Core Insights - WidePoint Corporation (WYY) and CSG Systems International, Inc. (CSGS) are both benefiting from digital transformation trends impacting enterprise and government IT priorities [1] - WidePoint focuses on federal IT contracts and cybersecurity, while CSG Systems is transitioning to a diversified SaaS platform with a presence in fintech and healthcare [2][8] Group 1: WidePoint Corporation - WidePoint is a government IT solutions provider specializing in mobile telecom lifecycle management and secure identity management, serving critical federal agencies [4] - The company achieved FedRAMP authorization for its Intelligent Technology Management System (ITMS), enhancing visibility among federal agencies [5] - WidePoint has secured three task orders under Spiral 4 and anticipates increased awards as Spiral 3 concludes, while investing in a Device-as-a-Service (DaaS) model and smart city initiatives [6] - Revenue growth for WidePoint is inconsistent due to the nature of government contracts and procurement delays, with recent accounting adjustments raising concerns [7][24] Group 2: CSG Systems International, Inc. - CSG Systems has evolved from a telecom billing provider to a diversified SaaS operator, generating over one-third of its revenue from fast-growing sectors like financial services and healthcare [8] - The company is focused on a capital-light model, reducing working capital needs and pursuing high-margin acquisitions to enhance its SaaS platform [9] - CSG Systems aims for a long-term operating margin of 18-20%, supported by a growing base of recurring, high-margin SaaS revenues [9] - CSG Systems returned $32 million to shareholders in Q1 2025 and plans to return over $100 million in 2025, showcasing strong cash generation and shareholder-friendly practices [11] Group 3: Financial Performance and Valuation - The Zacks Consensus Estimate for WidePoint suggests a 10.5% increase in sales and a 33.3% increase in EPS for 2025, with earnings estimates remaining unchanged [13] - CSG Systems is projected to see a 6% increase in sales and a 1.1% increase in EPS for 2025, with earnings estimates rising by 1.7% in the past 60 days [17] - WidePoint's stock has declined 5.7% over the past year, underperforming the industry and S&P 500, while CSG Systems shares have gained 55.5% [20] - WidePoint trades at a forward P/S ratio of 0.20X, significantly below the industry average of 1.77X, while CSG Systems has a forward P/S ratio of 1.56X [22] Group 4: Investment Outlook - WidePoint's niche in federal IT services and FedRAMP certification provide growth opportunities, but its smaller scale and revenue volatility may deter investors [24] - CSG Systems offers a more diversified SaaS model with disciplined capital allocation and high-margin recurring revenue, positioning it as a stronger investment choice [25][26]

Core Insights - WidePoint Corporation (WYY) is making significant progress under the Department of Defense's Spiral 4 contract, which has a potential value of up to $2.7 billion across multiple vendors, presenting a major pipeline opportunity [1] - The company secured two new task orders under Spiral 4 in Q1 2025, adding to a previously announced base-year award with a potential 10-year value of approximately $25 million, indicating growing traction despite modest award sizes [2][11] - WidePoint is expanding its internal team dedicated to Spiral 4, reflecting confidence in pipeline conversion and long-term execution, and differentiating itself by offering managed mobility and lifecycle services beyond core carrier offerings [3][11] - The transition from Spiral 3 to Spiral 4 is expected to drive momentum for WidePoint as several awards under Spiral 3 are set to expire by mid-2025 [2][4] Competitive Landscape - Other federal mobility providers, such as EchoStar Corporation (SATS) and T-Mobile US, Inc. (TMUS), are also positioning themselves under the Spiral 4 contract [5] - EchoStar, through its subsidiary Hughes Network Systems, is focusing on integrated 5G and satellite-backed connectivity solutions for federal mobility, although it faces operational scrutiny regarding its wireless service obligations [6] - T-Mobile has been selected by the U.S. Department of the Navy as a wireless solutions provider under a $2.67 billion contract, offering a range of services supported by its nationwide 5G network [7][8] Financial Performance - WidePoint's shares have declined by 14.6% over the past three months, contrasting with an 8.4% rise in the industry [9] - The Zacks Consensus Estimate for WidePoint's earnings in 2025 has shifted from a profit of 1 cent per share to a loss of 14 cents, while earnings for 2026 are projected to grow robustly by 175% [13] - The company's stock is currently trading at a forward 12-month price-to-sales multiple of 0.18X, significantly below the industry average of 1.8X, indicating an attractive investment opportunity [16]

