WYY - Earnings call transcript Q3 2017

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Operator

Greetings and welcome to the WidePoint Corporation 2017 Third Quarter Financial Results Conference Call. At this time, all participants are in listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the conference over to Kimberly Rogers with Investor Relations. ahead. go Please

Kimberly Rogers-Carrete

marketing Jin Good Interim overview XXXX the update, Rob. me thank of a for Marketing and and you on an questions Holloway, as Thank provide Sales the shareholders. Financial Chief quarter developments, recent afternoon Officer, institutional financial WidePoint's and CEO, President WidePoint's third will a call provide and quarter's sales Kito call and overview provide and With as of and strategy. results will joining financial the outlook. and well the point, Jin Jason WidePoint's you, Jason Officer; At are and Kang; to will Chief conference today an Mussa. we'll analysts call. accomplishments overview Kito from that open

as turn Securities Reform may, similar the Jin? any uncertainties. terminology expressions any materially undertakes SEC forward-looking over conference company this order These to Kang and financial reports that turn the obligation facts, Safe reflect by a of for remarks. intended of any call other forward-looking to historical without believe, expect, releases. forecasts, and including to due the limitation, sections expressions uncertainties, using that opening discussed required risk goals, update something press than or from future Form except the anticipates, law. Jin, to forward-looking Factors the Annual this Harbor after the made to to guidance over Risk XXXX. which or differ Jin call forward-looking factors no WidePoint's those such participants all circumstances including and identify call other results reflect statements pursuant risk statements Litigation conference would expressions, statements. I'd I like in to its call, revise are on of now WidePoint's and plans, involve filings including factors any provisions remind predicts, may and to Actual on XX-K, number will, in to Act may Private The Before Report XX-Q of like and Form Expressions arise events during of forward-looking are statements quarterly statements I company's CEO, the

Jin Kang

Kim, afternoon you, Thank good you joining interest all. WidePoint. for Thank today for your and and you to in us continued

very being contracts been executed successfully return to quarter. refresh for plans in company. CEO getting we've traction are have and this we and Since quarter to appointed second quarter performance July, efficiency implementing and land growth and our business, organic tangible This improvements and offerings. the in new operational strategy anticipate our our is we We the product I'm fourth discussed strategy in stabilize execute pleased continuing call profitability in in with August. and producing our our results to the continued

is also our the executing implemented team I strategy improved note expense during and to delivering value. committed third successfully we pleased Our to additional measures quarter. that reduction shareholder am

was That the positive. we that am is report pleased high goal. very result, achieved a to third quarter have run-rate a goal. adjusted exited that a on As that priority EBITDA I we

We for quarter are positive fourth XXXX. track EBITDA to entire adjusted now the on be

will second we expenses our have So we actions quarter guidance of during reduction operating in we during anticipate $X.X reduction taken approximately annually. million expense that issued result the far, the our by quarter call. met operating a earnings We the

total $X.X this of expect with measures of reduce annualized annual million. of performance remarks. expense we anticipate result business. will implement After improvement in continue enter At our approximately expenses first by our further XXXX, actions As reductions, profitable approximately to additional the more attrition that enable XXXX. into million. XXXX and additional material a fourth completing prepared These details $X.X XXXX his to material provide In such, the reduction or client in reductions. in anticipated financial operating quarter and these is quarter all EBITDA we Kito of will a cost of time, as will to expense streamlined our not savings do we expense revenues us reductions any planned foresee of

We company action. that stabilize the we priority goal our taking cost are pleased have savings to our reached by necessary

wins. tell me key bit contract a let Now, our little about you

long the Guard Agency or two the Coast We Federal and under Emergency have CWMS BPA, the new FEMA. captured DHS key awaited customers namely Management U.S.

two that components these BPA With greatly major now will we probability DHS. contract. improve the all These customers our of CWMS re-win of we two customers, the to provide services DHS

we million third the captured $XX new over in in quarter. have Additionally, work

cost we our and capturing have cut are business. new operating We

poised are of happy Again, are results very one short-term for growth. with We cutting cost measures, of we our the goals. our

reach will to order it than However, more long-term savings take our in cost goals.

