Annualized Recurring Revenue at Record
Overwatch Managed Cybersecurity TCV up 53% Sequentially to Record
The company plans to report its full official results for the third quarter and nine months following a restatement of its first and second quarter 2023 results which will remove a non-cash derivative liability. The restatements are anticipated to have a substantial positive effect on the company’s net income for these periods as it prepares to qualify for an uplist to a national exchange. The company anticipates filing the restatements before the end of this month.
Preliminary Financial Results
- Third quarter 2023 revenue increased 1% sequentially to
$6.0 million and declined 5% from the same year-ago quarter. The slowed growth and decline was primarily due to an overall industry slowdown and customer delays in the deployment of major multi-site Wi-Fi upgrade projects, which was partially offset by growth in recurring revenue from long-term contracts. Market conditions have improved in the current fourth quarter. - First nine months revenue increased 20% to
$22.1 million . The increase was primarily due to an increase in recurring revenue from new customers, along with an increase in project revenue. - Monthly recurring revenue increased 30% from the previous quarter to a record
$1.3 million or$15.6 million on an annualized basis. - Total contract value (TCV) for Overwatch managed cybersecurity services totaled a record
$9.5 million at quarter end, up 58% from$6.0 million at the end of the previous quarter (see TCV defined below). - Project delivery backlog of the company’s technology enablement business totaled
$7.0 million at quarter end and is currently at$11.5 million (see total project delivery backlog definition below). - Secured
$1.15 million of a$5 million convertible note offering which was announced onSeptember 29, 2023 and has now closed. Buyers of the notes included two institutional investors, along with High Wire’s CEO who purchased$70,000 of the note offering. - Implemented successful cost-cutting and operational optimization program that reduced expenses by more than
$3 million on an annualized basis and enabled the paydown of$5 million in debt. - Technology services sales pipeline totaled
$102 million at quarter-end and has since expanded to currently total$105 million .
Q3 2023 Operational Highlights
- Secured
$1 million mobile Wi-Fi upgrade project for a department store chain through a premier channel partner. Project involves installation of 6,000 new or upgraded Wi-Fi access points across more than 100 store locations nationwide. - Named to MSSP Alert’s annual list of the world’s Top 250 Managed Security Services Providers (MSSPs).
- Formed Overwatch CyberLab™ division. The division represents the company’s new cybersecurity technology platform that will serve as the incubator and IP manager for its cybersecurity product research and development.
- Chief marketing officer,
Susanna Song , was named to the inaugural 2023 Inclusive Channel Leaders list by CRN® magazine.
Subsequent Event
On
Management Commentary
“We had a strong first nine months of the year, with revenue up 20% to
“Revenue was up only slightly on a sequential quarterly basis primarily due to customer delays with two major multi-site, multi-tech projects we announced earlier this year. These national retailers are currently focused on the busy holiday shopping season, so the completion of these projects has been pushed out to early next year. Combined with improving industry conditions, we anticipate this will make for a particularly strong first quarter.
“Our tech enablement business has also been impacted by a fairly sudden industry-wide contraction that intensified in September despite the underlying need for technology upgrades and better network security. We believe this was due to inflationary factors and especially high interest rates for financing such projects. Despite these economic headwinds, we believe we still outperformed the industry in the third quarter.
“In light of these challenges, we have refocused on higher margin opportunities and making our operations more streamlined and cost efficient. This included suspending the operations of our
“We also completed the overhaul and virtualization of our
“All together, we believe our more cost-efficient operating structure puts us on track to close in on positive adjusted EBITDA in the first quarter of next year. We are also seeing strong indications that the environment for our tech enablement business is rebounding, particularly with our project delivery backlog growing from
“While the growth in our cybersecurity business slowed slightly over the first two quarters of 2023, in the third quarter we saw a step up in activity in this higher margin segment of our business. This was reflected in the sequential 30% growth in our monthly recurring revenue and especially the 50% growth in Overwatch TCV—both reaching record levels. We see this momentum continuing into the current quarter and new year, leading to new wins and productive partnerships.
“This includes our recent announcement of a new partnership with Exclusive Networks, a global leader in cybersecurity. Exclusive will distribute our Overwatch Managed EDR to its 2,500 clients, with this solution powered by industry-leading technology provided by SentinelOne. This major win is another indicator of the growing strength and reach of our Overwatch cybersecurity platform and the valuable capabilities it delivers to our channel partner network.
“We continue to work toward a listing on a national exchange. We anticipate such a listing will strengthen our ability to make complementary acquisitions, while elevating the confidence of our channel partners and end customers. Combined with the fine-tuning of our operations, new wins and the expansion of our recurring revenue streams, we see the listing enabling greater shareholder value over the long term.
“While it is unfortunate that the process of restating our first and second quarter of the year has delayed the full reporting of our third quarter results, we anticipate the elimination of the derivative liability to have a substantial positive effect on our net income for these periods as we prepare to qualify for the uplist to a national exchange.”
About
High Wire has 125 full-time employees worldwide and four
High Wire was recently ranked by
Learn more at HighWireNetworks.com. Follow the company on Twitter, view its extensive video series on YouTube or connect on LinkedIn.
Total Contract Value
The company defines Total Contract Value (TCV) as the aggregate monetary value of its customer contracts remaining under the duration of annual or multi-year contracts, including associated one-time fees, such as onboarding and training fees.
Total Project Delivery Backlog
The company defines Total Project Delivery Backlog as the aggregate monetary value of customer contracts remaining for deployment by the company’s technology enablement services which are project based, such as for technology installations, upgrades and related training.
About the Use of Non-GAAP Measures
The company believes that the use of adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, is helpful for an investor to assess the performance of the company. The company defines adjusted EBITDA as income (loss) before interest, taxes, depreciation, amortization, acquisition expenses, impairment of long-lived assets, gain/loss on change of fair value of derivatives, amortization of discounts on debt, financing costs, fair value adjustments from purchase accounting, stock-based compensation expense, liquidity damages related to escrow shares and expenses related to discontinued operations.
Adjusted EBITDA is not a measurement of financial performance under generally accepted accounting principles in
The company’s adjusted EBITDA measure may not provide information that is directly comparable to that provided by other companies in its industry, as other companies in the company’s industry may calculate non-GAAP financial results differently, particularly related to non-recurring, unusual items. The company’s adjusted EBITDA is not a measurement of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The company does not consider adjusted EBITDA to be a substitute for, or superior to, the information provided by GAAP financial results.
Forward-Looking Statements
The above news release contains forward-looking statements. The statements contained in this document that are not statements of historical fact, including but not limited to, statements identified by the use of terms such as "anticipate," "appear," "believe," "could," "estimate," "expect," "hope," "indicate," "intend," "likely," "may," "might," "plan," "potential," "project," "seek," "should," "will," "would," and other variations or negative expressions of these terms, including statements related to expected market trends and the Company's performance, are all "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and involve a number of risks and uncertainties. These statements are based on assumptions that management believes are reasonable based on currently available information, and include statements regarding the intent, belief or current expectations of the Company and its management. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performances and are subject to a wide range of external factors, uncertainties, business risks, and other risks identified in filings made by the company with the
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