Q4 2020 WidePoint Corp Earnings Call
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Good afternoon welcome.
Two one points fourth quarter and full year 2020 earnings Conference call. My name is Catherine and I will be your operator for today's call joining us for today's presentation are wide points, President and CEO Jin Kang.
Executive Vice President and Chief sales, and marketing Officer, Jason Holloway, and executive Vice President.
And CFO Kellie Kim following their remarks, we will open the call for questions from wide points publishing analysts and major investors. If your questions were not taken today and you would like additional information. Please contact of wide points Investor relations team at W. Y Y at Gateway IR Dot.
Com before we begin the call I would like to provide wide points safe Harbor statement that includes cautions regarding forward looking statements made during this call. The matters discussed in this conference call May include forward looking statements regarding future events and other future performance of wide point Corporation that involves risks and uncertainties that could cause.
Cause actual results to differ materially from those anticipated. These risks and uncertainties are described in the company's form 10-K filed with the Securities and Exchange Commission finally, I would like to remind everyone that this call will be made available for replay via a link in the Investor Relations section of the company's website at W.
<unk> W. W. Dot wide point Dot com now I would like to turn the call over to wide points, President and CEO Mr. Jin Kang.
Sir Please proceed.
Thank you operator, and good afternoon to everyone. Thank you for joining us today to review our financial results for the fourth quarter.
And fiscal year ended December 31, 2020.
As our financial results for the fourth quarter confirm 2020 was the most successful year in <unk> history.
We set records in each of our financial performance metrics all during the pandemic, while seamlessly managing the largest of mobility managed service contract.
Track in the country.
We expanded our work with our systems integrator partners to secure new business and we re secured a major contract with our most prominent customer the U S Department of Homeland security.
Let me emphasize that this win was a $500 million.
Five year contract and unlike many of the federal government, where the award is made to multiple contractors, we were the sole awardee.
I'm happy to report that for the full year 2020, our managed services revenue grew 29% to $42 7 million.
And our gross profit increased 18% to $25 million.
As a result, our adjusted EBITDA increased 59% year over year to $5 7 million, which was right at the top of our guidance.
Our net income increase of approximately 4400.
60% from 226000 in 2019 to $10 3 million in 2020.
Our topline revenue was approximately $180 million, which is a 77% increase compared to approximately $102 million in 2019.
Additionally, we ended the.
The year with an incredibly strong balance sheet with $16 million in cash and no debt.
Kelly will walk through the details of the financials in a few minutes, but it's worth reiterating that we generate at these record results during a very challenging year with the pandemic.
There were many factors that contributed to.
Our success in 2020, but two factors stand out.
The first is that we have an incredibly flexible and scalable organization.
I will once again take this opportunity to thank our dedicated staff for their diligence and their commitment.
It is because of them the Wi successfully.
Managed a record amount of work Duvernay logistically challenging year that drove positive financial performance for our shareholders.
The second is that we have an incredibly robust client base of large commercial enterprises and government agencies, including those who are at the forefront of.
Of the fight against COVID-19.
Of the department of Homeland Security Customs and border protection.
Immigration and customs enforcement the U S Army Corps of engineers.
And the department of Health and human services to name a few.
These two factors were paramount to our success.
And they will be integral.
Integral to <unk> success in 2021 and beyond.
But the single contract that caused the largest change to our business was of course, the 2020 U S census project.
This was the single largest managed mobility services project in the country.
For this project, we scaled the organization to deliver.
Ever manage and now decommission approximately 700000 devices in support of the 2020% of you'll census.
This project will serve as an excellent customer reference for us in the quarters to come as it perfectly demonstrates our ability to scale adapt to changing circumstances.
And deliver quality service under pressure on an essential project.
As you pursue larger higher margin business opportunities.
Such a use case will be integral to our future success.
And more importantly for the near term our core managed services business, excluding sensus is stable.
And growing.
So as this program comes to its natural conclusion carrier services revenue will decline presenting some significant comparison challenges on the top line. However, we believe we should see our gross margins improve in the quarters ahead.
