WYY - Earnings call transcript Q3 2020

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Operator

Good afternoon. Welcome to WidePoint’s Third Quarter 2020 Earnings Conference Call. My name is Karen, and I will be your operator for today’s call.

Joining us for today’s presentation are WidePoint’s President and CEO, Jin Kang; Executive Vice President and Chief Sales and Marketing Officer, Jason Holloway; and Executive Vice President and CFO, Kellie Kim.

Following their remarks, we will open up the call for questions from WidePoint’s publishing analysts and major investors.

not contact and at WidePoint’s were additional would wyy@gatewayir.com. questions please information, Investor your taken you today, like If Relations team

anticipated. WidePoint’s may during this Before like The and matters that includes These WidePoint the corporation call, the and XX-K the this call. materially statements that regarding Safe conference could uncertainties regarding in provide cause events of and call differ Form actual cautions performance described made future from Securities we that are forward-looking Harbor statements risks I those forward-looking risks uncertainties discussed Company’s Commission. Statement in to results include involve and the Exchange begin with to would filed future

will the available link www.widepoint.com. I via a Relations replay Investor be made Company’s Finally, to this like would website in for of remind section the everyone at call that

to I and Kang. Mr. Jin President would call Now WidePoint’s proceed. like over to CEO, please turn Sir, the

Jin Kang

Thank to Thank you, quarter XX, operator, and joining XXXX. the our ended results review us third September everyone. for for you financial good afternoon to today

be XXXX ambitions lining the know, to year you financial months high first this of indicated, continued year, the the the half As that a banner six WidePoint. the had has financial for Today, results I’m the year first we as and to of all up quarter. year report the of for was third pleased success of through

XX% million. customers. to increased Census XX% as Perhaps, our Government margins, managed XXXX, work increased of year-over-year year-over-year XX.X with U.S. quarter revenues our XX% XX.X maintains revenue, third which our expansions impressive, other well driven XXXX the increased approximately services million, to For gross on more the as Federal largely by

of which the a all almost we high we is year million increase five quarter, this recognized XXXX. net As recognized revenue, the in times income fiscal income of X.X net of margin result in

the million third XXX% quarter improved adjusted to to million, of for our X.X EBITDA Our EBITDA and XXXX. year-over-year increased X.X

cash increased XX.X to position our million. Additionally,

of which of able provide matter they financial be. on among our are it the year year the have contracts, reasons to in the those line shaping organization during what which of up the personnel challenging began year-to-date of incredible those more more Overall, this organizational accomplishments the efficient flexible working momentarily, to our continue we thank recent our in structure of will first most key elucidated improvements have be has management ability this betterment half improving the memory, our major will for in will is is the and confident opportunity been on by not perform the many for dedicated hard While in the if updates the put shareholders. this contracts with for remotely not and of work quarter our our year. third that theme our make take to of the that effective we to environment it the remain to in customers were are much this is, all we WidePoint’s operating making driven by back adaptability, been the work XXXX. fact who I employees team and this and

Our government incredibly stable. remains business

the of building and Engineers, been have of Services of pandemic, some Customs continue the the and U.S. battling Protection, the Human We hospitals. U.S. Border Health to service Corps and Army agencies against Department the including major emergency U.S. who

services our Our in products than well of ever impacts remain and COVID-XX, remained and insulated negative before. from organization more demand the

IdM both services from environment. enables are solution remotely, these workforce the infrastructure function Our sites, communications a remote today’s paramount provide IT to that which our of allows in secure and

let’s a mind, attention up trend XXXX. that quarter reasons, us in for and another context business setting was pertinent continuing. and our these for WidePoint, see in of we the to XXXX strong our QX With turn driving projects some more successful For that

Let’s Security. Wednesday, Wireless hearing XX. we begin contract contract with the to from days. Cellular Homeland This next back Department Managed that on November within start scheduled That is means U.S. Services should few the for BPA the be DHS of

our is have, competition back course, proposal, believe as the presented DHS. continue than We we of already in the we why submitted October, to and positioned case servicing to WidePoint our better

the for outlined optimism previous our reasons call. several have on We of earnings

the skip to going I’m explanation So today.