margin our Our and customer long-term up-selling pipeline wallet customer current of and those goals customers business capturing excellent new growing our retaining include: by our the opportunities of performance; cross-selling; with opportunities; capacity share growing system to through increasing that current high partnership and strategic our faster capital; allow our growing and our us will a delivery without acquisitions. streamlining our service services expand revenues; significant investment

our goals As on goals, we not these of and lose we will focus near-term sight success.

grow as our line to watch work profitability line diligently our top revenues. continue will to We we bottom

solution for our experts that matter value solutions in to from aspects and our In our our delivery. our of all it performance, excellent excellent of our subject differentiates WidePoint We end, unique provide will the competitors. staff continue is customers

We to make efficiency. service improvements operational for in will continue delivery our platforms

to in increase two WidePoint will pipeline ensure and that will the foreseeable We sales future. rates. areas these will concern remain continue for a going to marketing in Successes sales make and closure our improvements processes our

our Management call, second vision quarter are implementing As we in and Mobility Trusted stated TMX our framework. we or

as lines. all tight-knit of solution group, our a Our staff are the leveraging members working of strength

TMX early experienced framework. While our cross-selling we efforts, implementing the and already of by stages are in up-selling have our we some successes

strategy Our and up-selling has strong opportunities several to TMX led leads.

release our press to this A up-selling We for security soon announce a our current is services customer. opportunity mobile $XXX,XXX. management coming contract with have closed sizeable

you Database yourself. you For look of the up those can that FPDS, monitoring Federal for or System Procurement

addition and recent partnerships will In state remarks, ensure team, sales team. building of reach whole prepared while focused dramatically. and line a pipeline, ensure in the upon cohesive top productive management and our we as growth are creating to establishment of successes of revenues. driving Jason's taking our our that new to a have that sustainable our on and will successes, growing our We profitability working to want a you cross-solution-line company management he our more expand improved the opportunities In remains all as profitability. new And better sustainable communications action a necessary as team senior these

quarter the exiting is sum So to up, good have rate that on XXXX mostly our run goal EBITDA a on made adjusted neutral or we of third positive. positive,

new improving framework us and is and capture We have TMX efficiency launched operational communication our helping contracts. that

We partners count agreements with and Coast have FEMA entered as well. our into Guard that teaming lastly, in we customers. resulted has can strategic as new U.S. And contracts

on objectives. concerning Marketing to and our our floor future He pipeline to Now, subsidiary like TMX information vision sales strategic provide I'd growth opportunities. and additional & yield and some our Holloway, provide Cybersecurity Jason? the implementation our will also Officer of additional the information to Chief of CEO Jason Sales

Jason Holloway

Jin, discuss sales our to at differentiators. discussed you, recent high growth contract I level and wins, what's Thank and going market up strategy shareholders. am fellow

with closed we quarter, a $XX third the value contract million. During total over deals of

pipeline priority Given meet prospects of our targets. our length value the ensure growth have high our a to cycle, line number top our that in of sales sales and is we growth short-term long-term to sufficient

has we're continuing contract customers, our First an and on short-term. prospects, has approach To to $XXX,XXX in to new just current growth Their sales services added with customers. additional grow improve our prospecting successful share days. wallet last our in XX short-term for the in value addition expanded loyal

and additional Our as options expanded included management services international services. multi-currency such mobility management tablet

are that initiative, solutions our and that high been have customer Telecommunications are sales with improve services working requirements we growth known All immediately To that can platform. of which new or integrated demands Management margin current have our System customer ITMS serve. our partners into Intelligent

Let's and driving website Click which initiatives, traffic call our credential significant Pay is now sale and and positive last progress sales We search release. This press implemented the our our in growth now our we the long-term call. centers. engine are like recent results a which Per yielding SEO earnings or large to address initiated initiatives from optimization our

new We generate are now initiatives developing build and launching new business leads digital awareness. brand marketing to and

identify deals to front to our major carriers We front potential on us customer will Any strategic state in work require new mobile have continued important. that's of opportunities. partners key the to and with this

that of both our request-for-proposals responding We a our on relationships. or partner to and are number commercial actively result direct government of new opportunities RFPs