The operational highlights of.
Stable quarter once we re secured a new major contract with the U S Department of Homeland security on.
On November 25th of last year, we announced the much anticipated news that we had one of the cellular wireless managed services or gws to point out of contract.
Why.
Of the fourth of always optimistic in our ability to secure this business because of our excellent past performance rating and the quality relationship with this agency. We were very pleased to have once again earned the business from DHS.
The single award contract is valued at up to $500 million if.
If all option periods.
While we were the size it will last through November 2025.
It was an excellent accomplishment to cap off what was a monumental year.
And it has set the positive tone for a successful 2021.
Before I dive into our priorities and expectations for this year I will turn the call over to Jason.
<unk> provide you with some details on the sales momentum we've been building as we exited 2020 and entered the new year, then our CFO Kellie Kim will walk us through the financial results of the fourth quarter and full year Jason.
Thank you Jan.
In the fourth quarter of 2020, we.
We continue to effectively execute our sales strategy by successfully teaming with systems integrators and expanding our presence with both prominent players in the public and commercial sectors.
As Jim mentioned.
The most important contract win of the fourth quarter was the CW.
Two point of contract.
We've spent a great deal of time discussing this relationship in the past so I won't dwell on it today.
Suffice it to say that we are extremely pleased to see our expectations and our hard work manifest and re securing this business.
And we are excited.
Be focusing our full attention on new business going forward.
Excluding the DHS contract.
We recorded more than 30 contractual actions during the fourth quarter of 2020.
Which had an aggregate value of more than $10.4 million.
Subsequent to the win with DHS.
Our subsidiary soft ex six.
Secured several multi year contracts.
With prominent European enterprises, including can calm the.
Veda Com and three Ireland.
It is highly encouraging to see robust demand.
It tore our advanced digital billing and analytics solutions from commercial enterprises.
For whom our solutions are just as applicable as they are for government customers.
These solutions increased ROI for our clients.
They provide the best in class platform to our clients customers and.
They expand our foothold in the commercial space there are a win win.
While we had commercial success there is no doubt that some commercial enterprises have faced headwinds from the pandemic.
However, the spa.
These headwinds COVID-19 has accelerated ciber.
Fiber security efforts and encouraged more organizations to vest the new more effectively of secured solutions and we are cautiously optimistic that these positive trends.
We'll remain dominant over the coming quarters.
As we entered the new year.
Continue to build on our sales momentum.
And secured several new wins that support the thesis.
In February.
We announced that we had secured a new contract from a fortune Global 500 company to provide professional services hardware and personal identity verification or pay by credentials.
This.
The contract simultaneously allowed us to add a new commercial client that expanded the use of our credentials into a new U S Federal agency.
And the added high margin revenues to our books. It's a great example of how the identity management business.
Efficiently drive success.
For wide point of multiple areas of.
Also in February we announced that we secured a new contract the issue external certificate authority credentials to a hospital that interacts with the U S Department of health and human services or HHS.
Our ECA credentials allow the hospitals.
Successful EPS and industry partners to access H H S systems securely and effectively.
These are among the most important lines of defense, our government has for preventing cyber intrusions.
It seems that every week, we read about hacks and headlines and as data.
All of them become more prevalent and more damaging the demand for our credentials grow.
We continue to believe the IDM business will be a material driver for wide point in the upcoming quarters and years.
And that is in part due to the partnership that we had with Phoenix.
As the cynics.
The breach of ship continues to develop we.
We are continuing to enhance our T M two capabilities to ensure.
That whereas competitively positioned as possible to help both current and prospective clients manage the mobile landscape effectively and securely.
In addition to the T M two enhancement.
Partners, we also.
<unk> recently expanded our sales team.
I am excited that we were able to strategically recruit a very strong commercial enterprise sales director from IBM.
Who has added to our already strong pipeline of opportunities.
Suffice it to say that with our current.
Current sales momentum.
Our enhanced team and macro tailwind driving our industry forward.
<unk> remains an incredibly strong position and we look forward to continuing to execute on our sales strategy in 2021 with that I will hand, the call over to Kelly Kelly.