our hear say for the to remains optimism as that we ever before. as same our all investors know strong However, will the and anxious results. I are discussed We reasons have

and sharing are as them will appreciate we meantime, be as in we your soon DHS, We the patience. notified by continued

the the financial on to be record on year, work the of is performance primary progressing and XXXX Census our well. our continues project driver work this Our

reminder, a services managed country. the As in the this single largest is mobility project

continue as At over charge be time, to year this out means going turn I’m managing and a will complex through the delivering, to the work call bonus work and clients. quarter. to initiatives. Jason. this beyond the for will our walk the will our spot. expect Kellie of to discuss continue the tackle the rest us I results no in the benefit had throughout other return the Afterwards, we as WidePoint’s of proves expectations bright are call of and Jason completely this our residual large, sales decrease there we to and prospective but for We devices ability have census our in Kim, XXXX of an it more as end through financial for has by point decommissioning project beyond. the projects from questions. to and update that material also this our Then marketing project CFO, expect our point, of that we come to and on for approach will year third and I to end company, approximately and the soon this on open for that be to provide quarters scalability increases gradually year, but years We Bureau. the At the only October majority we been XXXX. Census XXX,XXX And contracts will many discussed, will to

Jason Holloway

Jin. you, Thank

As demand. mentioned, of story quarter continued increasing the third and is the success Jin

some service upon well reputation providing high-profile maintaining We high-quality support the and the our and that with contracts momentum valuable we many relationships renew have as to us, created effectively clients building expand with been ensures integrators to higher-margin business. more our systems have so been of achieve the our by of as our

issuing be which IdM we sessions business. vendor our the be calls, potentially discussed resellers, two we place continues have driver for our management a we large are SYNNEX with past to the conducting selling agreement in Currently, identity have will credentials. with On SYNNEX, who and training

XX with As dividends the the SYNNEX relationship did WidePoint here our new, to resellers all job, the circumstances, for as start adapting to of $XX and current bring the the third very expansions. table, which $XX the the pandemic last to dissipate. At is of It We are excellent find on recorded quarter, contractual million the was roughly will added worth potential client note XXX-plus pay $XX they optimistic million more environment training million. also also I’m call, or we more the month, as we process, but the work is we complicate this in to we operating and ways identity actions share over that the of either we effects an of efficient discussed cumulatively important done a new management our new well. excited and as has new credentialing that that that slowly in the than announced remain the we pandemic progressing. team

these in limited category. is our aware, but fall are into to our primary are higher-margin clients to books can contracts customers, and you all disclose as directly We what this add business and IdM we our about goal

Tim project a for Guide As with Jin have awareness included Services. security the our source quarter, powerful guide our of and makes study Census enterprise the mentioned, Gartner’s gaining team. thought but WidePoint by very increasing platform case to also industry is The This both are for recognition Expense enhanced we the our Guide note for Telecom makers, decision Market leaders. for why Management we brand our in it market Market excited past been recognized the Gartner have the customers, was XXXX which been is prospective for definitive high-profile to

is of enterprises management guides was the are an to life our end-user One and and of offering on take bread part devices, that findings looking in XX increasing that services for providers for butter. cycle role

management. developed Intelligent and ITMS, nervous encapsulates or managed of Telecommunications our is mobility software of all trusted components functional platform is Management Our our services our central System, the system proprietary that

XX%, to increase Regarding our ITMS, accessories our XX%. and which up increase sales XX% we to profits looking equipment will to by are

well. additional the to new and the we we are Each continue have. quarter, thanks we as customers number prospects business value, that new also recycling current the to who We recognize to of continue and explore to for relationships land to expand value beginning our components create

hand Kellie. to continue the confident the years. to forward driving will over generated to able will in With the we We call I year be are momentum the leverage that, business coming this and quarters

Kellie Kim

you, Jason. Thank

As positive record trends noted last major in net positive earning from the earnings of income. EBITDA producing many release, and our continued quarter, revenues, we

XXXX. for to ended September results Turning XX, our the quarter third

Services reported of same XX.X Third XXX% from increased quarter third the quarter year. quarter last to million the million for revenues million year. revenue was XX.X from million, last Carrier up XX% XX.X the XX in

product were of and accessories decrease government revenue XXX to Managed by revenue revenue, in customers XX% with last total third XX.X On is XXXX. increase to million very to and year-to-date third customers, was basis, in partnerships from of in for XXXX, large the government partially due resale to a the sales the our reminder, with increases a million, quarter commercial the XXX% integrators. was systems The and up XX% delivered in increases our prior expansions accounted the fee from third primarily last nine Services of services million Carrier services due managed and revenue by services a other As from to the quarter million also it margin in existing year. service of year. of compared in quarter XX% year. in through of timing in increased billable These revenue low reselling offset increases of XX.X

total year. revenue higher Carrier from million of Services was Year-over-year the in growth XX% nine-months primarily to due nine-month revenues both increase or total managed and of of managed and nine-months the Carrier for first in million from revenue period or quarter to XXXX, XX.X of total Services by XX.X last existing revenue. driven demand XX.X million customers. and managed and total revenues million services or XX% XXX.X This services of first revenues were Carrier were of Services the of XX% XX% For revenue, or compares revenue, of services

