WidePoint at H.C.Wainwright Chat: Strategic Growth and Challenges

On Tuesday, 19 August 2025, WidePoint Corporation (NYSE:WYY) participated in the H.C.Wainwright @ Home Fireside Chat, where CEO Jin Kang outlined strategic growth opportunities and challenges. The discussion highlighted optimism around upcoming contracts and products, though it also touched on billing delays affecting cash flow.

Key Takeaways

• WidePoint is optimistic about securing the CWMS 3.0 contract, which is expected to significantly boost revenue.
• The company aims to improve gross margins to 50% by 2027, despite current delays in FEMA billing.
• A strong pipeline for Device as a Service (DaaS) indicates potential growth in various sectors.
• WidePoint maintains a healthy cash position and is open to mergers and acquisitions in related fields.

Financial Results

• Revenue and Margins:

- In 2024, WidePoint generated about $58 million in non-carrier revenue with gross margins of 33-34%.

- The company aims for a 50% gross margin by 2027, focusing on managed services revenue.

• Cash Position:

- Ended Q2 with $6.8 million in cash, slightly higher than the end of 2024.

- Projected cash balance by year-end is between $11 million and $12 million, despite unbilled amounts from FEMA.

• Backlog:

- Current backlog is approximately $260 million, largely due to CWMS 2.0.

- Expected to increase with new task orders under CWMS 3.0.

Operational Updates

• CWMS 3.0 Contract:

- The RFP is expected soon, with the award anticipated in September.

- The contract is a 10-year agreement valued at $3 billion, double the size of CWMS 2.0.

• Mobile Anchor:

- Recently secured contracts with the Department of Energy and a Fortune 100 defense contractor.

• Navy Spiral Four Contract:

- WidePoint is the sole non-carrier provider, aiming to capture 10% of the $2.7 billion contract ceiling.

• Device as a Service (DaaS):

- Large opportunities exist in finance, healthcare, and energy sectors.

- The LA Olympics and Paralympics in 2028 present significant opportunities.

Future Outlook

• Revenue Impact:

- The completion of CWMS 2.0 will decrease backlog, but CWMS 3.0 will drive future growth.

• Hiring and Operating Expenses:

- New customer acquisitions will require additional staffing, but not proportionally to revenue growth.

• Mergers and Acquisitions:

- WidePoint is exploring opportunities with established companies in mobility, cybersecurity, and data analytics.

Q&A Highlights

• Billing Model:

- Primarily bills on a per-device-per-month basis under a SaaS model.

• Go-to-Market Strategy:

- Leverages partnerships with large systems integrators and strategic partners like CDW and Leidos.

• FEMA Billing Issues:

- Delays due to approval processes; efforts are underway to resolve these with a new contracting officer.

Readers are encouraged to refer to the full transcript for a more detailed understanding.

Full transcript - H.C.Wainwright @ Home Fireside Chat:

Scott Buck, Analyst, HCW: CW at home presentation. This morning, I have the privilege of speaking with Jin Kang, chief executive officer of WidePoint Corporation, a managed service provider to the US federal government as well as a variety of commercial customers. WidePoint trades under the ticker symbol WYY. Jen, welcome.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Thank you. Thank you, Scott. It’s always a pleasure to speaking with you, and thank you very much for your time.

Scott Buck, Analyst, HCW: Of course. Of course. Before we get into some of the specific programs and initiatives WidePoint is currently involved with, could you, with a broad brush, explain to our audience what a managed solution provider is and what services you are currently providing to the US government or some of your commercial customers? I guess, know, are you a cybersecurity company? Are you a government consultant, a hardware provider?

Help help us get some our arms around what you’re doing.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Sure. Thank you. I think, you know, all of those things are are true. We are, what you know, we’re in the business of helping our customer secure, manage, and provide visibility into their mobility mobile technology assets and and technology assets that allows us our customers to to work from anywhere in the world. And, of course, in this post pandemic environment is is critically important, and that’s a critically important function to provide for our customers.

Right? And all of our solutions are, you know, delivered in a a SaaS model, software as a service model. And and and we call our service the overall arching services that we call mobility as a service or MaaS, m a a s. Our mobility as a service is delivered in a in a very, you know, highly integrated fashion and includes identity management, which is cybersecurity, mobility management, which is handling all of your mobile devices, data analytics, and IT as a service. And and and then the four elements that can can go into a little more detail on this is is that our identity management solution provides the most secure multifactor authentication solution available on the market.

