AP NEWS

WidePoint Reports Third Quarter 2018 Financial Results

November 14, 2018

Revenue up 15%, Fifth Consecutive Quarter of Positive Adjusted EBITDA

MCLEAN, Va., Nov. 14, 2018 (GLOBE NEWSWIRE) -- WidePoint Corporation (NYSE American: WYY ), the leading provider of Trusted Mobility Management (TM2) specializing in Telecommunications Lifecycle Management, Identity Management and Bill Presentment & Analytics solutions, today reported results for the third quarter and nine months ended September 30, 2018.

Third Quarter 2018 Operational Highlights: $33.9M in contract actions:

-- Secured approximately $5.4 million in new contract awards, $2.8 million in expanded services with existing customers and $10.5 million in option year follow-on contracts with existing customers

-- Secured new $12.0 million task order from the U.S. Coast Guard under the U.S. Department of Homeland Security (DHS) Cellular Wireless Management Services (CWMS) Blanket Purchase Agreement, of which up to 6% to 7% of the total task order consists of high margin managed services

-- Awarded $1.67 million, five-year contract for mobile communications management services by the Centers for Disease Control and Prevention, of which the majority consists of high margin managed services

-- Awarded new, one-year Blanket Purchase Agreement (BPA) task order by DHS Headquarters valued at $1.5 million, of which up to one-third of the task order consists of high margin managed services

Third Quarter 2018 Financial Highlights (results compared to the same year-ago period):

-- Revenue increased 15% to $21.3 million

-- Gross profit increased 9% to $3.7 million

-- Net loss narrowed to $0.1 million

-- Adjusted EBITDA, a non-GAAP financial measure, increased to $561,000, marking the company’s fifth consecutive quarter of positive adjusted EBITDA

Nine Month 2018 Financial Highlights (results compared to the same year-ago period):

-- Revenue increased 5% to $58.9 million

-- Gross profit increased 7% to $10.8 million

-- Net loss narrowed to $1.0 million

-- Adjusted EBITDA totaled $768,400

Third Quarter 2018 Financial Summary (in millions, except per share amounts) SeptemberSeptember 30, 2018 30, 2017 ------------------------------------------ -------- -------- Revenues $ 21.29 $ 18.46 ------------------------------------------ - ------ - ------ Gross Profit $ 3.69 $ 3.38 ------------------------------------------ - ------ - ------ Gross Profit Margin 17.3% 18.3% ------------------------------------------ - ------ - ------ Operating Expenses $ 3.75 $ 3.66 ------------------------------------------ - ------ - ------ Loss from Operations $ (0.06) $ (0.28) ------------------------------------------ - ------ - ------ Net Loss $ (0.11) $ (0.31) ------------------------------------------ - ------ - ------ Basic and Diluted Earnings per Share (EPS) $ (0.00) $ (0.00) ------------------------------------------ - ------ - ------ Adjusted EBITDA $ 0.55 $ 0.03 ------------------------------------------ - ------ - ------ Cash and Cash Equivalents $ 3.95 $ 5.27 ------------------------------------------ - ------ - ------ Fiscal Nine Months 2018 Financial Summary (in millions, except per share amounts) SeptemberSeptember 30, 2018 30, 2017 ------------------------------------------ -------- -------- Revenues $ 58.92 $ 55.96 ------------------------------------------ - ------ - ------ Gross Profit $ 10.78 $ 10.10 ------------------------------------------ - ------ - ------ Gross Profit Margin 18.3% 18.0% ------------------------------------------ - ------ - ------ Operating Expenses $ 11.72 $ 12.81 ------------------------------------------ - ------ - ------ Loss from Operations $ (0.93) $ (2.71) ------------------------------------------ - ------ - ------ Net Loss $ (1.04) $ (2.77) ------------------------------------------ - ------ - ------ Basic and Diluted Earnings per Share (EPS) $ (0.01) $ (0.03) ------------------------------------------ - ------ - ------ Adjusted EBITDA $ 0.77 $ (1.10) ------------------------------------------ - ------ - ------

Financial OutlookFor the fiscal year ending December 31, 2018, the company anticipates total revenue in the range of $82.0 million to $83.0 million, representing growth of roughly 9% year-over-year, and EBITDA of $1.6 million as compared to $900,000 in the prior year.

The company’s financial outlook statements are based on current expectations. The following statements are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under the “Safe Harbor Statement” below.

