WidePoint Company (NYSE: WYY), a number one supplier of managed mobility companies, has reported a big income improve of 35% within the second quarter of 2024, reaching $36 million. The corporate additionally introduced optimistic adjusted EBITDA for the twenty eighth consecutive quarter and a powerful gross sales pipeline, together with substantial contract wins and strategic partnerships. WidePoint’s deal with advancing their technological capabilities and increasing market presence has contributed to their optimistic monetary outlook for the rest of the yr.
Key Takeaways
- WidePoint Company’s Q2 income surged by 35% year-over-year to $36 million.
- The corporate achieved optimistic adjusted EBITDA for the twenty eighth straight quarter.
- Vital contract wins embody the Spiral 4 contract value $2.7 billion and a $254 million addition to the CWMS 2.0 contract.
- WidePoint is actively pursuing alternatives within the industrial sector, together with the Okay-12 market.
- The corporate is optimistic in regards to the SEWP VI contract, which may additional improve market share.
- WidePoint anticipates reaching FedRAMP authorization by the top of 2024.
- The corporate’s backlog stands at $320 million, with expectations of great income conversion within the subsequent two years.
- Challenges embody elevated Days Gross sales Excellent (DSOs) and $25.8 million in unbilled receivables.
Firm Outlook
- WidePoint expects minimal influence from the federal election cycle on its operations.
- The corporate goals to attain optimistic earnings per share in 2025.
- There’s an ongoing deal with technological developments to fulfill shopper wants and safe new contracts.
Bearish Highlights
- The decline in money stability as a result of authorities ramp-ups and billing challenges with new prospects.
- Elevated accounts receivable balances and longer Days Gross sales Excellent (DSOs).
Bullish Highlights
- Confidence within the DHS’s extension of contracts as wanted.
- Anticipation of contract awards and energetic hiring to bolster sources.
- Robust second quarter and first half monetary efficiency, with $70.2 million in whole income.
Misses
- WidePoint reported $25.8 million in unbilled accounts receivable, indicating potential money circulate points.
Q&A Highlights
- Jin Kang mentioned the CWMS 3.0 contract timeline, anticipating completion by finish of 2025 and a possible extension to 10 years.
- Jason Holloway launched the MobileAnchor know-how, which is garnering federal company curiosity.
- Robert George addressed the decline in money stability and billing challenges.
WidePoint Company’s earnings name mirrored an organization on a development trajectory, with strategic strikes positioning it for continued success within the managed mobility companies market. Regardless of some challenges in money circulate and billing, the general tone of the decision was optimistic, with vital contract wins and technological developments laying the groundwork for future development. Traders and stakeholders can be watching carefully as WidePoint works in direction of reaching FedRAMP authorization and capitalizes on its strong gross sales pipeline.
InvestingPro Insights
WidePoint Company’s latest efficiency has been marked by spectacular income development and a constant observe document of optimistic adjusted EBITDA. The corporate’s strategic initiatives and contract wins have positioned it properly for future enlargement. To offer a deeper understanding of WidePoint’s monetary well being and market place, listed here are some insights from InvestingPro:
- WidePoint’s income for the final twelve months as of Q1 2024 stands at $114.96 million, displaying a strong development of roughly 18.59%. This aligns with the reported 35% surge in Q2 income, evidencing the corporate’s sturdy gross sales efficiency.
- Regardless of the expansion, WidePoint operates with a reasonable stage of debt and has not been worthwhile over the past twelve months, as indicated by a destructive P/E ratio of -8.35. This might be a priority for traders searching for profitability along with development.
- The inventory has skilled vital worth volatility, but it has delivered a powerful return over the past three months, with a 36.82% improve, and an much more spectacular 102.87% return over the past yr. This will likely appeal to traders who’re within the firm’s development potential and are prepared to climate the inventory’s volatility.
InvestingPro Suggestions additional reveal that WidePoint suffers from weak gross revenue margins, which presently stand at 14.35%. Moreover, the corporate doesn’t pay a dividend, which could be an element for income-focused traders to think about. For these fascinated with a extra complete evaluation, there are further InvestingPro Suggestions accessible at https://www.investing.com/professional/WYY, which may present additional steerage on WidePoint’s market valuation and monetary well being.
