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WIDEPOINT CORP (WYY)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 revenue rose 33% year over year to $37.7M; gross margin was 13% (36% excluding carrier pass-through), and adjusted EBITDA increased 49% to $0.63M; GAAP EPS was a loss of $0.04, improving from a loss of $0.15 in Q4 2023 .
  • WidePoint exceeded all FY 2024 guidance metrics, delivering $142.6M revenue (+35% YoY), $2.6M adjusted EBITDA (+229% YoY), and $2.5M free cash flow; year-end cash was $6.8M with no bank debt, and backlog stood at ~$290M .
  • Strategic catalysts: FedRAMP Authorized status for ITMS, a $25M Spiral 4 task order (annual ~$2.5M), and commercialization efforts for MobileAnchor and M365 Analyzer—management targets positive EPS for FY 2025 .
  • Estimates comparison: S&P Global consensus was unavailable at time of analysis (system access limit); relative to company guidance, results were clear beats on revenue, EBITDA, and free cash flow .

What Went Well and What Went Wrong

  • What Went Well

    • Achieved FedRAMP Authorized status for ITMS, unlocking federal opportunities and strengthening DHS CWMS 3.0, Census 2030, and NASA SEWP VI positioning .
    • Exceeded FY 2024 guidance across revenue, adjusted EBITDA, and free cash flow; recorded 30th consecutive quarter of positive adjusted EBITDA and fifth consecutive quarter of positive free cash flow .
    • Secured a $25M Spiral 4 task order (annual ~$2.5M for up to 10 years), demonstrating competitiveness versus large carriers; MobileAnchor and M365 Analyzer launched with early customer traction .

  • What Went Wrong

    • Gross margin declined to 13% due to higher carrier service mix; though ex-carrier margins improved, overall mix pressure remains a watch item .
    • Administrative challenges with a major customer delayed invoice approvals, inflating DSOs/unbilled receivables and constraining cash conversion; management is working through approvals .
    • No detailed 2025 numeric guidance at Q4; management plans to issue ranges with the Q1 call, increasing near-term uncertainty on exact top-line/EPS trajectory despite targeted positive EPS .

Financial Results

MetricQ4 2023Q3 2024Q4 2024Consensus (Q4 2024)
Revenue ($USD Millions)$28.3 $34.6 $37.7 N/A (S&P Global consensus unavailable)
Gross Margin (%)14% 14% 13% N/A
Gross Margin ex-Carrier (%)32% 38% 36% N/A
Adjusted EBITDA ($USD Millions)$0.42 $0.57 $0.63 N/A
GAAP EPS ($USD)$(0.15) $(0.04) $(0.04) N/A

Segment breakdown (Q4 2024 vs YoY change):

SegmentQ4 2024 ($USD Millions)YoY Change vs Q4 2023
Carrier Services$24.6 +$8.9
Managed Services Fees$9.4 ~Flat
Billable Services Fees$1.0 +$0.7
Reselling & Other$2.7 ~Flat

KPIs and operating metrics:

MetricQ3 2024Q4 2024
Free Cash Flow ($USD Millions)$0.51 $0.59
Cash And Equivalents ($USD Millions)$5.6 $6.8
Contract Backlog ($USD Millions)$300 ~$290
Sales & Marketing Expense ($USD Millions)$0.50 $0.56
G&A Expense ($USD Millions)$4.3 $4.3

Guidance Changes

MetricPeriodPrevious GuidanceCurrentChange
Revenue ($USD Millions)FY 2024$120–$133 Actual: $142.6 Raised/Beat
Adjusted EBITDA ($USD Millions)FY 2024$2.1–$2.4 Actual: $2.6 Raised/Beat
Free Cash Flow ($USD Millions)FY 2024$2.0–$2.3 Actual: $2.5 Raised/Beat
GAAP EPSFY 2025None previouslyTarget: Positive EPS Initiated