Key Takeaways WidePoint is positioned to benefit from rising federal IT spending and growing contract momentum. WYY gained FedRAMP authorization and is progressing under DoD's Spiral 4 and DHS' CWMS 3.0 efforts. With a recent stock drop, WYY trades at a low 0.18X P/S ratio, far below the 1.81X industry average.WidePoint Corporation (WYY) appears well-positioned to benefit from rising federal IT spending, particularly through its strategic alignment with key government priorities and growing contract momen ...

Core Insights - WidePoint Corporation (WYY) is focused on returning to profitability through strategic initiatives aimed at enhancing long-term earnings potential [1] - The company is shifting towards higher-margin business segments, particularly in managed services and federal contracts [1][4] Financial Performance - In Q1 2025, WidePoint maintained a gross profit margin of 14% relative to total revenues, consistent with the previous year, but gross profit margin excluding lower-margin carrier services rose to 40%, up from 32% a year earlier [2][3] - The improvement in gross margin is attributed to a reduction in lower-margin reselling activities, indicating a positive shift in revenue mix [3] - WidePoint continues to generate positive free cash flow and adjusted EBITDA, with a goal of achieving positive earnings per share (EPS) in 2025 [4][8] Market Position - WidePoint's stock has declined by 10.4% over the past three months, contrasting with a 6.8% rise in the industry [6] - The company's current forward price-to-sales (P/S) ratio is 0.19X, significantly below the industry average of 1.82X, suggesting an attractive investment opportunity [9] Earnings Estimates - The Zacks Consensus Estimate for 2025 has shifted from projected earnings of 1 cent per share to a loss of 14 cents, while the company reported an adjusted loss of 21 cents per share in 2024 [11] - Earnings for 2026 are expected to grow robustly by 175%, while competitors CACI International and Cass Information Systems are projected to grow by 17% and 93.5%, respectively [11]

Core Insights - WidePoint Corporation (WYY) shares have decreased by 43.5% over the past month, underperforming the Zacks Computer - Services industry, which rose by 0.6%, and the broader S&P 500, which grew by 2.5% [1][2] Financial Performance - The decline in stock price follows weaker-than-expected Q1 2025 results, with a reported loss of 8 cents per share, missing the Zacks consensus estimate of a loss of 1 cent. Revenues were $34.2 million, falling short by approximately $5 million [10][12] - A $2.7 million accounting adjustment related to reselling contracts negatively impacted reported revenues, causing confusion around growth trends [11] - Cash reserves have dropped to $3.7 million due to delayed payments from a major customer, raising short-term liquidity concerns [12] Market Position and Strategic Developments - WidePoint has secured three task orders under the $2.7 billion Spiral 4 contract, with expectations for increased activity in H2 2025 [7][17] - The company achieved FedRAMP authorization for its Intelligent Technology Management System (ITMS), enhancing its position with federal agencies [16] - WidePoint is also investing in commercial growth opportunities, including its Device-as-a-Service (DaaS) offering and early-stage smart city initiatives [18][19] Valuation and Analyst Sentiment - WYY stock is trading at a forward 12-month price-to-sales (P/S) multiple of 0.19X, significantly below the industry average of 1.82X, indicating a potentially attractive investment opportunity [20] - Analysts maintain a bullish outlook, with an average price target of $7.50, suggesting a potential upside of 126.6% from the last closing price of $3.31 [23][24] Investment Considerations - Despite strategic progress, near-term challenges such as the recent earnings miss, accounting adjustment, and declining cash reserves present executional risks [25] - Investors are advised to monitor the company's ability to convert pipeline opportunities into revenue and improve liquidity before making new investments [26]