It is it forms the basis of the federal government’s zero trust architecture. And this system you know, this solution has been certified by the US federal government and has been implemented in all of the federal government departments, including the Department of Defense. One, a solution that is quantum computing resistant. Second part of our solution is our managed mobility solutions, which provides 360 degree support for our customers’ mobile technology assets from the time that they acquire the assets to the time that, you know, they use it until the time that they put it out in, you know, recycling and end of life processing. The third part of it is our data analytics solution, which provides full visibility for how the asset is used, location, cost, operating conditions, assignments, you know, usage contracts, etcetera, etcetera.

And, of course, our fourth leg of our solution is our IT as a service. Our our customers this is where our customers completely outsource their management of their IT infrastructure to us, including their cybersecurity requirements. And and we utilize our proprietary intelligent technology management system or ITMS, which recently received FedRAMP authorized status it’s FedRAMP risk authorization management program authorization status, which means that we meet the highest level of federal requirements for cybersecurity. And so our mobility as a service solution is what we provide, and we provide security, manageability, and visibility to our, you know, customers’ technology mobile technology assets.

Scott Buck, Analyst, HCW: Great. I think that’s a pretty good good overview. Now there were a few specific opportunities that you seem particularly excited about on last week’s earnings call. I think the first, the Department of Homeland Security CWMS three point zero contract. And CWMS stands for cellular wireless managed service for the newbies out there.

You talk a little bit about why you feel like YPoint is is well positioned to be a a winner here? You know, the potential size of of that business opportunity and maybe some expectation around timing.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. Yeah. You know, the CWMS three point o is the single largest contract for WidePoint, represents roughly 60% of our revenues. And, you know, we’ve had previous iterations of CWMS, you know, one point o, two point o, and then we even had the predecessors to the the CWMS, you know, one point o. And so we’ve been involved in this contract and supporting the Department of Homeland Security for, you know, almost twenty years.

And we feel that we are in the best position to win. We have the inside track here. There were, various, requirements that were released as part of the draft request for proposal responses, and we we we, replied to that in July, June, July of this year. And in that RFP, they talk about, you know, various requirements like the company must have facility security clearance, which we have. Company must have FedRAMP authorized status, which we have, and none of our competitors have.

You know, they they also said that the the past performance of only the prime contractor can be used, meaning, you know, WidePoint or whatever the the company that is bidding on the contract. And to make, you know, even the the the the the competition field even smaller, they said that this is going to be a small business requirement, which means that any companies that that is over 1,500 people in terms of staffing cannot bid on that. And so, you know, all of those requirements kind of point to, you know, DHS liking the incumbent, WidePoint. They also made this award best value to the government. A lot of times, the federal government will go with a the the lowest price technically acceptable or what they call LPTA award.

But this time, they made a conscious decision to say, we want best value. So and, you know, the lowest price won’t necessarily win. And and so usually what that means is that they favor the incumbent. And so this the scheduling of the CWMS three point o, as I said, the draft RFP was released at the June and responses returned in the July, they stated that the final RFP would come out at the July. Here we are in the mid, you know, August now.

And so the the final RFP, the re re re request for proposal package, should be coming out any day now. And their response their their current schedule is they want to have all of the proposals and the cost proposals and the oral presentation done by probably August, begin September, and to have an award by the September. And so, you know, we’re about a month and a half out. And, you know, based upon the vagaries of, you know, federal government acquisition process, it probably will take a little bit longer than, you know, at the September. WidePoint’s current contract, the CWMS two point o, expires at the November this year.

However, they’ve already the Department of Homeland Security already have executed task orders that goes until the November 2026. And and the reason why they do this is because as they go through the acquisition process, sometimes, you know, there’s hiccups, there’s protests, and so forth. And so, ideally, you know, what the federal agency like to do is to have the contracts overlap. So the two point o goes out until November year. The CWMS three o gets awarded, like, towards the end of this year, beginning of next year.

They start issuing the task orders on the three o, the new contract. And as the old one expires, they’ll just keep adding new task orders onto the new contract vehicle. So, you know you know, I know that was a very long, you know, description, but I I you know, we’re very optimistic about our chances of winning that.

Scott Buck, Analyst, HCW: Yeah. I know. It it sounds like you you guys are extremely well positioned given some of the criteria around the the new contract. Mhmm. Now another area where you guys have seen some positive momentum is is Mobile Anchor, including a a new contract award from I believe it was the Department of Energy, at the end of this past July.