XX.X% the the was million Our quarter to quarter gross million third quarter XX% profit year. X.X% third in Gross third for compared of in to increased last the X.X from margin XXXX. X.X

For was In driven the previously the XX.X% or margin total of the revenue. by our million XXXX, first third Carrier nine-months profit million in quarter million the XX.X the four XX.X XX% of discussed. revenues by gross increase XX% the of increased increased million year to periods, last from revenue in or third decrease Services quarter both year. to expenses from in XX.X% X.X operating last of total In gross year,

amounted of third percentage of to a As the operating XX% revenue quarter in X% as expenses compared XXXX. of to revenue,

to our year, partially the XX.X higher operating offset cost, the increased both For business, expenses SG&A increased higher support the to the million by expense payroll X% reflects from in In reduced by periods, employee XX with consistent first count increase of costs. million. travel nine-months

the integration. of approximately development last to similar million, and invested nine-months enhance first the during product to portal year X.X platform in Additionally, our

in six XXXX, than of was improvement million, an more quarter the doubled million, year. income for from was basis, two XXXX XXXX. On XXX,XXX improvement a X.X more third XXX,XXX year. from On of from was non-GAAP XXX,XXX fold income the net the For quarter than last million, EBITDA a last basis, of third net year-to-date quarter X.X income GAAP net third an

million, two to last compares For EBITDA XX, an year, the nine-months was ended which X.X September XXXX, XX% million improvement.

the to last adjusted Our XXXX. in million, Shifting X.X was up EBITDA increased XX% year-to-date a XX% quarter EBITDA compared draw million to working non-GAAP the and five in the to of our XX.X capital million period my credit X.X financial to quarter XXX,XXX X.X in with sheet. the approximately basis, summary. cash, to year. third On available on balance This same compared completes exited million adjusted net million We down facility.

to this our reference analysis which was filed detailed please results, more our call. financial a Form For of prior XX-Q,

with So I it that, would like back to Jin. turn to

Jin Kang

be WidePoint. adaptability are Clearly, Kellie, are better large-scale to never incredibly to we and demand has that the our today. you, Jason. year stronger, have been and our Thank thank we Thanks by fruitful solution we positioned on build never continues mobility and been for The for continuing an performing to than you, credibility XXXX successfully projects. our

confidence For long our beneficial the reverse on in it those owners reasons, XX that WidePoint. during the provided dialogue run institutions maintain split, of number as feedback will which this all have effective be process. for engaged of investors organization who become opens a in Xth, our November the we of one became our door greater to thank I and for to

next are the excited that steps never WidePoint’s this be Our company in has evolution. stronger on we position, a of moving conviction financial and results to and to been the year-to-date shows

the the are end end year, we October. we look the provided As the reiterating we of at guidance of to increased

maintaining hit million. million that will our midpoint original guidance of our have to we are revenues year-over-year. range, If We XXX of revenue increased the XX% XXX

importantly, than originally have more revenues higher-margin More anticipated. we added

our ending adjusted to no continue translates would for we million is over the XXXX. Should million which into be X.X doubt such, be momentum X.X numbers, on XX% and to to those there EBITDA a year. will year high in new that increase X.X XXXX, we a EBITDA of note, last As hit X.X intend we million, guidance million to

our and to Going leverage organic scale year, to into our means next business. plans are both inorganic

enhance making marketing improve our and of new business. capabilities, more our competitive, are to in more invest to make to technical prospects solutions going capital and investments will attractive sales We we and securing our

for firm We to consulting unique certification, have us already the help engaged competitive provide prepare a which a security edge. will us FedRAMP cyber with

near We expand capabilities the in planned our also to TLM have future.

also As mentioned exploring before, are we acquisition we have opportunities.