Full transcript – Widepoint C (NYSE:) Q2 2024:
Operator: Good afternoon. Welcome to WidePoint’s Second Quarter 2024 Earnings Convention Name. My identify is Matthew, and I can be your operator for at the moment’s name. Becoming a member of us for at the moment’s presentation are WidePoint’s President and CEO, Jin Kang; Chief Income Officer, Jason Holloway; and Chief Monetary Officer, Robert George. Following their remarks, we are going to open up the decision for questions from WidePoint’s publishing analysts and main traders. In case your questions weren’t taken at the moment and you want further data, please contact WidePoint’s Investor Relations group at [email protected]. Earlier than we start the decision, I want to present WidePoint’s Protected Harbor Statements that features cautions concerning forward-looking statements made throughout this name. The issues mentioned on this convention name might embody forward-looking statements concerning future occasions and the longer term efficiency of WidePoint Company that contain dangers and uncertainties that might trigger precise outcomes to vary materially from these anticipated. These dangers and uncertainties are described within the firm’s Type 10-Q filed with the Securities and Trade Fee. Lastly, I’d wish to remind everybody that this name can be made accessible for replay by way of a hyperlink within the Investor Relations part of the corporate’s web site at www.widepoint.com. Now I’d like to show the decision over to WidePoint’s President and CEO, Mr. Jin Kang. Sir, please proceed.
Jin Kang: Thanks, operator, and good afternoon to everybody. Thanks for becoming a member of us at the moment to evaluate our monetary outcomes for the second quarter ended June 30, 2024. I’m happy to share that now we have continued to construct on the momentum from earlier quarters, having completed Q2 forward of forecast for the second consecutive time and seeing vital year-over-year enhancements in income, adjusted EBITDA and free money circulate. Our income for second quarter was $36 million, and our six month income ended June 30, 2024, was $70 million, each a 35% improve from the identical interval in 2023 and a testomony to our group’s skill to execute our gross sales and advertising technique. We achieved our twenty eighth consecutive quarter of optimistic adjusted EBITDA, concluding with $811,000 or 479% improve from the identical interval final yr. For the six months ended June 30, 2024, our adjusted EBITDA was roughly $1.4 million, which is a 764% improve from the identical interval final yr. We additionally achieved a 3rd consecutive quarter of optimistic free money circulate sequentially enhancing from $310,000 in This fall 2023 and $566,000 and $800,000 within the first and second quarter 2024 respectively. In comparison with the place we had been final yr, our place within the capital markets has improved considerably, due to our group’s dedication to executing our natural development technique. Our gross sales and advertising group continues to ship and seize new high-margin contracts which have positioned us properly for potential optimistic earnings per share for 2025. Moreover, all of our capital investments and glued prices have been paid for and we proceed to aggressively handle our prices, supporting our future bottom-line outcomes, margin enhancements and profitability projections. As evidenced by our consecutively enhancing free money circulate figures, we’re not off course. Our strategic partnerships and investments, significantly in our totally different enterprise options, have performed an incremental position in driving our gross sales development and have considerably contributed to our topline efficiency over the previous a number of quarters. These efforts, together with our certification and accreditation, superior and various suite of choices in addition to not too long ago introduced MobileAnchor Digital Credential options have positioned us properly to have the ability to efficiently goal our rivals’ enterprise. WidePoint is now in a powerful place the place our strategic companions search us out and wish to work with us, a big shift from a couple of years in the past after we had been those pursuing them. The investments and efforts now we have made over time are paying off, and we’re excited to proceed constructing on this upward momentum in direction of worthwhile return for our valued shareholders. Transferring on to some second quarter contract highlights and operational developments. The standout this quarter was our $2.7 billion Spiral 4 contract award, the place we had been one in all seven firms, together with the US Large 3 wi-fi carriers, to offer a full vary of wi-fi and telecommunication companies to army personnel and federal civilian workers stationed inside the nation and the US territories. We additionally acquired the contract modification, including $254 million to the ceiling of the CWMS 2.0 contract with DHS. Particularly with Spiral 4, now we have began receiving preliminary RFQs and are within the strategy of establishing administrative preparations with the US Navy, in addition to establishing vendor agreements for companies and gear. Now we have a differentiated set of choices for the Navy and imagine that we will efficiently compete with earlier incumbents on this contract. We stay