WidePoint Corporation

conference will begin shortly. Once again, thank you for your patience. The conference will begin shortly. We'll be right back. Thank you. Good afternoon. Welcome to WidePoint's fourth quarter and full year 2023 earnings conference call. My name is Matthew, and I'll be your operator for today's call. Joining us for today's presentation are WidePoint's President and CEO, Jin 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 analysts 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 gateway-grp.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 the future events and future performance of WidePoint Corporation that involves 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, everyone. Thank you for joining us today to review our financial results for the fourth quarter and full year ended December 31, 2023. This past year was a pivotal one for YPoint, marked by successful execution of our financial and operational plans and initiatives. We closed out 2023 on a strong note pertaining to both our financials and operations with approximately $106 million in revenue, positioning us at the higher end of our full year 2023 guidance. Simultaneously, we achieved 26th consecutive quarter of positive adjusted EBITDA and demonstrate a sequential quarter-over-quarter growth in 2023. Additionally, and more notably, we concluded the fourth quarter free cash flow positive, a trend that we anticipate maintaining throughout 2024 and beyond, and something that is vital for the company, especially within this high interest rate environment. This momentum we anticipate carrying into 2024 is is backed by multiple initiatives and developments made throughout fiscal year 2023. First, a robust demand for our solution and services remain evident, with the fourth quarter alone witnessing more than 30 contractual actions amounting to more than $70 million in contract value. These wins include new awards, contract renewals, expansions, and extensions in all of our solution lines. As you know from the news headlines, the federal government budget battle is and will be an ongoing issue. However, we continue to successfully mitigate this risk by proactively engaging with our government counterparts to renew contracts early and ensuring that they are fully funded. Currently, all affected contracts are successfully awarded and carried over into the new year. With this, a significant catalyst for our anticipated growth in 2024 lies in our substantial contract backlog totaling $359 million as of December 31, 2023. Furthermore, WidePoint continues to solidify its position as the most secure, premier choice for trusted mobility management solutions, evidenced by our strong contract renewal and customer retention rates of over 90%. With these initiatives driving our momentum, we confidently forecast double-digit percentage growth in the teens for top-line revenues, and double-digit percentage growth in the high teens for managed services revenues, in addition to achieving positive free cash flow for the full year 2024. Another factor driving our growth is the recent completion of the majority of our capital investments made in 2023. With this, we anticipate having minimal capital expenditures for 2024, strengthening our balance sheet, enabling us to concentrate fully on various operational growth initiatives. More specifically, I'd like to emphasize two previous investments that are in their final phases nearing completion. Last earnings call, we mentioned our Intelligent Technology Management System, or ITMS, was in the FedRAMP in-process status. We continue to see positive news on this front throughout the quarter. with ITMS now nearing its final FedRAMP authorized designation. We anticipate certification in the first half of 2024. However, the timelines may change based on General Services Administration's workload for FedRAMP processing. The good news is that we already have all the necessary authorization to operate, or ATOs, from our current customer agencies, which attests to our strong cybersecurity posture that places us ahead of our competition. As a reminder, attaining full FedRAMP certification will uniquely position our ITMS platform and grant YPoint a substantial competitive edge in competing for new business with the federal government and large enterprises. This certification indicates that our solutions align with federal cybersecurity standards for protecting our customers' data. It will showcase the robust security levels offered by YPoint solutions to both existing and prospective customers, particularly in commercial sectors and industries where data and system security are paramount. We look forward to announcing the completion of our FedRAMP process and anticipate this to be a significant factor to continue differentiating our solutions and serve as a catalyst to fuel new wins in the near future. Another investment near completion is in our delivery system, more specifically enhancements to our continuity of operations site or COOP, which we also anticipate completion by the first half of 2024. These COOP site enhancements will further differentiate us from our competitors and provide additional resiliency to our delivery systems. Our enhanced COOP site will have automatic failover capabilities and data replication such that if there is a system outage of our primary operations site, the secondary site will immediately come online to greatly reduce the system recovery time, ensuring that we meet and exceed all of our service level agreements with our customers. In addition to these investments, we are excited by the potential for artificial intelligence to streamline our everyday business operations. And we are developing a strategy aimed at leveraging AI. The potential to improve our customer service experience by reducing response time, increasing