Mhmm. Can you help with the investors on the line understand what what Mobile Anchor is and who the product is is tailored for?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yes. So the the Mobile Anchor product is a an extension or an enhancement to our current, you know, I identity and access management solution. The the solution that is currently implemented is currently implemented on smart cards, and the the smart cards look something like this. Let me see if I could bring a prop in here. It looks like this.

And if you’ve been to, you know, any federal government, you know, agencies or even at in the airports, you’ll see that many of the TSA agents will carry an identification card, and it has a little smart chip on it. And that smart chip contains all of the identification information that that is assigned to that particular individual. And they use that card to get physical and logical access, physical access in door readers and server rooms and those kinds of things. And then what they do is they slide that card into a reader, and you can use that card to gain logical access like emails, payroll, asset management, inventory management, those kinds of things. And now what we have what mobile anchor product does is it places the digital certificate onto your mobile device.

Right? And since we manage more of these device for the federal government than anyone else, it makes logical sense to be able to now issue those certificates that are on the smart chips onto the mobile phones. And now the users are going to be using the smartphones as their physical and logical access. So they won’t have to carry around both of these things. They will need the mobile device to do that.

And so far, as as we know, we are the only one that are that is able to issue those certificates without using a what they call an MDM container right to the phone versus having it issued through an MDM. So one, it makes the process faster and and simpler and more streamlined, and it doesn’t you know, you don’t have to pay for another MDM software. And so it was the Department of Energy that we won that contract with. We also won a small project with the Department of Education, and we won, you know, another contract with a fortune I I believe they’re a fortune one hundred defense, you know, contractor. You know, I I can’t name the names there, but, you know, it is a a a commercial entity.

And, you know, we’re we’re seeing a lot of traction there on our, Mobile Anchor product.

Scott Buck, Analyst, HCW: That’s great news. Jin, how how many devices within the federal government do you do you manage? Do you have a ballpark number?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. We haven’t released that information. And the the reason why we don’t release that information is because we don’t want our competitors to get the wind of how many devices that we’re managing. But I I will tell you that it’s in the, you know, close to seven figures. And I think that that’s the right and then we have another opportunity that’s coming up, which I can talk about, is, you know, it’s another commercial opportunity.

And that that particular opportunity is well over 7 figures. $2.02 2,000,000 to 2,500,000.0. And that’s that’s all a SaaS opportunity. This is where our customers our potential client will take our software and manage all of the devices that they have under contract with their customers. And this is one with a one of the major cellular carriers in The US in The US.

So Wow.

Scott Buck, Analyst, HCW: You guys have a lot going on.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Lot of good things. Lot of good things.

Scott Buck, Analyst, HCW: And I and I got more to ask about. So, also in July, were awarded, you know, your fourth task order under the Navy Spiral four contract. You know, what is your opportunity within Spiral four? I think the total contract value is about 2,700,000,000.0. But I’m curious, you know, what WidePoint’s opportunity is within that, you know, broader contract and

Jin Kang, Chief Executive Officer, WidePoint Corporation: Mhmm.

Scott Buck, Analyst, HCW: When we start to see some of that revenue flow through the p and l?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Great question. As you said, we won our fourth, SPIRE four contract, and, you know, those contracts were won in the in the second quarter, and they have been implemented. And so we did see some revenues in the ’4 in the second quarter. Okay. You know, the the most of the the revenues and the regularly you know, regular monthly, you know, recurring revenue will continue to come in in q three, and then we should get to the the full, you know, ramp up towards the end of q three.

And and and we feel that we have a, you know, a differentiated solution. And the reason why we say that is because the all of the care all of the the winners of the Spyro four contract are, you know, all the carriers, AT and T, T Mobile, Verizon, Hughes Networks, MetTel, and then Republic Wireless, I believe. You know? And and so and then us and and my point. And all of those, winners are carriers, and we are the sole non carrier, provider.

And so if you’re looking for a multi carrier solution, you would most likely come to us. Right? Because we’re Right. These brokers, and we’ve always acted as honest brokers. And so, and we have the the system to be able to track multi carrier solutions and and also look at invoicing and to make sure that the invoices are accurate and those types of services, you you won’t mean you probably won’t have AT and T, you know, auditing the Verizon Right.

Invoices and Right. But so so we feel pretty good that out of the $2,700,000,000, you know, contract, you know, ceiling, we should be able to capture, you know, a significant I I would say significant being, you know, if we could capture 10%

Scott Buck, Analyst, HCW: Yeah.

Jin Kang, Chief Executive Officer, WidePoint Corporation: I think that we would be pretty happy with that.

