WidePoint Corporation

Thank you for joining us today to review our financial results for the fourth quarter and fiscal year ended December 31, 2020. As our financial results for the fourth quarter confirm, 2020 was the most successful year in YPoint's history. We set records in each of our financial performance metrics, all during a pandemic, while seamlessly managing the largest mobility managed service contract in the country. We expanded our work with our systems integrators partners to secure new business, and we re-secured a major contract with our most prominent customer, the U.S. Department of Homeland Security. Let me emphasize that this win was a $500 million five-year contract, and unlike many in the federal government where the award is made to multiple contractors, we were the sole awardee. I'm happy to report that for the full year 2020, our managed services revenue grew 29% to $42.7 million, and our gross profit increased 18% to $20.5 million. As a result, our adjusted EBITDA increased 59% year over year to $5.7 million, which was right at the top of our guidance. Our net income increased approximately 4,460% from $226,000 in 2019 to $10.3 million in 2020. Our top line revenue was approximately $180 million, which is a 77 percent increase compared to approximately $102 million in 2019. Additionally, we ended the year with an incredibly strong balance sheet with $16 million in cash and no debt. Kelly will walk through the details of the financials in a few minutes, but it's worth reiterating that we generated these record results during a very challenging year with the pandemic. There were many factors that contributed to our success in 2020, but two factors stand out. The first is that we have an incredibly flexible and scalable organization. I will once again take this opportunity to thank our dedicated staff for their diligence and their commitment. It is because of them that YPoint successfully managed a record amount of work during a logistically challenging year that drove positive financial performance for our shareholders. The second is that we have an incredibly robust client base of large commercial enterprises and government agencies, including those who are at the forefront of the fight against COVID-19. The Department of Homeland Security, Customs and Border Protection, immigration and customs enforcement, the U.S. Army Corps of Engineers, and the Department of Health and Human Services, to name a few. These two factors were paramount to our success, and they will be integral to YPOINT's success in 2021 and beyond. But the single contract that caused the largest change to our business was, of course, the 2020 U.S. Census Project. This was the single largest managed mobility services project in the country. For this project, we scaled our organization to deliver, manage, and now decommission approximately 700,000 devices in support of the 2020 Decennial Census. This project will serve as an excellent customer reference for us in the quarters to come as it perfectly demonstrates our ability to scale, adapt to changing circumstances, and deliver quality service under pressure on an essential project. As we pursue larger, higher margin business opportunities, such a use case will be integral to our future success. And more importantly for the near term, our core managed services business excluding census is stable and growing. So as this program comes to its natural conclusion, carrier services revenue will decline, presenting some significant comparison challenges on the top line. However, we believe we should see our gross margins improve in the quarters ahead. The operational highlights of the fourth quarter was that we re-secured a new major contract with the U.S. Department of Homeland Security. On November 25th of last year, we announced the much-anticipated news that we had won the Cellular Wireless Managed Services, or CWMS, 2.0 contract. While we were always optimistic in our ability to secure this business because of our excellent past performance rating and our quality relationship with this agency, we were very pleased to have once again earned the business from DHS. This single award contract is valued at up to $500 million. If all option periods are exercised, it will last through November 2025. It was an excellent accomplishment to cap off what was a monumental year. and it has set the positive tone for a successful 2021. Before I dive into our priorities and expectations for this year, I will turn the call over to Jason to provide you with some details on the sales momentum we've been building as we exited 2020 and into the new year. Then our CFO Kelly Kim will walk us through the financial results of the fourth quarter and full year. Jason.

Thank you, Jen. In the fourth quarter of 2020, we continue to effectively execute our sales strategy by successfully teaming with systems integrators and expanding our presence with both prominent players in the public and commercial sectors. As Jen mentioned, the most important contract win of the fourth quarter was the CWMS 2.0 contract. We've spent a great deal of time discussing this relationship in the past, so I won't dwell on it today. Suffice it to say that we are extremely pleased to see our expectations and our hard work manifest in re-securing this business, and we are excited to be focusing our full attention on new business going forward. Excluding the DHS contract, we recorded more than 30 contractual actions during the fourth quarter of 2020, which had an aggregate value of more than $10.4 million. Subsequent to the win with DHS, our subsidiary SoftEx secured several multi-year contracts with prominent European enterprises including CanCom, Zetacom, and 3 Ireland. It is highly encouraging to see robust demand for our advanced digital billing and analytics solutions from commercial enterprises. for whom our solutions are just as applicable as they are for government customers. These solutions increase ROI for our clients, they provide a best-in-class platform to our clients' customers, and they expand our foothold in the commercial space. They're a win-win. While we had commercial success, there's no doubt that some commercial enterprises have faced headwinds from the pandemic. However, Despite these headwinds, COVID-19 has accelerated cybersecurity efforts and encouraged more organizations to invest in new, more effectively secured solutions. And we are cautiously optimistic that these positive trends will remain dominant over the coming quarters. As we entered the new year, we'll continue to build on ourselves momentum and secured several new wins that support this thesis. In February, We announced that we had secured a new contract from a Fortune Global 500 company to provide professional services, hardware, and personal identity verification, or PIVI, credentials. This contract simultaneously allowed us to add a new commercial client, it expanded the use of our credentials into a new U.S. federal agency, and it added high margin revenues to our books. It's a great example of how the identity management business can efficiently drive success for WidePoint in multiple areas. Also in February, we announced that we secured a new contract to issue external certificate authority credentials to a hospital that interacts with the U.S. Department of Health and Human Services, or HHS. Our ECA credentials allow the hospital's employees and industry partners to access HHS systems securely and effectively. These are among the most important lines of defense our government has for preventing cyber intrusions. It seems that every week we read about hacks and headlines, and as data breaches become more prevalent and more damaging, the demand for our credentials grow. We continue to believe the IDM business will be a material driver for White Point in the upcoming quarters and years. And that is in part due to the partnership that we have with Cinex. As the Cinex partnership continues to develop, we are continuing to enhance our TM2 capabilities to ensure that we're as competitively positioned as possible to help both current and prospective clients manage the mobile landscape effectively and securely. In addition to the TM2 enhancements, we also recently expanded our sales team. I am excited that we were able to strategically recruit a very strong commercial enterprise sales director from IBM, who has added to our already strong pipeline of opportunities. Suffice it to say that with our current sales momentum, our enhanced team, and macro tailwinds driving our industry forward, WidePoint remains an incredibly strong position and we look forward to continuing to execute on our sales strategy in 2021. With that, I will hand the call over to Kelly. Kelly?

