WidePoint Corporation

Ladies and gentlemen, thank you for joining us today. We will be getting started in another minute. Please stay on the line. Thank you. So, Thank you. Good afternoon. Welcome to WidePoint's second quarter 2021 earnings conference call. My name is Rich, 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 at gatewayir.com. Before we begin the call, I would like to provide White Point'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 report. 10K, 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 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 the financial results for the second quarter ended June 30, 2021. The second quarter marked a period of steady operational progress for YPoint. Over the last few months, we have continued to make focused and judicious investment in our technology, as well as further enhance our sales and marketing resources and processes. Over time, these efforts will extend YPoint's competitive advantages while driving greater efficiencies and new sources of high margin revenue for our company. We made consistent progress on our strategic plan during Q2, but our financial performance in the period was impacted by certain timing issues with customers' orders as well as the lingering effects of the pandemic. Kelly will provide the specifics of the timing issues later in our presentation. With that in mind, if you exclude the timing issues in Q2 and the census project revenue recognized in the year-ago period, our underlying business grew 5% on a year-over-year basis, which is encouraging, especially given that Q2 is historically a soft period for our company. Our initiatives to drive efficiencies and build our base of higher margin managed services revenue continued as demonstrated by the 11% increase in gross margin compared to Q2 of last year. While we knew 2021 would be a difficult comparison to last year, our gross margin expansion and solid adjusted EBITDA demonstrate that even without census, our core business fundamentals and growth drivers remain intact. At a high level, the mobile landscape continues to become more complex on a daily basis, thereby increasing the need for our trusted mobility management solutions that help enterprises secure their mobile workforce. As a result, we are moving full steam ahead with strengthening our product portfolio and are already seeing encouraging signs of progress. Now, let me provide you more details on the investments that are being made to our technical infrastructure, which we believe will make our services and our solutions even more appealing to a greater number of prospective clients. First, we have been making improvements to our identity management delivery systems. More specifically, we've been putting a significant amount of our resources into our continuity of operations, or COOP, infrastructure. which helps our system be more resilient from cyber attacks, power outages, weather-related disasters, and other unforeseen events. Once the upgrades are fully made, our equipment will be able to provide failover capabilities so that if and when our primary operations center goes down for any of the unforeseen event I just described, we'll be able to spin up our secondary site almost immediately, ensuring continuity of service. This type of solution is extremely pertinent and, in most cases, necessary for our customers who are blue-chip commercial enterprises or organizations within the government sector. In particular, as the prevalence of cyber attacks grows, solutions like our group infrastructure become more and more of a must-have versus a nice-to-have. I am proud to say that we have already begun to commercialize this solution and we are able to recognize some early revenues from this higher margin offering. Additionally, our continuity of operations capabilities will free us from expensive long-term physical office leases that will allow us the flexibility to take advantage of cloud services and co-location efficiencies and outsource much of our ancillary information technology infrastructure to streamline our operations and reduce costs. We are also currently in discussions with strategic partner specializing in information technology infrastructure as a service, or ITAAS, to cross-sell and upsell our services that we believe will lead to high margin revenue opportunities. We will keep you apprised of developments in this partnership in the near future. Another product that we have been and will continue to invest our time and resources into is our Intelligent Telecommunications Management System, or ITMS. As a reminder, ITMS is our system for delivering our trusted mobility management solutions to our customers. The first key enhancements we are making is to improve the overall user experience as well as to improve the efficiency for our customers as they perform their day-to-day duties. We made considerable progress with FedRAMP certification, which will improve the cybersecurity posture of our system to thwart efforts by cyber criminals from ransomware attacks, denial of service, and other malicious attacks. The FedRAMP certification will not only give us the upper hand in future government RFPs against competitors, but it will also be a seal of approval that shows potential customers that we truly possess the highest cybersecurity measures that are available on the markets today. Third, we made system performance upgrade to our ITMS to ensure that we are capable of scaling swiftly for when we do win large contracts like the Census Project. We want to be proactive in making sure that we're well-equipped to be able to surpass the expectations of our customers. Furthermore, we have made strategic investments in our capabilities to maintain our inclusions in the Microsoft marketplace. Given the overlap between our operations and Microsoft's breadth of services and solutions, we want to make sure that we are in a position where we're able to leverage their resources. Our goal is to augment the synergies with them and to ultimately address opportunities within the unified communication space for voice telecom management, which is in line with our strategy to take advantage of the move to remote working. The next exciting investment we've made is our green initiatives. Our subsidiary, YPoint Mobile Corporation, have recently received our R2, or Responsible Recycling Certification, through sustainable Electronics Recycling International, or SERI. This certification affirms that our green initiatives for recycling our customers' legacy assets meet the global industry standards for responsible testing, repair, reuse, and recycling. As mentioned on our previous call, this investment will help accelerate the adoption of our device recycling services and will generate incremental ESG momentum, which will also add to our top-line growth and bottom-line profitability. This is truly a win-win for us. With this certification recently awarded to us, I am proud to share that we have begun to recognize higher revenues. Last but not least, we have made security and COOP investments throughout our IT framework and continue to make considerable progress 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. As you can see, we are threading the needle across multiple fronts with respect to our strategy of investing back into the business to increase our margins and to drive profitable growth. With that said, and as I previously alluded to, these changes won't happen overnight, but will instead take time. Nonetheless, I can assure you that our team is committed to achieving these investments in the most efficient manner as possible with the end goal of expanding our competitive advantage and our potential total addressable market. I will now turn the call over to Jason to provide you with some details on the investment we are making on the sales and marketing front and the sales momentum we have been building since the start of the year. Then our CFO, Kelly Kim, will walk us through the financial results of the second quarter. Jason?