specifics. talk it's early Although, to too

the this by our result initiative. encouraged very are We in a as pipeline of increased

a end implemented the I QX discussed strategy the our experience significant management our of we implemented to services. able at report we were I streamline to As a of and revenues in identity shift the our our in as to second identity am increase instead of did decline happy that we not management result our cost reductions on quarter. focus call, earnings sales offering

our We've TMX partners differentiators. our platform strategic marketing support push. to customers, in Mobility Management with of pushed mobile-centric and solutions our or marketing and to Now Trusted perspective forward market of our

requirements. solution capabilities and into perspective internal support seamlessly integrated our We external our compliance and their operations, showing are and partners customers have can their be

adding and to third sales Mobility a our implemented we and We the made our are our XXXX Telecommunications platform. that sales TMX System growth Trusted have Management marketing strengthen push summary, differentiators competitive enhance our during Intelligent initiatives. quarter significant vision of also to differentiators. ITMS our of We introduce to approach meet security strategies or In adjust Management or the

our I'd have in cohesive a forward. you and to long-term can outlook we to ground gained a Kito Mussa, and perspective a I as very profitability WidePoint's that, results to to an QX, have hard our Go like the that now With Kito? provide of goals. we sales on ask the Listen, we meet going are provide CFO still working assets assure during go Although, quarter team. ways third financial interim to

Kito Mussa

Thank you Hello, everyone. Jason. for introduction that

have met not as those me since been many For XXXX, years. I and President served WidePoint before, have with Vice Controller and for you the

discuss Today quarter achieving the deeply first over the financial and it dive to into of of results including areas been of then administration prepared the Jin. immersed I've third remarks, goals number time, made a that in details company. our business progress During turn towards then of we financial our I'll back the my the

on You Commission our find with call. information earnings to just Form U.S. XXXX Securities prior can additional quarter filed was XX-Q the also report, which our and third Exchange

let's EBITDA. regarding achieving expand Jason both and the first into adjusted diving before on quarter-over-quarter positive Jin Now, comparisons, by made comments

Our in XXXX. compared $XXX,XXX adjusted EBITDA to was approximately $XX,XXX as

line shows implementation move third long-term that revenue in can exit appropriate a XXXX cost Our successful growth with and quarter achievement of enabled adjusted that continue sales of our reductions impact for with with us top goal sustainable the had and our the of to the growth. our adjusted strategies positive EBITDA quarter, EBITDA place. of from for third additional positive to We quarter third meaningful entire cost growth profitable controls forward the

Now rate our run positive line-item exited third let's us results EBITDA quarter. quarter the during that discuss third financial as led we to an

the revenues Our year. million, million XXXX as $XX.X quarter $X.X same $XX.X decrease quarter approximately were for XX% of last a of in compared million the third to or approximately

we and deals to services was reselling streamline third and Gross approximately expense in required to to Now XXXX. credentialing is our for to third all to compared of directly driven XXXX of XXXX related that accessory delays able savings decrease not sale. efficiency cost new delivery orders the that our approximately orders a Sales and quarter to do services, quarter implemented labor anticipate credentialing our fewer year. reselling the related implemented in the marketing near-term. We $XXX,XXX The for and revenue savings and in optimizations and accessories XXXX the sales lowered was not million carrier approximately customers, pushed result maintain marketing decreases quarter this profit as pushed that of approximately as that restructuring of task $X.X offset XXXX. was partially that gross $XXX,XXX costs. in fourth decrease was attributable for within savings customer important marketing third as base into were These in was million note profit decrease carrier a onetime while increase core amount expense the significant our delays the of second of by were of and the orders did XXXX. the XXXX, and repeat compared sales in into your and initiatives $X.X that our fourth we this by during recognition of by The sales It occurred quarter mobile quarter we in of realized supplier closed timing XXXX. due mobile

However, third and approximately million as compared and XXXX. XXXX we sales accelerate was for decrease cost plans during as administrative and $X.X we profitable. General approximately become quarter in as the XXXX. The of marketing million G&A driven $X a we quarter the more in result of that realized our by decisions to savings second as could change future third and of largely in the expenses made were

our former to in Looking ahead report costs fourth to of the related quarter, approximately expect $XXX,XXX resignation CFO. severance to the we

as a run basis go XXXX. into will lower our one on comparatively that rate Excluding general be costs administrative we and item,

loss culminated of of as XXXX. for approximately the XXXX quarter in All approximately this, compared a $XXX,XXX third of to $XXX,XXX in net

financial talk about let's Now our position.