Thank you, Jason. Good afternoon, everyone. I'm pleased to share more details on the fourth quarter and full year 2020 results. Turning to our results for the fourth quarter, revenue was $28.4 million, up slightly from the $28.1 million reported for the same quarter last year. Carrier services revenues declined to $19.5 million from $19.8 million in the fourth quarter of last year. Towards the end of the fourth quarter, a significant portion of savings to a large carrier services customer came through, resulting in a reduction in carrier services revenue. If it were not for a 10.6 million credit issued to our customer, our total fourth quarter revenue would have been closer to 40 million. While this shift impacted our top line, its effects on the rest of our financial performance were immaterial given the low margins we earned from carrier services revenues. Managed services revenue increased by 7% to 8.9 million, from $8.3 million in the fourth quarter of last year. The increase in managed services was primarily due to expansions with federal government clients. As a result, for the full year 2020, our total revenue was $180.3 million, up 77% from $101.7 million last year. Carrier services revenues for fiscal 2020 were $137.6 million or 76% of total revenue compared to carrier services of $68.7 million or 68% of total revenue in 2019. Our total revenue would have been approximately $191 million if it were not for a large credit discussed above. Managed services revenues for the full year 2020 increased 29% to 42.7 million or 24% of total revenue from 33 million or 32% of total revenue in 2019. Year-over-year growth for both the quarter and the full year were primarily driven by increases in revenue from carrier services and managed services due to higher demand. Our gross profit for the fourth quarter 2020 was $4.8 million, consistent with $4.8 million in the fourth quarter of 2019. Similarly, gross margin was 17% in the fourth quarter of 2020 and 17% in 2019. For the full year, our gross profit increased 18% to $20.5 million or 11% of total revenue from $17.4 million in 2019 or 17% of total revenue. The increase in gross profit was due to an increase in managed services revenue. As managed services become a higher percentage of total revenue in 2021, it is our expectation that gross margins will return to more historical levels and may increase long-term. In the fourth quarter of 2020, operating expenses decreased 8% to 4.1 million from 4.5 million in the fourth quarter of last year. For the full year 2020, our operating expenses increased by 4% to 17.2 million from 16.5 million. The increase in SG&A expense for the full year reflects higher payroll costs consistent with higher employee count to support the increased business, partially offset by reduced travel costs. Additionally, during 2020, we invested approximately 2.1 million compared to 1.9 million last year in product development to enhance our technology platform and portal integration. For the fourth quarter of 2020, GAAP net income was 8.3 million, an improvement from net loss of $34,000 in the fourth quarter of 2019. For the full year, net income was $10.3 million compared to $2.2 million in 2019. During the fourth quarter, we recognized $8.2 million from a reversal of deferred tax asset valuation allowance. Excluding this one-time non-cash tax benefit, our net income would have been $2.1 million or $0.25 per diluted share, which is a substantial improvement from 2019 when EPS was $0.03, accounting for the 1 for 10 reverse split. On a non-GAAP basis, EBITDA for the fourth quarter 2020 increased 39% to $1.1 million from $0.8 million last year. For the full year ended December 31, 2020, EBITDA increased 71% to $4.9 million from $2.8 million last year. Our non-GAAP adjusted EBITDA increased 30% to 1.3 million in the fourth quarter from 1 million in the same period 2019. For the full year 2020, adjusted EBITDA increased 59% to 5.7 million from 3.6 million in 2019. Both metrics were at the top end of the guidance range. Shifting to cash flow and the balance sheet. We exited the quarter with $16 million in cash, or $1.86 per diluted share, net working capital of $13 million and approximately $5 million available to draw down on our credit facility. Our operating cash flow was $6.4 million. Capital expenditures were $1.2 million compared to $0.5 million last year. and 3.7 million increase in net cash from our financing activities. We plan to continue our investments in technology and expect to be in the range of 1.2 million to 1.5 million for the full year 2021. This completes my financial summary. For a more detailed analysis of our financial results, please reference our Form 10-K, which was filed prior to this call. So with that, I would like to turn it back to Jen.