Scott Buck, Analyst, HCW: Yeah. As as I think you should be. Now a topic that came up frequently on the earnings call last week was your pipeline for device as a service or or DaaS. I I know this is something that you guys are are very excited about. Can you talk to us a little bit about that that pipeline, for potential new business in this space and

Jin Kang, Chief Executive Officer, WidePoint Corporation: and, you

Scott Buck, Analyst, HCW: know, maybe the broader DAS opportunity?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. I I think the DaaS opportunity is, you know, large and continues to continue to grow. And and much of our DaaS opportunities are in the commercial sector with the exception of now the new senses that could be coming out, and I’ll talk a little bit about that.

Scott Buck, Analyst, HCW: Sure.

Jin Kang, Chief Executive Officer, WidePoint Corporation: But, you know, including we’re we’re talking all of these DaaS opportunities are commercial with Fortune 100 companies with you know, very in various industry with finance, health care, you know, energy sector. And so we’re not really you know, we’re sort of market agnostic when it comes to DaaS because I think everybody need need this service. And so, you know, we’re we’re talking all of these opportunities that are out there. And a lot of these folks, you know, even though they’re commercial, they want to make sure that the system that they’re using to provide and support the services are the the most secure solution that that’s out there. Yeah.

And so, you know, having our FedRAMP authorized status for our intelligent technology management system gives us a huge leg up. And and a lot of these, you know, opportunities are large opportunities, and they’re all SaaS deals. Licensing, it’s a situation where we will sell the the licenses to the, our platform, and we’ll either operate it on their behalf or we will train them, and they would use that, you know, system to operate, you know, for themselves. And so we have a lot of, you know, large opportunities, and and I think we alluded to, our our partner CDW Yeah. Being named the official, supporter for, the LA Olympics and Paralympics in in 02/2008.

And so, we see a large opportunity there. And in terms of the census, you know, there’s the the 2030 census and the RFI we received the RFI actually last week. It it it it’s on it’s on the street, and so anybody can go there and take a look at the RFI for this for the census project in 2030. And we feel like we are the incumbents for that. We manage the the largest managed mobility project in in the world.

I mean, this this particular census involves 700,000 devices and enumerators. And we, you know, you know, acquired all of these devices, set up all of the devices, configure them, did the logistics to send it out to them, and and, you know, help, you know, process all of that, provide a 24 by seven help desk. Once the the the census was done, we did the reverse logistic, brought them all back, wiped them all down, recycled them in the inventory, recycled some of the devices, and and sold them on the, you know, the the, you know, secondary markets and so forth. And we did that, you know, all during a pandemic without losing a single device. And so we we know that our solution can scale, and it was also the first time that the census was conducted using mobile devices.

They’ve tried it several times before, and they were unsuccessful. But they they did this during a pandemic, and they were it was a very successful project. And so we feel that we’re in the you know, again, have the inside track on the census 2030 along with our partner CDW, our prime contractor partner CDW, and we feel pretty good about our opportunities. And, and, of course, there’s a, you know, potential, since it’s 2025.

Scott Buck, Analyst, HCW: I was just gonna go there. You know?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. Who knows what’s going

Scott Buck, Analyst, HCW: No reason to think you wouldn’t be as well positioned for 2025 as as you are for 2030.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Right. Right. If they have to spin up something really quickly, you know, why not go with a known commodity? Right? And so we feel pretty good about that, but I, you know, I think that there may be an outside chance that there might be a 2025, but we’re ready.

Right? We’re ready for that and and, you know, our our ITMS solution is ready and it could scale.

Scott Buck, Analyst, HCW: Yep. No. It makes a ton of sense. Now, you know, given the the programs that we just discussed Mhmm. It seems like we we have kind of a a backlog of of potential work here.

How should investors be thinking about timing and that potential revenue impacts on the ’25 and and ’26? And I and I wanna be clear. I’m not asking for any kind of guidance, but

Jin Kang, Chief Executive Officer, WidePoint Corporation: just

Scott Buck, Analyst, HCW: directionally directionally, how should we be thinking about that?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. Directionally, I mean, you know, our we have our contract backlog with something like 260,000,000, something like that Yep. And change. And a lot of that has to do with our CWMS two point o. And so as we, reach towards the end of that period of performance, you should see the contract backlog continue to kinda edge down.

