WIDEPOINT CORP
For the period ended Jun 30, 2024. Filed Aug 14, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 14, 2024
WYY$6.29+1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-15.
0001654954-24-006397
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-14.
0001654954-24-010643
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 64 current paragraphs.
25 unchanged; 21 reworded; 13 added; 4 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 4 previous and 5 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (13)
Current report
Our managed service fees were $9.2 million, an increase of approximately $2.3 million, compared with the same period in 2023.
Current report
Billable service fees were $1.2 million, a decrease of approximately $618,000 compared with the same period in 2023. The decrease is due to less project work at one of our U.S. Government customers and lower fees in Europe.
Current report
Gross profit excluding carrier services for the three month period ended June 30, 2024 was 31% compared to 31% in the same period last year.
Current report
General and Administrative. General and administrative expenses include employees in finance, human resources, information technology, and other administrative support functions; employee labor not associated with any single revenue producing activity, all company fringe benefits, including paid time off, employee health and medical insurance, 401k matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue. General and administrative expenses for the three month period ended June 30, 2024 were approximately $4.5 million (or 12% of revenues), as compared to approximately $3.8 million (or 16% of revenues) in 2023. The dollar increase during 2024 primarily relates to an increase in share based compensation expense compared to the same period last year.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Our carrier services revenue was $39.7 million, an increase of approximately $11.9 million, compared with the same period in 2023. The increase in carrier services revenues over the same period last year is a result of new US government contracts, that were signed in the second half of 2023, which provide for WidePoint to pay for carrier services on the US government’s behalf, which are reflected in the six month period ended June 30 2024 results.
Current report
Billable service fees were $2.4 million, a decrease of approximately $678,000 from the same period last year. The decrease is due to less project work a one of our U.S. Government customers, and lower fees in Europe.
Current report
Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, and the associated cost of products and third-party software that we resell to our end customers. Cost of revenues also includes amortization of capitalized software related to delivering our solutions. Cost of revenues for the six month period ended June 30, 2024 were approximately $60.6 million (or 86% of revenues), as compared to approximately $44.3 million (or 85% of revenues) in 2023. The dollar increase in cost of revenues was a result of the corresponding costs related to the resale of the new capabilities provided by a third-party partner for two large federal contracts.
Current report
The Gross Profit percentage excluding carrier services was 31% for the six-month period ended June 30, 2024 compared to 32% in the same period last year. The lower gross margin percentage excluding carrier services is related to the corresponding costs related to the resale of the new capabilities provided by a third-party partner and increased depreciation and amortization related to capital investments in our delivery platforms reaching completion and beginning to be amortized. Our gross profit percentage will vary from period to period due to our revenue mix.
Current report
**Sales and Marketing.Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid non-employee sales agents and partners, and costs associated with travel and trade shows.**Sales and marketing expense for the six month period ended June 30, 2024 remained constant at approximately $1.2 million (or 2% of revenues), as compared to approximately $1.1 million (or 2% of revenues) in 2023.
Current report
Depreciation and Amortization. Depreciation and amortization expense for the six month period ended June 30, 2024 was $508,600 compared to $529,500 in 2023.
Current report
**Other Income (Expense).Other income (expense) for the six month period ended June 30, 2024 was an expense of $(66,300) compared to expense of $(123,300) in 2023. **
Current report
Net Loss.* *As a result of the cumulative factors described above, net loss for the six month period ended June 30, 2024 improved to $1.1 million compared to net loss of $1.8 million in the same period last year.
Removed paragraphs (4)
Previous report
We believe these actions could drive a strategic repositioning of our TM2 offering and may include the sale of non-aligned offerings coupled with acquisitions of complementary and supplementary offerings that could result in a more focused core set of TM2 offerings.
Previous report
Our managed service fees were $8.7 million, an increase of approximately $1.8 million, as compared with the same period in 2023.
Previous report
Billable service fees remained relatively consistent with the same period in 2023.
Previous report
Gross profit excluding carrier services was 31% in the first quarter of 2024 compared to 33% in the same period last year due in part to the increased amortization on our delivery platforms and due to increased reselling revenues which are lower margin.