the accuracy of those responses, as well as increasing our overall capacity are all being explored. Furthermore, there's potential to enhance our IT as a service by integrating AI to detect cybersecurity vulnerabilities and enhance behavior-based security measures. There are other areas of our business that could benefit from the implementation of AI. such as software development, responding to proposals, invoice audits, and leveraging our knowledge base to serve our customers' requirements better. We are in the process of sifting out the noise from the real AI capabilities. We will share more on this front as we evolve our strategy to meet our business needs. With our investments out of the way, I'd like to highlight just a few of our contract wins achieved recently that we believe will have the potential to grow into substantial revenue generators over the coming years. At the federal level, we saw roughly $60 million in governmental contracts won in the fourth quarter alone. While we are bound by non-disclosure agreements and unable to disclose specific government clients, Jason will talk to one of our recent federal contract wins, which has the potential to grow into one of our largest federal contracts, second only to our contract with the U.S. Department of Homeland Security. On the commercial side, We have won contracts with a nationwide professional services firm and a major Florida attraction and research center, both of which have the potential to grow into a material IT as a service customer over the next 12 months. On the sales and marketing side, our strategy to expand market presence has proved to be fruitful, especially in a year with challenging macroeconomic headwinds affecting the whole market. Jason will dive deeper into this topic shortly, but we are proud to say that these efforts contributed significantly to YPoint's success this past fiscal year. Lastly, the sales of YPoint's business solutions have maintained their momentum, playing a significant role in the company's growth and reach. YPoint has shown year-over-year growth, and we anticipate this positive trajectory to persist in 2024 as we continue to grow our sales pipelines. The potential for cross-selling and upselling within YPoint's comprehensive suite of trusted mobility management solutions creates further avenues for business expansion and advancement. These business solutions remain pivotal in our sustained long-term growth and in fortifying our competitive advantage. I will now hand the mic over to Jason, who will dive into the progress made on the sales and marketing front. Jason?

Thanks, Jim, and good afternoon, everyone. As Jen stated earlier, our concentrated efforts on capturing additional deals within the sales and marketing front has contributed significantly to WidePoint's performance this past year. This past quarter alone, WidePoint was awarded over $70 million in contract wins, approximately $65 million of which were considered new business wins. This showcases our commitment to continuously drive new business into WidePoint and to trust our current and new customers have for our solution. Recently, we closed a deal with a commercial entity to provide a full range of managed telecom solutions on behalf of its U.S. government and customer. This deal is approximately $20 million with a three-year base period and two one-year option periods. As Jen mentioned, although we cannot disclose this client's name, We are proud to state this contract can become one of our most significant. Additional information can be found in our SEC form 8K filed January 2024. We remain committed to advancing these sales and marketing initiatives into 2024. The strong results this past year have prompted us to develop a new internal plan to allocate additional resources and budget towards enhancing our staff and capabilities to secure additional high margin contracts like the one mentioned just now. Specifically, we look to add an additional senior level commercial sales resource, an established federal business development resource with a proven track record within the DC area, and a vendor partner manager for the expansion of strategic partners. With ample funding and guidance from new senior staff members, we are confident in carrying this momentum into fiscal year 2024 to garner more contracts. On the K-12 side, we continue to accelerate our market penetration. We recently engaged with an expert within the K-12 sector to facilitate our partnership program aimed at integrating White Point's IAM solutions into existing offerings for numerous sector entities. I also want to note that our identity and access management pipeline is equivalent to our managed mobility pipeline in terms of the number of opportunities. As Jen mentioned earlier, we have a robust contract backlog of $359 million in value. A large part of this backlog and success seen this year can be attributed to our flagship contract with DHS, the Cellular Wireless Management Services 2.0 contract. Based on our current contract run rate, we are nearing the contract ceiling of $500 million. As such, we are working closely with DHS to review options for continuing to perform under this contract. With the additional resources and staff, we will increase our investments in the sales and marketing efforts as we look to win additional impactful contracts like this for WhitePoint's financial growth. Lastly, I wanted to recognize the IT authorities team. As you know, we acquired IT authorities in 2021. Even though the integration took a little longer than expected due to challenges faced During the COVID pandemic and external macro headwinds, the team has been closing deals at a pretty rapid pace. They have been working extremely hard, and we are excited about their tremendous momentum in 2024. With that, I will hand the call over to Bob.