But what will happen as the the contract backlog continue to, you know, go down, what will happen is is that when the new CWMS three o starts up and the task orders are being issued to that, you should see that backlog continue to build. And and based upon the current estimate, the CWMS three o is going to be a ten year contract versus a five year contract, and it’s going to be a $3,000,000,000 contract versus 754,000,000,000 a million. And so, essentially, what they have done is that they doubled the size of the CWMS two point o contract. Right? And so right now, the current contract is the two point o is 750,000,000 and change.

And if you would multiply that because it’s a five year contract, then you will multiply that by two, I get 1,500,000,000.0. Right? Sure. If you go ten ten years. But the ten year contract for CWMS three o is not 1.5.

It’s actually 3,000,000,000. And so we see the the the volume of the the the contract increasing and doubling. It’s not gonna happen all overnight, but I think some of it will happen probably, you know, first quarter because I think that these items that they’re gonna put out are going to be new projects potentially related to, know, securing the northern and the southern borders and using wireless and cellular technology and satellite technology to, you know, help monitor, you know, the border and those kinds of things. And so and and, of course, there’s going to be an increase in, you know, staffing for ICE and CBP because you’ve already heard that they’re, you know, repeating people. I think Dean Kane signed up to be a ICE agent.

Scott Buck, Analyst, HCW: Well, super if Superman’s on it, then

Jin Kang, Chief Executive Officer, WidePoint Corporation: That’s right. Superman is on it. And I, you know, I was surprised that, you know, he’s almost 60 years old, and they still took him. And so there you go.

Scott Buck, Analyst, HCW: Alright. Well

Jin Kang, Chief Executive Officer, WidePoint Corporation: k.

Scott Buck, Analyst, HCW: Great. That that’s that’s that’s very, very helpful. Now one thing I have heard in in conversations with other companies that that contract with the federal government, you know, as it, I think, is typical with a change in the executive branch, you can get some disruption and and delays. Are you guys seeing any of that in your business? Because it certainly sounds like it’s it’s all systems go.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. So for us, you know, we haven’t experienced that, you know, any, you know, negative sentiments on you know, from our customer side. And and and and because we’re in the, you know, mobility as a service industry, cybersecurity and, you know, mobility management and data analytics are they’re a nonpartisan issue. And as part of our mobility management, one of the things that we do and we pride ourselves in is is that we help save, you know, taxpayer dollars. You know, for DHS, I think at last count, we were we had saved them something like $380,000,000 in taxpayer dollars.

And this is all through, you know, managing, you know, all of these mobile devices and, making sure that these devices are on the same you know, the right plans and making sure that these devices are secure and you have clear visibility. Because a lot of times when we go into a new organization, you’ll find somewhere between, you know, seven to 20% of devices that go unused. And and, of course, you know, the the customers are paying for that. And so as you, you know, you can imagine, you know, at let’s say, you know, at a modest, you know, $50 per month per device, You know, if you have a, you know, a million device that are not being used, that’s a big chunk of change per month. Right?

50,000,000 times 12 is $600,000,000, you know, all all across the federal government. So one of the things that we did with Doge when when Doge was, you know, prominently, of course, in the news, we had sent a one pager to Elon Musk and, I think, Vivek at the time. And and the next thing we see is that OPM has now gone through this process and we have located all of these unused devices, and we turned them off and we saved x million dollars. And while that’s good, I think it it was good that they do that. But what we do is that we keep the good hygiene going twelve months, you know, every day to make sure that you you’re not you know, essentially, if you do an audit every 12 months, you’re losing that savings opportunity for the the twelve months that you’ve already spent that money on.

Right? Right. And so we’d keep all of those things very clean, making sure that the inventory is accurate, making sure that the devices are on, you know, the right plans. And we give you complete visibility for them. Right?

Who’s using it? Why they’re using it? What department is spending most money in data and so forth, and how many of these device have been compromised and so forth. Right? And so we keep that nice clean hygiene for our customers so that they don’t have to go through an annual audit or biannual audit and and and find out that they’ve been paying millions of dollars more than what they should be paying over the last twelve months or twenty four months.

Scott Buck, Analyst, HCW: Yep. No. That makes sense. Yeah. I’m sure every contract is a little bit different, and even every product and and service you offer may may be a little bit different.

But could you just give us an overview of, you know, how you bill your customers? Is it on a per device per month basis? Is it simple, you know, kind of one size fits all subscription, you know, monthly subscription? What does that kinda look like? And I’m just trying to get a sense of what, you know, visibility you have as CEO and maybe what kind of visibility the investor has.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. So so the way we, you know, invoice our customer is, you know, as I said, is a, you know, software as a service model where, we, you know, license our software to the customer and we operate it on the on their behalf. And it’s it’s based upon the number of devices that are being managed. So it’s each unit per per device, per month. And and and so that’s our, you know, our bread and butter.