Reworded paragraphs (21)
Previous wording
Three Months Ended March 31, 2024 as Compared to Three Months Ended March 31, 2023
Current wording
Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023
Previous wording
Revenues. Revenues for the three month period ended March 31, 2024 were approximately $34.2 million, an increase of approximately $8.9 million (or 35%), as compared to approximately $25.3 million in the same period in 2023. Our mix of revenues for the periods presented is set forth below:
Current wording
Revenues. Revenues for the three month period ended June 30, 2024 were approximately $36.0 million, an increase of approximately $9.3 million (or 35%), compared to approximately $26.8 million in the same period in 2023. Our mix of revenues for the periods presented is set forth below:
Previous wording
Our carrier services revenue was $19.3 million, an increase of approximately $5.8 million, as compared with the same period in 2023.
Current wording
Our carrier services revenue was $20.4 million, an increase of approximately $6.2 million, as compared with the same period in 2023. The increase in carrier services revenues over the same period last year is a result of new US government contracts, that were signed in the second half of 2023, which provide for WidePoint to pay for carrier services on the US government’s behalf, which are reflected in the three-months ended June 30 2024 results.
Previous wording
The increase in both carrier services revenues and managed service fees was primarily due to new federal customers signed in the third and fourth quarter of 2023.
Current wording
The increase in managed service fees was primarily due to new federal and commercial customers signed in the third and fourth quarter of 2023.
Previous wording
Reselling and other services increased by approximately $1.4 million from the same period last year primarily due to additional products being offered for resale. Reselling and other services are transactional in nature, and the amount and timing of revenue will vary significantly from quarter to quarter.
Current wording
Reselling and other services increased by approximately $1.5 million from the same period last year primarily due to increased demand and activity for items we resell to our customers. Reselling and other services are transactional in nature, and the amount and timing of revenue will vary significantly from quarter to quarter.
Previous wording
Cost of Revenues. Cost of revenues for the three month period ended March 31, 2024 were $29.5 million (or 86% of revenues), which is consistent with $21.5 million (or 85% of revenues) in 2023. Included in cost of revenues is carrier costs paid on behalf of our DHS customer of approximately $19.4 million and $13.6 million for the three month periods ended March 31, 2024 and 2023, respectively. We do not typically mark up our carrier payments.
Current wording
Cost of Revenues. Our cost of revenues include employee labor, excluding fringe benefit costs, and subcontractors directly associated with satisfying customer performance obligations, and the associated cost of products and third-party software that we resell to our end customers. Cost of revenues also includes depreciation and amortization of capitalized software related to delivering our solutions. Cost of revenues for the three month period ended June 30, 2024 were $31.1 million (or 86% of revenues), which is consistent as a percentage of revenues with $22.8 million (or 85% of revenues) in 2023. Included in cost of revenues is carrier costs paid on behalf of our DHS customer of approximately $20.4 million and $14.2 million for the three month periods ended June 30, 2024 and 2023, respectively.
Previous wording
Gross Profit. Gross profit for the three month period ended March 31, 2024 was $4.6 million (or 14% of revenues), as compared to approximately $3.8 million (or 15% of revenues) in 2023. The slight decline in gross margin as a percentage of revenues in the first quarter of 2024 compared to the same period last year was related to increased amortization expenses as our delivery platforms are placed into service.
Current wording
Gross Profit. Gross profit for the three month period ended June 30, 2024 was $4.9 million (or 14% of revenues), as compared to approximately $3.9 million (or 15% of revenues) in 2023. The slight decline in gross margin as a percentage of revenues in the second quarter of 2024 compared to the same period last year was related to increased amortization expenses as our delivery platforms are placed into service.
Previous wording
**Sales and Marketing.**Sales and marketing expense for the three month period ended March 31, 2024 was approximately $0.6 million (or -2% of revenues), as compared to approximately $0.5 million (or 2% of revenues) in 2023.
Current wording
**Sales and Marketing.Sales and marketing expenses include employee labor, excluding fringe benefit costs, and sales commissions associated with our sales force, commission fees paid non-employee sales agents and partners, and costs associated with travel and trade shows.**Sales and marketing expense for the three month period ended June 30, 2024 was approximately $0.6 million and remained relatively constant at 2% of revenues, as compared to approximately $0.5 million to 2023.