Thank you, Jason and good afternoon, everyone.
I'm pleased to share more details on the fourth quarter and full year 2020 results.
Turning to our results for the fourth quarter revenue was $28 4 million up slightly from the $28 1 million reported for the same quarter last year.
Carriers two of interest revenues declined to $19 5 million from the $19 8 million in the fourth quarter of last year.
Towards the end of the fourth quarter, a significant portion of savings to a large carrier services customer came through leasing of opinion and a reduction in carriers.
Because revenue.
If it were not from a $10 6 million credit issue to our customer our total fourth quarter of revenue would have been closer to $40 million.
While this shift impacted our top line.
On the rest of the financial performance were immaterial given the low margins.
Two of learned from carrier services revenue.
Managed services revenue increased by 7% to $8 9 million from $8 3 million in the fourth quarter of last year the.
The increase in managed services was primarily due to expenditures with federal government clients.
We as a result for the full year 2020, our total revenue was $180 3 million up 77% from $101 7 million last year.
Carrier services revenues for fiscal 2020, $137 6 million.
Or 76% of total revenue compared to carrier services of $68 7 million.
Or 68% of total revenue in 2019.
Our total revenue would have been approximately $191 million if it were not for a large credit.
Discussed above.
Managed services revenues for the full year, 2020 increased 29% to $42 7 million or 24% of total revenue from $33 million or 32% of total revenue in 2019 year over year of growth for both the.
Quarter and the full year were primarily driven by increases in revenue from carrier services and managed services due to higher demand.
Our gross profit for the fourth quarter of 2020 was $4 8 million consistent with $4 8 million in the fourth quarter of 2019.
Similarly, gross margin was 17% in the fourth quarter of 2020 and 17% in 2019 for.
For the full year, our gross profit increased 18% to $25 million or 11% of total revenue from $17 four.
And in 2019 or 17% of total revenue.
The increase in gross profit was due to an increase in managed services revenue.
As managed services become a higher percentage of total revenue in 2021. It is our expectation that gross margin.
The mill will return to more historical levels and May increase long term.
In the fourth quarter of 2020 operating expenses decreased 8% to $4 1 million from $4 5 million in the fourth quarter of last year for the full year 2020, our operating.
<unk> expenses increased by 4% to $17 2 million from $16 5 million.
The increase in SG&A expense for the full year reflects higher payroll costs consistent with higher employee count to support the increased business partially.
Offset by reduced travel costs.
Margins. Additionally, during 2020, we invested approximately $2 1 million compared to $1 9 million last year and product development to enhance our technology platform and port of integration.
For the fourth quarter of 2020 GAAP.
Net income was $8 3 million an improvement from net loss of $34000 in the fourth quarter of 2019 for the full year net income was $10 3 million compared $2 2 million in 2019 during the fourth quarter, we recognized $8 2 million from everywhere.
The reversal of deferred tax asset valuation allowance.
Excluding this onetime noncash tax benefit our net income would have been $2 1 million or 25 cents per diluted share, which is a substantial improvement from 2019 when EPS was three.
The accounting for the one for 10 reverse split.
On a non-GAAP basis EBITDA for the fourth quarter 2020 increased 39% to $1 1 million from <unk> 8 million last year.
For the full year ended December 31, 2020, EBITDA increased 70.
The 1% to $4 9 million from $2 8 million last year, our non-GAAP adjusted EBITDA increased 30% to $1 3 million in the fourth quarter from 1 million in the same period in 2019 for the full year 2020, adjusted EBITDA increase.
59% to $5 7 million from $3 6 million in 2019.
Both metrics were at the top end of the guidance range share.
Shifting to cash flow and the balance sheet, we exited the quarter with $16 million in cash or dollars 80.
Six per diluted share net working capital of $13 million and approximately $5 million available to draw down on our credit facility.
Our operating cash flow was $6 4 million capital expenditures were $1 2 million compared to $5 million last.
At year, and $3 7 million increase in net cash from financing activities.
