High Wire Reports Q2 2024 Revenue up 14% to $1.9 Million; Net Income of $4.8 Million
Rhea-AI Summary
High Wire Networks (OTCQB: HWNI) reported Q2 2024 results with revenue up 14% to $1.9 million and net income of $4.8 million. Key highlights include:
- Sale of technology enablement services business for $11.2 million, used to reduce debt by $5 million
- Overwatch managed cybersecurity revenue increased 24% to $1.05 million
- Gross margin expanded to 40.8% from 25.4% year-over-year
- Total contract value for Overwatch reached $10.4 million, up from $6.0 million last year
- Integrated new SIEM system into Overwatch MXDR services
- Appointed Edward Vasko as strategic advisor for Overwatch growth
The company is focusing on scaling its higher-margin Overwatch cybersecurity business, aiming to double total contract value in the near term. Management expects continued margin improvement and operational profitability for Overwatch by Q4 2024.
Positive
- Revenue increased 14% to $1.9 million in Q2 2024
- Overwatch managed cybersecurity revenue grew 24% to $1.05 million
- Gross margin expanded to 40.8% from 25.4% year-over-year
- Total contract value for Overwatch reached $10.4 million, up from $6.0 million last year
- Reduced debt by approximately $5 million from sale of technology enablement business
- Net income of $4.8 million or $0.02 per diluted share in Q2 2024
- Expecting Overwatch to become operationally profitable by Q4 2024
Negative
- Net loss from continuing operations of $3.1 million in Q2 2024
- Total operating expenses increased 10% to $4.9 million year-over-year
- Net loss from continuing operations of $5.4 million in first half of 2024
BATAVIA, Ill., Aug. 23, 2024 (GLOBE NEWSWIRE) -- High Wire Networks, Inc. (OTCQB: HWNI), a leading global provider of managed cybersecurity, reported results for continuing operations for the three months and six months ended June 30, 2024. All comparisons are to the same year-ago period unless otherwise noted.
Q2 2024 Operational Highlights
- On June 27, 2024, High Wire sold its technology enablement services business in a transaction valued at
$11.2 million . - Proceeds from the sales of the technology enablement business were used to reduce debt by approximately
$5 million , including eliminating approximately$1.1 million in convertible debentures,$3.2 million in notes payable, and a factoring facility. The company was also able to restructure the remaining debt of$3.1 million , including a reduction of$1.3 million in principle due as well as extension of the payment terms, thereby preserving cash on the balance sheet. - Awarded a major new contract to deliver High Wire’s Overwatch OT/IoT Security™ for a U.S. health system comprised of more than 25 hospitals and clinics and dozens of ancillary care facilities.
- Integrated new Security Information Event Management (SIEM) system into Overwatch managed cybersecurity services, enhancing Overwatch Managed Extended Detection and Response (MXDR).
- Appointed Edward Vasko, CISSP, as strategic advisor to help accelerate the growth and development of the company’s Overwatch managed cybersecurity services.
- Chief marketing officer, Susanna Song, was named a 2024 Women of the Channel Power 100 Solution Provider—an elite subset of prominent leaders selected from the CRN® 2024 Women of the Channel list by CRN®, a brand of The Channel Company.
Q2 2024 Financial Highlights
- Revenue increased
14% to$1.9 million , primarily due to growth in the company’s Overwatch managed cybersecurity business. - Revenue from Overwatch increased
24% to$1.05 million . - Gross margin expanded to
40.8% from25.4% in the same year-ago quarter, primarily due to a greater mix of higher margin recurring revenue, particularly from Overwatch. - Net loss from continuing operations totaled
$3.1 million or$(0.01) per diluted share, compared to net loss of$4.7 million or$(0.02) per diluted share in the same year-ago quarter. - Net income attributable to common shareholders was
$4.8 million or$0.02 diluted share, as compared to a loss of$4.1 million or$(0.02) per diluted share in the same year-ago quarter. - Total contract value (TCV) for Overwatch managed cybersecurity services totaled
$10.4 million at June 30, 2024, compared to$6.0 million at June 30, 2023 (see definition of TCV, below).