Thank you, Jim, and good afternoon, everyone. In aggregate, we secured more than $36 million in identity management and managed mobility services deals spread across 48 contractual actions, renewals, and extensions with partners we can't name at this time for security purposes. These contractual actions included DHS headquarters, FPS or Federal Protective Services, TSA or Transportation Security Administration, Science and Technology, Office of Biometric Identity Management, DHS CWMD Office or Countering Weapons of Mass Destruction, and FLET-C or Federal Law Enforcement Training Centers. These are task orders awarded under CWMS 2.0 contract vehicle for long-term contracts and they range up to five years. Specifically focusing on the higher margin identity management solution customers, we were able to add new credentialing sales for a major public research university, a global aerospace manufacturer, a major IT provider to the federal government, and numerous defense contractors. As we look to expand our footprint, we continue to explore sole sourcing opportunities via the protected class, such as American Native corporations, service-disabled veteran-owned small businesses, as well as other 8 As. This strategy is a win-win because it allows White Point to not only partner but mentor these protected class businesses and ultimately expand our contractual footprint. Our sales strategy continues to be based on the same tactics we've successfully implemented in the past several quarters. to team with large, entrenched systems integrators and expand our teaming relationships with both prominent players in the commercial and federal sectors. Due to the very nature of systems integration, we're able to capitalize on the promising leads we collaborate with other companies who provide solutions that are accretive to ours. We foresee This business model further deepening and expanding, and we look forward to capturing the greatest amount of market share as possible. This also ties into why we are so focused on investing back into our business, because with more robust portfolio of solutions, we make ourselves that much more appealing and valuable to prospective customers. Due to the number of moving orchestrated parts and enhancing our technology on the back end, in parallel to the progress we're seeing on the sales and marketing front, we've begun to see a higher demand for demos and RFPs from prospective customers. We can't guarantee that each of these opportunities will materialize, but the more shots we have on goal, the higher our odds are in closing more deals. As I mentioned on the last call, we were listed in the 2021 Gartner Magic Quadrant for managed mobility services, which highlighted our strong emphasis on security and our ability to scale to support the largest enterprises on a global basis. It also reinforced and amplified our go-to-market messaging for both commercial markets and public sector. Going forward, we hope to increase our branding and name recognition through accredited organizations like Gartner. From a marketing standpoint, as Jen pointed out earlier, although it was more convenient this year compared to last, we are still not able to fully conduct our sales and marketing initiatives at full capacity. Nevertheless, we are doing what we can to be proactive in maximizing our efforts despite external circumstances and have kick-started or revamped several marketing initiatives. First, we plan to have several media expansions across different platforms, including podcasts and talk radio to allow us to speak during a specific segment tailored towards our target market. In addition to our media ad campaigns, we are supplementing our marketing efforts by revamping our social media strategy and have recently engaged a new public relations firm to assist in this process. Given the inherent nature of our business and the space we play in, we are confident that our extensive marketing initiative will help capture the mind share of companies both in private and public sectors who need our TM2 solutions. Echoing Jen's previous point, Due to the recent surge in ransomware attacks and cyber threats, we believe we are in a great position to capitalize on current tailwinds. We believe that much, if not all, of the recent cyber attacks highlighted in the media could have been prevented by securing the IT infrastructure endpoints using our PKI-based identity managed solution. As we continue through the ever-changing COVID environment, We are cautiously optimistic that there will be an increase in sales activities associated with the transition back to normalcy. In the meantime, we are proactively doing all that we can to invest in our sales and marketing activities to put us in the best position possible to capture new customers and increase our ROI. I am confident that what we are doing now will set us up for additional revenue opportunities in the near future. With that, I will hand the call over to Kelly. Kelly?