We plan to continue our investments in technology and expect to be in the range of $1 2 million to $1 5 million for the full year 2021.
This completes my financial summary.
For a more detailed analysis of our financial results. Please reference our form 10-K, which was filed prior to this call.
So with that I would like to turn it back to Jim.
Thank you Kelly and thank you Jason.
2020 was a transformative year for <unk>.
We said.
Set records in nearly all of our financial metrics by driving profitable managed services revenues, which added to our bottomline in each quarter.
We seamlessly scaled the organization during the pandemic to manage nearly 700000 devices for the largest managed mobility services project in the country.
The 2000.
<unk> 20 of U S census.
We reset cured a major new contract with one of the most prominent customers. The U S Department of Homeland security as projected we successfully fluctuated a reverse stock split and we ended the year with a strong balance sheet that provides us with the financial ability to make strategic acquisitions.
That will be accretive to our business.
As we look towards the future we remain confident that 2021 will be another positive year for wide point.
At this early stage in the year, it's difficult to forecast of our financial performance for 2021 and provide financial projections at this time because.
Timing of variables are not fully known.
But we are optimistic that 2021 will be another positive and profitable year for wide point.
As I mentioned in my introductory remarks, our managed services revenues are growing sustainably.
The focus of this team has always.
The title of profitably and that remains our goal.
Our objective is to continue to grow of managed services revenue, which will increase our gross profit margins and drive positive adjusted EBITDA and net income.
We will endeavor to match or exceed the profitability benchmarks set in 2020 and the coming year.
And given our flexibility and adaptability, which we demonstrated throughout 2020, we believe that these targets are well within our reach.
The need to manage and secure the remote workforce is even more imperative today than it was a year ago with hacking and cyber attacks on the rise.
We believe that.
Of our tier two products and services will continue to be relied upon to facilitate a more flexible workforce as we provide the infrastructure that allows the workforce to work remotely and IBM solution provides for secure communication among devices from these remote sites.
And the two unique.
Aspects of our organization that I mentioned at the start of this call, which helped drive our success in 2020.
Our adaptability and a robust base of large commercial and government customers will continue to be advantages for us in the quarters and years to come.
Given what we've seen so far.
Unique new presidential administration, and the reputation we've developed from servicing the needs of high profile agencies on the frontline of our fight against the pandemic. We believe our government business will remain strong in 2021.
But our intention is not to be passive and allow our business to be dictated by macro trends.
We intend to actively grow Wi point, both organically and Inorganically.
Inorganically the search for REIT acquisition targets continue.
There were a number of targets we've added at the end of last year. So seriously that we were required to take measures to ensure that we have the balance.
From the necessary to tackle them.
This included utilizing our at the market offering to Opportunistically raise a net $5 4 million by selling 500000 shares at an average share price of $11 62.
From the end of the fourth quarter through the second week of January.
For.
<unk> net million of which was added to our balance sheet before the end of the year.
However, as we progress deeper into the due diligence process. It became apparent that these prospects were not ideal candidates and we opted to move in a different direction.
The good news is that with $16 million on the balance sheet and positive cash flow from opera.
Operations.
We are better positioned than ever to find the target that will be the highest possible benefit to our organization and therefore, we have no plans to sell additional shares at this time.
Organically, we are continuing to enhance our technical capabilities to make our solutions more attractive and more competitive.
Three and we're continuing to invest in sales and marketing to improve our prospects of securing new business.
As Jason mentioned, we are expanding our <unk> capabilities to include new offerings and services, which we believe will allow us to cross sell more effectively by the end of the year.
We are partnering with mobile equipment providers to include our.
And solutions as part of our product offerings, and we are continuing to work on our fed ramp certification, which once completed will be a substantial competitive advantage.
We also launched a green initiative policy at the start of this year.
We are focused on identifying and maximizing every opportunity.
The idea we have to manage our clients' mobile assets and technology in an environmentally safe and responsible manner and eventually reaches zero carbon footprint for our organization.
But this initiative is adjusted for wide point, our solutions like device recycling can actually help our customers achieve their ESG objectives.
