WidePoint (NYSEAMERICAN:WYY) reported higher second-quarter revenue, improved profitability and a strengthened long-term outlook tied to its recently awarded Department of Homeland Security contract, while the company continues to await a decision on a protest of that award.
For the quarter ended June 30, 2026, WidePoint recorded revenue of $38 million, up from $37.3 million a year earlier. Net income was $66,000, or $0.01 per diluted share, compared with a net loss of $618,000, or $0.06 per share, in the prior-year quarter. Adjusted EBITDA increased to $635,000 from $183,000, while free cash flow rose to $627,000 from $90,000.
CWMS 3.0 Protest Remains in Decision Window
President and CEO Jin Kang said the company views the second quarter as a “transformational period” following DHS’s late-June selection of WidePoint as the single awardee of the 10-year, $3.1 billion Cellular Wireless Managed Services, or CWMS 3.0, contract.
The award is under protest, but Kang said WidePoint believes the protest will not succeed, citing its solution set, more than two decades of performance and its integration into DHS operations. He also pointed to the company’s successful defense of prior protests involving CWMS 2.0, CWMS 1.0 and the GSA FSSI TEMS award.
The Government Accountability Office must issue a decision within 100 days of the protest filing, setting an outside deadline of Oct. 7, 2026, according to Kang. DHS and the protester have submitted responses, and the matter is now in the GAO decision window.
Meanwhile, DHS awarded WidePoint a short-term CWMS 2.5 bridge contract on Aug. 6. The bridge contract has a $113 million ceiling and a six-month performance period consisting of a three-month base period and three one-month options. Kang said the award is intended to avoid a gap in the ordering period while the protest is resolved.
WidePoint does not expect the protest to have a material effect on third- or fourth-quarter results. Kang said task orders under the current CWMS 2.0 vehicle remain in place through the second quarter of 2027, while the bridge contract allows DHS to modify existing task orders and issue additional ones.
Management Sees Significant CWMS Growth Potential
Management described the $3.1 billion CWMS 3.0 ceiling as representing roughly $300 million in average annual revenue over 10 years, approximately twice the annual run rate under CWMS 2.0.
WidePoint expects approximately $150 million of annual value to remain consistent with CWMS 2.0, with pricing adjustments expected to make that business slightly more profitable. The company expects the revenue mix to remain about 80% carrier revenue and 20% managed-services revenue.
The company sees its largest opportunity in an estimated additional $150 million in annual work, which it expects to be concentrated in managed services and solution-based offerings. Kang said such work has historically supported net profit margins of 8% to 10% in federal contracting.
If the protest is resolved on or before the Oct. 7 deadline, WidePoint said new task orders could begin arriving in the fourth quarter. Management expects 2027 to be a year of meaningful but uneven ramp-up, with the program potentially reaching its contemplated scale by the end of 2028.
Carrier Contract, DaaS Pipeline and Federal Vehicles
WidePoint also provided an update on its software-as-a-service contract with one of the three largest U.S. telecommunications carriers, which it will refer to as the ATV contract. The original contract was valued at approximately $45 million over five years and is expected to cover 2 million to 2.5 million federal devices.
The company announced an expanded implementation scope in late June after identifying additional deployment requirements with the carrier. Management now expects the official launch by year-end, with some devices implemented in the fourth quarter and broader deployment potentially ramping by the end of the first quarter or beginning of the second quarter of 2027.
Kang said discussions are also underway about potentially expanding the carrier relationship beyond federal users to state and local government clients, though those discussions remain early-stage. He said state and local government device volumes could potentially rival the federal market, but WidePoint does not yet know the carrier’s addressable customer base.
Chief Revenue Officer Jason Holloway said the contract is expected to carry an estimated gross margin of about 70%. He also said WidePoint is pursuing opportunities with the other two major U.S. carriers, though discussions remain preliminary and no material developments were announced.
On device-as-a-service, or DaaS, Holloway said WidePoint remains cautiously optimistic that it can close an opportunity in the coming months. He identified the LA28 opportunity as having the clearest line of sight, with contracting potentially beginning soon. The company also has two smaller DaaS opportunities nearing potential closing and continues to pursue larger Fortune 100-scale prospects.
WidePoint said DaaS gross margins on large engagements are expected in the 60% to 70% range. Management also said its MobileAnchor identity and access-management product has pilot programs underway and has received requests for information from organizations including USAccess, the Treasury Department, the IRS, NATO’s Communications and Information Agency, DHS’s U.S. Citizenship and Immigration Services and the Defense Manpower Data Center.
The company was also named a prime contractor awardee under Category A of NASA’s 10-year, $60 billion SEWP VI contract vehicle, covering IT, communications and audiovisual solutions. The SEWP VI ordering period is set to begin Nov. 1, with WidePoint expecting related activity to begin ramping as early as the first quarter of 2027.
Financial Details and Expenses
Chief Financial Officer Robert George said second-quarter carrier services revenue increased to $24.1 million from $22.2 million, driven by growth in DHS phone lines under management during the second half of 2025. Managed-services fees increased to $9.7 million from $8.6 million, primarily due to an additional Customs and Border Protection task order awarded in September 2025 to manage 30,000 additional phone lines.
Gross profit rose to $5.8 million, or 15% of revenue, from $5.1 million, or 14% of revenue. Gross margin excluding carrier services improved to 36% from 30%.
The company capitalized approximately $700,000 of qualifying internal labor tied to ATV implementation during the quarter. George said those costs were deferred rather than recognized in general and administrative expenses, and will be recognized over the expected contract term once the ATV contract goes live.
WidePoint ended the quarter with approximately $219 million in federal funded and unfunded contract backlog, $10 million in unrestricted cash and a renewed revolving credit facility with up to $4 million of borrowing capacity, subject to covenant compliance.
Looking ahead, George said operating expenses will face pressure from costs associated with becoming an accelerated SEC filer, higher health insurance expenses, inflation and labor costs. The company also expects a one-time payment under employee incentive arrangements if CWMS 3.0 is ultimately upheld, as well as targeted near-term investments in post-quantum cryptography.
Separately, Holloway said he will retire at the end of 2026 after 10 years with the company. He said he will transition responsibilities, mentor a successor and remain involved with management and customers during the handoff.
About WidePoint (NYSEAMERICAN:WYY)
WidePoint Corporation (NYSE American: WYY) is a provider of secure mobility management and identity management solutions. Headquartered in Reston, Virginia, the company delivers a range of managed services designed to help organizations control and secure their telecommunications and IT environments. Since its inception in the late 1990s, WidePoint has focused on helping businesses and government agencies optimize their mobile device portfolios and ensure regulatory compliance.
WidePoint’s core offerings include mobile device management, telecom expense management, and unified endpoint security.