should It capital Our important $X.X quarter million of this we cost our our realized we approximately annually, our reduction that net enter during estimate manage the net initiatives approximately over reduction credit. note line to as million from as is in We working third of which savings should improve, due XXXX. months. timing short-term the us last working collection decreased $X.X capital initiatives receivable differences, to XXXX we that save nine cost

telecom XXXX customers first to platform. the after implemented. our reduce consolidation office one closure annual of in our anticipate remaining We expect $XXX,XXX quarter office approximately this fully conversion ITMS finalize our during We will cost further complete by we additional of the once

as our enabled tuned adjusted investors quarter great exit positive more. made the third a company, entire is first decisions, Before we over EBITDA. that encourage I a Jin, and to a turn to to actions it us like those reiterate stay back tough of we our cost, I'd reduced to step with the This and all for

that, with to over turn I'd back like So it to Jin.

Jin Kang

to Thank the this like you, you, questions? call Operator, thank Jason. open At will Kito, our open please up would you from up questions the call and I for participants. time, for

Operator

Thank you. session. Instructions] you. a now conducting We'll question-and-answer be [Operator Thank

Crawford Our with first Please question is the from with Mike Riley. line B. question. of your proceed

Mike Crawford

can couple the quarter? Thank you, couple maybe Crawford A carrier broader ones; B. you revenue Mike FBR. provide specific from then of of services a Riley questions in one, and

Kito Mussa

provide the $XX.X million Hi, Mike, this approximately quarter. third quarter. carrier the It for is Kito. was Yes, we for services did

Mike Crawford

in you Okay. end run Kito. the half relative is operating Thank you, that about And then, the reduction, rate expenses of XXXX? when first talk a or the $X.X million the at expense XXXX to of

Kito Mussa

at this necessarily we're Kito again. we the Mike, is, What at total Hi, we're pool to not cost out. of took relative is It's looking XXXX. that looking

$X.X have effective we started had these we model year didn't our fresh we if of of have X. and these about we So costs, would the any costs million January all out saved made if

Mike Crawford

the know broadening comes see positions good Guard year the changes next there Coast to DHS that When on for that to FEMA and to to a board just contract. little And then, retain thanks. and RFP scope any timing? it it's you Okay, bit, is

Jin Kang

So far, no there change. is

Officer there said that As second delayed, has because end quarter our out year a of And draft change looking may the we Security. Contracting next we a of at are for beginning RFP either Department the call, year. or at be Homeland that's in of in this coming been the

So we're fiscal awarded there of holding and having some schedule by government everything to completed year our be but XXXX. tentative may still delays,

September be time XX - will that So XXXX.

Mike Crawford

week go investor some with through in And only made, updated an ends optimal and with really then, or of tactical deck. you've contemplated the Okay. it changes strategic financial company trajectory it much but today not XXXX, you. margins than also model an now. think X-K business given the Great, does be of with higher right the would have the filed And last Jin, thank you I

could that get talk to maybe through what to please? So, how help model walk even and about perhaps model, takes that - it you

Jason Holloway

Hi, I Mike, go if - this is yes. ahead, Jay,

Kito Mussa

question. again. Kito is Great, This great

looking that a to is try things are to few the make we to past some try try directional do wanted on of changes the targets. and to and we have One

class. - as targets we'd is like world. management to what are team, we optimal be perfect ranges. they're what some objectives - the know This and set a certainly in how it be in in best a people what view terms Now, have some stretch really they business goals to to to and have target we're And definitely let the thinking of we takes

ourselves are a set we identified over have these we know those and to our do up Obviously, what we're can as that in future. to achieve these when try and won't looking we're targets to able close well targets period. move are time, internally. that we be to So these this to at also like make is we'd internally achieve the we things But folks to after we're looking that the as results optimal targets - keep is them and single-year that let sure in this looking for this