Management Commentary
“In Q2, we continued to transform our company to better align its operations with the best opportunities for growth and profitability, particularly under a more scalable model where we can leverage proprietary technology for greater profitability,” stated High Wire CEO, Mark Porter.
“Our pursuit of this strategy led to the sale of our technology services business at the end of the quarter. This further streamlined our operations and enabled us to better focus on delivering our best-in-class managed cybersecurity services as provided by our Overwatch division. This business, with its long-term, renewing contracts, provides a more reliable and predictable revenue stream. Such revenue models also garner higher market valuations that enhance shareholder value.
“We have also now moved from defense to offense, no longer being subject to today’s sky-high cost of capital and burdensome financial instruments. We believe we can now better scale and potentially double again the total contract value of our managed cybersecurity engagements over the near term.
“Our cybersecurity pipeline continues to strengthen, driven by the growth of our global portfolio of channel partners and their clients, including 23 new partners in the first half of the year. Many of these new partners are larger than existing partners, with more clients and wider industry reach.
“As the result of this strengthening pipeline, our Overwatch managed cybersecurity revenue grew
“From the sale proceeds of our IT business, we have also significantly reduced most of our outstanding debt and were able to restructure the remaining amount, cutting it by approximately
“We have transitioned to a key technology partner, Fluency Security, a leading SIEM provider that leverages proprietary streaming analytics. Their powerful and adaptable behavioral security solution is second-to-none yet ties in seamlessly with our Overwatch cybersecurity managed detection and response services and security orchestration automation response (or SOAR).
“This integrated solution delivers unmatched managed cybersecurity for our growing global portfolio of channel partners and end-clients. We look forward to announcing additional details regarding this partnership over the next few weeks.
“Also, in the second quarter we secured substantial renewal contracts and add-on services for Overwatch. In fact, an end-customer increased spend by 4.5x for the renewal of its contract for our enhanced MXDR platform hosted by Overwatch which delivers faster detection and response capability.
We have so far transitioned about
“We see a significant leverage opportunity for converting additional users to this MXDR platform. Given that only approximately
“Our SVC telecom subsidiary’s gross profit has also improved after we migrated to a new high-performing switch platform. We anticipate SVC to become profitable in the current third quarter and generate significant cash flow for the company.
“Looking ahead, we expect our margins to continue improving due to the scalability of our operational model. By leveraging our proprietary AI-driven cybersecurity technology, with every new customer we become incrementally more profitable. As we continue to downsize our overhead, we expect the anticipated growth in revenue to result in Overwatch becoming operationally profitable no later than the fourth quarter of this year.
“Given that the transition of our IT services divestiture is now virtually complete, our management team can now focus all of their efforts on growing Overwatch. Our strong cash position and ability to borrow at more reasonable rates as needed also positions us well for the many M&A opportunities we are seeing in the challenging liquidity environment for smaller cybersecurity companies.
“Now past the halfway mark through the third quarter, we are seeing our recurring revenue stream and margin improving, with this keeping us on track for another year of record growth in 2024 for our continuing operations along with increased value delivered for all stakeholders.”
Q2 2024 Financial Summary
Revenue in the second quarter of 2024 totaled
Gross profit totaled
Total operating expenses increased
Net loss from continuing operations in the second quarter of 2024 totaled
Net income attributable to High Wire Networks common shareholders in the second quarter of 2024 totaled
First Half of 2024 Financial Summary
Revenue in the first half of 2024 totaled
Gross profit totaled
Total operating expenses increased
Net loss from continuing operations in the first half of 2024 totaled
Net income attributable to High Wire Networks common shareholders in the first half of 2024 totaled
About High Wire Networks
High Wire Networks, Inc. (OTCQB: HWNI) is a fast-growing, award-winning global provider of managed cybersecurity. Through over 230 channel partners, it delivers trusted managed services for more than 1,100 managed security customers worldwide. End-customers include Fortune 500 companies and many of the nation’s largest government agencies. Its U.S. based 24/7 Network Operations Center and Security Operations Center is located in Chicago.
High Wire was ranked by Frost & Sullivan as a Top 12 Managed Security Service Provider in the Americas for 2023. It was also named to CRN’s MSP 500 and Elite 150 lists of the nation’s top IT managed service providers for 2023 and 2024.
