WIDEPOINT CORP Q2 FY2026 earnings call

Major Contract Awards

• In late June 2026, YPoint (WidePoint's subsidiary) was named the single awardee of the 10-year $3.1 billion CWMS 3.0 contract with the Department of Homeland Security (DHS). The contract has an average annual revenue ceiling of $300 million, double the CWMS 2.0 annual run rate of $150 million. The revenue split is expected to remain 80% carrier, 20% managed services, with the $150 million in incremental annual opportunity concentrated in higher-margin managed services.

• YPoint was also selected as a prime awardee on the 10-year $60 billion NASA SUP6 government-wide acquisition contract, under Category A covering IT, communications, and audiovisual solutions. The ordering period begins November 1, 2026, with activity expected to ramp up starting Q1 2027.

• The short-term CWMS 2.5 bridge contract ($113 million ceiling, 6-month performance period) was awarded in August 2026 to ensure service continuity during the CWMS 3.0 protest resolution.

• The ATV commercial contract (with one of the big three U.S. telecommunications carriers) received an expanded implementation scope in Q2 2026, confirming the carrier's confidence in WidePoint's platform. Full go-live is expected by the end of 2026; the original contract value is $45 million over five years, with a 70% gross margin profile. Early discussions are underway to expand the partnership from the current 2 million to 2.5 million device federal scope to the carrier's state and local government clients, and potentially Fortune 500 commercial clients.

Operational Pipeline Updates

• DAS (device management service) pipeline progress is encouraging. Management is cautiously optimistic of closing the LA-28 DAS opportunity in the near term, with two additional smaller DAS opportunities also nearing close. Large DAS engagements with Fortune 100 clients remain active, with expected margins of 60% to 70%, where a single award would materially improve EPS. DAS revenue is recurring, billed per managed device per month.
• Mobile Anchor (WidePoint's secure multi-factor authentication solution) is gaining traction, with ongoing pilot programs and inbound requests for information from high-profile public sector entities including U.S. Access, Treasury IRS, NATO NCIA, DHS USCIS, and Defense Manpower Data Center. Commercial go-to-market is led by partners CDW, Ingram Micro, and Tech Data, with opportunities to cross-sell alongside DAS engagements.
• In the first half of 2026, WidePoint secured $58 million in new and renewed contracts across federal and commercial sectors, demonstrating healthy core business demand.
• Chief Revenue Officer Jason Holloway announced he will retire at the end of 2026 after 10 years with the company, with a planned transition of responsibilities over the coming months.

Total Q2 2026 revenue was $38 million, up from $37.3 million in Q2 2025. Total first half 2026 revenue was $78.6 million, a $7.8 million increase from the first half of 2025. Breakdown by segment:

1. Carrier Services: Q2 2026 revenue of $24.1 million (63.4% of total Q2 revenue), up $1.8 million from Q2 2025; first half 2026 revenue of $49.8 million (63.4% of total H1 revenue), up $5.2 million year-over-year. Growth was driven by increased phone lines under management for the DHS customer in the second half of 2025.
2. Managed Services Fees: Q2 2026 revenue of $9.7 million (25.5% of total Q2 revenue), up $1.1 million from Q2 2025; first half 2026 revenue of $19 million (24.2% of total H1 revenue), up $1.8 million year-over-year. Growth stemmed from an additional task order with U.S. Customs and Border Protection awarded in September 2025 to manage 30,000 extra phone lines.
3. Billable Service Fees: Q2 2026 revenue of $1.2 million (3.2% of total Q2 revenue), consistent with Q2 2025; first half 2026 revenue of $2.5 million (3.2% of total H1 revenue), down $0.6 million year-over-year due to reduced activity from the partial February 2026 DHS shutdown.
4. Reselling and Other Services: Q2 2026 revenue of $3 million (7.9% of total Q2 revenue), down $2.1 million from Q2 2025 due to non-recurring revenues booked in Q2 2025; first half 2026 revenue of $7.2 million (9.2% of total H1 revenue), up $1.3 million year-over-year due to the absence of an out-of-period adjustment recorded in Q1 2025.