But I think that things are changing a little bit in terms of our device as a service opportunity where the the customer will pay a fixed monthly rate for everything soup to nuts on their smartphones or their mobility requirement. And if they have, you know, 50 to or a 100,000 staff members, these device, they would pay a fixed monthly fee for having, you know, these, you know, smartphones or laptops, you know Right. You know, mobile hotspots and what have you. And they will pay a fixed monthly fee for a specific setup, and and we would bill them for that. And and and and we have, you know, mitigated the risk associated with actually holding inventory and actually acquiring the devices.

We will partner with, you know, these large, you know, logistics companies, you know, these hardware software vendors like CDW, to, you know, do the acquisition, and, they would do the inventory and the acquisition portion. We will provide the management portion to the customer in a fixed monthly fee.

Scott Buck, Analyst, HCW: Great. Something that comes up in my conversations frequently when I introduce WidePoint to to potential investors is the the margin story. The company reports revenue as either managed service or carrier service, and both have materially different margin profiles. How do you kind of unpack that for investors and help them understand you know, what the real margin opportunity here is in the business?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. That’s a great question. And and, you know, we try to do that in every one of our SEC filings to let the you know, our investors know that, you know, there’s two lines two main lines of revenue, the first being carrier services and the other being managed services. And and, you know, for all intents and purposes, the managed, you know, service revenue is the real business. Yep.

The carrier services revenue is, pass through. This is invoice payment, invoice processing revenue. And so and, you know, when an investor looks at any of our filing, they should just ignore the carrier services portion, which is, as I said, you know, just pass through revenue. Yep. And and really look at, you know, WidePoint to for the non carrier services revenue.

And they they will get get they will get a clearer picture of, you know, how you know, the size and the scope of our company. And, you know, we are about I would fifth for 2024, we were around 58,000,000 in non carrier revenue with, you know, gross margins of somewhere around 33, 34%. And and we’re continuing to improve our gross margins. And as we, you know, close on some of these DaaS opportunities and, you know, some of our managed services revenues, you should see that margin continue to tick up. You know, our goal is to get that to, you know, 50%, you know you know, as we exit 2025 2026 and and and into 2027.

So it’s it’s probably like a, you know, twelve months, twenty four month, you know, effort, but you should see our gross margins continue to tick up. And so, you know, looking at, you know, our revenue, just ignore the carrier services revenue, just concentrate on the non carrier services revenue, and I think you’ll get a, you know, much truer picture of what the company is really doing.

Scott Buck, Analyst, HCW: Right. I think that’s some really, helpful added color. And I know, you know, as I said, in my conversations, there’s some confusion. But, as I think about valuation and the way I model the business, you know, my valuation is purely based off of what you’re doing on the managed service side

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah.

Scott Buck, Analyst, HCW: Which I think is the right way to

Jin Kang, Chief Executive Officer, WidePoint Corporation: That’s the right way to

Scott Buck, Analyst, HCW: think about the business. Yep. In terms of go to market strategy for for both on the federal government side and and the commercial side, Are you using partners in a lot of cases to get involved in in this work, or are you using a direct sales force to, to pitch business?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. So so, you know, we do have our direct sales, you know, support and staff, but that pales in comparison to the the the the the budgets and the the the reach that our partners have. And so we’ve made a an active part of our strategy to, you know, engage and invest in our, you know, partnerships with large systems integrators and strategic partners. And that’s being that’s, you know, paying, you know, a lot of dividends. Specifically, you know, I can talk to CDW that has that that we have partnered with winning the census project, census 2020.

They are also in alignment with us or we’re in in alignment with them in their DaaS device as a service strategy. So we see a lot of opportunities are spinning up because of that. And by partnering, we can leverage, you know, our partners, you know, significant sales and marketing resources along with their, you know, extensive customer networks. And and I think you’ll see a lot more of those opportunities coming. And we have announced in the past a lot of opportunities that we have won with CDW.

Some of the, you know, devices of service with this defense health agency. I can’t name the name, but Sure. It’s a defense health agency. That was a, you know, a teaming opportunity with CDW. We also won the NASA NEST contract with Leidos, our partner also over at US Army Corps of Engineer.

