WidePoint (NYSEAMERICAN:WYY) reported a 27% increase in third-quarter revenue and a narrower net loss as it continued to serve the Department of Homeland Security under bridge contracts while awaiting a decision on a contested contract award.
Revenue rose to $45.1 million for the quarter ended Sept. 30, 2026, from $35.5 million a year earlier. The net loss narrowed to $192,000, or $0.02 per share, from $559,000, or $0.06 per share.
President and CEO Jin Kang said WidePoint submitted a revised proposal for the pending CWMS 3.0 procurement after the Government Accountability Office sustained a protest regarding the award. DHS requested revised proposals, and the company is awaiting the agency’s evaluation and award decision.
DHS bridge contracts continue
Kang called the protest decision an unexpected setback but said WidePoint continues to serve DHS without interruption under the CWMS 2.0 and 2.5 bridge contracts. The company received 40 new and replacement task orders worth approximately $33.7 million in the third quarter and has continued to receive work in the fourth quarter, he said.
Some CWMS 2.0 task orders extend into 2027, while CWMS 2.5 allows DHS to issue new orders and modify existing ones during the interim period. Kang said the 2.5 contract vehicle is scheduled to end around February 2027 if all options are exercised, but task orders issued under it can extend beyond that date.
In response to an analyst’s question, Kang estimated that CWMS represents approximately 80% to 85% of company revenue when carrier and managed services are combined. He said a further bridge contract could be possible if the CWMS 3.0 decision is delayed.
Revenue growth outpaces gross profit growth
Third-quarter carrier services revenue increased to $26.3 million from $20.4 million, driven by growth in DHS phone lines under management. Managed service fees rose to $10.9 million from $9.5 million, primarily due to a September 2025 U.S. Customs and Border Protection task order covering 30,000 additional phone lines.
Reselling and other services revenue rose to $6.7 million from $4.3 million, primarily reflecting sales of deployable communications kits known by the U.S. Coast Guard as Digital Seabags. Chief Financial Officer Robert George said the company expects to deliver approximately 8,000 kits across the third and fourth quarters, with some deliveries potentially spilling into the first quarter of 2027.
Gross profit increased to $6.2 million from $5.3 million, though gross margin declined to 14% from 15%. Excluding carrier services, gross margin was 30%, compared with 29% a year earlier. Adjusted EBITDA, a non-GAAP measure, was $338,000, down from $344,000.
For the first nine months of 2026, revenue rose 16% to $123.6 million, and the net loss narrowed to $49,000 from $1.9 million. Adjusted EBITDA increased to $1.7 million from $620,000.
George said general and administrative expenses benefited from the deferral of approximately $600,000 in third-quarter internal IT labor costs associated with implementation of the ATV contract. Those costs will be amortized to cost of sales over the remaining contract term once the contract goes live.
Investment plans and new opportunities
WidePoint ended September with $10.1 million in unrestricted cash, no bank debt and an undrawn $4 million revolving credit line, subject to covenant compliance. Federal funded and unfunded backlog totaled approximately $209 million, including subcontract work serving federal customers.
George said the company expects approximately $400,000 in capital expenditures for the remainder of 2026 and approximately $2 million in 2027, primarily for identity-management security and capability upgrades, including post-quantum cryptography. WidePoint also expects about $800,000 in incremental accelerated SEC filer costs in the second half of 2026.
Chief Operating Officer Todd Dzyak said the ATV contract remains on track to launch in the fourth quarter. He also said WidePoint signed a teaming agreement with CDW to support CDW’s role as an IT equipment and solutions provider for the LA28 Olympics and Paralympic Games and Team USA. The companies are negotiating a subcontract.
The ordering period for NASA SEWP VI began Nov. 1, and WidePoint expects meaningful activity to increase in 2027. Dzyak said it was too early to quantify the potential opportunities. Kang said WidePoint also continues to respond to requests for quotations under Spiral 4.
Finance and sales leadership transitions
George said he is stepping down as CFO to devote more time to personal and family priorities. Following the filing of the third-quarter Form 10-Q, he expects to assist WidePoint in a non-officer capacity while the company evaluates internal and external candidates for his successor.
Dzyak said he and Kang have temporarily assumed sales and marketing duties, respectively, ahead of the chief revenue officer’s retirement. WidePoint is reviewing candidates for a permanent replacement.
About WidePoint (NYSEAMERICAN:WYY)
WidePoint Corporation provides secure technology solutions for government agencies, regulated organizations and commercial enterprises. The company focuses on helping customers manage mobile communications, digital identities and cybersecurity requirements across distributed workforces and connected devices. Its services include telecommunications expense management, managed mobility and wireless lifecycle management, identity assurance, credentialing, authentication and cybersecurity. WidePoint also provides tools and services designed to support secure access to networks and applications, protect communications and improve visibility into technology usage and expenses.