up for sharing extra excellent news with you on this entrance on our future calls. Our CWMS 2.0 contract with DHS is an Indefinite Supply, Indefinite Amount or IDIQ contract valued at $754 million reflecting a rise of $254 million, which represents practically a 55% improve from the unique contract worth. And as introduced in our earlier earnings name, now we have begun to obtain further process order requests for quotes from DHS for the reason that contract ceiling elevated. We should always see the outcomes from these new process order awards that can enhance our topline and backside line outcomes. Moreover, as a lot of you may have seen in our press launch, we made a strategic rent by bringing on Michelle Richards, who’s now our lead for CWMS program. Michelle has an in depth background working inside the DHS group and brings to WidePoint over 3 a long time of expertise within the cell telecommunication business and over 15 years of federal authorities contracting expertise. Michelle’s business stature will assist WidePoint improve our industrial and federal presence and influence. And our experience can be invaluable in getting ready for and capturing vital parts of the Spiral 4 contract. We’re excited to have her on board and along with her imaginative and prescient and mission completely aligned with WidePoint, we stay up for the immense worth she can be offering. Along with these two IDIQ contracts, now we have two extra thrilling milestone offers presently within the works. First is the CWMS 3.0 RFI, a 10-year and roughly $1.5 billion to $2 billion contract. Our programs and processes are carefully built-in with DHS programs and our sturdy observe document for previous efficiency positions us in one of the best spot to rewin this contract. We maintain certification and accreditations that our rivals can’t match and our pending FedRAMP licensed standing will additional strengthen our aggressive edge. Moreover, we’re pursuing the SEWP VI contract with NASA. This chance is a 10-year $60 billion government-wide acquisition contract or GWAC, that may be utilized by each authorities company. This contract’s scope of labor consists of all manners of IT services and products. We imagine that now we have the qualification, the certifications and accreditations to be a winner on this contract. We may even be positioned properly with a differentiated set of services and products to seize a big quantity of labor beneath this contract. To maximise our skill to seize vital work beneath these excellent IDIQ contracts, now we have not too long ago applied a undertaking administration workplace mannequin or PMO. This mannequin will assist WidePoint in outperforming our rivals in capturing work beneath these IDIQ contracts. The PMO mannequin takes a group method to managing massive applications, guaranteeing that there isn’t a single level of failure and a mannequin that has labored properly in our different marquee applications. We are going to proceed to leverage this PMO mannequin and are excited to see our group seize further work to additional drive our prime and bottom-line development. These billion-dollar IDIQ contracts we pursue such because the $2.7 billion Spiral 4 and the $60 billion SEWP VI contracts are essential to our firm’s long-term development technique. These contracts supplies a target-rich atmosphere, providing a singular aggressive benefit for WidePoint’s gross sales and advertising group. Many firms aspire to function in such a target-rich profitable ecosystem, however only a few have the chance. With our latest strategic investments, partnerships, certifications and accreditations and software of the PMO mannequin, we proceed to aggressively put money into our gross sales and advertising efforts to place ourselves to maximise our skill to seize work and extra importantly, the chance to even accomplish that within the first place. This proactive method goals to make sure that WidePoint secures a significant portion of those contracts. Even capturing a small proportion of the $1 billion alternative from these two contracts alone may considerably elevate our development trajectory. Within the industrial sector, we’re seeing pilot tasks launched and strategic partnership consummated with programs integrators, that are leading to new alternatives. We’re pursuing sizable alternatives with Fortune 100 firms and stay up for offering you with information of contract awards later this yr. Within the second quarter alone, we noticed contractual actions throughout all WidePoint resolution strains, together with our managed mobility companies, id and entry administration, IT as a service and interactive billing and analytics. These new alternatives are the high-margin SaaS contracts, our gross sales and advertising group is aggressively pursuing, that are anticipated to contribute vastly to our bottom-line efficiency. We started the third quarter with roughly $320 million in federal contract backlog. Moreover, our present certified gross sales pipeline is more healthy than it has ever been. To offer you some further shade on our gross sales pipeline, I’ll now hand the mic over to Jason, who will dive deeper into our gross sales and advertising efforts and up to date technological developments, particularly our new proprietary MobileAnchor Digital Credential resolution. Jason?
