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Yahoo
3 days ago
- Business
- Yahoo
WidePoint vs. CSG Systems: Which Tech Stock Has the Edge Now?
Despite operating in distinct corners of the technology landscape, WidePoint Corporation WYY and CSG Systems International, Inc. CSGS are both capitalizing on digital transformation tailwinds that are reshaping enterprise and government IT priorities. WidePoint is leveraging its federal IT credentials and secure telecom management expertise to expand its role within defense and homeland security agencies. Meanwhile, CSG Systems is evolving from a legacy telecom billing provider into a diversified SaaS platform player with a growing presence in fintech, healthcare and global demand for digital identity management and engagement platforms has created strong growth opportunities for both companies. WidePoint's focus on federal contract execution, including its FedRAMP-authorized ITMS platform and Device-as-a-Service (DaaS) solutions, positions it to benefit from elevated public sector cybersecurity and mobility needs. At the same time, CSG's integrated SaaS offerings are winning high-margin deals across new verticals, helping it diversify and expand its for investors, the question remains: Which of these tech stocks is more attractive? Let's dive deeper into their respective strengths, challenges, and positioning to evaluate their upside potential. WidePoint is a government IT solutions provider with deep roots in mobile telecom lifecycle management, secure identity management, and digital credentialing. It serves critical federal agencies, including the Department of Homeland Security and the Department of Defense, through long-term company recently reached a key milestone with FedRAMP authorization for its Intelligent Technology Management System (ITMS), a move that dramatically increases visibility among federal agencies and primes WYY for deeper market has secured three task orders under Spiral 4 and expects a surge in new awards as Spiral 3 sunsets. The company is also making strategic investments in a DaaS model, smart city initiatives with public-private partners, and even global digital identity pilots. Its partnership ecosystem is expanding, and management is deploying capital into infrastructure and sales hiring to support WidePoint faces headwinds. Revenue growth remains lumpy, especially given the nature of government contracts and delays in procurement cycles. An out-of-period accounting adjustment in the first quarter of 2025 (linked to prior revenue recognition errors) trimmed top-line results and raised questions about controls. CSG Systems is a mature, diversified SaaS operator that has successfully expanded well beyond its telecom roots. While it continues to serve major clients like Comcast and Charter, CSG Systems derives over one-third of its revenues from fast-growing verticals such as financial services, healthcare and transportation. Recent wins with JPMorgan Chase, PLDT, and the North Texas Tollway Authority underscore its growing relevance across industries that aim to modernize customer engagement, billing and monetization systems. The company is committed to a capital-light model. It has reduced working capital requirements, is consolidating infrastructure, and is actively pursuing high-margin, tuck-in acquisitions to strengthen its SaaS platform. CSG Systems' long-term operating margin target of 18–20%, backed by cost discipline and a growing base of recurring, high-margin SaaS revenues, underlines its transformation into a leaner and profitable CSG Systems is highly disciplined. The company returned $32 million to shareholders in the first quarter of 2025 through dividends and share repurchases and has committed to returning over $100 million in 2025. With more than 90% revenue visibility, modest capex needs and a stable balance sheet, CSG Systems is in a strong position to pursue tuck-in acquisitions that enhance its platform without straining financial resources. Its consistent cash generation and shareholder-friendly capital allocation stand out. Nonetheless, CSG faces moderate challenges. Despite diversifying, macro headwinds in telecom could delay deal cycles. Some contracts, like Comcast's six-year renewal, include near-term pricing concessions, which may limit growth in that segment. The Zacks Consensus Estimate for WidePoint's 2025 sales and earnings per share (EPS) suggests year-over-year increases of 10.5% and 33.3%, respectively. In the past 30 days, earnings estimates for 2025 have remained unchanged. For WYY Image Source: Zacks Investment Research The Zacks Consensus Estimate for CSG Systems' 2025 sales and EPS suggests year-over-year increases of 6% and 1.1%, respectively. In the past 60 days, earnings estimates for 2025 have increased by 1.7%. For CSGS Image Source: Zacks Investment Research WidePoint stock has declined 5.7% in the past year, underperforming its industry and the S&P 500 rise of 6.6% and 10.8%, respectively. Meanwhile, CSG Systems shares have gained 55.5% in the same time. WYY & CSGS Stock 1 Year Price Performance Image Source: Zacks Investment Research WidePoint is trading at a forward 12-month price-to-sales (P/S) ratio of 0.20X, below the industry average of 1.77X over the last year. CSGS' forward 12-month P/S multiple sits at 1.56X, over the same time frame. Image Source: Zacks Investment Research Both WidePoint and CSG Systems are benefiting from the accelerating shift toward digital transformation, with tailored strategies to meet the evolving demands of government and enterprise clients. WidePoint stands out for its niche focus in federal IT services, bolstered by FedRAMP certification, deep agency relationships, and expanding contract opportunities under Spiral 4. However, its smaller scale, revenue lumpiness, and recent accounting adjustments introduce volatility that may challenge near-term investor Systems, by contrast, brings a more diversified and scalable SaaS model to the table, with a strong presence across telecom, financial services, and healthcare. The company's disciplined capital allocation, high-margin recurring revenue, and expanding footprint in non-telecom verticals support its transformation into a lean, high-performing by steadier earnings momentum, stronger analyst sentiment, and clear outperformance in share price over the past year, CSG Systems holds the edge as the more compelling investment choice. With a Zacks Rank #3 (Hold) compared with WidePoint's Zacks Rank #4 (Sell), CSGS appears better positioned to deliver shareholder value in the current environment. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report WidePoint Corporation (WYY) : Free Stock Analysis Report CSG Systems International, Inc. (CSGS) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research
Yahoo
17-04-2025
- Business
- Yahoo
WidePoint Corp (WYY) Q4 2024 Earnings Call Highlights: Strong Revenue Growth and Strategic ...