Jin Kang

just and gross mean, Mike, terms one are Right, our been doing have is to of that. we've been going so margin in revenues. to margins to the of that add that our I we focusing that - things on how we increase it's higher

gross somewhere margins XX, are our So XX right now. running around

But also our some concentrating I looking are think the we higher we're delivery. of can automation sales at cost we on to of margin do reduce cutting cost that obviously. and through

we're can terms out our of in industry of General terms In average. range and you as of way our Administrative, see

within to XXXX our enter we to fell think get so to we we're at range weigh as margin there in XX%. of made margins, within XX% XXXX, going we enter all corrections, XX% step-by-step And we But range, that we'll by swoop. all higher of as the that not there operating I XX%. one concentrating on looking get And sales. net we're the

Mike Crawford

then, couple any And Samsung you. or for in years AT&T there are to of have likely be final been maybe very some where or your today? relates question seemingly channel hopes Thank to channels And Okay. others. high several of past productive these the more

Jin Kang

Sure, sure, Mike.

Jason has of one just press in had and this one and that. channels release new that good Let to add because with going am that the Protection a pretty CDW, company. from I was we that happened, our will fairly up. Border and say, in some here. are within we is The are success that be was have we're probably answer will then large will a the one contract of mobility dealing got they coming start month, company This an MPSA, awards getting be to their a Master Agreement, I'll to me is We they to and to process Services as CWMS and of our market Customs their try with we - Samsung. will sell our vehicle. to significant security that And channel using sales partner, of development another with the and which management. There using for it their solutions customer. out go as they finish Professional

some the that NDA horizon. I are are of now we're some also that over an there it, the there sort awards right them, some are significant there that horizon. bright spots just on So talk can't and are assure are under about happening, are rest with that but things significant because

Jason Holloway

cyber to with relationship Mike. we Mike, add them. - both that, and both we do AT&T, have telecom add so -

major So want on are we a partnered we AT&T, them with be with actively to just everybody are clear working airline. I that

airline. good is, are major using leverage regarding we're and actually them, the certificates discussions with doing We some are the in device them really other our with providing we FirstNet. we're thing relationship But through

for a and is inventory. award much around expense single and management centered pretty FirstNet it's So AT&T,

Jin other releases. and Samsung, will So said, press tuned with to to doing sets like additional recent stay with going what be continue so success we're just our with AT&T grow, there

Unidentified Analyst

you Yeah. Great. Thank much. very

Jin Kang

Mike. you, Thank

Operator

a line Please proceed investor. from is Donnells the question Sam with question. private next your [ph] Our

Unidentified Analyst

the best tell the the in happened. I've booked Gentlemen, quarter. have you with loss and loss net do see or am I on are us got that's correct? And Coast and I now the two three the at on But Guard. negotiation. fact with it? have is it, Tell second you have step, the like what with idea third of probably lead to I let's but Pilot place as not I renew the think program not, the that probably I things will the step for coming. there see, that we've last to a that quarters you program some That fact stick third you don't I that about or and good than the whether old just of which is Coast bone Am let's well, to smaller the put on this in been first end I me Pilot is I'm Guard that a and know and question satisfied going - understand

Jin Kang

wanted So of and project The until piece to officer performance that got extended actually the to next can to until months sure it. it the that Pilot we next get on make but contracting of of June do goes period March year, three he we follow-on that Pilot the out year. project

rest as for the do solution. task management for a identity our order officer trained and to order the are less full into the over of program the the another that. which the came moving it's going to task of opposed the modifying us So talking are of ready that all to the Coast magnitude Guard Coast On manager Coast order, a order They that task the issue well, they their through all program Guard task had just the of staff come Pilot country, note, we process is issuing of new about is to going board, now taking in, Pilot in really already direction Guard order. is we complicated matter on contracting

up-sell where and solutions situation another cross-sell is this are Management our customers. So leveraging through Mobility we our current Trusted

Unidentified Analyst

the continue going to saying they Guard to right? well well, of they does will or understand no go go have well, thanks, if Coast I the things opportunity But are but and risk. for you the but thanks anticipate have Am I you

Jin Kang

play mean, statement I that that follow-on however, we that is That to task. Right. we're exercise the to card very get thank confident but can are say you, Right. the a they not true government going the we has will always options.

my from what said performance. performance is competitors far the our differentiates prepared in remarks and CPARS, us - our that past in I have As we performance, responses is received has of performance past everyone excellent exceptional contractor database, been so their that our our terms of

So we very are confident.