Jason Holloway: Thanks, Jin, and good afternoon, everybody. As Jin simply talked about, we efficiently developed, examined and authenticated our new proprietary MobileAnchor Digital Credential. This digital credential resolution now not requires a sensible card, however as a substitute is deployed straight on to good cell gadgets, offering the very best stage of safety for cell digital credentials accessible whereas guaranteeing that cyber interactions use essentially the most safe id administration options available on the market at the moment. This can be a know-how breakthrough and locations WidePoint forward of our competitors within the cyber id world. Now we have already efficiently deployed MobileAnchor in a federal company and are actively advertising it to different federal and industrial companies that presently use the standard good card-based credentials. We proceed to determine our aggressive edge, and this new product will allow us to win enterprise from our rivals as they don’t provide related options. This coincides with our technique to win work away from our rivals within the IdM sector. We’re excited to proceed advertising this new product and stay up for probably implementing it inside our pipeline of offers presently within the works. On a associated notice, MobileAnchor has traction inside the Division of Schooling. As you might be conscious, we have been aggressively pursuing Okay-12 on the district stage. Now we’re seeing a shift in getting nearer to securing the required buyer funding to maneuver this initiative ahead. Though WidePoint has been on the forefront of id and entry administration for the reason that inception of PKI, it takes time to reconfigure our resolution to handle a market akin to Okay-12. We are going to maintain you posted as MobileAnchor beneficial properties traction inside the Division of Schooling. As Jin talked about earlier, SEWP VI is a really thrilling alternative for WidePoint. Because of its 10-year, $60 billion ceiling, WidePoint is uniquely positioned to offer our Managed Mobility Companies, in addition to achieve further market share for our proprietary platform, clever know-how administration system. Together with the upcoming FedRAMP licensed standing, we’re cautiously optimistic that WidePoint can be positioned to capitalize as soon as the SEWP VI has been awarded. As I’ve said beforehand, we’re optimistic concerning our pipeline, and there are a lot of alternatives that we’re aggressively working. That being mentioned, we’re proactively hiring further strategic sources in anticipation of those contract awards in addition to pursuing further gross sales alternatives. Now we have established our program administration places of work or PMO for each the DHS 3.0 recompete effort and the Spiral 4 contract. We may even be using the identical PMO mannequin for SEWP VI. Lastly, for Q3 and onwards, we plan to proceed advancing our efforts to reinforce WidePoint’s general capabilities. The continued innovation in our technological capabilities is important for strengthening and sustaining our aggressive place. By enhancing our technological capabilities, we intention to supply extra options and higher meet the wants of our shoppers. This strategic deal with know-how will considerably improve our skill to safe new contracts and broaden our advertising presence sooner or later. We’re assured that these efforts will play a significant position in driving our long-term development and success, and we stay up for asserting related developments as they come up. With that, I’ll now flip the decision over to Bob to debate our second quarter monetary outcomes. Bob?
Robert George: Thanks, Jason, and because of everybody for becoming a member of us at the moment. I am happy to share the small print of our monetary outcomes for the second quarter and first half of 2024. We delivered sturdy three and 6 months 2024 outcomes, and I am blissful to report we’re trending in direction of the upper finish of our steerage vary. Whole revenues for the quarter had been $36 million, a rise of $9.3 million or 35% from $26.8 million reported for a similar interval final yr. Revenues for the primary half of ’24 had been $70.2 million, a rise of $18.2 million or 35% on the $52 million in the identical interval final yr. Now I am going to present an extra breakdown of our second quarter and first half 2024 revenues. Our provider companies income for the quarter was $20.4 million, a rise of $6.2 million in comparison with the identical interval in 2023. Service companies income for the primary half of ’24 was $39.8 million, a rise of $11.9 million in comparison with the identical interval final yr. Our managed companies income for the quarter was $9.2 million a rise of $2.3 million or 25% in contrast with the identical interval in 2023. For the primary half of 2024, our managed companies revenues had been $17.9 million, a rise of $4.1 million or 23% in the identical interval final yr. The rise in each provider and managed companies income is principally as a result of new federal and industrial prospects signed within the third and fourth quarter of 2023, which aren’t mirrored within the comparability interval final yr and likewise, as a result of development inside a number of current federal prospects. Billable companies charges for the quarter had been $1.2 million, a lower of $618,000 in comparison with the identical interval in 2023. For the primary half of 2024, billable companies charges had been $2.4 million, a lower of $678,000 in the identical interval final yr. The second quarter and the primary half of 2024, the lower was as a result of comparatively much less undertaking work at a US authorities buyer. Reselling and different companies within the second quarter had been $5.2 million, a rise of $1.5 million from the identical interval final yr. For the primary half of 2024, reselling and different companies had been $10.2 million, a rise of $2.9 million from the identical interval final yr. The rise for each intervals was as a result of elevated demand and gross sales exercise for objects that we promote to our federal and industrial prospects. A reminder, reselling and different companies are transactional in nature and the quantity and timing of income might range considerably from interval to interval. Gross revenue for the second quarter was $4.9 million or 14% of income in comparison with $3.9 million or 15% of revenues in the identical interval in 2023. Gross revenue for the primary half of 2024 was $9.5 million