Financial Performance - WidePoint Corporation reported total revenues of approximately $142.6 million for the full year 2024, a 35% increase compared to $106 million in 2023[22]. - The company achieved $2.6 million in adjusted EBITDA for the year, reflecting a robust 229% increase over the prior year[28]. - Free cash flow for 2024 was $2.5 million, a significant improvement from negative free cash flow of approximately $300,000 in 2023, representing a 933% increase[29]. - The carrier services revenue for the fourth quarter was $24.6 million, an increase of $8.9 million compared to the same period in 2023[23]. - Full-year net loss improved by $2.1 million to $1.9 million or a loss of $0.21 per share, compared to a net loss of $4 million or a loss of $0.46 per share in the previous year[30]. - Net loss for Q4 improved to $356,000 or a loss of $0.04 per share, compared to a net loss of $1.3 million or a loss of $0.15 per share for the same period last year[30]. - Cash balance at year-end was $6.8 million, consistent with the end of 2023, with a revolving line of credit providing $4 million of potential borrowing capacity[31]. Contract and Backlog - WidePoint secured $51.2 million in total contract value for the year, with $45.6 million awarded by federal agencies[8]. - As of December 31, 2024, WidePoint's contract backlog stood at approximately $290 million, excluding a recent $25 million task order award[14]. - Anticipated task order award under the Spiral 4 contract totals $25 million over a 10-year period, indicating continued government spending despite budget cuts[33]. - The Spiral 4 contract is expected to generate an additional $2.5 million annually, contributing positively to the company's revenue[63]. - The company ended 2024 with a contract backlog of approximately $290 million, providing a strong revenue outlook for 2025[63]. Operational Efficiency - General and administrative expenses for the year were $17.6 million, or 12% of revenue, compared to 15% in 2023, indicating improved operational efficiency[27]. - Sales and marketing expenses for the year were $2.3 million, remaining constant as a percentage of revenues at 2%[26]. Product Development and Market Strategy - The company launched two new solutions in 2024: MobileAnchor and M365 Analyzer, aimed at enhancing security and providing actionable insights for clients[10]. - Focus on commercialization of new solutions, particularly MobileAnchor and M365 Analyzer, to capture mobile digital credential market share[37]. - New products such as the M365 Analyzer and MobileAnchor are expected to meet significant market demand, enhancing revenue potential[63]. Future Outlook - Company aims to expand strategic relationships and grow contract backlog, with a focus on the MobileAnchor solution expected to be fully commercialized in 2025[35]. - Goal to deliver positive earnings per share for the full year 2025, driven by technological innovations and strong performance across business lines[38]. - Guidance for 2025 will be provided after Q1, with expectations for double-digit percentage growth in top line and similar growth in EBITDA and cash flow[58]. - The company plans to provide confident guidance during the Q1 call, indicating a positive outlook despite macroeconomic uncertainties[62]. - The company is optimistic about capturing additional work from the DOGE project, which is anticipated to be a tailwind for growth[63]. Compliance and Authorization - The company achieved FedRAMP authorized status for its Intelligent Technology Management System (ITMS), enhancing its market position and access to federal contracts[11]. - Preparing for the DHS CWMS 3.0 recompete, with a proposal team formed to address anticipated RFP requirements[36].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1] Company Overview: WidePoint (WYY) - WidePoint currently holds a Momentum Style Score of B, indicating potential as a solid momentum pick [2][3] - The company has a Zacks Rank of 2 (Buy), suggesting it is positioned to outperform the market [3] Price Performance - Over the past week, WYY shares increased by 18.91%, while the Zacks Computer - Services industry rose by 1.3% [5] - In the last month, WYY's price change was 84.67%, significantly outperforming the industry's 10.16% [5] - Over the past quarter, WYY shares rose by 32.5%, and over the last year, they increased by 100.76%, compared to the S&P 500's -2.89% and 12.85% respectively [6] Trading Volume - WYY's average 20-day trading volume is 138,466 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the past two months, two earnings estimates for WYY have been revised upwards, while none have been lowered, leading to an increase in the consensus estimate from -$0.12 to $0.01 [9] - For the next fiscal year, one estimate has moved upwards with no downward revisions [9] Conclusion - Considering the positive price trends and earnings outlook, WYY is positioned as a 2 (Buy) stock with a Momentum Score of B, making it a potential candidate for near-term investment [11]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," rather than traditional strategies of buying low and waiting for recovery [1][2] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks can lose momentum when their valuations exceed future growth potential [2] - A safer approach involves investing in bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score to identify such opportunities [3] Group 2: Company Spotlight - WidePoint (WYY) - WidePoint (WYY) has shown significant recent price momentum, with a four-week price change of 84.7%, indicating growing investor interest [4] - Over the past 12 weeks, WYY's stock has gained 32.5%, and it has a beta of 1.81, suggesting it moves 81% more than the market in either direction [5] - WYY has a Momentum Score of B, indicating a favorable time to invest based on its momentum characteristics [6] Group 3: Earnings and Valuation - WYY has received a Zacks Rank 2 (Buy) due to upward trends in earnings estimate revisions, which attract more investor interest [7] - The stock is currently trading at a Price-to-Sales ratio of 0.36, suggesting it is undervalued, as investors pay only 36 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides WYY, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 different strategies to help identify potential winning stocks based on various investing styles [9]

