SurgePays, Inc. Q3 FY2024 earnings call

• Post-ACP strategy: Channeled energy into core mission post-ACP end, aiming for cash flow positive. Migrated ACP customers to Lifeline and focused on growth initiatives.
• MVNO segment: Partnered with Lifeline provider to migrate 280,000 subscribers, self-funded MVNO operations temporarily, and expects Lifeline subscribers to outpace ACP totals.
• LinkUp Mobile: Secured direct carrier connection, plans full scale rollout in early Q1 2025, expects to generate hundreds of thousands of new subscribers.
• Prepaid platform: Prepaid top ups platform saw monthly revenue surge nearly 400% to over $2.2 million, trend expected to continue.
• ClearLine POS SaaS: Advanced platform redefines in-store experience, ready for market deployment, expected to contribute to revenues by Q1 2025.
• El Salvador center: Opened dedicated sales and operations center, bringing 100+ team members in-house for growth and product launches.

SurgePays operates through two primary business segments. The MVNO segment, including LinkUp Mobile, had revenue of $23,609 in the third quarter of 2024. The platform services segment, which includes prepaid top ups, software, and ClearLine Point of Sale SaaS, saw sales surge 69% to $4.7 million. The prepaid platform service segment's monthly revenue reached over $2.2 million, growing nearly 400% in five months. ClearLine Point of Sale SaaS is expected to contribute meaningfully to consolidated revenues by Q1 2025.

• Anticipates Lifeline subscribers to reach closer to 200,000 by end of year, expecting to get closer to cash flow breakeven.
• LinkUp Mobile to have full scale rollout in early Q1 2025, expected to generate hundreds of thousands of new subscribers.
• ClearLine Point of Sale SaaS expected to contribute meaningfully to consolidated revenues by Q1 2025.
• Focus on migrating ACP customers to Lifeline and leveraging LinkUp Mobile and ClearLine for growth.

• Uncertainty around ACP resumption.
• Cost and efficiency of migrating customers to Lifeline.
• Market competition in telecommunications and fintech sectors.

Q: Can you give more details on renewed expectations about getting back to breakeven, conversion efficiency to Lifeline, and path to cash flow breakeven?

A: Brian Cox stated that between 2,000 - 3,000 customers migrate to Lifeline daily, over 50% of initial contacts convert, over 70,000 enrolled on Lifeline, aims to get to 200,000 by end of year, and expects Lifeline to get close to cash flow breakeven.

Q: Any other guidance going forward, what to look for?

A: Brian Cox mentioned shifting messaging to focus on subscribers from subsidized and prepaid wireless, point of sale software as a service, and expecting incremental revenue increases and profitability.

Q: About number of convenience stores, revenue from prepaid, top ups expectations?

A: Currently at 8,000 - 9,000 convenience stores, prepaid revenue mostly from top ups, $2.2 million run rate, expects over $3 million in December, $10 - 12 million by end of 2025.

Q: How many qualify for Lifeline compared to ACP, cost per month?

A: Lifeline is similar to ACP in qualifying people (receiving government assistance), cost per month for service related to device, commission, but new deal with direct carrier reduces cost below $5.

Q: Sense of optimism from end customers, political impact?

A: Brian Cox mentioned market sits below economic wave, political change with J.D. Vance's pro-connectivity stance, optimism around enhanced Lifeline product potentially increasing subsidy amounts.