WYY WidePoint Corporation

WidePoint Corporation (NYSE American: WYY), the leading provider of Trusted Mobility Management (TM2) specializing in Telecommunications Lifecycle Management, Identity Management and Digital Billing & Analytics solutions, today reported results for the second quarter ended June 30, 2020.

Second Quarter 2020 and Recent Operational Highlights:

• Secured $42 million in federal contract wins, exercised option periods, and contract extensions during the second quarter of 2020
• Awarded a new contract from the Virginia Alcoholic Beverage Control Authority (Virginia ABC) for telecom expense management (TEM) services
• Secured $1.5 million in commercial TM2 contracts during the second quarter of 2020
• Increased the number of devices managed for the United States Census 2020 by over 50% to approximately 680,000 devices
• Announced a strategic vendor agreement with SYNNEX Corporation (NYSE: SNX), potentially expanding channels for reselling credentials

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

• Revenues increased 148% to $54.8 million
• Managed Services revenue increased 22% to $9.8 million
• Gross profit increased 25% to $5.1 million
• Net income totaled $489,000
• EBITDA, a non-GAAP financial measure, increased 230% to $1.0 million
• Adjusted EBITDA, a non-GAAP financial measure, increased 107% to $1.2 million

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

• Revenues increased 115% to $94.4 million
• Managed Services revenue increased 37% to $21.4 million
• Gross profit increased 21% to $10.0 million
• Net income totaled $973,000
• EBITDA, a non-GAAP financial measure, increased 73% to $2.2 million
• Adjusted EBITDA, a non-GAAP financial measure, increased 62% to $2.7 million

Second Quarter 2020 Financial Summary

(in millions, except per share amounts)	June 30, 2020				June 30, 2019
	(Unaudited)
Revenues	$	54.8			$	22.1
Gross Profit	$	5.1			$	4.1
Gross Profit Margin		9.2	%			18.4	%
Operating Expenses	$	4.4			$	4.2
Income (Loss) from Operations	$	0.6			$	(0.2	)
Net Income (Loss)	$	0.5			$	(0.3	)
Basic and Diluted Earnings per Share (EPS)	$	0.01			$	0.00
EBITDA	$	1.0			$	0.3
Adjusted EBITDA	$	1.2			$	0.6
Six Month 2020 Financial Summary
(in millions, except per share amounts)	June 30, 2020				June 30, 2019
	(Unaudited)
Revenues	$	94.4			$	44.0
Gross Profit	$	10.0			$	8.3
Gross Profit Margin		10.6	%			18.9	%
Operating Expenses	$	8.7			$	8.0
Income from Operations	$	1.4			$	0.3
Net Income	$	1.0			$	0.1
Basic and Diluted Earnings per Share (EPS)	$	0.01			$	0.00
EBITDA	$	2.2			$	1.3
Adjusted EBITDA	$	2.7			$	1.7

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

Financial Outlook

For the fiscal year ending December 31, 2020, the company is reiterating its revenue guidance of $185 million to $195 million, which at the midpoint of the range, would represent 87% growth. The company is also reiterating its EBITDA guidance of $3.0 million to $3.4 million, which at the midpoint, represents a 13% increase relative to fiscal 2019.The EBITDA forecast takes into consideration the company’s planned strategic investments in sales and marketing and product development in the second half of 2020. The company’s financial outlook is based on current expectations.

Management Commentary

“Despite the challenging operating environment that persisted through the second quarter of 2020, we continued to build on the positive trends we established at the start of the year and produced one of the most successful quarter’s in our company’s history,” said WidePoint’s CEO, Jin Kang. “Our revenues increased considerably to $54.8 million, largely driven by our increased work on the U.S. Census 2020 as well as expansions with other federal government customers who rely on our services to help them navigate the increasing complexities of the mobile landscape. Although the Census project contains a large amount of Carrier Services revenues, which negatively impact our margin profile, we still earned $489,000 in net income and approximately $1.0 million in EBITDA as our high margin Managed Services revenues increased 22% to $9.8 million in the second quarter.

“As the number of mobile and IoT devices continues to expand, the need for effective management and top-tier security, which simplifies complexity and generates cost savings, is only increasing. Given those trends and our strong financial position, we remain optimistic about our prospects for the second half of the year and our ability to continue profitably growing the business over the long term.”

Conference Call

WidePoint management will hold a conference call today (August 13, 2020) at 4:30 p.m. Eastern time (1:30 p.m. Pacific time) to discuss these results.

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

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

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through August 27, 2020.

Toll-free replay number: 877-481-4010International replay number: 919-882-2331Replay ID: 36035

About WidePoint

WidePoint Corporation (NYSE American: WYY) is a leading provider of trusted mobility management (TM2) solutions, including telecom management, mobile management, identity management, and digital billing and analytics. For more information, visit widepoint.com.

Non-GAAP Financial Measures

WidePoint uses a variety of operational and financial metrics, including non-GAAP financial measures such as EBITDA, to enable it to analyze its performance and financial condition. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. A reconciliation of GAAP Net income to EBITDA is included on the schedules attached hereto.