Financial Data and Key Metrics Changes - The company recorded total revenue of $34.2 million for the quarter, remaining in line compared to the same quarter last year [23] - Gross profit for the first quarter was $4.8 million, or 14% of revenues, compared to $4.7 million, or 14% of revenues in the same period in 2024 [25] - Net loss for the first quarter was $724,000, or a loss of $0.08 per share, compared to a net loss of $653,000, or a loss of $0.07 per share for the same period last year [27] - Adjusted EBITDA for the first quarter was $92,400, marking the thirty-first consecutive quarter of positive adjusted EBITDA [27] Business Line Data and Key Metrics Changes - Carrier services revenue for the quarter was $22.4 million, an increase of $3 million compared to the same period in 2024, driven by growth in the number of lines under management for the DHS customer [24] - Managed services fees for the quarter were $9.3 million, an increase of $564,000 compared to the same period last year, primarily due to a new federal end customer [24] - Reselling and other services revenue decreased to $789,000, a drop of $4.2 million from the same period last year, with $2.7 million of the decrease attributed to an out-of-period adjustment [25] Market Data and Key Metrics Changes - The federal contract backlog as of March 31, 2025, stood at $268 million, indicating a strong pipeline of future revenue opportunities [25] - The company is experiencing increased activity under the SPIRO-four contract, with two additional task orders awarded this quarter [6][7] Company Strategy and Development Direction - The company aims to deepen relationships with existing partners while building new ones, particularly through its Device as a Service initiative [11] - The company plans to prepare for the upcoming DHS CWMS three point zero recompete, believing it is well-positioned to win the contract again [11] - Strategic investments will be made in sales and marketing capabilities to drive visibility and growth across core markets [20] Management's Comments on Operating Environment and Future Outlook - Management remains cautiously optimistic about the alignment with federal government priorities, particularly in reducing waste and improving efficiency [9] - The company is focused on capturing opportunities in a politically dynamic and economically uncertain environment, with a commitment to delivering long-term value for shareholders [12] - Management expressed confidence in achieving positive earnings per share for 2025, despite the ongoing economic challenges [12] Other Important Information - The company plans to increase capital investments by approximately $500,000 for the year to support strategic priorities, including the Device as a Service program [28] - The cash balance at the end of the quarter was $3.7 million, impacted by administrative challenges with a major customer [28] Q&A Session Summary Question: Clarification on accounting adjustment impact - The analyst inquired if the reported numbers should be adjusted to reflect the out-of-period adjustment, to which the CFO confirmed that revenue and EBITDA should be grossed up accordingly [31][32] Question: Timeline for CWMS recompete - Management indicated that the recompete is expected to occur this year, with an award made prior to the expiration of the current contract in November [35][36] Question: Details on SPIRO-four contract - Management confirmed that SPIRO-four has a total contract value of $2.7 billion, with the company having captured several task orders under this contract [41][42] Question: Commercial opportunities and resource allocation - Management highlighted that there are significant commercial opportunities, particularly in the Device as a Service sector, and emphasized ongoing investments to support these initiatives [57][58]

WidePoint (WYY) Q1 2025 Earnings Call May 15, 2025 04:30 PM ET Speaker0 Good afternoon. Welcome to WidePoint's First Quarter twenty twenty five Earnings Conference Call. My name is Kelly, and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang Chief Revenue Officer, Jason Holloway and Chief Financial Officer, Robert George. Following their remarks, we will open up the call for questions from WidePoint's publishing analysts and major inves ...