And with those objectives being top of mind from many companies this could be another driver for our business.
Among our many objectives for 2021 is to continue improving these processes and all other environmental social and corporate governance or ESG aspects of our business throughout 2021.
We believe that our green initiatives represent a win win opportunity to protect our environment, while also increasing of profitable revenues.
More news will be forthcoming on this front in the quarters ahead.
We set the bar incredibly high with the operational and financial successes of the past year.
But given.
Our position and the momentum we've built heading into 2021, we are confident that we'll continue executing on our TMT strategy to drive value for our shareholders.
With that covered we are ready to take questions from our analysts and major shareholders. Operator will you. Please open the call for questions.
Our currently ladies and gentlemen, the floor is now open for questions.
You have any questions or comments. Please press star one on your phone now.
Yes that will posing a question you. Please pickup your handset it will stay on speaker phone to provide op from sound quality.
Once again, if you have any questions. Please press star one.
Your first question is coming from Amman, Gulati from B Riley.
Your line is live.
Hey, guys. Thanks for taking my question.
Can you give us an update on some of the commercial opportunities you're seeing with Phoenix given its current acquisition of tech data.
Hi, I'm on its good to hear from you.
We just heard about the tech data.
We have some relationship with tech data already we our resellers of some of their security products on our GSA schedule. So.
Bye.
The <unk> and tech data emerging I think that debt.
Present additional opportunities to utilize the reseller network.
So we have been working with <unk> and their 800.
Or so 800 plus.
Resellers and we had some.
Some successes there.
And we're optimistic that we'll be able to capture additional revenue during this.
Recognizing the reseller model.
As <unk>.
Pandemic gets under control and I think that the tech data has additional resellers as well and so we will be leveraging that hopefully when the.
The.
The deal is consummated further.
Okay. Thanks.
Given that you are in U D.
DHS contract was one of the best value basis, what opportunity is there for wide point to generate better margins on managed service provided to our member agencies like the coast Guard at both the border control.
There will be additional news forthcoming really shortly.
And.
I don't want to steal any thunder from that but I will tell you that we have captured several contracts I think if you go out to the the Pds dot Gov youll be able to see some of the task orders that are already have been awarded under the DHS contract.
Also this.
This time around we did negotiate higher rates for our managed services.
Additionally, we are looking at adding the the FEMA.
Agency for under the DHS under this contract.
Our team with the current contractor that is currently supporting FEMA.
And they are our subcontractor this time around so as the contract ends.
For that particular contractor, we foresee that contract coming under the <unk> umbrella. So we should see.
An increase in volume.
For wide.
The point, Okay and then.
In 2020.
How much of managed service revenue was the total.
Attributable to the census project.
Okay.
In terms of the the census project.
It was approximately I think of it.
At my notes here.
Kelly can you remember what the total was on that.
The percentage of the protein.
From the census project from the overall.
It was a little over.
10 per se.
Okay.
Yes.
So again, our objective is to equal or beat our profitability performance for.
Of 2020 in 2021.
We feel that that target is well within our reach and that is our goal to.
Outperform our profitability performance in 2020, I mean 2021 debt.
In 2020.
Okay and just last question from me what do you think the <unk>.
<unk> ability of growing managed services in 2021 versus 2020.
I'm, sorry say that again.
As of the probability of growing managed services.
In 2021 relative to 2020.
Yeah as I said I mean, our objective is to beat.
Beat the performance benchmark set in 2020.
The port both profitability and our managed services.
I think based upon our past performance and what we have in the sales too.
Within our.
Okay. Thank you I'll jump back in the queue.
Yeah.
Okay. Thank you. Thank you Omar.
Once again, ladies and gentlemen, if you have any questions. Please press star one on your phone now.
Your next question is coming from Barry sine from Sparta Spartan capital Securities.
Your line of life Okay.
Hey, good afternoon folks.
Hi, Barry I never ask Jason question, So Jason Let me put you on the Heartbeat of if you don't mind.
Started out talking about it I think theres been a press release on the $10 4 million in contracts in the fourth quarter of some of those.