				THREE MONTHS ENDED							SIX MONTHS ENDED
				JUNE 30,							JUNE 30,
					2020			2019				2020				2019
				(Unaudited)							(Unaudited)
NET INCOME (LOSS)				$	488,600		$	(307,800	)		$	972,500			$	76,300
Adjustments to reconcile net (loss) income to EBITDA:
	Depreciation and amortization				408,600			477,100				831,400				949,800
	Amortization of deferred financing costs				400			1,200				1,700				2,500
	Income tax provision (benefit)				53,100			66,500				230,300				94,500
	Interest income				100			(200	)			(3,000	)			(4,700	)
	Interest expense				75,800			74,200				156,600				150,400
EBITDA				$	1,026,600		$	311,000			$	2,189,500			$	1,268,800
Other adjustments to reconcile net (loss) income to Adjusted EBITDA:
	(Recovery) Provision for doubtful accounts				3,600			3,600				600				11,200
	Stock-based compensation expense				209,500			284,100				490,900				373,400
Adjusted EBITDA				$	1,239,700		$	598,700			$	2,681,000			$	1,653,400

Safe Harbor Statement

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

Investor Relations:

Gateway Investor RelationsMatt Glover or Charlie Schumacher949-574-3860WYY@gatewayir.com

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

	JUNE 30,				DECEMBER 31,
		2020				2019
	(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	7,520,725			$	6,879,627
Accounts receivable, net of allowance for doubtful accounts
of $116,898 and $126,235 in 2020 and 2019, respectively		22,092,308				14,580,928
Unbilled accounts receivable		26,698,793				13,976,958
Other current assets		1,397,958				1,094,847
Total current assets		57,709,784				36,532,360
NONCURRENT ASSETS
Property and equipment, net		589,664				681,575
Operating lease right of use asset, net		5,606,082				5,932,769
Intangibles, net		2,196,878				2,450,770
Goodwill		18,555,578				18,555,578
Other long-term assets		641,381				140,403
Total assets	$	85,299,367			$	64,293,455
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable	$	20,107,933			$	13,581,822
Accrued expenses		28,534,306				14,947,981
Deferred revenue		1,892,243				2,265,067
Current portion of operating lease liabilities		566,881				599,619
Current portion of other term obligations		31,887				133,777
Total current liabilities		51,133,250				31,528,266
NONCURRENT LIABILITIES
Operating lease liabilities, net of current portion		5,332,139				5,593,649
Other term obligations, net of current portion		-				-
Deferred revenue, net of current portion		354,385				363,560
Deferred tax liability		2,096,636				1,868,562
Total liabilities		58,916,410				39,354,037
Commitments and contingencies		-				-
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value; 10,000,000 shares
authorized; 2,045,714 shares issued and none outstanding		-				-
Common stock, $0.001 par value; 110,000,000 shares
authorized; 84,418,523 and 83,861,453 shares
issued and outstanding, respectively		84,418				83,861
Additional paid-in capital		95,759,312				95,279,114
Accumulated other comprehensive loss		(252,325	)			(242,594	)
Accumulated deficit		(69,208,448	)			(70,180,963	)
Total stockholders’ equity		26,382,957				24,939,418
Total liabilities and stockholders’ equity	$	85,299,367			$	64,293,455

 WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	THREE MONTHS ENDED								SIX MONTHS ENDED
	JUNE 30,								JUNE 30,
		2020				2019				2020				2019
	(Unaudited)								(Unaudited)
REVENUES	$	54,783,790			$	22,093,153			$	94,449,146			$	44,010,055
COST OF REVENUES (including amortization and depreciation of $142,150, $232,968, $301,768, and $465,159, respectively)		49,726,210				18,036,409				84,426,234				35,699,468
GROSS PROFIT		5,057,580				4,056,744				10,022,912				8,310,587
OPERATING EXPENSES
Sales and marketing		439,684				415,462				931,915				808,873
General and administrative expenses (including share-based compensation of $209,427, $284,111, $490,868 and $373,377, respectively)		3,733,516				3,563,405				7,203,608				6,698,114
Product development		-				-				-				-
Depreciation and amortization		266,404				244,064				529,632				484,612
Total operating expenses		4,439,604				4,222,931				8,665,155				7,991,599
INCOME (LOSS) FROM OPERATIONS		617,976				(166,187	)			1,357,757				318,988
OTHER (EXPENSE) INCOME
Interest income		(68	)			259				3,025				4,721
Interest expense		(76,190	)			(75,372	)			(158,307	)			(152,917	)
Other income		9				(9	)			340				-
Total other expense		(76,249	)			(75,122	)			(154,942	)			(148,196	)
INCOME (LOSS) BEFORE INCOME TAX PROVISION		541,727				(241,309	)			1,202,815				170,792
INCOME TAX PROVISION		53,100				66,452				230,300				94,452
NET INCOME (LOSS)	$	488,627			$	(307,761	)		$	972,515			$	76,340
BASIC EARNINGS PER SHARE	$	0.01			$	0.00			$	0.01			$	0.00
BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING		83,920,314				83,990,722				83,880,197				83,902,077
DILUTED EARNINGS PER SHARE	$	0.01			$	0.00			$	0.01			$	0.00
DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING		84,964,261				83,990,722				84,664,395				83,965,994