Learn more at HighWireNetworks.com. Follow the company on X, 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.
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 Securities and Exchange Commission. Actual results may differ materially from those indicated by such forward-looking statements. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statement contained herein to reflect any change in the company's expectations with regard thereto or any change in events, conditions or circumstances upon which any statement is based except as required by applicable law and regulations.
High Wire Contact
Susanna Song
Chief Marketing Officer
High Wire Networks
Tel +1 (952) 974-4000
Email contact
Investor & Media Relations:
Ronald Both or Grant Stude
CMA Investor & Media Relations
Tel +1 (949) 432-7557
Email contact
| High Wire Networks, Inc. Condensed consolidated statements of operations (Unaudited) | ||||||||||||||||
| For the three months ended | For the six months ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| Revenue | $ | 1,937,618 | $ | 1,699,542 | $ | 3,999,121 | $ | 3,648,640 | ||||||||
| Operating expenses: | ||||||||||||||||
| Cost of revenue | 1,146,444 | 1,267,193 | 2,268,462 | 2,627,214 | ||||||||||||
| Depreciation and amortization | 233,523 | 214,743 | 421,861 | 415,890 | ||||||||||||
| Salaries and wages | 2,012,884 | 1,183,807 | 3,333,103 | 1,888,697 | ||||||||||||
| General and administrative | 1,548,481 | 1,831,098 | 2,506,734 | 3,496,339 | ||||||||||||
| Total operating expenses | 4,941,332 | 4,496,841 | 8,530,160 | 8,428,140 | ||||||||||||
| Loss from operations | (3,003,714 | ) | (2,797,299 | ) | (4,531,039 | ) | (4,779,500 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (744,037 | ) | (402,401 | ) | (987,073 | ) | (588,053 | ) | ||||||||
| Amortization of debt discounts | (423,876 | ) | (328,828 | ) | (856,810 | ) | (837,392 | ) | ||||||||
| Warrant expense | (19,140 | ) | - | (233,877 | ) | - | ||||||||||
| (Loss) gain on change in fair value of warrant liabilities | (12,200 | ) | - | 229,793 | - | |||||||||||
| Gain on settlement of debt | 219,330 | - | 219,330 | - | ||||||||||||
| Exchange loss | (12,974 | ) | (6,573 | ) | (27,862 | ) | (8,029 | ) | ||||||||
| Gain on extinguishment of warrant liabilities | 921,422 | - | 921,422 | - | ||||||||||||
| Penalty fee | - | - | (100,000 | ) | - | |||||||||||
| Liquidated damages related to escrow shares | - | (1,222,000 | ) | - | (1,222,000 | ) | ||||||||||
| Gain on change in fair value of derivative liabilities | - | - | - | 3,140,404 | ||||||||||||
| Gain on extinguishment of derivatives | - | - | - | 1,692,232 | ||||||||||||
| Other income | - | 37,500 | - | 37,500 | ||||||||||||
| Total other (expense) income | (71,475 | ) | (1,922,302 | ) | (835,077 | ) | 2,214,662 | |||||||||
| Net loss from continuing operations before income taxes | (3,075,189 | ) | (4,719,601 | ) | (5,366,116 | ) | (2,564,838 | ) | ||||||||
| Provision for income taxes | - | - | - | - | ||||||||||||
| Net loss from continuing operations | (3,075,189 | ) | (4,719,601 | ) | (5,366,116 | ) | (2,564,838 | ) | ||||||||
| Net income (loss) from discontinued operations, net of tax | 7,860,514 | 577,606 | 9,737,003 | (1,408,848 | ) | |||||||||||
| Net income (loss) attributable to High Wire Networks, Inc. common shareholders | $ | 4,785,325 | $ | (4,141,995 | ) | $ | 4,370,887 | $ | (3,973,686 | ) | ||||||
| Income (loss) per share attributable to High Wire Networks, Inc. common shareholders, basic: | ||||||||||||||||
| Net loss from continuing operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Net income (loss) from discontinued operations, net of taxes | $ | 0.03 | 0.00 | $ | 0.04 | $ | (0.01 | ) | ||||||||