or 14% of revenues in comparison with $7.7 million or 15% of revenues in 2023. The extra vital metric of gross revenue proportion excluding provider companies, was 31% within the second quarter which is constant from the identical interval final yr. For the primary half of 2024, gross revenue proportion, excluding provider companies, was 31% in comparison with 32% in the identical interval final yr. Barely decrease gross margin proportion excluding provider companies is impacted by our income combine and elevated depreciation and amortization associated to our accomplished supply platforms. Our gross revenue proportion will range from interval to interval based mostly on our income combine. Gross sales and advertising bills within the second quarter had been $600,000 or 2% of income in comparison with $500,000 and likewise 2% of revenues in the identical interval final yr. Within the first half of 2024, gross sales and advertising bills had been $1.2 million or 2% of revenues in comparison with $1.1 million and a couple of% of revenues in the identical interval final yr. We count on to see additional greenback will increase in gross sales and advertising bills as we proceed to put money into gross sales and advertising efforts, although we count on gross sales and advertising to be fixed to barely decrease as a proportion of income. Normal and administrative bills within the second quarter are $4.5 million or 12% of revenues in comparison with $3.8 million or 16% of revenues in the identical interval of 2023. Normal and administrative bills within the first half of 2023 are $8.9 million or 13% of income in comparison with $7.8 million or 15% of income in 2023. The rise in absolute {dollars} relates primarily to a rise in share-based compensation bills. Web loss for the second quarter decreased by $342,000 to a web lack of $500,000 or a lack of $0.05 per share in comparison with a web lack of $842,000 or a lack of $0.10 per share for a similar interval final yr. Web loss for the primary half of 2024 decreased by $600,000, with a web lack of $1.2 million or a lack of $0.13 per share in comparison with a web lack of $1.8 million or a lack of $0.20 per share in the identical interval final yr. Transferring to the stability sheet. We ended the quarter with $4 million in money, which, in our view, is a big lower in comparison with the $6.9 million at December 31, 2023. That is vital, significantly contemplating our sturdy free money circulate metrics over the past three quarters. The lower in money was primarily as a result of new buyer implementations, which have briefly impacted billings and accordingly our money place. We wish to spotlight that now we have further liquidity choices accessible with our revolving line of credit score facility with $4 million of potential borrowing capability, though we don’t anticipate having to depend on that facility. Additional, we do not count on these points to persist and are actively working to resolve them to enhance our money place within the coming quarters. This completes my monetary abstract. For a extra detailed evaluation of our monetary outcomes, please seek advice from our Type 10-Q, which was filed previous to this name. With that, I am going to flip the decision again over to Jin.
Jin Kang: Thanks, Bob and Jason. One ongoing initiative we would wish to replace you on is our FedRAMP certification standing. Now we have submitted responses to all of GSA’s questions, and they’re presently beneath evaluate. Whereas we’re nonetheless within the in-process stage, we count on to attain FedRAMP licensed standing by the top of 2024. This certification is among the key technological investments that Jason talked about, which can diversify our choices and seize enterprise from rivals, whereas enhancing WidePoint’s aggressive edge and place out there. With the upcoming federal election cycle, finances discussions are anticipated to take heart stage as soon as once more. A change in administration may result in delays in federal budgets no matter which celebration wins the presidency. We are going to carefully monitor the state of affairs because it unfolds. Presently, we anticipate minimal or no influence from the administration change, provided that we function within the important sector of cybersecurity and mobility administration. These areas are important companies that can stay in excessive demand for the foreseeable future. Lastly, I might wish to reiterate our steerage the place we count on revenues to vary between $120 million and $133 million, adjusted EBITDA vary between $2.1 million and $2.4 million. Moreover, we count on free money circulate to vary between $2 million and $2.3 million. I am blissful to report that now we have been forward of our forecast for the previous two quarters and are trending in direction of the upper finish of our steerage for the complete yr. Our gross sales and advertising efforts, technological developments and the offers presently within the pipeline are sturdy indicators of enhancements in our bottom-line and margin for the upcoming quarters. Our group continues to aggressively push for worthwhile operations within the fourth quarter, and we anticipate reaching optimistic earnings per share in 2025. Our government group maintains a optimistic outlook on our future as evidenced by a number of board members and executives buying further shares within the open market. We stay devoted to unlocking sustainable development and delivering sturdy returns for our valued shareholders. That concludes our ready remarks, and now we’ll take questions from our analysts and main shareholders. Operator, will you please open the decision for questions.
Operator: Definitely. Everybody right now we conducting a question-and-answer session. [Operator Instructions] Your first query is coming from Barry Sine from Litchfield Hills Analysis. Your line is stay.
Barry Sine: Hello, good night gents. First query is on CWMS. I do not suppose my hand was writing quick sufficient to get all the small print down. So it appears like there may be visibility on letting out 3.0. If you happen to may simply repeat the greenback quantity, give us any sense of the timing on that? After which simply to place that in some perspective, clearly you gained 2.0. You lately had a really vital improve within the ceiling on that. After which I keep in mind vividly, 2.0 simply took endlessly to get prolonged. So the federal government works fairly slowly. So I assume we should not be anticipating a quick resolution on 3.0?