Management Commentary“The third quarter was another strong period for WidePoint. We now have five straight quarters of positive adjusted EBITDA and we are continuing to build momentum toward achieving GAAP profitability,” said company President and CEO, Jin Kang. “Our performance in Q3 was highlighted by solid topline growth as we successfully expanded relationships with key Federal and enterprise customers. In addition to our strong topline results, we also delivered another sequential improvement in adjusted EBITDA.

“From a business development standpoint, we continue to execute on our strategy to maintain our customer, upsell and pursue new business. This is evidenced by the substantial orders and large contracts we have recently secured, including the $12 million follow-on order from the U.S. Coast Guard as well as the $20 million in aggregate of new contract orders from various government agencies. These awards highlight WidePoint’s position as the premier provider of Trusted Mobility Management services solutions to the public and private sectors. Looking ahead, our building momentum in the new Federal fiscal year underscores a robust pipeline of significant opportunities.”

Conference CallWidePoint management will hold a conference call today (November 14, 2018) at 4:30 p.m. Eastern time (1:30 p.m. local time) to discuss these results.

WidePoint President and CEO Jin Kang, Chief Sales and Marketing Officer Jason Holloway, and CFO Kito Mussa will host the conference call, followed by a question and answer period.

U.S. dial-in number: 877-451-6152International number: 201-389-0879

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the company’s website.

A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day through November 28, 2018.

Toll-free replay number: 844-512-2921International replay number: 412-317-6671Replay ID: 13684462

About WidePoint

WidePoint Corporation (NYSE American: WYY) is a leading provider of technology-based management solutions, including telecom management, mobile management, access management and identity management. For more information, visit widepoint.com.

Non-GAAP Financial MeasuresWidePoint uses a variety of operational and financial metrics, including non-GAAP financial measures such as Adjusted EBITDA, to enable it to analyze its performance and financial condition. The presentation of non-GAAP financial information should not be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. A reconciliation of GAAP Net loss to Adjusted EBITDA is included on the schedules attached hereto.

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- ------------------------------ 2018 2017 2018 2017 ------------ ------------ -------------- -------------- (Unaudited) NET LOSS $ (110,000 ) $ (314,600 ) $ (1,044,400 ) $ (2,769,000 ) Adjustments to reconcile net loss to adjusted EBITDA: Depreciation and amortization 353,100 388,400 1,114,900 1,108,000 Income tax provision (benefit) 24,800 17,200 45,700 32,700 Interest income (900 ) (2,000 ) (6,300 ) (11,600 ) Interest expense 21,600 23,500 71,500 45,900 Other (expense) income - 1,500 - (1,800 ) Provision for doubtful accounts (300 ) - (6,100 ) 31,200 Gain on sale of assets held for sale - - (66,700 ) Loss on disposal of leasehold improvements - - 172,500 Severance and exit costs - - 187,500 Stock-based compensation expense 272,800 (81,400 ) 593,100 138,000 - -------- - - -------- - - ---------- - - ---------- - Adjusted EBITDA $ 561,100 $ 32,600 $ 768,400 $ (1,133,300 ) - -------- - - -------- - - ---------- - - ---------- -

Safe Harbor StatementThe information contained in any materials that may be accessed above was, to the best of WidePoint Corporation’s knowledge, timely and accurate as of the date and/or dates indicated in such materials. However, the passage of time can render information stale, and you should not rely on the continued accuracy of any such materials. WidePoint Corporation has no responsibility to update any information contained in any such materials. In addition, you should refer to periodic reports filed by WidePoint Corporation with the Securities and Exchange Commission for information regarding the risks and uncertainties to which forward-looking statements made in such materials are subject. Such risks and uncertainties may cause WidePoint Corporation’s actual results to differ materially from those described in the forward-looking statements.