specifics both targets number could targets. providing a that won’t So reviewed far, on we we and be we At any of time, horizontally. integrate vertically this these

problems the has want do these and necessary we that I year then tuned Please that expanding of in if heading and momentum a to shareholders offerings say, to XXXX months is bright. our ready today’s for covered, strategic initiatives. of major are updates the any Though to for in take of suite been our coming solution equity, as aforementioned a should large please that utilizing luxury by government call giving Sufficed our into remind flexible challenging structure volatile function many, With for you from and year Operator, for the resulting enterprises will have forward environment we our and in we the open beneficial. many are commercial excellent stay However, for with of a XXXX. organizational first, and questions questions? move faced record excellent cash the staff, debt targets, and shareholders. and the future analysts us

Operator

Crawford with question will Instructions] Mike from you. B. first Thank Riley. We our [Operator take

Michael Crawford

see Thanks the services a in with strength business. DHS. managed the have and question it continued the on is I great do contract to

So is bit. days, chance there two but be in a a that good it could fairly to due little extend seems

for in to what So be further, do what would the had recompete, really likely of you in or that case don’t able by half? existing then actually given turn if and happen and some continue we would year events, get unexpected you year the to - maybe one

Jin Kang

Mike. Sure,

part your XXth. a period yes. first of November to contract performance for the on the answer the of me The start supposed Let is it is new question,

date that with However, modification date a the government acquisition. can change or the that extend to

them concern period that. currently a then April and X is little because our XXXX, very beyond contract out it goes option contract XX, us up an until them to our that. is for has do It So current with to months of

and So issued then us out task time at go at XX-months puts that like beyond another can XXXX, of October orders any that that.

to case I that some could So it happen, it if XXXX. should think October of won’t will In transition that we to go the win time that is of it, high-risk new hate win take altogether, for recompete. out placed another the all but very we off reason best think and why we work this to DHS, which the maneuver order contractor, are a the to task and until

However, XX-months, will XX-months pass, come a all will that under our long cycle, and beyond if should to be transition be maybe there that, contract. that maybe current

Michael Crawford

Okay, it government. thank is you look disclosed I XX-Q, that if clarifying mean, your for Jin. accounts at receivable as I your Also, just in just predominantly balances

commercial. million two Just

making we great SYNNEX in keep What that on enterprise Jason, will Now come more see front? to you growth going are CDW should this it others. milestones with you I for? business and what take mentioned But strides look know, help to and

Jin Kang

me first, Jason, of that and on you back great. Let then, to if start tag be the off would can that,

Jason Holloway

Sure.

Jin Kang

of report The don’t a a that fairly Federal lot or the think aging I large. reason the Government how good that business have. Firstly, AR are is contracts much indication we of our is

So Also, or in our worked outstanding receivable the our significantly been from DSO accounts of the past. been commercial the we for reducing have looks number little down so a the small. comparison, side days have invoices

So ahead, with it business, closing in rest in businesses you Jason. a of could that with will a Jason new the had there. And have continue with contract but be on commercial our opportunity. that is milestone that Go increases of Jason commercial difference, and Solution, I been we our the the that mentioned IdM let terms we seeing are and answer.

Jason Holloway

Jin. you, Thank Yes.

COVID-XX going to we uptick. have the that is the going we that impact. is, the things really, cautiously So add really pandemic the where to on with to Mike, seen I’m as optimistic the I get side thing really only see was enterprise better start are commercial

along have we positive we that that generation have our the extraordinary very work all of of the we demand going that we And work that done doing with bode done are with really partner all well. definitely Gartner is SYNNEX going results. again, some to have the think is to with that well it with I produce work as

say again, I And all going about it. tuned, announcements some can excited So I’m there coming. be, I to would is good is are that that stay say and

Michael Crawford

Thank much. great. very you Okay,

Jin Kang

Okay.

Operator

this session. will our conclude Instructions] time, question-and-answer [Operator At this

not to your to now over back taken, IR team Kang WidePoint’s question I closing at was his like If would contact turn call remarks. the for Jin wyy@gatewayir.com. Mr. please

Jin Kang

everyone silent crowd appreciate pretty you, taking time today. and Thank to us today, but we operator, join the

were address today, operator that our any contact the please not if we As mentioned, team. did questions there IR

You earnings at today’s bottom can find a again, their full information and have of evening. contact the Thank release. great you

Operator

you for Thank Conference joining today WidePoint’s us Third Call. for XXXX Quarter

may day. disconnect, and You now great a have

WidePoint (WYY) 16 Nov 202020 Q3 Earnings call transcript