Jin Kang: Hello ihGiBarry, that is Jin. It is good to listen to from you once more. The reply is sure. It’s going to most likely take longer than anticipated. Proper now the timeline for the three.0 award goes to — they wish to get it accomplished by the top of 2015 — I imply, 2025, sorry. And the rationale for them upping the cap on the contract is as a result of they’ve already reached the ceiling on the contract with process orders that had been already awarded beneath 2.0. And I imagine additionally that the extra {dollars} may even present an overlap between the two.0 and three.0, in order that they’ll easily transition from the two.0 and the three.0. And so we imagine that this contract now’s going to go from a five-year contract to a 10-year contract. And we did kind of a mathematical extrapolation to give you the $1.2 billion to $1.5 billion ceiling. And so based mostly upon the place we’re at the moment, we’re at $750 million or so million. So in case you multiply that by two for a 10-year interval, that can put you at like $1.5 billion in a delegated procurement authority. And so that is what we’re seeing. Once more, we really feel like we’re forward of our competitors in our software program platform, our subject material experience and our previous efficiency with DHS. Identical to after we competed for the two.0, our programs and workflows are all built-in with DHS’s processes and programs, and now we have the safety accreditations and certifications that others can’t match. So we really feel fairly good about our prospect of profitable the three.0. However we’re not sitting on our palms. We’re continually searching for enhancements, continually searching for value-add companies that we are able to provide to DHS in order that when it come the award time for 3.0, we would be the ones receiving the award.
Barry Sine: And only a few extra factors of clarification on CWMS. What’s the official contract finish date for two.0? After which when that occurs, final time, it ended they did not renew, however you had been made entire the entire time. So I do know there was investor angst that you simply had been made a complete the entire time whereas they took an prolonged interval to resume that. So may you give us the expiration date? After which simply remind us what did occur beforehand. And hopefully, that is a sign of what might occur in the event that they’re late on issuing 3.0.
Jin Kang: Positive, certain. So the official finish date for the CWMS 2.0 is November, I imagine, nineteenth or twentieth of 2015. And so — ’25? 2025. Sure. Did I say 2015 once more? I am trying again. However anyway, it’s November nineteenth or twentieth of 2025 and certain, it might be prolonged — and so the final time what occurred was the federal government got here as much as the top date, and so they put in a bridge contract for a yr. The contract was presupposed to have been a five-year contract, and it ended up being 8. So that they had prolonged the contract with like a 12-month contract. They put one other bridge contract in for 1.5 years. After which they exercised one other choice to go one other six months past that, making it an eight-year contract for a five-year contract. So it’s — it might be that the contract might must be prolonged. However what they did with CWMS 2.0, is that they put in an choice, in order that they’ll truly award process orders 12 months past the top of the official contract date. So the official contract date ended November 19 of 2025, to allow them to truly concern process orders that go till November 19, 2026. And in the event that they want further extensions, they’ll modify the contract to increase the contract additional. They’ll additionally put a bridge contract in. In order that they have a whole lot of instruments of their instrument belt to have the ability to lengthen the contract in the event that they do fall behind on their acquisition schedule. So we cannot be left holding any unpaid payments or something like that throughout the time the contract goes by the recompete.
Barry Sine: What’s the deadline so that you can submit your bid for — has that been given for CWMS 3.0.
Jin Kang: Not but. What was launched was a request for data. And what that’s — is that they are trying round for certified bidders for the contract. And we deliberately did not put out a press launch as a result of we did not wish to publicize this data, so we are going to get extra rivals. However the deadline for the request for data had expired. I imagine this was on the finish of July someday. And so we did all of our responses, and we despatched it again in. And now we’re letting folks know that the RFI was on the market on the road and that they are within the strategy of going by the recompete course of. They haven’t put out the schedule for the award or when the proposals are due however it will likely be launched within the RFP as authorities will get ready to ship out and obtain the proposals.
Barry Sine: And I imagine that context is for ITMS and ITMS can also be the product that you’re making use of for FedRAMP certification. That is on a product-by-product foundation, not on a company-wide foundation. How does the delays we’re seeing with the FedRAMP? And I imply you gained 2.0 with out FedRAMP certification. So I assume it’s good to have however not wanted to have for — to win the three.0.
Jin Kang: Proper. In order that’s a fantastic query. The reply is ITMS is the product that’s going beneath the FedRAMP certification course of. As I mentioned, we have answered the entire questions for GSA and so they had an in depth record of questions, however most of them had been fairly superficial questions. And I feel we answered the mail on all of these issues. However what I’ll inform you is that for DHS is that we had ATOs, authorization to function. Primarily, what which means is that we meet the entire cybersecurity necessities that the Division of Homeland Safety requires. None of our rivals can say that. And the final time round, they didn’t make the FedRAMP certification particularly a requirement as a result of there weren’t that many distributors that had the system that met the FedRAMP licensed standing. And so this time round, it’s most likely going to be the identical factor. Even when we do get our FedRAMP certification as a result of we could be the one firm that has that certification, they should open up the bidding to have some further rivals. However what FedRAMP licensed standing will do for us is that they are going to give us a better level within the technical part in order that we get further factors for having that functionality.