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS

SEPTEMBER 30, DECEMBER 31, 2018 2017 --------------- --------------- (Unaudited) ASSETS CURRENT ASSETS Cash and cash equivalents $ 3,950,106 $ 5,272,457 Accounts receivable, net of allowance for doubtful accounts of $96,846 and $107,618 in 2018 and 2017, respectively 8,022,377 8,131,025 Unbilled accounts receivable 7,803,572 8,131,448 Other current assets 963,649 767,944 Total current assets 20,739,704 22,302,874 NONCURRENT ASSETS Property and equipment, net 1,058,786 1,318,420 Intangibles, net 3,284,626 3,671,506 Goodwill 18,555,578 18,555,578 Other long-term assets 145,477 44,553 Total assets $ 43,784,171 $ 45,892,931 - ----------- - - ----------- - LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES Accounts payable $ 6,080,686 $ 7,266,212 Accrued expenses 9,064,369 9,796,350 Deferred revenue 2,689,038 2,348,578 Current portion of capital leases 105,712 101,591 Current portion of other term obligations 107,109 203,271 Total current liabilities 18,046,914 19,716,002 NONCURRENT LIABILITIES Capital leases, net of current portion 151,037 232,109 Other term obligations, net of current portion 64,006 78,336 Deferred revenue 410,310 264,189 Deferred tax liability 393,975 392,229 Total liabilities 19,066,242 20,682,865 STOCKHOLDERS’ EQUITY Preferred stock, $0.001 par value; 10,000,000 shares authorized; 2,045,714 shares issued and none outstanding - - Common stock, $0.001 par value; 110,000,000 shares authorized; 84,062,446 and 83,031,595 shares issued; 83,762,446 and 83,031,595 shares outstanding, respectively 83,763 83,032 Additional paid-in capital 94,814,580 94,200,237 Accumulated other comprehensive loss (185,317 ) (122,461 ) Accumulated deficit (69,995,097 ) (68,950,742 ) - ----------- - - ----------- - Total stockholders’ equity 24,717,929 25,210,066 Total liabilities and stockholders’ equity $ 43,784,171 $ 45,892,931 - ----------- - - ----------- -

WIDEPOINT CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 2018 2017 2018 2017 -------------- -------------- -------------- -------------- (Unaudited) REVENUES $ 21,294,360 $ 18,463,872 $ 58,918,317 $ 55,956,617 COST OF REVENUES (including amortization and depreciation of $248,009, $318,461, $802,174, and $895,088, 17,609,287 15,087,567 48,134,084 45,859,532 respectively) - ---------- - - ---------- - - ---------- - - ---------- - GROSS PROFIT 3,685,073 3,376,305 10,784,233 10,097,085 - ---------- - - ---------- - - ---------- - - ---------- - OPERATING EXPENSES Sales and marketing 387,407 532,714 1,366,989 1,709,892 General and administrative expenses (including share-based compensation of $272,737, ($81,043), $593,075 and $138,036, respectively) 3,257,262 3,046,148 10,037,904 10,668,368 Product development - 11,342 - 219,141 Depreciation and amortization 104,914 69,935 312,763 212,874 - ---------- - - ---------- - - ---------- - - ---------- - Total operating expenses 3,749,583 3,660,139 11,717,656 12,810,275 - ---------- - - ---------- - - ---------- - - ---------- - LOSS FROM OPERATIONS (64,510 ) (283,834 ) (933,423 ) (2,713,190 ) OTHER (EXPENSE) INCOME Interest income 936 1,971 6,339 11,564 Interest expense (21,644 ) (13,985 ) (71,531 ) (36,402 ) Other income (expense) 2 (1,541 ) 3 1,758 - ---------- - - ---------- - - ---------- - - ---------- - Total other expense (20,706 ) (13,555 ) (65,189 ) (23,080 ) - ---------- - - ---------- - - ---------- - - ---------- - LOSS BEFORE INCOME TAX PROVISION (85,216 ) (297,389 ) (998,612 ) (2,736,270 ) INCOME TAX PROVISION 24,795 17,212 45,743 32,723 - ---------- - - ---------- - - ---------- - - ---------- - NET LOSS $ (110,011 ) $ (314,601 ) $ (1,044,355 ) $ (2,768,993 ) - ---------- - - ---------- - - ---------- - - ---------- - BASIC LOSS PER SHARE $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.03 ) - ---------- - - ---------- - - ---------- - - ---------- - BASIC WEIGHTED-AVERAGE SHARES OUTSTANDING 83,177,804 82,946,847 83,100,832 82,878,287 - ---------- - - ---------- - - ---------- - - ---------- - DILUTED LOSS PER SHARE $ (0.00 ) $ (0.00 ) $ (0.01 ) $ (0.03 ) - ---------- - - ---------- - - ---------- - - ---------- - DILUTED WEIGHTED-AVERAGE SHARES OUTSTANDING 83,177,804 82,946,847 83,100,832 82,878,287 - ---------- - - ---------- - - ---------- - - ---------- -

Investor Relations: Liolios Matt Glover or Tom Colton 949-574-3860 WYY@liolios.com

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