WIDEPOINT CORP (WYY)·Q3 2025 Earnings Summary

Executive Summary

• Q3 2025 revenue was $36.1M, up 4% year over year, with a net loss of $0.6M and gross margin of 15% .
• Results missed Wall Street consensus: revenue $36.1M vs $39.6M consensus and EPS of -$0.06 vs -$0.053, as delays in contracts pushed timing to the right; management emphasized this is timing, not demand (Values retrieved from S&P Global).
• Adjusted EBITDA ($0.34M) and free cash flow ($0.32M) improved sharply sequentially (+88% and +260% vs Q2), with 33rd consecutive quarter of positive adjusted EBITDA and eighth consecutive quarter of positive FCF .
• Strategic catalysts: a multi‑year SaaS award with a major U.S. carrier estimated at $40–$45M over 3 years beginning 2H26, DHS CWMS 3.0 final RFP out with proposal due Dec 17, 2025, CBP task order up to $27.5M, Spiral 4 momentum (eight awards YTD), and DaaS/Olympics pipeline .

What Went Well and What Went Wrong

What Went Well

• FedRAMP-authorized ITMS platform continues to differentiate; WidePoint states it is “the only SaaS managed mobility platform with this status,” unlocking margin‑accretive opportunities including the major carrier SaaS award estimated at $40–$45M over 3 years .
• Sequential profitability inflection: adjusted EBITDA of $0.34M and free cash flow of $0.32M in Q3, up 88% and 260% vs Q2, supporting the return to the 2024 growth trajectory .
• Federal backlog ~$269M and cash of $12.1M with no bank debt provide strong visibility and liquidity heading into year‑end and 2026 .

What Went Wrong

• Revenue and EPS missed consensus (revenue: $36.1M vs $39.6M; EPS: -$0.06 vs -$0.053), reflecting delays and mix shifts; management revised FY25 revenue, adjusted EBITDA, and FCF to “positive but below prior guidance” (Values retrieved from S&P Global).
• Carrier services declined year over year to $20.4M (from $22.4M) due to variations in lines managed for a DHS customer; gross margin ex‑carrier services compressed to 34% (vs 38% prior year) amid higher labor and greater reselling mix .
• Government shutdown risk caused slower activity and pipeline execution lag; though WidePoint noted essential services status, the timing impact remains a near‑term headwind .

Financial Results

Core P&L and Cash Metrics

Note: Asterisks indicate values retrieved from S&P Global. Values retrieved from S&P Global.

Actuals vs Wall Street Consensus (Q3 2025)

Segment Breakdown (Q3)

KPIs and Balance Sheet

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We stand apart as the only SaaS managed mobility platform with [FedRAMP] status…setting WidePoint clearly ahead of competitors who simply cannot match or compete with our capabilities” .
• “We estimate that this single [carrier] contract alone will generate $40 million to $45 million in margin‑accretive SaaS revenue over the initial three‑year term” .
• “We now expect full‑year revenue to be slightly below our previously issued guidance…We expect [adjusted EBITDA and free cash flow] to be positive, but below our previous guidance…this is a matter of timing, not demand” .
• “We ended the quarter with…$12.1 million in cash…no bank debt…additional liquidity via our revolving line of credit with $4 million of potential borrowing capacity” .

Q&A Highlights

• Carrier SaaS award timing/backlog: Implementation expected around Q3 2026 on average; not included in the ~$269M federal backlog; no exclusivity—can engage other carriers .
• Cash and M&A: Elevated cash partly timing of payables; active but patient on M&A given high valuations; focus on fortifying balance sheet .
• MobileAnchor deployment: Typical 60‑day implementation; does not rely on external systems; certificates are ingested by AD/LDAP directories .
• Olympics via DaaS/CDW: WidePoint’s ITMS to help secure/manage devices; scale estimated at 95k–135k participants/devices, similar to Census 2020 capabilities .

Estimates Context

• Q3 2025 results missed consensus: revenue $36.1M vs $39.6M and EPS -$0.06 vs -$0.053, likely driving estimate revisions lower for FY25 given management’s lowered guidance (Values retrieved from S&P Global).
• With CWMS 3.0 RFP milestones, CBP task order, and Spiral 4 momentum, medium‑term risk to consensus may shift positive into 2026 as SaaS and managed services mix rises .

Key Takeaways for Investors

• Mix shift and contract timing are the primary drivers of Q3 misses; sequential EBITDA/FCF inflection suggests operating resilience ahead of 2026 catalysts .
• The FedRAMP‑authorized ITMS platform is a real competitive moat; the $40–$45M carrier SaaS award validates margin‑accretive scale with potential to expand to other carriers .
• Federal visibility is strong (backlog ~$269M; CBP up to $27.5M; CWMS 2.0 extended; CWMS 3.0 proposal due Dec 17), underpinning near‑term revenue while larger awards queue up .
• Watch FY25 estimate revisions: management guided “positive but below” prior ranges; risk centers on timing, not demand; sequential trend is constructive for Q4 .
• Spiral 4 traction (eight awards YTD) and unique multi‑carrier independence can drive incremental wins; the paging contract adds breadth to managed mobility offerings .
• Commercial DaaS/MobileAnchor proof points may catalyze 2026 growth; LA ’28 engagement via CDW is a potential scale deployment to showcase platform capability .
• Liquidity is adequate (cash $12.1M, no bank debt, $4M LOC); management remains selective on M&A until valuations normalize .

Additional Q3‑period press releases:

• Multi‑year carrier SaaS contract estimated at $40–$45M over three years .
• Navy Spiral 4 task order >$1.25M (paging solution) .
• CBP task order under CWMS 2.0 valued up to $27.5M through Dec 2026 .