WidePoint Corporation

Good afternoon, ladies and gentlemen, and thank you for your patience. The conference will begin shortly. Once again, thank you for your patience. Your conference will begin shortly. © transcript Emily Beynon Thank you. Thank you. Good afternoon. Welcome to WidePoint's fourth quarter and full year 2022 earnings conference call. My name is Matthew and I'll be your operator for today's call. Joining us for today's presentation are White Point's President and CEO, Jen Kang, Chief Revenue Officer, Jason Holloway, and Chief Financial Officer, Robert George. Following their remarks, we will open up the call for questions from White Point's Publishing Analyst and Major Investors. If your questions were not taken today and you'd like additional information, please contact White Point's Investor Relations Team at 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 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'd 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'd 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 fourth quarter and full year ended December 31, 2022. I am pleased to share with you all that we ended 2022 on a high note as we met our guidance targets for full year revenue of $94 million and adjusted EBITDA of $1 million, while simultaneously experiencing several encouraging events within our core business. It's safe to say that the investments we have made throughout the past year have optimally positioned us toward a positive trajectory in 2023. as we are starting to reap the fruits of closed deals that have been in the pipeline for quite some time, in addition to operating with a leaner workforce. As I shared on our last call, though we reduced our staffing costs by 10%, our ability to close new contracts was not affected, as we continue to invest in sales and marketing. In fact, we are projected to outpace the total revenue and adjusted EBITDA figures of 2022 this year. We are also forecasting to be cash flow positive for 2023 as a majority of our capital projects have reached their logical completion, as well as increases in our more profitable managed services revenue. We're making this bold forecast because our robust sales pipeline continues to grow. In parallel with winning new customers and new net deals, our team has been doing a phenomenal job of fulfilling our contractual obligation to our existing customers. and we have been successful in expanding the scope of services as well as winning renewals with them. The numbers speak for themselves as we have officially retained over 97% of all customers on a revenue basis. A big driver for this success is due to several upsell and cross-sell opportunities we can provide to our customers in tandem with our track record of service delivery excellence and the growing need for the types of solutions that we provide. On brand with the theme of a strong 2023 for YPoint, there are other encouraging events that we are excited about. For one, our capital investments has significantly decreased as almost all of our infrastructure has been revamped. We have approximately $1.4 million worth of CapEx this year compared to the roughly $3.4 million we had in 2022. From a working capital standpoint, we are fully operational with existing cash on hand. and are not in need of any near-term financing. Given the status of the economy with surging interest rates and a myriad of uncertainties around the broader corporate America, cash is certainly king. We're very fortunate to be in the situation we're in and the trajectory of our business given our ability to be financially sustainable. Additionally, we are in much more opportune position today when gauging the impact of the macroeconomic obstacles that were previously mentioned in our path toward progression. As illustrated through our robust sales pipeline and our customers' willingness to expand their working relationship with us and a healthy core operating business, it's safe to say that many of the issues of the past are no longer a material problem for us at present. Though there are still supply chain disruptions, impasse of the federal government debt ceiling, and rise in interest rates, These factors are manageable given the certain status of our organization. YPOIN will continue to stay the course as we remain steadfast in our efforts to both organic and inorganic growth. Furthermore, as we announced via press release toward the end of November 2022, our Intelligent Technology Management System, or ITMS, has achieved FedRAMP in-process status. As a reminder, FedRAMP was established in 2011 to provide a cost-effective, risk-based approach for the adoption and use of cloud services by the federal government. FedRAMP empowers agencies to use modern cloud technology with an emphasis on security and protection of federal information. We've been working diligently with a contracted third-party assessment organization and the Bureau of Alcohol, Tobacco, Firearms, and Explosives to review and test the 616 security controls and sub-controls necessary to achieve FedRAMP authorization at the FSMA moderate level. We have until May 2023 to complete the assessment to earn the FedRAMP authorization status. FedRAMP authorization status will put us in rare company and will position YPoint ahead of our competition and open up new contract opportunities for us. We will keep you all posted on our progress. We're also completing the installation and configuration of our hot COOP site hardware and software. We will soon enter the testing stage for our hot COOP site. Testing will include both on-site testing at Y-Point facility and testing at secondary hosting facility. We are targeting the testing during the second quarter of this year. The move and final installation will occur no later than Q4 of 2023. To be clear, we currently have a cold-coop site that meets our service level agreements. However, the hot-coop site will put us ahead of our competitors and will provide additional resiliency of our delivery system. With that overview completed, I will now turn the call over to Jason to provide you with some details on the investment we are making in the sales and marketing front. Jason?

Thanks, Jim, and good afternoon, everyone. I wanted to start by sharing that there are many encouraging activities taking place in both the government and commercial sectors of our go-to-market strategy. With respect to our government vertical, I am pleased to share that we have recently entered into a strategic partnership agreement with our major identity management solution provider. The goal is to provide ongoing credentialing support to three major federal agencies. However, details of this engagement are currently under NDA. We hope to share the details in our upcoming earnings calls, and of course, we will be sure to notify the public via appropriate Reg FD channels as soon as we are able. Additionally, as you may have seen in one of our recent press releases, we announced that we signed a reseller agreement with BK Technologies Corporation for the resale of BK Technologies Interop 1 Push-to-Talk overseller service. We plan to use our Cellular Wireless Managed Services, CWMS, IDIQ contract as a vehicle to sell BK's Interop 1 service to the U.S. Department of Homeland Security and U.S. Department of State agencies. Interop 1 is designed to enable all first responders to communicate regardless of which cellular network they use or push to talk over cellular service they subscribe to. or even first responders who do not subscribe to a push to talk overseller service. Providing interoperable communications during emergency incidents with no other communications platform meets the need. As it relates to our CWMS IDIQ contract with DHS, with the task orders that we have received to date, we are approaching 80% of the contract ceiling Additionally, we are anticipating some follow-on task orders that could potentially reach or exceed the original ceiling of $500 million. I'll now shift gears to the commercial sector, where we are also seeing immense progress. As we mentioned on the last call, our agreement with CSG International has recently translated to our top line and has resulted in the execution of deals for SoftX. Our relationship with CSG has brought us material contracts with a national media company and a national telecommunication carrier. Additionally, we are currently in the implementation process for a national cable company. Moreover, one of the more prominent partners we struck a deal with was with an S&P 500 food and beverage company for our mobile and telecom managed services. Not only was this a significant win for WidePoint, but it was even more impactful given the fact that we replaced one of our competitors, which was being used by this food and beverage titan. As a status report from the last earnings call, I am proud to share that the progress we have made of implementing our quantum-resistant multi-factor authentication solution, or MFA, into K-12 schools has been successful so far. The feedback that we have received to date has been very positive, so much so that we are currently developing a custom commercial enterprise software certificate to be used not only in the K-12, but to all of the existing identity and access management commercial customers. Our goal is to have the new capability rolled out by the end of Q3. I will provide an update on the next earnings call. With that, I will hand the call over to Bob.