Surgepays Inc (SURG) Q1 2024 Earnings Call Transcript Highlights: Navigating Challenges with ...

GuruFocus Research
4 min read

In This Article:

  • Revenue: Q1 2024 revenue was $31.4 million, a decrease of 10% from $34.8 million in Q1 2023.

  • Net Income: Q1 2024 net income was $1.2 million, down from $4.5 million in Q1 2023.

  • Earnings Per Share (EPS): Q1 2024 EPS was $0.07, compared to $0.32 in Q1 2023.

  • Gross Profit: Increased 6% to $8.2 million in Q1 2024 from $7.7 million in Q1 2023.

  • Gross Margin: Improved to 26% in Q1 2024 from 22.1% in Q1 2023.

  • Cash Balance: As of March 31, 2024, cash balance was $42.9 million, significantly up from $14.6 million at year-end 2023.

Release Date: May 13, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Surgepays Inc has successfully launched its own prepaid wireless company, LinkUp Mobile, which is expected to significantly contribute to revenue growth.

  • The company has strategically shifted focus to more profitable and scalable business verticals, leading to a 6% increase in gross profit and a 4% increase in gross margin.

  • Surgepays Inc has a strong cash position with approximately $43 million in the bank, providing ample liquidity for future growth and potential accretive acquisitions.

  • The company has established partnerships with over nine master nationwide dealers for the distribution of LinkUp Mobile and prepaid top-up business, enhancing its market reach.

  • Despite uncertainties around ACP funding, Surgepays Inc is proactively diversifying its revenue streams and is not solely reliant on ACP for its business operations.

Negative Points

  • Revenue for Q1 2024 decreased by 10% year-over-year due to operational changes and the discontinuation of the lead generation services.

  • The company faces significant uncertainty regarding the continuation of funding for the Affordable Connectivity Program (ACP), which could impact future revenues.

  • SG&A expenses increased by 115% year-over-year, primarily due to non-cash stock compensation and additional expenses related to acquisitions.

  • The company experienced a decrease in net income from operations, dropping from $4.6 million in Q1 2023 to $1.8 million in Q1 2024.

  • The ACP stopped accepting new subscribers as of February 2024, which could potentially reduce the customer base and impact revenue growth.

Q & A Highlights

Q: What is the current status of the ACP funding and its impact on SurgePays? A: (Brian Cox - CEO) The ACP funding is pending government approval, which is uncertain but hopeful. SurgePays is not solely reliant on ACP; they have developed a strategic plan to replace or exceed ACP revenue within 12 months through initiatives like the launch of LinkUp Mobile and enhancing their prepaid wireless top-up business.

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