Surgepays Inc ((SURG)) has held its Q4 earnings call. Read on for the main highlights of the call.
SurgePays Inc. recently held its earnings call, revealing a mixed sentiment among its stakeholders. While the company celebrated strategic advancements such as the nationwide launch of Linco Mobile and a successful integration with AT&T, these positives were overshadowed by significant financial challenges. The call highlighted a major revenue decline, a substantial net loss, and increased operational costs, primarily due to the shutdown of the ACP program and other factors.
Launch of Linco Mobile Nationwide
SurgePays announced the nationwide launch of Linco Mobile, its prepaid brand, during the earnings call. This strategic move is expected to accelerate growth, as the company aims to capture a larger market share in the prepaid mobile sector.
New Revenue Engine as a Mobile Virtual Network Enabler (MVNE)
The company has unlocked a new revenue stream by becoming a Mobile Virtual Network Enabler (MVNE). This initiative allows SurgePays to provide wireless infrastructure to other companies, which is anticipated to drive significant cash flow and bolster the company’s financial standing.
Successful Integration with AT&T
SurgePays successfully completed a multiyear agreement with AT&T, providing its customers with nationwide 4G LTE and 5G coverage. The initial soft launch exceeded expectations, with 30,000 SIMs deployed, marking a significant milestone in the company’s expansion efforts.
300% Revenue Growth in Top-Up Platform
The company’s point of sale software platform experienced over 300% revenue growth from Q1 to Q4 in 2024. This impressive growth highlights the platform’s effectiveness in boosting activations and transactions, contributing positively to the company’s revenue streams.
Significant Revenue Decline
Despite the positive developments, SurgePays faced a significant revenue decline of 56% in 2024, dropping to $60.9 million from $137.1 million in 2023. This decline was primarily attributed to the shutdown of the ACP federal funding, which had a notable impact on the company’s financial performance.
Gross Loss and Increased SG&A Expenses
The company reported a gross loss of $14.3 million in 2024, a stark contrast to the $35.6 million gross profit in 2023. Additionally, SG&A expenses increased by 57% year over year, driven by non-cash stock compensation and contractor fees, further straining the company’s financial resources.
Net Loss and Operating Loss
SurgePays experienced a net loss of $45.7 million and a loss per share of $2.39 in 2024. The loss from operations was $41.8 million, compared to an $18.9 million profit in 2023, highlighting the financial challenges the company faced during the year.
Impact of ACP Shutdown
The shutdown of the ACP program had a significant adverse impact on SurgePays’ revenue and profitability, contributing to the financial losses in 2024. This development underscored the company’s dependency on the program and the need for diversification in revenue streams.
Forward-Looking Guidance
Looking ahead, SurgePays outlined its strategic vision and financial guidance for the upcoming year. The company anticipates over $200 million in revenue for the next twelve months, starting from April 1, 2025. SurgePays plans to leverage its position as an MVNE and its partnerships, particularly with AT&T, to scale operations and drive growth. The company expects to ship 250,000 to 300,000 SIMs monthly, supported by its expanded retail network of nearly 9,000 stores. Despite the challenges faced in 2024, SurgePays remains confident in achieving positive cash flow by exiting 2025, driven by diversified revenue streams from their wireless and POS segments.
In conclusion, SurgePays Inc.’s earnings call presented a mixed bag of strategic advancements and financial hurdles. While the company is poised for growth with its new initiatives and partnerships, the significant revenue decline and financial losses underscore the challenges it faces. However, with a strong forward-looking strategy, SurgePays aims to overcome these obstacles and achieve substantial growth in the coming year.