Your new and some of our renewals if it's new it's going to represent growth of its just the renewal could you break any of that out and then we're just give us the sense of it and then also any sense I don't think there was any timing if that's over the next month, that's a big deal of it over the next 10 years not such a big deal could you kind.
The break some of that out force please.
Yes.
I'm sorry, Barry of it looked like Jason is having a little bit of trouble with us as audio so I'll try to answer that.
In terms of the that the $10 4 million.
A lot of that was re signing of current customers.
The mers at higher rates. So some of the revenue does represent net new revenue.
But and there are some new customers that some of the IBM customers, but there are.
I wouldn't say that there are huge.
So.
In terms of.
<unk> net new revenues that are coming in.
I'd say, maybe 10% of that was.
New revenue net new revenues.
Okay, and if I look at the 10-K.
Commercial revenue was down for the year and presumed.
Presumably some of that is going to be due to COVID-19, but I would've thought COVID-19 is also of benefit to you as you have more.
Workers working remotely of your <unk>.
Porting the do the devices for that remote work.
And then going forward after a flat year in commercial you have now hired a.
New.
Sales head from IBM, if you could elaborate a little bit on that and maybe you can give us the person's name.
Yes, so so so in terms of the the.
The remote workforce.
<unk>.
We have increased demand on the government side, but on the commercial side.
Right.
That we haven't seen an increase in demand from the commercial side. However.
The pandemic is starting to wind down a little bit you may have seen our press release on <unk> Com and day to come in and Zurich, and we see some of these things coming to fruition and so youll see some of the increase.
Increases happening in the next few quarters from the commercial side.
And could you elaborate a little bit on that new hire from IBM.
All of the new hire from IBM.
Our new hire from IBM.
Yes, I can releases.
Name. His name is Jim no I cannot name of the mainland.
He is one of the higher level of director over there at IBM.
Does have a book of business that he has brought to us and we feel pretty confident that the.
A lot of these opportunities will be coming to fruition this year.
Some of it and it is making our sales pipeline.
<unk> than it already is.
Kelly you May I hand, we'll put up the numbers, we will put out a press release at some point on the the debt.
Name and.
In the coming quarter I believe yes.
Okay all right.
Part of him as Jim until that.
Yeah, Jim from IBM, that's good yes.
Kelly some number of questions.
You gave a lot a lot of guide.
Guidance the type of information out there I wanted to start and talk about what you said about the gross margin.
Obviously, a huge difference in gross margin almost nothing for carrier and the very attractive margin from managed services and obviously the mix is shifting back towards managed now that census is over.
Where do your mouth, but I think you.
Told us to kind of look back prior to the census.
This error for wide point the maybe.
If I look back 2017 was 18% gross margin in 2018, 18 point too in 2019 and $17. One consolidated gross margin are those the types of levels that you were thinking that we get back.
Back to now that that census contract has worked its way through.
Yeah.
With the the mix of managed services, becoming higher two of our top line.
Should see the.
The range you just stated between 17 and 18.
Percentage, depending on the mix quarter to quarter.
And we are endeavoring to try to make that better and that's our goal to again make our.
Our profitability.
Gross profit margin is better and as we add on additional managed services.
That's the.
That's our primary goal for 2021.
One of our primary goals.
And Kelly towards the end of your comments you talked about of one two to $1 5 million number I kind of.
Wasn't paying attention. When you said that I think that you are making investments and that's going to be incremental none.
Number in G&A is out there.
No that's not is our cash.
<unk> capital investment.
Analogy.
So that is in reference to I guess you can use.
Use that information for forecasting.
Cash and expense and the cash flow.
So that capital expense not an expense item, that's going to run through the income statement.
Correct correct.
Mhm.
And lastly for Kelly, if you could elaborate a little bit on that tax item that went through the income statement.
We appreciate the big Big number and if I can kind of paraphrase GAAP. It sounds like now that you have more confidence that youre going to be consistently profitable you brought some of it for an accident.