And so there’s a lot of, you know, large opportunities that we won. And the reason why we’re successful teaming with these large integrators is because we have the certification and accreditation that the federal government and these large acquisition, you know, departments require. And now with the our FedRAMP authorized status, you know, we’ll be even, you know, you know, sought out more for for that requirement. Because as far as I know, for mobility management, we’re the only game in town for FedRAMP authorized. I think that there are a few that are in the cycle to get the thing, get the fed FedRAMP authorized status.

But I can tell you that it is a long drawn out process, and you are part of it. You’ve been following this for a long time. Took us roughly, you know, three years to get this thing done. So, you know, we feel pretty good

Scott Buck, Analyst, HCW: about dig in and give people a look at, you know, what that process entails and and what, you know, the benefits coming out of that that work are.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. The the process is is that they have to, you know, look at all of our documentation, our, you know, system security plan, our SSPs, and then they have to, you know, run scans on our software and system to make sure that there aren’t any, you know, loopholes or backdoors and such, and there’s specific tools to do that. And and and you have to go through this process. And and, of course, even before you start that process, you have to get a a sponsor from the federal agency that says that you need that. And then once you get through that process and and as I said, it has been a long drawn out process.

You have a third party three p a o, third party. I I’ll get you the acronym.

Scott Buck, Analyst, HCW: But It’s okay.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Essentially, it’s a third party auditor that goes through your code and your system and your network diagram and site visits and all of this stuff to make sure that you are operating your system in a very secure fashion. Right? And so we’ve gone through that process. It’s an, you know, it’s an expensive and lengthy process. And and and once you’re through that process, what that means is is that your system and and the people that are operating your system and all of the environment in the network, meets all of the stringent cybersecurity standard for the federal government.

So that’s a big stamp of approval. So, you know, various organizations have may have what they call authorization to operate, ATOs, with various agencies, but FedRAMP goes across the entire federal organization. And so that’s that’s a big deal.

Scott Buck, Analyst, HCW: Yeah. No. That that’s great, great color. And we we’ve talked a lot about the revenue opportunities, that that you guys have in front of you, here in the ’25 and and really as you get into ’26. I’m curious, is there a fair amount of, you know, hiring or added OpEx you’ll need to support revenue growth?

And I’m just trying to get a sense of what, you know, operating leverage starts to look like, you know, in ’26 and maybe into ’27.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. So so, you know, as we add on new customers, you know, we will be you know, we will need to hire additional staffing. Sure. But not at the level that, you know, it will be a, you know, dollar for dollar. So every every opportunity that we signed, going forward, we should see, you know, operating leverage.

You know, so far, all of the spiral four that we’ve won, we haven’t had we didn’t have to go out and hire additional, you know Mhmm. Staffing. Our device as a service, as I said, is a licensing model, so it’s very light in terms of staffing unless, of course, our customers wants us to operate the licenses for them, in which case that they will pay a higher price. And so we feel, you know, our operating, you know, you know, requirements for our operations will be, you know, further and further diminished compared to the revenue that’s coming in.

Scott Buck, Analyst, HCW: Perfect. Then I wanna touch on the balance sheet quickly. You know, the company ended June with, I don’t know, just about 7,000,000 in in cash and no debt. I’m curious what kind of cash do you need to balance, do you need to run the day to day of the business? And what about near term cash needs?

Do you have the available cash on the balance sheet to to provide the runway for some of this new business?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Yeah. So so in terms of our, you know, you know, operations, I mean, we have more than enough net working capital to continue to operate without having to go into debt. We we have a line of credit with, you know, Old Dominion National Bank, ODMB, and we rarely touch that revolving line of credit because we are continuing to generate cash. We do have a little bit of hiccup with, you know, FEMA, and we’re, you know, working diligently to resolve that. We’re probably six months behind in our billing, and that has to do with not WidePoint being able to generate the invoices, but it’s the the process that FEMA has to go through to approve the invoices.

Mhmm. Know, FEMA is organized into, you know, seven different, you know, contracting officer representative, and each, COR, is having to, you know, approve the invoice. And they all like to see it the way they wanna see it. And so, recently, there’s been a new, you know, hire, new contracting officer that’s coming in, and and and we’re working, you know, to make sure that we we get that straightened out and and get this you know, all of the unbilled out of the way because that is the the largest source of, you know, unbilled. And as you said, we we ended q two with 6,800,000.0, which was about a little bit higher than where we ended 2024.

You know, really, our our cash balance should be north of $10,000,000. And and the reason why it isn’t is because of, you know, some of these unbilled. And and, you know, we should see our, you know, cash balance continue to fluctuate, you know, as we add on new customers and we have to spin up new pieces. Sure. But, you know, we’re continuing to add cash to our balance sheet and, you know, you know, we’re looking at our cash balance at the end of this year being, you know, roughly, you know, know, $1,112,000,000 dollars.