Revenue: $142.6 million for the full year 2024, a 35% increase compared to 2023. Adjusted EBITDA: $2.6 million for the full year 2024, a 229% increase from the previous year. Free Cash Flow: $2.5 million for the full year 2024, a 933% increase from the previous year. Net Loss: $1.9 million for the full year 2024, improved from a $4 million loss in 2023. Gross Profit: $19 million for the full year 2024, with a gross margin of 13%. Carrier Services Revenue: $86.8 million for the full year 2024, an increase of $28.6 million from 2023. Managed Services Fees: $35.8 million for the full year 2024, an increase of $4.5 million from 2023. Contract Backlog: Approximately $290 million as of December 31, 2024. Cash Balance: $6.8 million at the end of 2024. Warning! GuruFocus has detected 3 Warning Signs with WYY. Release Date: April 16, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. WidePoint Corp (WYY) achieved a 35% increase in full-year revenue, reaching approximately $142.6 million, surpassing their revenue guidance. The company secured $51.2 million in total contract value, with significant contributions from federal agencies and commercial organizations. WidePoint Corp (WYY) achieved FedRAMP authorized status for its Intelligent Technology Management System (ITMS), enhancing its market position and opening new federal contract opportunities. The integration of IT Authority into the WidePoint brand has streamlined operations, enhancing customer response and increasing potential for upselling and cross-selling. WidePoint Corp (WYY) reported a 229% increase in adjusted EBITDA and a 933% increase in free cash flow for the year, indicating strong financial performance. The delay in the earnings call was due to the complexity of new contracts and increased business growth, which extended the annual audit process. Gross profit margins decreased slightly due to increased carrier services, impacting overall profitability. The company experienced administrative challenges with a major customer, affecting cash flow and invoice approvals. Despite positive financial metrics, WidePoint Corp (WYY) reported a net loss for the year, although it was an improvement over the previous year. There is uncertainty regarding potential impacts from federal budget cuts and changes in government contracting processes, which could affect future business. Q: Can you provide an update on the pilot program with federal agencies for MobileAnchor? A: Jin Kang, President and CEO, stated that the pilot with a federal agency related to the transportation industry is progressing well, with plans to increase the number of credentials issued. Additionally, another agency related to K-12 education is also showing interest in the technology. Q: Are there any impacts from the federal budget cuts and administrative changes on WidePoint's operations? A: Jin Kang mentioned that so far, WidePoint has not experienced negative impacts from federal budget cuts. The company is on long-term contracts with the government, and agencies like the Department of Homeland Security (DHS) are expected to maintain or increase their spending. WidePoint is monitoring changes in federal acquisition processes closely. Q: What is the outlook for capital expenditures and cash deployment in 2025? A: Jin Kang and Robert George, CFO, indicated that capital expenditures are expected to be minimal, around $200,000, primarily for revenue-generating activities. The company aims to improve its cash position and continue fortifying the balance sheet. Q: How is WidePoint engaging with the Department of Government Efficiency (DOGE) to leverage cost-saving opportunities? A: Jin Kang highlighted WidePoint's commitment to cost savings and its alignment with DOGE's objectives. The company is actively seeking to engage with DOGE to demonstrate how its services can help reduce technology spending without cutting staff, particularly in areas like device management and billing analytics. Q: Can you clarify the guidance for 2025, particularly regarding growth trajectory and earnings expectations? A: Jin Kang explained that WidePoint aims to achieve positive earnings per share for 2025 and expects to maintain double-digit percentage growth in revenue, EBITDA, and cash flow. The company plans to provide more detailed guidance after the first quarter, as it assesses recent developments and finalizes forecasts. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus. Sign in to access your portfolio
