard against this ever-changing threat landscape. I am also proud and excited to share that building on our K-12 pilot projects and the WidePoint’s experience and expertise, our team is now working with government and industry partners to develop and deploy a more secure offering based on our pioneering PKI solution. To shift public and private sector enterprises to adopt new secure solutions in a monumental effort. Imagine a war room of strategists working together to combat terror. Cybercrime is such a threat. WidePoint is joining forces with the experts and leaders needed to shift this work. It will not happen overnight, but Q2, 2023 will be one of our markers for when the partnerships truly started coming together. In the months ahead, we will report back with incremental material developments and successes.
With that, I will hand the call over to Bob.
Robert George
Thank you, Jason. Good afternoon, everyone. I'm pleased to share the details of our second quarter 2023 financial results. For the second quarter, our revenue was $26.8 million, an increase of $3.7 million or 16% from the $23.1 million reported for the same period last year. Revenues for the six-month period ended June 30, 2023, were $52.1 million, an increase of $6.8 million or 14% from the $45.5 million in the same period last year.
Now I will provide a further breakdown of our second quarter and six-month revenues. In the second quarter, our carrier services revenue was $14.2 million, an increase of $1.7 million from the $12.5 million in the same period in 2022. For the six months ended June 30, 2023, our carrier services revenue was $27.8 million, an increase of $2.4 million from $25.4 million in the same period in 2022. The increase for both the three-month and six-month results is due to increased carrier activity that we are seeing across our customer base.
In second quarter, our managed services revenues increased marginally relative to the same period last year at $6.9 million and $6.7 million, respectively. For the six months ended June 30, 2023, our managed services revenue is $13.8 million, which is relatively constant from period to period. In the second quarter, billable services fees were $1.9 million, an increase of $900,000 from $1 million in the same period in 2022. For the six months ended June 30, 2023, billable services fees were $3.1 million, an increase of $1 million from the $2.1 million in the same period last year. For both the three and six month periods, the increase in billable services fees was the result of more billable positions with a particular government customer and an increase in implementation services in our Soft-ex subsidiary.
In the second quarter, reselling and other services was $3.8 million, an increase of $900,000 from the $2.9 million in the same period last year. For the six months ended June 30, 2023, reselling and other services was $7.3 million, an increase of approximately $3.3 million from the $4 million in the same period last year. The increase for both periods was due to the resale of new capabilities for three federal customers. We do want to highlight that reselling and other services are transactional in nature and the amount and timing of revenue could vary significantly from quarter-to-quarter.
Gross profit for the three month period ended June 30, 2023 was $3.9 million or 15% of revenues, as compared to $3.3 million, or 14% of revenues in 2022. Gross profit for the six month period ended June 30, 2023, was $7.7 million, or 15% of revenues, as compared to $7.2 million, or 16% of revenues in 2022. The more significant metric of gross profit percentage excluding carrier services was 31.2% for the second quarter of 2023, which is consistent with 31.5% in the same period last year. For the six-month period ended June 30, 2023, gross profit percentage excluding carrier services was 32%, compared to 36% in the same period last year. The lower gross margin percentage excluding carrier services is related to corresponding costs from the resale of the new capabilities provided to the three government customers I previously mentioned, and increased amortization expenses related to the capital investments in our delivery platforms that are reaching completion and now beginning to be amortized. We note that our gross profit percentage will vary quarter to quarter due to our revenue mix.
In the second quarter, general and administrative expenses were $3.9 million, or 15% of revenues, compared to $3.8 million, or 17% of revenues in the same period of 2022. The change in general and administrative dollars was not significant. However, general and administrative expenses are lower as a percentage of revenue. General and administrative expenses for the six month period ended June 30, 2023 are $7.9 million or 15% of revenue, as compared to $7.6 million, or 17% of revenue in 2022. We expect to see general and administrative costs as a percentage of revenues lower in the future.
