Name: HIGH WIRE NETWORKS, INC. Q3 2023 Earnings Call
Start: 2023-12-08T00:00:00.000Z

Executive Summary

Q3 2023 preliminary revenue was $6.02 million, up 1% sequentially but down 5% year over year; net loss attributable to common shareholders was $2.11 million, and loss from operations was $2.62 million .
Management highlighted record monthly recurring revenue ($1.3 million, $15.6 million ARR) and Overwatch managed cybersecurity TCV of $9.5 million, reflecting stronger recurring revenue mix despite delayed Wi‑Fi deployments; it also cited a $102 million technology services pipeline at quarter-end .
The company is restating Q1 and Q2 2023 to remove a non‑cash derivative liability; management expects a positive effect on net income and notes reclassification of certain preferred equity from mezzanine to equity; revenue and loss from operations are not impacted by the restatement .
No Wall Street consensus (S&P Global) estimates were available for Q3 2023; accordingly, no beat/miss assessment can be made (S&P Global data unavailable).

What Went Well and What Went Wrong

What Went Well
- “Monthly recurring revenue increased 30% from the previous quarter to a record $1.3 million or $15.6 million on an annualized basis,” underscoring growing Overwatch and managed services traction .
- Overwatch Managed Cybersecurity total contract value rose 53% sequentially to a record $9.5 million, supporting visibility into future recurring revenue .
- Operational optimization reduced expenses by more than $3 million on an annualized basis and enabled paydown of $5 million in debt, improving financial flexibility .
What Went Wrong
- Revenue declined 5% year over year to $6.02 million; management cited an “overall industry slowdown and customer delays in the deployment of major multi-site Wi‑Fi upgrade projects” as the driver of the softness .
- Continuing operations posted a loss from operations of $2.62 million and net loss attributable to common shareholders of $2.11 million, reflecting elevated operating costs relative to revenue scale .
- Prior quarters (Q2) showed pressure at SVC due to new regulations that reduced VoIP traffic (a headwind to segment revenue mix), amplifying top-line volatility into Q3 .

Metric	Q1 2023	Q2 2023	Q3 2023
Revenue ($USD)	$10,165,171	$5,940,066	$6,021,585
Loss from Operations ($USD)	$(2,630,943)	$(2,219,693)	$(2,618,882)
Net (Loss) Attributable to Common Shareholders ($USD)	$(1,523,923)	$(3,960,368)	$(2,111,094)

Segment breakdown (historical context):

Segment Net Sales ($USD)	Q1 2023	Q2 2023
Technology	$10,165,171	$5,940,066
High Wire	$0	$0

KPIs (Q3 2023, continuing operations):

KPI	Q3 2023
Monthly Recurring Revenue ($USD Millions)	$1.3
Annualized Recurring Revenue ($USD Millions)	$15.6
Overwatch Managed Cybersecurity TCV ($USD Millions)	$9.5
Technology Services Sales Pipeline ($USD Millions, quarter-end)	$102
Annualized Cost Reduction ($USD Millions)	>$3
Debt Paydown ($USD Millions)	$5

Notes:

Q3 figures are preliminary (company emphasized unaudited estimates subject to change) .
Q1/Q2 restatement to remove derivative liabilities will not affect revenue or loss from operations .

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY/Q4 2023	Not provided	Not provided	Maintained (no formal guidance)
Margins (Operating / Adjusted EBITDA)	FY/Q4 2023	Not provided	Not provided (company references adjusted EBITDA as a non-GAAP performance view but gave no numeric range)	Maintained (no formal guidance)
Uplisting Preparation	Near-term	N/A	Plans restatements and uplist pursuit; expects positive net income impact from removing derivative liability	New disclosure (process update)

Topic	Previous Mentions (Q1 2023)	Previous Mentions (Q2 2023)	Current Period (Q3 2023)	Trend
Managed cybersecurity / recurring revenue	Revenue growth driven by new customers and recurring contracts	HWN revenue up; mix shift with recurring; SVC down on regulation	Record MRR/ARR; Overwatch TCV +53% seq	Strengthening recurring base
Project deployments / macro timing	Project revenue contributed alongside recurring	Decrease in SVC; HWN project revenue offset; macro variability	Wi‑Fi upgrade delays impacted QoQ/YoY growth	Short-term headwind easing in Q4
Regulatory/legal	—	SVC revenue decline due to 2022 regulation impacting traffic	Restatement to remove non‑cash derivative liability; no impact to revenue/operating loss	Cleanup of capital structure
Cost actions / capital	—	Liquidated damages related to escrow shares impacted Q2	$3M annualized cost cuts; $5M debt paydown	Improving opex leverage

“Third quarter 2023 revenue increased 1% sequentially to $6.0 million and declined 5% from the same year-ago quarter. The slowed growth and decline was primarily due to an overall industry slowdown and customer delays in the deployment of major multi-site Wi‑Fi upgrade projects, which was partially offset by growth in recurring revenue from long-term contracts.” (Company press release, Dec 11, 2023) .
“Monthly recurring revenue increased 30% from the previous quarter to a record $1.3 million or $15.6 million on an annualized basis.” (Company press release) .
The company plans to restate Q1 and Q2 2023 to remove a non‑cash derivative liability and reclassify Series D/E preferred from mezzanine to equity; revenue and loss from operations are unaffected. Management expects a positive effect on net income and is preparing for an uplist filing (8‑K; Dec 8, 2023) .

No Q3 2023 earnings call transcript was available; no Q&A disclosures could be reviewed (company did not publish an earnings-call transcript in the period searched).

Wall Street consensus estimates (S&P Global) for HWNI’s Q3 2023 EPS and revenue were unavailable; therefore, we cannot assess beats/misses vs consensus for the quarter (S&P Global data unavailable).

Recurring revenue momentum is building: record $1.3 million MRR ($15.6 million ARR) and Overwatch TCV of $9.5 million point to improving revenue visibility and a more defensible mix .
Near-term project timing headwind (Wi‑Fi upgrades) weighed on Q3; management indicated conditions improved in Q4, suggesting potential sequential recovery in project revenue flow .
Operating discipline: $3+ million annualized cost reductions and $5 million debt paydown enhance cash flow trajectory and reduce financing risk for continued growth investments .
Restatement should eliminate non‑cash derivative noise, with no impact to revenue or loss from operations; this may improve reported net income and clarify capital structure ahead of uplisting efforts .
Revenue base normalized in Q3 versus Q2 (revenue up to $6.02 million from $5.94 million), but profit metrics remain constrained (loss from operations ~$2.62 million), highlighting the importance of recurring growth and opex leverage .
Pipeline remains robust ($102 million), supporting medium-term delivery opportunities as deployment cycles stabilize .
Trading implications: Without consensus estimates, focus on narrative—watch for Q4 sequential improvement, recurring revenue expansion, and completion of restatements/uplisting steps as catalysts .