The tax assets through the income statement, because you're now under whatever the GAAP rules are comfortable.
The ball, taking some of that deferred access asset and putting it through the income statement is that fair.
That's exactly right and we have pretty detailed information in the 10-K and then the <unk>.
Recently the allowance.
The established in.
The other often 14 after managements assessment of.
Is that the deferred tax asset will not be realizable.
The two cumulative losses.
Thats for several years to 2020.
Then we re determined that the.
In truth, we can realize these deferred tax benefit.
Primarily due to the three year cumulative.
The positive income.
So we reverse not all of it but.
The majority of.
What was in the allowance of $8.
The <unk>.
And so there is still about $2 million left on.
On the books.
Okay and my last question, Jim You gave a lot of information in terms of what Youre thinking with M&A.
Kicked a lot of tires I guess in the fourth quarter.
The came through.
<unk> got a very nice balance sheet could you give us a sense what types of parameters you're thinking of as you look at acquisitions in two different buckets first from a financial perspective would you lever up to buy something or would it be more something you can afford with your cash would.
You can do something that's dilutive now that you've you're finally consistently profitable what of your financial parameters and then your strategic parameters are you looking for something that will take you.
More global are there certain product categories, you'd like to add maybe cyber securities Youre not reselling other.
Would your products could you give us a sense of.
What you guys are thinking of so when we do see that big announcement, we have a sense of way to kind of analyze it.
Alright, so I'll take the the.
Last one first and tell you about the size of the the acquisition that we're looking for.
So in terms of companies that.
People's before our companies.
Jason areas, so that will provide us some vertical integration opportunities that will add to our capabilities both.
Anything to have to do with our trusted mobility management footprint.
That could be identity management, it could be telecom lifecycle management or anything that adds to.
We're looking capabilities also our digital billing in analytics and Theres a lot of potential.
Companies that are out there.
We're also looking for companies.
And that where we can acquire new customers so horizontal integration.
Find companies that do the similar thing that we do.
So those are the them onto our delivery platform. So we are still looking for those companies in terms of size, we would like to do a larger deal than a smaller deal.
Because.
A smaller deal will take just as much time, we are finding out.
<unk>.
We've been reviewing a lot of these companies.
And there were.
There were smaller we would say within the $10 million range and I think.
And those ranges, there's a lot of personal investment in these companies by the the founders of the company and its kind of like negotiating too.
<unk>.
Adopt their baby kind of thing and so we were finding it very difficult.
They feel that their babies are the most beautiful babies.
That exists on Earth, and so I think what we're trying to do is to move upstream a little bit may be in the range of.
$45 $50 million range.
Where we will look for.
Potential consultants to help us read out lot of the noise. That's out there. So that we don't spend so much time going through up to the due diligence process.
We're looking at in terms of 40 to 50, maybe even 60 million.
Range.
And I think that's well within our reach.
And financial parameters. It sounds like you are going to go through of the cash would be part of something like that and perhaps take on some debt and perhaps even issue additional equity.
Yes.
Potentially what we would like to do is as I said before is obviously use cash and lever up where we can and I think.
There is a potential.
We may offer equity, but we would do that as a last resort.
And would you do something that sets.
You back from a profitability or an EBITDA standpoint significantly.
Yeah.
No we are trying to avoid that as much as possible.
I'll never say never but.
We want to remain profitable.
At least on an adjusted EBITDA basis.
We do not want to back slide into nonprofit ability.
Okay. Thank you very much.
Okay. Thank you Barry.
At this time. This concludes our question and answer session. If your question was not taken please contact wide points.
<unk> IR team at W. YY at Gateway IR Dot com.
I'd now like to turn the call back to Mr. Jin Kang for his closing remarks.
Thank you operator, we appreciate everyone, taking the time to join us today.
As the operator mentioned if there were any questions that we did not answer today.
Please contact our IR team.
You can find their full contact information at the bottom of today's earnings release. Thank you again and have a great evening.
Okay.
Thank you ladies and gentlemen, this does conclude todays event you may disconnect at this time and have a wonderful day. Thank you for your participation.