Unidentified Analyst

Okay. Good.

from option I'm I but a asking. the that I'm correct? going $X is it and June, occur. that to that So Is think million things don't after it you with was extended the might month that Coast Guard well, I telling just Then that think won't,

Jin Kang

$X some some margin carrier be fee, it lower managed services services margin. month include That also and include high will that million will a will

So $X yes, it could be million up to month. a

Unidentified Analyst

you it, AT&T. AT&T. write-off on But do standpoint AT&T. of and Final the of lot then you it do. restructured talked some of about what we it. the Mike it. put When understand about money as And than all you from Rather what Samsung, has into, the it think, doing money I what to do Okay. asked of I had goals put you've to was with, a of company question, you're and the - Samsung the we

those companies how the larger way so, thought years Now, ago come And person, we're could. what's can if we that back in the we difference? Are same non-sophisticated now explain to optimistic three a leverage we now? me, we believing

Jin Kang

we - Well, our focus bit we than different a are is little - before.

we focus services. Our the our on of the is services and currently have intersection that selling of leveraging all

the our contract terms Samsung, And security wants management that in and a their and put management devices we prime we to vehicle manage have of Samsung with identity so relationship mobile software.

order. So incorporate Samsung's purchase to identity able that we management solution suite use the of also some mobile will management to into our convince were CTP this

part So that's the of one equation.

since have other The future is, is we What like and will waiting done future so that we that have implement solution, for be which a of and Certificate-on-Device. Certificate-on-Device the wants in solutions along and policy been have Until to we [ph] investing is lot forth the that the with so approve. part the technology for difficult and it us government solution to Certificate-on-Device happens, right-cert on. very is

solution systems So and there ready won't that with along the with out. we statement, integrators we are a solution that roll until ready be But policy up and able is we're help our spin our to to that from partners.

are few we partners would makes add if set And, sense. our Jason, a that? currently So you working our with to to with solution words that available like

Jason Holloway

Absolutely.

AT&T. COD and regarding that, and That's to time asked add just We've we appropriate to a started for Sam, with waiting are the like But is Jin you relationship back So, explained, AT&T. that attack come relationship also then I a okay? went it what not wanted to away. about had very long-standing

working larger that were has But clarify the strong. with I pan I it's much on relationship of terms been in project regarding AT&T obviously, and mean, been IoT we a relationship, do didn't So that. to before out. want there the

on, that something we've is airline. this a them So especially with been major working with

well, wanted I add you. so, to that back to Jin, So as

Jin Kang

are work single with that And them of in we right? for leverage, for relationships or is award the is which are we continuing of one. the carriers AT&T various AT&T, on Again, we're AT&T orders using dollars, with about the example, billions FirstNet, just U.S. so, to contract telecom is in which on a working are some talking And FirstNet. with management subcontractors lifecycle like these of to we're our their working

others. We are working with

you you an lot see were spots And releases releases. - with in as lot as that will press of coming from have place, possible. getting the a were you us, be transparent We things so want we bright hopefully, because out of of have but as the to horizon, NDA we in all that happy press I level on said

Operator

time you. end question-and-answers We've concluding Thank to for of reached now. floor the our back I'll for turn the management remarks.

Jin Kang

review And look Thank please have investors you on taking very ask on to you, the appreciate listen call. joining call We interest talking proxy-statement out the support March and I of we quarter vote you to time if thank ask vote, in for your there forward administrative look more to of future. great sure join you, the sent we third like note, But, and today that to quarter and Thank and to One will continued operator. and operator. us our us questions. to questions. its our much take we to could thought to And call thank of today early were you often. and the all to I WidePoint everyone XXXX. time of evening. that to forward for next be be a the all

Operator

Thank concludes teleconference. you. This today's

You this your Thank participation. at may lines for your you time. disconnect

WidePoint (WYY) 14 Nov 172017 Q3 Earnings call transcript