WidePoint Corporation

Ladies and gentlemen, the Wide Point event will begin in approximately five minutes. Thank you for your continued patience. Please do not disconnect. Once again, the Wide Point event will begin in approximately five minutes. Thank you for continuing to hold. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good afternoon. Welcome to WidePoint's first quarter 2021 earnings conference call. My name is Kate and I will be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin Kang, Executive Vice President and Chief Sales and Marketing Officer, Jason Holloway, and Executive Vice President and CFO, Kelly Kim. Following their remarks, we will open up the call for questions from WidePoint's Publishing Analysts and Major Investors. If your questions were not taken today and you would like additional information, please contact WidePoint's Investor Relations Team at wyy.com wyy at gatewayir.com. Before we begin the call, I would like to provide WidePoint's safe harbor statement that includes cautions regarding forward-looking statements made during this call. The matters discussed in this conference call may include forward-looking statements regarding future events and the future performance of WidePoint Corporation that involve risks and uncertainties that could cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's Form 10-K filed with the Securities and Exchange Commission. Finally, I would like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at www.widepoint.com. Now, I would like to turn the call over to WidePoint's President and CEO, Mr. Jin Kang. Sir, please proceed.

Thank you, Operator, and good afternoon to everyone. Thank you for joining us today to review our financial results for the first quarter ended March 31, 2021. After completing what was by many metrics the most successful year in YPoint's history, we entered 2021 with solid momentum and with a considerable task ahead of us to maintain and ultimately to grow our profitability after our work on the 2020 Census project wound down. Today, I'm pleased to report that we started the year on the right foot with the first quarter. In the first quarter, despite Census winding down, our high-margin managed services revenue increased sequentially to $9.3 million. Our gross profit remained fairly steady relative to this time last year at $4.7 million and in line with our projections and expectations. Our gross margin improved substantially to 22.8 percent as carrier services revenues from Census trickled away. We also earned $585,000 in net income for the quarter, which, on a per share basis, was a slight improvement compared to Q1 of last year. While we all knew that 2021 would be a difficult comparison to last year, the profitability metrics demonstrate that even without Census, our core business and our business's fundamental growth drivers remain intact. Additionally, we finished the quarter with $17.1 million in cash which provides us with a great deal of flexibility as we now have greater opportunity to put capital to work and to better position our business for success in the coming quarters. Our primary objective for 2021 is to add new high margin sources of revenue to our business. And one of the ways we intend to do that is by investing back into our technical infrastructure to make our services and our solutions even more appealing to a greater number of prospective clients. We've been making several investments into the business in the past few quarters, a few of which are worth highlighting today. To start, we've made enhancements to our flagship delivery system, our Intelligent Telecommunications Management System, or ITMS. As a reminder, ITMS is our system for delivering our trusted mobility management solutions to our customers. Our investments in cybersecurity, cloud enablement, and user interface enhancements will allow us to scale more effectively, implement more quickly, and more securely, and improve the user experience. In addition to our investments in ITMS, we continue to make investment into our device recycling program. Device recycling is a major component of the green initiative program we discussed last year. Our recycling program is a win-win. It helps our clients achieve their ESG objectives. And with these objectives being top of mind for many companies, it serves as a growth driver for our business. While we only launched this initiative in Q4 of 2020, we're already starting to drive profitable revenue from it as we have implemented that recycling program for select customers in both public and private sectors. We plan to roll out our recycling program for all of our customers in the coming quarters. To help accelerate the adoption of our device recycling, We're currently pursuing an R2, or Responsible Recycling Certification, through CERI, Sustainable Electronics Recycling International. This certification will ensure that we meet the industry standards for responsible testing, repair, reuse, and recycling programs. And if we can attain this certification, it is likely to open new revenue streams for us. This certification process is progressing smoothly, and we're likely to receive results soon, so please stay tuned. In addition, we are making enhancements to our digital billing and analytics infrastructure to enhance our telecommunication data intelligence platform, or TDI, to meet expanding requirements of the unified communication and collaboration market. We also continue our investment in our IDM infrastructure, to ensure that we are able to scale to meet customer demands and to ensure that our systems are secure and resilient to withstand the increasing frequency of cyber attacks that are being reported in the news. We're also continuing to pursue our FedRAMP certification. As of today, we have verbal communication that DHS has submitted the sponsorship applications to the General Services Administration, or GSA, and we are awaiting the approval of the sponsorship application by GSA. Once approved, we will officially start the FedRAMP certification process. In the meantime, preparations continue in earnest. We have engaged cybersecurity subject matter experts to prepare our systems, work products, and documentation to shorten the FedRAMP certification process. Investing in our technology suite expand our competitive advantage and our potential total addressable market. But at the end of the day, effective selling is key to profitable growth. So with that in mind, I'm going to turn a call over to Jason to provide you with some details on the sales momentum we've been building since the start of the year. Then our CFO, Kelly Kim, will walk us through the financial results for the first quarter. Jason?

