SurgePays, Inc. Q2 FY2025 earnings call

• Second quarter 2025 revenue increased ~8.9% sequentially, with total revenue for the first half of 2025 at ~$22.1 million. Post-second quarter, strong accelerating momentum across all business verticals. - Lifeline wireless program via Torch brand has scaled significantly; activations increased from 20,000 in June to 57,000 in July, projecting 80,000-90,000 in September. - LinkUp Mobile fully launched in April, with 10,000 activations in April and over 20,500 in July driven by expanded retail distribution, target marketing, and competitive pricing. - Third-party prepaid wireless top-up revenue saw significant growth; $4.3 million in July 2025 and projected ~$5 million in August, with a run rate over $60 million assuming no growth. - MVNE wholesale platform is a growing revenue engine with a robust pipeline, having onboarded 3 MVNO partners, and in advanced talks with national convenience store distributors. - Proprietary point-of-sale software is the backbone of the ecosystem and a competitive advantage.

Second quarter 2025 revenue totaled $11.5 million, an increase of 8.9% sequentially compared to $10.6 million in the first quarter of 2025. Platform service revenue grew robustly to $9.2 million in the second quarter of 2025 from $2.5 million in the second quarter of 2024. Prepaid top-up revenue has shown strong growth over the past two quarters. Gross profit was a loss of $2.7 million in the second quarter of 2025 compared to a gross profit loss of $3.4 million in the second quarter of 2024. SG&A expenses decreased 45% year-over-year to $4.1 million in the second quarter of 2025. Loss from operations was $6.8 million in the second quarter of 2025 compared to $10.9 million in the second quarter of 2024. Reported net loss for the second quarter of 2025 was $7.1 million with a loss per share of negative $0.35. Cash and cash equivalents and investment balances as of June 30, 2025, were $4.4 million compared to $11.8 million as of December 31, 2024. Revenue contribution: MVNO operations through LinkUp Mobile and Torch Wireless, MVNE wholesale platform, and SurgePays point-of-sale prepaid top-ups all contributed to the revenue growth.

• Provided revenue guidance of $75 million to $90 million for 2025. - Provided revenue guidance of $225 million to $240 million for 2026.

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed, as per the Private Securities Litigation Reform Act of 1995.需参考SurgePays最新SEC filings for discussion of such risks. - Competition from other companies in the wireless and related industries could impact market share and revenue. - Regulatory risks associated with the Lifeline program, such as ongoing regulatory approvals and compliance requirements, could affect activations and operations. - Potential negative impact from leaking wholesale cost information which could be used against the company in negotiations.

Q: It looks like you've got quite an acceleration coming up in Lifeline activations. I kind of wonder what are really the key drivers that are driving that growth?

A: Thanks for the question, John. The drivers right now are in states with higher-margin ACP, similar gross margins. We've retooled the platform for Lifeline and state-specific programs with extra money. We've added inventory controls and compliance components. We're focusing on states with more profitable customers.

Q: You got Lifeline and LinkUp. How do you really balance the priorities between those 2 different businesses?

A: It goes back to management team's experience. We focus on what's known and sure thing. Lifeline has almost known revenue with direct return, so we're spending most resources there. LinkUp has a grindy market adoption.

Q: I have some more specific questions about Lifeline. So you just mentioned tents and stuff, but is most of this through your retail network or tents? And the other part of that is, what sort of commission, if any, are you paying to get each account?

A: Tents are allocated to states with extra money. There's federal $9.25 and additional state money. Commissions vary. Our margins and cost of acquisition are similar to ACP.

Q: What is your monthly cost?

A: Can't disclose wholesale numbers to avoid giving away competitive information. Our margins and cost of acquisition are similar to ACP.

Q: How is the competitive marketplace? It seems you're ramping up a lot of these new customers. Are you taking them from someone else? And is there any risk of price competition going forward?

A: There's risk of competition. We are enticing field enrollment agents with our platform. We own our own platform, which allows us to quickly address issues like regulatory requirements. Our team in El Salvador and own platform are differentiators.