Previous wording
Depreciation and Amortization. Depreciation and amortization expense for the three month period ended March 31, 2024 was approximately $256,500 as compared to approximately $265,900 in 2023. The change in depreciation and amortization expense is related to capital investments in our delivery platforms reaching completion and beginning to be amortized.
Current wording
Depreciation and Amortization. Depreciation and amortization expense for the three month period ended June 30, 2024 was $252,100 as compared to $263,700 in 2023.
Previous wording
**Other Expense.Other expense for the three month period ended March 31, 2024 was approximately $44,200 as compared to approximately $56,800 in 2023. **
Current wording
**Other Expense.Other expense for the three month period ended June 30, 2024 was $22,100 compared to $66,500 in 2023. **
Previous wording
Income Taxes. Income tax benefit for the three month period ended March 31, 2024 was approximately $42,100 as compared to income tax provision of approximately $6,300 in 2023. Income taxes were accrued at an estimated effective tax rate of 6.1% for the three month period ended March 31, 2024 compared to (0.7)% for the three month period ended March 31, 2023.
Current wording
Income Taxes. Income tax provision for the three month period ended June 30, 2024 was $15,800 as compared to $48,800 in 2023. Income taxes were accrued at an estimated effective tax rate of (3.3)% for the three month period ended June 30, 2024 compared to (6.2)% for the three month period ended June 30, 2023.
Previous wording
Net Loss.* *As a result of the cumulative factors annotated above, net loss for the three month period ended March 31, 2024 decreased by approximately $298,400 to approximately $653,100 as compared to net loss of approximately $951,500 for the three month period ended March 31, 2023.
Current wording
Net Loss.* *As a result of the cumulative factors described above, net loss for the three month period ended June 30, 2024 decreased by $342,500 to $499,600 compared to net loss of $842,100 for the three month period ended June 30, 2023.
Previous wording
General and Administrative. General and administrative expenses for the three month period ended March 31, 2024 were approximately $4.4 million (or 15% of revenues), as compared to approximately $3.7 million (or 13% of revenues) in 2022. The increase during 2024 primarily relates to an increase in share based compensation expense compared to the same period last year.
Current wording
General and Administrative. General and administrative expenses include employees in finance, human resources, information technology, and other administrative support functions; employee labor not associated with any single revenue producing activity, all company fringe benefits, including paid time off, employee health and medical insurance, 401k matching contributions, and payroll taxes. General and administrative expenses also include professional services to include audit, consulting, outside legal, and outsourcing services. Certain of these expenses, including those associated with the operation of our technical infrastructure as well as components of our operating expenses, are generally less variable in nature and may not correlate to the changes in revenue. General and administrative expenses for the six month period ended June 30, 2024 were approximately $8.9 million (or 13% of revenues), as compared to approximately $7.8 million (or 15% of revenues) in 2023. The dollar increase during 2024 primarily relates to an increase in share based compensation expense compared to the same period last year.
Previous wording
Our immediate sources of liquidity include cash, accounts receivable, unbilled receivables and access to our new credit agreement with Old Dominion National Bank.
Current wording
Our immediate sources of liquidity include cash, accounts receivable, unbilled receivables and access to our credit agreement with Old Dominion National Bank.
Previous wording
At March 31, 2024, our net working capital was approximately $1.6 million as compared to $1.4 million at December 31, 2023. The increase in net working capital was primarily driven by positive free cashflow and a decrease in investments in computer hardware and software purchases and capitalized internally developed software costs during the first quarter of 2024 compared to the prior period. We believe that our existing cash on hand, our anticipated cash flows from operations, and funds available under the Old Dominion Credit Facility, through its maturity on February 28, 2025, will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for the next 12 months.
Current wording
At June 30, 2024, our net working capital was approximately $2.4 million compared to $1.4 million at December 31, 2023. The increase in net working capital was primarily driven by a decrease in investments in computer hardware and software purchases and capitalized internally developed software costs during the six month period of 2024 compared to the prior period. We believe that our existing cash on hand, our anticipated cash flows from operations, funds available under the Old Dominion Credit Facility, through its maturity on February 28, 2025, and our access to alternative financing sources will be sufficient to meet our working capital, expenditure, and contractual obligation requirements for the next 12 months. The Company is currently in compliance with its covenants that do not become effective until December 31, 2024.