Thank you, Jim. For 2021, our sales strategy is based on the same tactics we've successfully implemented in the past several quarters to team with systems integrators and expand our presence with both prominent players in the commercial and federal sectors. But as Jen mentioned, we are leaning into this strategy and investing back into our business more aggressively, which we are able to do thanks to our strong balance sheet, our high customer retention rate, and the momentum we've built over the past several years. We started the year by receiving our first task orders under the Department of Homeland Security Cellular Wireless Management Services 2.0 contract, which were valued at $86 million in aggregate. The total CWMS 2.0 contract, which we secured last November, has a $500 million ceiling and a contract period of five years. Almost immediately after the contract vehicle was put in place, task orders started to be awarded. For example, the CISA, or Cybersecurity and Infrastructure Security Agency, award is new. It's important to note that CISA is a relatively new division within DHS that has been growing, and so there may be opportunities for us to expand our work with them. when we secured the first cwms 1.0 contract we spent the first seven years getting the majority of the dhs components under the contract vehicle now that those components are already onboarded we can focus on expanding services to bring additional value to dhs like focusing on the 5g technologies and helping enable dhs missions through newly expanded professional services, which we are working diligently to ensure that every major component of DHS puts in place a one base year plus four option year contract such that we can maximize the CWMS 2.0 contract. If you've followed our press releases, you'll notice that the IDM business in particular performed well in Q1 and has been building momentum. During our last call, I discussed two major IDM wins we announced in February. We secured a new contract from a Fortune Global 500 company through which we are providing them with professional services, hardware, and personal identity verification, or PIVI, credentials. Along with a strategic partner, Intercede, we completed this deployment in less than 30 days. For reference, the competition normally takes three times as long. We also secured a new contract to issue external certificate authority or ECA credentials to a hospital that interacts with the U.S. Department of Health and Human Services. Then, just before the quarter's end, we won two new additional credential deals, both of which are federal clients whose names we cannot share for security reasons. Regarding our PKI solutions, simplicity and ease of use are exactly what the industry is looking for today. This gives us an advantage as we approach prospective customers who may be sensitive to long and complex PKI deployments. For example, we are positioned to offer PKI as a service. Because we have all of the required accreditations, the software and the secure network operations facility to protect PII data, along with being a certificate authority, large commercial businesses do not have to worry about making the high dollar investments in certifying their own environment and hiring highly specialized resources to run the program. There's a reason why the Department of Defense has stuck with PKI for so long, and that's because of its ability to protect against tax, of both people and hardware. As more high-profile hacks become publicized, commercial enterprises are looking for more secure solutions, and that's where YPoint comes into the picture. We can deliver DoD-grade protection at a fraction of the cost it would be if they were to deploy it themselves. There's clearly momentum building in our favor, and to help capitalize on that momentum, we've applied the same mentality Jen discussed. investing back into the areas of business that can drive growth. We've applied that to marketing to improve our branding and our name recognition. We were recently listed in the 2021 Gartner Magic Quadrant for Managed Mobility Services. Being included in this particular publication was a huge win for WidePoint. Over 70% of the Fortune 1000 and over 10,000 midsize and large enterprises rely on Gartner for their advice and guidance in key technology areas. This research highlights WhiteCoin's strong emphasis on security and our ability to scale to support the largest enterprises on a global basis, which reinforces and amplifies our go-to-market messaging for both public sector and commercial markets. The listing in last fall's TEM market guide has already resulted in new opportunities in our pipeline, which we are aggressively pursuing, and we expect this year's write-up in the MMS Magic Quadrant to produce even more. As I said on our last call, we strategically recruited a very strong commercial enterprise sales director who has added to our already strong pipeline of opportunities. While we had hoped to share more details on the appointment, the reality is that flaunting the new hire and discussing new opportunities could jeopardize the hard work and strategy we've put forth to close those potential deals. Optics matter, and while we know that the shareholders are eager for specific updates, it is our hope that you will trust our discretion and our decision to put the business's growth first. as our new hire navigates through some of these new opportunities. We are excited with how the pipeline is growing and look forward to sharing specifics and news in the month ahead. As the negative impacts from COVID-19 in the US begin to dwindle, there's a sense that normalcy is just on the horizon. This bodes well for us for two reasons. For one, the mobile landscape is more complex today than it was before COVID. and we do not see that complexity materially diminishing. As a result, there are more opportunities than ever to help large organizations manage their mobile assets and ensure they are secure. Second, while the digital billing and analytics and IDM businesses performed well in Q1, their growth was somewhat constrained by our inability to travel and to conduct in-person meetings, training sessions, and demonstrations. It is our belief that as in-person meetings become more prevalent, sales of these high margin business as well as other components of TM2 may accelerate. We don't know the exact timing, but the trends we see today make us cautiously optimistic that 2021 will be another productive year for the sales team and for WidePoint as a whole. With that, I will hand the call over to Kelly.