For the second quarter of 2023, our net loss was $842,000, compared to a net loss of $13.8 million in the same period last year. Net loss for the six month period ended June 20, 2023, was $1.8 million, compared to a net loss of approximately $14.1 million in the same period last year. The principal difference in the net loss from the three and six month periods in 2023, compared to the same periods in 2022 was a non-cash goodwill charge of $16.3 million that was taken in the second quarter of 2022, and to a lesser extent, the increased amortization expenses previously mentioned.
Moving to our balance sheet, I'm encouraged about where WidePoint stands from a liquidity perspective, as we've done an exceptional job in managing our cash, and because of our access to a $4 million receivables factoring facility. With that said, we end of the quarter with $7.8 million in cash, which was in part due to an accelerated timing of cash receipts ahead of some vendor payments on the last day of the quarter.
This completes my financial summary. For a more detailed analysis of our financial results, please reference our Form 10-Q, which was filed on August 14.
So with that, I will turn the call back over to Jin.
Jin Kang
Thank you, Bob and Jason. On band with the prior quarters, we've been continuing to receive and review interesting M&A opportunities that could be incrementally beneficial to our existing operations. There are no substantive updates for me to share with you at this time, but we'll be sure to keep you all apprised if and when an opportunity crystallizes.
As I mentioned at the outset of the call, though operations have been improving and heading in the right direction, there are certain variables that are outside of our control, which I described earlier, and that can potentially impact our operations. To that point, we are trending toward the bottom of our aforementioned adjusted EBITDA guidance, and on target for revenues. The reason behind this stems from us experiencing growth in our value-added resale business, which explains for the higher revenue, but lower adjusted EBITDA. Since it's a lower margin offering, nonetheless, we are still confident that we will be exiting the year on a cash flow positive run rate basis. More specifically, we believe we will be improving cash flow year-over-year by approximately $3.5 million.
It is an exciting time at WidePoint, as the investments we have made into the business have begun to bear fruit. We've seen a small sample set of that recently, as Jason shared, but the more compelling thing to note is, what is in store for our organization. As we shared, in addition to increased client retention, augmented scope of work with some of those clients, fueled by sales and marketing tactics as discussed by Jason, we believe that we are approaching an inflection point in our growth story. It is certainly an invigorating moment in our corporate history.
With that said, we are ready to take questions from our analysts and major shareholders. Operator, will you please open the call for questions?
Question-and-Answer Session
Absolutely. At this time, we will be conducting a question-and-answer session. [Operator Instructions] While we pole for questions, I'd like to start with a couple of questions. The first, regarding FEMA. There have been tragic news coming out of Lahaina, Hawaii, and questions about the FEMA budget in the news. How does the current federal government budget discussions affect FEMA? The overall federal government budget and WidePoint.
A - Jin Kang
Thank you, operator. The news out of Lahaina is tragic, and we pray for the people of Hawaii during this time. On the federal government front, they are again embroiled in a budget discussion, and FEMA's budget, which is part of the Department of Homeland Security, is caught up in that process. Good news is that, current WidePoint's contracts are all funded and very little risk to our current revenue run rate. However, any new projects could be delayed, pushing revenue streams to the right, potentially.
Operator
Thank you. And the second question, can you provide more color on your FedRAMP status?
Jin Kang
Sure, can. The current status is that, we are awaiting the Alcohol, Tobacco, Firearms, and Explosives, or ATF, to provide an Authorization to Operate, or ATO. The ATO is currently with the ATF's CIO's office for final signature. Once signed by the CIO's office, it goes to the General Services Administration for final review and approval and FedRAMP authorization status. GSA's final review usually takes a few weeks to complete. However, GSA has informed us that they have received record numbers of applications this year and that the review process has lengthened a little bit. With that said, we believe that this process will be completed in Q4 of this year.
Operator
Thank you. [Operator Instructions] At this time, this concludes our question-and-answer session. If your question was not taken, please contact WidePoint's IR team at wyy@gatewayir.com. I'd now like to turn the call back over to Mr. Jin Kang for his closing remarks.
Jin Kang
Thank you, operator. We appreciate everyone taking the time to join us today. As the operator mentioned, if there were any questions we did not address today, please contact our IR team. You can find their full contact information at the bottom of today's earnings release. Thank you again and have a great evening.
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