And so, you know, we’re continuing to make progress, and we are not looking for cash. We’re not looking to raise cash. And and we recently filed an form s eight and an s three. An s eight was for our bonus incentive plan, which was out of out of shares. But the s three is a a purely a housekeeping activity to make sure that if there is an opportunity for us to go out and raise capital, you know, we have the the facility to do that.

But we don’t have any plans of going out and and raising, you know, capital. And we would only do that tied with a a potential, you know, m and a opportunity. We do not need cash for operations. We have zero, you know, bank debt, and we rarely touch our, you know, line of credit. And so, we’re in pretty good shape, and we have plenty of runway.

Scott Buck, Analyst, HCW: So that’s my I think my last question for, for this morning, Jen.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Mhmm.

Scott Buck, Analyst, HCW: On m and a, you know, company, I believe, was was formulated through the merger of IT consulting companies back, you know, nearly 30 ago and

Jin Kang, Chief Executive Officer, WidePoint Corporation: Right. Right.

Scott Buck, Analyst, HCW: Has a history of of of m and a. So what is the appetite today, and what does acquisition criteria look like, as you think about potential targets?

Jin Kang, Chief Executive Officer, WidePoint Corporation: Good good question. I think when, you know, when when the company was originally formed, it was formed with a vision of being a, portfolio company. Mhmm. They’ve, you know, brought in companies, you know, professional services companies and such, and and they even, you know, bought a company that did, y two k remediation for, you know, old goats like me, you know, who knew who understand what that is. And so, you know, we do have some, you know, professional services work, but it’s usually ancillary to, you know, our mobility as a service, work.

And a lot of the the the the expertise that they look for, know, subject matter experts for mobility and cybersecurity professionals is what what we usually, bill out as professional services. But in terms of m and a, I mean, we’re always looking, you know, without, you know, weighing too heavily on our, you know, operations. And we wanna continue to, you know, operate and, you know, concentrate on organic growth, and we’re gonna continue to do that. But we have been, you know you know, quietly looking around, and and we haven’t seen anything serious rise, out of the, you know, the the m and a markets. But in terms of what we’re looking for is we’re looking for, you know, company in the mobility or the cybersecurity and data analytics side that kinda fits well with our current operations.

We did the IT as a service, you know, ITA, IT authorities back in 2020 2021, and that added roughly 10,000,000, to our top line and, you know, contributing, you know, to EBITDA. I’m gonna say it’s probably a a pretty large contributor. Yeah. And so we’re looking for companies that are established that have revenue. We’re not looking for companies that are pre revenue companies that, you know, say that they’re gonna have a hockey stick revenue growth.

Sure. Because there’s a lot of them out there. And and so, you know, when they hit that inflection point and showing that hockey stick, we’re we’re more than happy to pay a premium for that. Right? Yep.

And so, you know, in terms of, you know, companies that we’re looking for, we’re looking for companies that are established, you know, stable, you know, marginally, EBITDA positive would be great because we can accumulate the, you know, redundancies and make them, you know, profitable. And so, you know, we’re looking for opportunities like that. Even, you know, like, companies that are, you know, EPS positive, that would be great. Right? Because Sure.

You know, once we merge the operation, we’re gonna be that much better. And so, but it is in the the mobility and the cybersecurity area. We’re not looking for, you know, shrimp boat captains.

Scott Buck, Analyst, HCW: Well, it sounds like you have a lot on your plate between the organic opportunities and and the potential for, for for a deal. Jen, I I mean, I I think this seems like a good place to to stop today. I wanna thank you for your time. And any investors on the line, if you have questions regarding WidePoints, please do not hesitate to reach out directly to to me at, sbuck@hcwco.com. Jin, any closing, closing thoughts?

Jin Kang, Chief Executive Officer, WidePoint Corporation: No. The closing thoughts is thank you, Scott, as always. You know, thank you for, your thorough analysis. Sometimes I feel like I’ve gone to see the doctor. So I appreciate that.

And then I think, you know, investors, when they listen into your commentary, you know, they can they can, you know, rely on how thorough that analysis was. Right.

Scott Buck, Analyst, HCW: Good. Well well, thank you very much for the time, everyone, and, have a nice day.

Jin Kang, Chief Executive Officer, WidePoint Corporation: Great. Thank you.

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