WYY Q2 Earnings Match Estimates, Revenues Miss on Reselling Dip

WYY Carrier & Managed Services Revenues Rise

Carrier services revenues increased 8.6% year over year to $24.1 million. Management attributed the increase to growth in phone lines under management for the Department of Homeland Security during the second half of 2025.

Managed services fees rose 12.8% year over year to $9.7 million from $8.6 million, reflecting an additional U.S. Customs and Border Protection task order covering 30,000 phone lines. Reselling and other services declined 41.2% year over year to $3 million from $5.1 million as the prior-year quarter included certain nonrecurring revenues. Billable service fees were $1.2 million and remained relatively consistent year over year.

WYY Builds Around Major Federal Contract Awards

WidePoint was named the single awardee of DHS' CWMS 3.0 contract, a 10-year indefinite-delivery, indefinite-quantity contract with a ceiling of roughly $3.1 billion. An unsuccessful bidder has protested the award, with the Government Accountability Office required to issue a decision by Oct. 7, 2026.

DHS awarded WidePoint the CWMS 2.5 bridge contract, carrying a $113 million ceiling and six months of performance consisting of a three-month base period and three one-month options. Management does not anticipate a material impact from the protest on third or fourth-quarter results because existing task orders remain active and the bridge vehicle supports continued ordering.

WidePoint Targets ATV & DaaS Expansion

The company's ATV contract with a major U.S. telecommunications carrier remains on track for an official launch by year-end. The original five-year contract was valued at approximately $45 million, or about $9 million annually and management estimates a roughly 70% gross margin profile once fully ramped.

WidePoint is also discussing a potential expansion of the relationship into state and local government customers. Separately, management remains cautiously optimistic about its Device-as-a-Service (DaaS) pipeline, including the LA28 Olympic opportunity and two smaller engagements nearing potential closure. Large DaaS engagements are expected to carry margins in the 60%-70% range.

WYY’s Q2 Operating Details

In the second quarter of 2026, gross profit increased to $5.85 million from $5.12 million. Gross margin was 15%, up about 100 basis points year over year. Gross margin excluding carrier services revenues improved to 36% from 30% in the prior-year quarter. 

Operating expenses totaled $5.84 million. Sales and marketing expenses were roughly $0.6 million and remained relatively stable year over year. General and administrative expenses were $4.9 million, also largely unchanged. 

Adjusted EBITDA surged 246% year over year to $0.635 million from $0.183 million.

Operating income improved to $0.010 million from an operating loss of $0.70 million. Operating margin improved to 0.03% from negative 1.9% a year ago.

WYY Balance Sheet Provides Financial Flexibility

As of June 30, 2026, cash and cash equivalents were $10.02 million compared with $10.92 million as of March 31, 2026. WidePoint had no bank debt.

Net cash used in operating activities was $1.03 million in the first six months of 2026 compared with $0.06 million in the year-ago period. Free cash flow increased 740% year over year to $1.30 million.

WidePoint Outlines Q3 & Second-Half Outlook

For the third quarter of 2026, WidePoint expects no material impact from the CWMS 3.0 contract protest, supported by existing CWMS 2.0 task orders and the interim CWMS 2.5 bridge contract. Management expects additional operating costs in the second half from its transition to accelerated SEC filer status, along with higher health insurance, labor and inflation-related expenses.

If the CWMS 3.0 protest is resolved by Oct. 7, 2026, WidePoint could begin receiving new task orders in the fourth quarter. Management expects 2027 to be a meaningful ramp-up year, with CWMS 3.0, the ATV deployment and NASA SEWP VI providing potential growth opportunities, while targeted investments in post-quantum cryptography are expected to increase near-term capital expenditures.

WYY Zacks Rank & Stocks to Consider

Currently, WidePoint carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader Zacks Computer and Technology sector are Affirm AFRM, NVIDIA NVDA and Analog Devices ADI, which carry a Zacks Rank #2 (Buy) each, at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Affirm have gained 5.2% in the year-to-date period. AFRM is set to report the fourth quarter of fiscal 2026 results on Aug. 27.

Shares of NVIDIA have increased 20.8% in the year-to-date period. NVDA is slated to report second-quarter 2026 results on Aug. 26.

Analog Devices shares have declined 40.6% in the year-to-date period. ADI is set to report first-quarter fiscal 2027 results on Aug. 19.

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