Barry Sine: Okay. Obtained it. After which switching gears to the SEWP contract automobile. I simply wish to make clear, that is S-E-W-P not soup?
Jin Kang: Appropriate.
Barry Sine: Okay. These acronyms. Options for enterprise-wide procurement. I do not fairly perceive why NASA is forward for a government-wide contract and never TSA. However that is a subject for one more name. So in case you may give us some specifics on that. What’s the deadline there for a contract award? After which additionally, I do not imagine you had been the prime beforehand. Are you bidding to be the prime for SEWP VI?
Jin Kang: Sure. We’re bidding to be prime on SEWP VI. We had been companions with different contractors like Carahsoft and I feel that there was one different the place we had been subcontractors too. However as a result of now we have a differentiated product set, we are actually pursuing this as a first-rate contractor. And so SEWP VI and NASA — NASA has been going by this acquisition course of for SEWP for now a few years. That is the sixth iteration. In order that they have been doing this for a very long time. And it’s been a really profitable contract for NASA, not solely as a result of they’ll get services and products for themselves as a result of this contract is managed properly, different authorities companies have determined to forego their very own acquisition cycle and go after utilizing the SEWP automobile to buy. There are different contracts that we’re additionally pursuing, and we’ll discuss just a little bit extra about that on our future calls, however the SEWP contract is a pretty big scope of labor, and it has services and products that goes — once more it covers the whole waterfront in data know-how, services and products. So it’s a very basic contract for anyone to return and use the contract autos. That is why they elevated the delegated procurement authority to $60 billion.
Barry Sine: What was it beforehand?
Jin Kang: I imagine the earlier one was like $20 billion.
Barry Sine: Okay. And switching gears to Navy Spiral 4. You had introduced the win a while in the past. How are we doing with process orders on Navy Spiral 4?
Jin Kang: Proper now, we’re within the preliminary levels the place RFQs are popping out, and a whole lot of them are small and a whole lot of them are for renewal contracts. And so proper now, we’re within the strategy of establishing our relationship with our resellers, getting all of our pricing, all of our objects and companies and merchandise, get all of them nailed out. So when the RFP comes out for our particular differentiated product set, we can be bidding on them.
Barry Sine: Okay. After which Spiral 4, you have introduced a product known as MobileAnchor, which appears like it could be excellent for the Navy, however I assume that is not the — it is not meant that approach. Might you elaborate, there may be a whole lot of jargon related to MobileAnchor. However primarily, my understanding is it permits the mobile phone to be the pc processing engine for the safety card moderately than having a separate card.
Jin Kang: Proper. In order that was the MobileAnchor product that could be a differentiated asset that we are going to offer beneath SEWP. We can be providing it beneath Spiral 4. There may be one factor that I might wish to level out for each — all of the listeners right here at the moment is that the Spiral 3 does not formally finish till September of this yr, September 2024 or one thing like that. And so the duty orders are beginning to roll in. And hopefully, we’ll see some that really meet with our specialised product and repair set. Getting again to the MobileAnchor, sure, we’re going away from the standard good card kind issue to the smartphones. And Jason can inform you just a little bit extra about that our MobileAnchor and our — how that’s differentiated from our rivals.
Jason Holloway: Hello, Barry how are doing?
Barry Sine: Hello Jason.
Jason Holloway: As Jin talked about, so with MobileAnchor, traditionally, folks have been utilizing their good card credentials. That is the credential that has the chip on it. And sometimes, what they’re doing is that they stick it into the aspect of their laptop computer or they’ve a sled that is related to the cell machine itself. Traditionally what some folks have been doing to get what’s known as a derived credential which all which means is that it permits you to do safe communications out of your cell machine is they have been utilizing what’s known as a cell machine administration container. However what that does is, with out getting too technical on everyone is that transmission and authentication is occurring over the airways. So primarily, there isn’t a actual safety or authenticating that is truly occurring. So what WidePoint has discovered tips on how to do is tips on how to generate a web new digital credential on the machine itself, and that is what makes it so game-changing. So we have taken the entire vetting, the id of the cardholder, proper, of that particular person, so it will likely be very signed. After which we have been capable of derive that information after which put that data on the machine itself after which that enables you to have the ability to securely signal e-mail transmissions and the entire issues which might be occurring on the cell machine itself. So it is — like I mentioned on the decision, it is a big-time recreation changer. There’s — we all know that a whole lot of the federal companies are going to be very on this as a result of they clearly perceive that MDMs — utilizing MDM containers over the airways has been a type of ok options, and I feel all of our listeners will agree that ok, it is simply not — it is not ok anymore. So we’re very blissful to be within the place that we’re in in addition to the timing. So keep tuned, after which we’ll have extra great things for you.