Earnings Call Themes & Trends

TopicQ2 2024 (Previous Mentions)Q3 2024 (Previous Mentions)Q4 2024 (Current Period)Trend
FedRAMP AuthorizationExpected by YE 2024; in-process In-process finalization Achieved Authorized status Improving
CWMS 3.0 (DHS)RFI discussed; strong incumbent case Process/timing context (bridge options) Preparing for recompete; confidence reiterated Building
Spiral 4 (US Navy)Initial RFQs, setup underway Early RFQs, groundwork Won $25M task order (annual ~$2.5M) Accelerating
MobileAnchorDeveloped, authenticated; initial deployment Deployed into two agencies; pilots expanding Pilot successes; commercialization plan; D2C MVNO partner Scaling
M365 Analyzer (Soft-Ex)Launch noted Pipeline contextLaunched; cost optimization value prop Scaling
Backlog~$320M entering Q3 $300M at 9/30 ~$290M at 12/31 (excludes Spiral 4 TO) Normalizing with revenue
Cash/DSO/UnbilledCash down on implementations; resolving billing Unbilled/DSO elevated; remediation underway Cash $6.8M; continued focus on approvals Improving
Macro/Budget/DOGEEssential services; minimal expected impact Election/budget tailwinds (DHS scope) Budget cuts commentary; services “must-haves” Neutral-to-positive

Management Commentary

  • “We closed out 2024 exceeding our revenue guidance… recording $2.6 million of adjusted EBITDA and $2.5 million in free cash flow.” .
  • “WidePoint achieved the long-awaited FedRAMP authorized status for [ITMS], marking a major milestone in our commitment to security and innovation.” .
  • “This [Spiral 4] task order carries an annual value of approximately $2.5 million… totaling a potential value of $25 million, if all options are exercised.” .
  • “Our services are must-haves for the government, not nice-to-haves.” .
  • “Our goal remains to deliver positive earnings per share for the full year 2025.” .

Q&A Highlights

  • MobileAnchor pilots: One unnamed transportation-related agency completed pilot; K-12 agency engagement underway via 22Vets partnership .
  • Macro/budget/DOGE: Management sees agencies insulated, with potential DHS scope increases (CBP/ICE), and highlighted efficiency tailwinds aligning with government priorities .
  • Cash and CapEx: CapEx outlook ~$0.2M in 2025 (facility build-out for DaaS); cash improvement expected as billing challenges resolve .
  • Guidance cadence: Expect detailed 2025 guidance after Q1 call—ranges for top line, EBITDA, and free cash flow (EPS target: positive) .
  • Contract mechanics: CWMS 2.0 bridge/extension tools mitigate transition risk; Spiral 4 RFQs building; SEWP VI bid as prime with differentiated offerings .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 (revenue, EPS, EBITDA, # of estimates) were unavailable at time of retrieval due to a system request-limit error. We attempted multiple pulls but were blocked; consequently, “vs estimates” comparisons are not included and should be refreshed when access is restored.
  • Relative to company-issued FY 2024 guidance, WidePoint delivered clear beats on revenue, adjusted EBITDA, and free cash flow (see Guidance Changes table) .

Key Takeaways for Investors

  • FedRAMP Authorized status is a structural catalyst for federal SaaS adoption and strengthens technical scoring on major bids (CWMS 3.0, SEWP VI), improving win probability and margin mix over time .
  • Spiral 4 momentum—$25M task order—validates competitiveness versus large carriers and provides multi-year revenue visibility (~$2.5M annually if fully exercised) .
  • Mix-driven margin dynamics persist (carrier pass-through dilutes gross margin), but ex-carrier margins improved, and managed services/SaaS initiatives (MobileAnchor, M365 Analyzer) should support margin expansion .
  • Cash conversion weighed by invoicing approvals at a major customer; remediation is in progress—watch DSO/unbilled metrics and cash trajectory in Q1/Q2 2025 .
  • FY 2024 execution beat internal guidance; management’s FY 2025 target is positive EPS—expect numeric ranges with Q1 call; any explicit top-line/FCF targets will be stock-moving .
  • Near-term trading: headlines around FedRAMP, Spiral 4 task orders, and MobileAnchor commercialization are likely upside catalysts; delays in federal procurement cycles or invoicing approvals are key risks to monitor .
  • Medium-term thesis: federal IDIQ exposure plus proprietary identity/analytics tools underpin durable growth; diversified commercial DaaS pipeline reduces reliance on government, potentially stabilizing margins and cash flow .