| Net income (loss) per share | $ | 0.02 | $ | (0.02 | ) | $ | 0.02 | $ | (0.02 | ) | ||||||
| Income (loss) per share attributable to High Wire Networks, Inc. common shareholders, diluted: | ||||||||||||||||
| Net loss from continuing operations | $ | (0.01 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.01 | ) | ||||
| Net income (loss) from discontinued operations, net of taxes | $ | 0.03 | 0.00 | $ | 0.04 | $ | (0.01 | ) | ||||||||
| Net income (loss) per share | $ | 0.02 | $ | (0.02 | ) | $ | 0.02 | $ | (0.02 | ) | ||||||
| Weighted average common shares outstanding | ||||||||||||||||
| Basic | 240,620,455 | 232,300,415 | 240,579,600 | 214,984,254 | ||||||||||||
| Diluted | 272,051,584 | 232,300,415 | 272,010,729 | 214,984,254 | ||||||||||||
| High Wire Networks, Inc. Condensed consolidated balance sheets | ||||||||
| June 30, | December 31, | |||||||
| 2024 | 2023 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash | $ | 4,185,310 | $ | 328,282 | ||||
| Accounts receivable, net of allowances of | 1,374,335 | 670,388 | ||||||
| Prepaid expenses and other current assets | 213,795 | 117,030 | ||||||
| Current assets of discontinued operations | - | 1,629,011 | ||||||
| Total current assets | 5,773,440 | 2,744,711 | ||||||
| Property and equipment, net of accumulated depreciation of | 913,325 | 1,026,293 | ||||||
| Goodwill | 1,812,818 | 3,162,499 | ||||||
| Intangible assets, net of accumulated amortization of | 3,202,861 | 3,620,256 | ||||||
| Operating lease right-of-use assets | 226,763 | 277,995 | ||||||
| Total assets | $ | 11,929,207 | $ | 10,831,754 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | 5,685,998 | 5,189,996 | ||||||
| Contract liabilities | 364,930 | 80,819 | ||||||
| Current portion of loans payable to related parties, net of debt discount of | 116,556 | 254,032 | ||||||
| Current portion of loans payable, net of debt discount of | 1,432,666 | 2,995,803 | ||||||
| Current portion of convertible debentures, net of debt discount of | 634,484 | 326,005 | ||||||
| Factor financing | - | 1,361,656 | ||||||
| Warrant liabilities | 122,000 | 833,615 | ||||||
| Operating lease liabilities, current portion | 96,853 | 89,318 | ||||||
| Current liabilities of discontinued operations | 505,782 | 1,529,286 | ||||||
| Total current liabilities | 8,959,269 | 12,660,530 | ||||||
| Long-term liabilities: | ||||||||
| Loans payable to related parties, net of current portion, net of debt discount of | 273,319 | 44,703 | ||||||
| Loans payable, net of current portion, net of debt discount of | 95,750 | - | ||||||
| Convertible debentures, net of current portion, net of debt discount of | - | 685,161 | ||||||
| Operating lease liabilities, net of current portion | 134,995 | 190,989 | ||||||
| Total long-term liabilities | 504,064 | 920,853 | ||||||
| Total liabilities | 9,463,333 | 13,581,383 | ||||||
| Commitments and contingencies | ||||||||
| Series B preferred stock; | - | - | ||||||
| Total mezzanine equity | - | - | ||||||
| Stockholders’ deficit: | ||||||||
| Common stock; | 2,406 | 2,399 | ||||||
| Series D preferred stock; | 7,745,643 | 7,745,643 | ||||||
| Series E preferred stock; | 4,869,434 | 4,869,434 | ||||||
| Additional paid-in capital | 32,022,974 | 31,178,365 | ||||||
| Accumulated deficit | (42,174,583 | ) | (46,545,470 | ) | ||||
| Total stockholders’ deficit | 2,465,874 | (2,749,629 | ) | |||||
| Total liabilities and stockholders’ deficit | $ | 11,929,207 | $ | 10,831,754 | ||||
FAQ
What was High Wire Networks' Q2 2024 revenue?
How much did Overwatch managed cybersecurity revenue grow in Q2 2024?
What was High Wire Networks' gross margin in Q2 2024?
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When does High Wire Networks expect Overwatch to become operationally profitable?
