WidePoint Q2 Earnings Call Focuses on CWMS 3.0 Ramp in 2027

Second-quarter revenues were $38 million, down from $41.70 million of the Zacks Consensus Estimate. Reported EPS of 1 cent matched the Zacks Consensus Estimate. Gross margin was 15%, or 36% excluding carrier services.

WYY Frames CWMS 3.0 as the Main Growth Engine

CEO Jin Kang said WidePoint remains confident it will retain the single-awardee CWMS 3.0 contract. The GAO has until Oct. 7, 2026, to rule, though Kang said a decision could come sooner.

DHS also awarded WidePoint the six-month CWMS 2.5 bridge contract with a $113 million ceiling. Kang said existing task orders and modifications should prevent a material protest-related impact on the third or fourth-quarter results.

If the protest is resolved by the deadline, Kang said some new CWMS 3.0 task orders could arrive in the fourth quarter. Management expects a meaningful ramp in 2027 and broader scale by the end of 2028.

WidePoint Sees Higher-Margin Work Under CWMS 3.0

Kang said the $3.1 billion ceiling equates to roughly $300 million of average annual revenues for discussion purposes, about twice the CWMS 2.0 run rate.

The additional roughly $150 million annual opportunity is expected to center on managed services and solution-based work. Kang said such work historically supports 8% to 10% net profit margins in federal contracting.

WYY Targets Year-End ATV Launch

President of WidePoint Global and chief revenue officer Jason Holloway said the ATV carrier implementation expanded during the quarter and remains targeted for a year-end go-live.

Kang said some devices should be implemented in the fourth quarter, with the ramp reaching toward the end of the first quarter or start of the second quarter of 2027. The original five-year contract was valued at about $45 million with an estimated 70% gross margin profile.

In Q&A, a Titan Partners analyst asked about state and local expansion. Kang said that opportunity could potentially double managed devices, while the exact size of any Fortune 500 expansion is not yet known.

WidePoint Builds DaaS and SEWP VI Pipeline

Holloway said LA28 offers the clearest near-term DaaS opportunity. Two smaller DaaS opportunities are also close to closing, while larger Fortune 100-sized opportunities remain active.

Kang said WidePoint would mainly supply licenses to CDW for LA28 and is targeting year-end completion of terms and conditions so implementation can begin.

Holloway also highlighted WidePoint’s Category A prime position on SEWP VI. The ordering period begins Nov. 1, and management expects activity could start ramping in the first quarter of 2027.

WYY Flags Near-Term Cost Pressures

Executive vice president and CFO Robert George said adjusted EBITDA rose to $635,000 from $183,000, while free cash flow increased to $627,000 from $90,000.

George said about $700,000 of qualifying internal labor tied to ATV implementation was capitalized rather than expensed in the quarter. Operating expenses would have risen more significantly without that treatment.

For the second half, George expects higher costs from accelerated SEC filer status, health insurance, inflation and labor, plus post-quantum cryptography investments. A one-time employee incentive payment also depends on a favorable final CWMS 3.0 protest resolution.

WidePoint Keeps 2026 Focus on Execution

Kang characterized 2026 as an execution year, with major contracts secured and implementations underway. Management expects 2027 to begin reflecting an evolving operating and financial profile.

Priorities remain clearing the CWMS 3.0 protest, launching ATV, converting DaaS opportunities and preparing SEWP VI for ordering while managing the costs tied to those initiatives.

WYY Rank and Style Scores Send Mixed Signals

WYY carries a Zacks Rank #3 (Hold). Its Growth Score of A, Value Score of B and VGM Score of B are favorable under the Style Scores framework, while the Momentum Score of F is weak.

The Zacks methodology gives the strongest emphasis to favorable Style Scores paired with Zacks Rank #1 (Strong Buy) or 2 (Buy) stocks, though a Zacks Rank #3 can still be held under the framework. The Zacks Rank can change as estimates are revised after the just-reported results. You can see the complete list of today’s Zacks #1 Rank stocks here.

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