Previous wording
For the three months ended March 31, 2024, net cash used in operations was approximately $1.6 million driven by collections of accounts receivables and temporary payable timing differences, as compared to approximately $2.6 million net cash used in operations for the three months ended March 31, 2023.
Current wording
For the six months ended June 30, 2024, net cash used in operations was approximately $2.4 million driven by delayed billing and collections of accounts receivables with predominately four (4) U.S. government customers and is partially offset by temporary payable timing differences. The delays on billing and collections relate to administrative contract actions that the Company expects to resolve in the next three to six months. In the same period in 2023, $1 million net cash was provided by operations.
Previous wording
For the three months ended March 31, 2024, cash provided by investing activities was approximately $0.3 million and consisted of receipt of deferred portion of proceeds from factoring arrangement offset by purchases of property and equipment.
Current wording
For the six months ended June 30, 2024, cash provided by investing activities was approximately $0.2 million and consisted of receipt of deferred portion of proceeds from factoring arrangement offset by purchases of property and equipment.
Previous wording
For the three months ended March 31, 2023, cash used in investing activities was approximately $0.4 million and consisted of computer hardware and software purchases and capitalized internally developed software costs, primarily associated with upgrading our ITMS™ platform, secure identity management technology and network operations center.
Current wording
For the six months ended June 30, 2023, cash used in investing activities was approximately $0.6 million and consisted of computer hardware and software purchases and capitalized internally developed software costs, primarily associated with upgrading our ITMS™ platform, secure identity management technology and network operations center.
Previous wording
For the three months ended March 31, 2024, cash used in financing activities was approximately $0.3 million and reflects line of credit advances and payments of $1.0 million, lease principal repayments of approximately $137,500, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $218,800.
Current wording
For the six months ended June 30, 2024, cash used in financing activities was approximately $0.5 million and reflects line of credit advances and payments of $4.6 million, finance lease principal repayments of approximately $278,600, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $258,400.
Previous wording
For the three months ended March 31, 2023, cash used in financing activities was approximately $0.1 million and reflects line of credit advances and payments of approximately $4.3 million, lease principal repayments of approximately $125,600, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $3,600.
Current wording
For the six months ended June 30, 2023, cash used in financing activities was approximately $0.3 million and reflects line of credit advances and payments of approximately $6.4 million, finance lease principal repayments of approximately $255,400, and withholding taxes paid on behalf of employees on net settled restricted stock awards of approximately $3,600.
Previous wording
For the three months ended March 31, 2024 and 2023, the gradual appreciation of the Euro relative to the US dollar increased the translated value of our foreign cash balances by approximately $7,100 as compared to last year.
Current wording
For the six months ended June 30, 2024 and 2023, minor fluctuations in the Euro and U.S. dollar exchange rate increased the translated value of our foreign cash balances by approximately $13,000 as compared to last year.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Revenues. Revenues for the six month period ended June 30, 2024 were approximately $70.4 million, an increase of approximately $18.4 million (or 35%), as compared to approximately $52.1 million in 2023. Our mix of revenues for the periods presented is set forth below:
Current report — wording carried from elsewhere
Our managed service fees were $17.8 million for the six-month period ended June 30, 2024 an increase of $4.1 million as a result of increased new awards activity in the second half of 2023. The increase in both carrier services revenues and managed service fees was primarily due to new federal customers signed in the third and fourth quarter of 2023.
Current report — wording carried from elsewhere
Reselling and other services increased by $2.8 million from the same period last year primarily due to increased demand and activity for items we resell to our customers. Reselling and other services are transactional in nature, and the amount and timing of revenue will vary significantly from period to period.
Current report — wording carried from elsewhere
Gross Profit. Gross profit for the six month period ended June 30, 2024 was approximately $9.5 million (or 14% of revenues), as compared to approximately $7.7 million (or 15% of revenues) in 2023.
Current report — wording carried from elsewhere
Income Taxes. Income tax benefit for the six month period ended June 30, 2024 was $26,300 compared to income tax provision of $55,100 in 2023. Income taxes were accrued at an estimated effective tax rate of 2.2% for the six month period ended June 30, 2024 compared to (3.2)% for the six month period ended June 30, 2023.