Barry Sine: Okay. After which lastly, I might wish to put Bob on the new seat with a few questions. And first, to go with Bob for getting that Q, I am already taking a look at it. It is already filed. So thanks. That makes life rather a lot simpler for us analyzing the corporate. The primary query, Bob you talked about the decline within the money stability is because of authorities ramp-ups. Are these — have you ever issued payments? So does that present up in accounts receivable? Or have you ever not but issued payments, so these are receivables that can nonetheless come? And what are we taking a look at when it comes to having calculated DSOs? Are DSOs going up?
Robert George: DSOs have gone up. And in these ramp-ups, we primarily pre-agree the billing with the client. And with our current prospects the place we’re in bizarre course of enterprise, we ship them the bill, then we clarify the element and so they approve it, we invoice it, and so they pay it in a short time. With these new prospects, there’s plenty of dialogue across the minutia on these payments. Considered one of them has 8 totally different contract officers. So it is form of a democracy course of has occurred. So as soon as they do approve these payments, it has been very excruciating, then we invoice it and we receives a commission. We have been paid, I feel the final one was paid in lower than every week or perhaps just a bit over every week. However it’s simply been very laborious to get the payments into an improved state. We checked out form of how rapidly they’re peeling off now. And we predict that by the top of the yr, we would be in a standard regular state. A few different ones are inflicting some difficulties. It is the identical state of affairs in a way that the shoppers moved line counts and funding between totally different contracts — totally different companies inside DHS. And so it is longer to type that out. And when you type it out with a number of the invoice and so they pay very promptly.
Barry Sine: So it appears like there’s three form of shifting — associated shifting items. To begin with, accounts receivable stability is up. Second, general DSOs are taking longer. After which third, it sounds such as you nonetheless have unbilled work that’s on the market that isn’t on the receivables line but. Is that right?
Robert George: Nicely, it is on the unbilled receivable line. So we do ebook an asset and accrued income, and we additionally accrue for essentially the most half, virtually all the prices as a result of these are provider invoices that are inflicting the issues. And so now we have a rise within the accrued bills and a rise in billed and unbilled AR.
Barry Sine: Okay. So I see that $25.8 million in unbilled accounts receivable.
Robert George: Sure.
Barry Sine: Okay. I obtained it. Okay. That is a superb rationalization. And I didn’t jot down the backlog quantity, and that is not within the Q. Might you give me the backlog quantity once more? After which I all the time ask this, however remind me how lengthy to count on that backlog to show to income?
Robert George: The backlog quantity is $320 million. I feel we mentioned that within the name. And when it comes to when it peels off, a whole lot of that backlog is over the following two years due to the ending — or the recompete on the CWMS 20. However I form of say perhaps a median lifetime of that backlog is 2 years.
Jin Kang: Sure. And on that entrance, Barry I simply wish to make it possible for I am clear on this, is that the Division of Homeland Safety can’t concern process orders past the contract official finish, however they’ll concern process orders earlier than that date. In different phrases, they’ll concern a process order in October to exit till November of 2026.
Barry Sine: However I imply, if the entire thing hypothetically had been to expire, the DHS’s telephones would cease working. So they’re going to discover a technique to get that prolonged in the event that they have not let 3.0. And so they did final time.
Jin Kang: Sure, sure. They’ve loads of avenues to do this. So I am not – we aren’t too involved about them dropping protection or us holding the bag for any price that isn’t reimbursed. And they’re going to lengthen the contract. And we’re fairly assured that they are going to get the contract in place in time.
Barry Sine: Okay. You are an optimistic man. All proper. Will finish my questions on that notice. Thanks.
Jin Kang: Thanks.
Jason Holloway: Thanks Barry.
Operator: Thanks. Right now, this concludes our question-and-answer session. In case your query was not taken, please contact WidePoint’s IR group at [email protected]. I might now like to show the decision again over to Mr. Jin Kang for his closing remarks.
Jin Kang: Nice. Thanks, operator. We recognize everybody taking the time to hitch us at the moment. Because the operator talked about, if there have been any questions that we didn’t handle at the moment, please contact our IR group. Yow will discover their full contact data on the backside of at the moment’s earnings launch. Thanks once more, and have a fantastic night.
Operator: Thanks for becoming a member of us at the moment for WidePoint’s second quarter 2024 convention name. It’s possible you’ll now disconnect.
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