Gross profit totaled $5.8 million (15% of revenue) in Q2 2026, up $700,000 from Q2 2025. Gross profit margin excluding carrier services was 36% in Q2 2026, up from 30% in Q2 2025. Adjusted EBITDA was $635,000 in Q2 2026, compared to $183,000 in Q2 2025. Net income was $66,000 ($0.01 EPS) in Q2 2026, versus a net loss of $618,000 (-$0.06 EPS) in Q2 2025. Total contract backlog as of June 30, 2026 was approximately $219 million.

• The GAO will issue a decision on the CWMS 3.0 award protest by an outside deadline of October 7, 2026; management expects a potential earlier decision and is confident the protest will be dismissed, consistent with WidePoint's prior success protesting predecessor CWMS contracts. No material impact to Q3 or Q4 2026 results is expected from the protest period, supported by the CWMS 2.5 bridge contract.
• If the protest is resolved by the October 7 deadline, initial new CWMS 3.0 task orders could arrive in Q4 2026, with meaningful ramp-up in 2027. Full scale for the incremental $150 million annual managed services opportunity is expected by the end of 2028, with an expected 8% to 10% net margin on the incremental revenue that will materially strengthen WidePoint's earnings profile. No corresponding proportional increase in headcount is expected for the incremental opportunity.
• 2026 is framed as a year of execution, with 2027 expected to show early evidence of WidePoint's evolving financial profile, and accelerated growth hitting target levels by the end of 2028.
• Elevated compliance-related expenditures (for transitioning to accelerated SEC filer status) will be incurred in H2 2026, with a lower annual impact spread across quarterly results starting in 2027. Inflation, rising labor, and health insurance costs will weigh on operating expenses in coming periods.
• Near-term elevated capital expenditures are planned for targeted investments in post-quantum cryptography to strengthen long-term cybersecurity competitiveness, which are expected to improve margins over time as the business scales.

• The CWMS 3.0 contract ramp and financial contribution are dependent on GAO ruling in WidePoint's favor on the pending award protest, which introduces uncertainty to near-term growth timelines.
• Competition for task orders under multi-award government contract vehicles like SUP6 is high, which could limit the company's ability to capture meaningful revenue from the vehicle despite holding a prime award.
• The potential expansion of the ATV contract to state/local and commercial clients remains in early discussion, with no guarantee additional opportunities will materialize.
• Inflationary pressures and rising labor and health insurance costs will increase operating expenses in the near term, which could pressure near-term margins if revenue growth does not offset these increases.

Q: After the ATV contract launches at the end of 2026, how long will full deployment take, and what size opportunity could the potential state and local expansion represent? / A: Some devices will be deployed in Q4 2026, with full ramp-up completed by the end of Q1 or beginning of Q2 2027, a 3 to 6 month timeline from launch. Management notes the potential state and local device population is comparable to the federal scope, which could double the current device count, with additional potential expansion to the carrier's Fortune 500 commercial clients; exact numbers are not yet available and will become clearer as implementation progresses.

Q: Are there additional large wireless carrier contract opportunities beyond the current ATV contract, and do they have a similar scope? / A: Management confirms the other two of the big three U.S. wireless carriers are active target opportunities, and they are in early preliminary discussions for similar contracts. All three major carriers serve comparable federal, state, and local customer segments and have similar cybersecurity requirements, and WidePoint's FedRAMP authorization positions it well for these opportunities, though no material contracts have been finalized.

Q: When is a decision expected for the LA-28 (Olympics 2028) DAS opportunity, and what is the deployment timeline? / A: Management expects final contracting to be completed by the end of 2026 to enable implementation, with crunch time for the deal coming in early 2027. The opportunity is a software-as-a-service DAS engagement where WidePoint provides licenses to partner CDW for deployment, so the ramp-up period will be relatively quick after contracting is finalized.

Q: How is Mobile Anchor generating inbound interest, and what is the commercial go-to-market strategy for the product? / A: Inbound interest comes from a mix of WidePoint's direct outreach and connections, and unsolicited inquiries from organizations seeking secure identity solutions, as WidePoint is one of the few external certificate authorities with the high-security solution these customers need. For commercial markets, Mobile Anchor is distributed through partner channel partners CDW, Ingram Micro, and Tech Data, and the go-to-market plan focuses on cross-selling the solution to DAS customers after securing the core DAS engagement.