SurgePays Announces Fourth Quarter and Full Year 2023 Financial Results
- Record revenue of $137.1 million in 2023, a 13% increase over the previous year.
- EBITDA for 2023 stood at $22.3 million, showcasing strong financial performance.
- Net income reached $20.6 million in 2023, a substantial improvement from the prior year.
- Gross profit margin surged to 26%, indicating enhanced profitability.
- Acquisition of Clearline Mobile and upcoming launch of Linkup Mobile to bolster product offerings.
- Strategic focus on expanding sales channels and distribution for sustained growth.
- Potential expansion in non-subsidized MVNO business and Comprehensive Platform Services.
- Positive outlook despite uncertainties surrounding ACP program funding.
- Management's successful execution of growth strategy reflected in financial results.
- None.
Insights
The reported EBITDA of $22.3 million and net income of $20.6 million signify robust profitability for SurgePays, especially when contrasted with the previous year's net loss of $0.7 million. The earnings per share (EPS) increase to $1.39 is a strong indicator of shareholder value creation and the gross profit margin improvement to 26% suggests enhanced operational efficiency. However, the quarterly revenue decline of 11% warrants scrutiny, as it may indicate volatility or challenges in sustaining growth momentum.
It's essential to assess the sustainability of these financial results, particularly the reliance on the Affordable Connectivity Program (ACP) for revenue generation. The potential discontinuation of ACP funding could necessitate a strategic pivot to non-subsidized business models. Investors should evaluate the company's contingency plans and the feasibility of its growth strategy without ACP contributions.
SurgePays' focus on the underbanked and underserved markets through its suite of prepaid wireless and financial technology products positions it within a niche yet significant segment. The acquisition of Clearline Mobile and the integration with SurgePays software could enhance the company's competitive edge in the convenience store space.
However, the market for services targeting the underbanked is highly competitive and sensitive to regulatory changes. The reliance on programs like the ACP highlights the need for diversification. The planned launch of Linkup Mobile and the expansion of Comprehensive Platform Services are strategic moves that could broaden the company's revenue base and reduce dependency on government-funded programs.
The telecommunications sector is rapidly evolving and SurgePays' strategy to integrate technology like customer-facing touchscreen tablets in convenience stores is innovative. This approach could disrupt traditional retail experiences for prepaid wireless services. The expansion of the ACP subscriber base and the efficiency in customer acquisition are pivotal for the company's growth in the subsidized mobile broadband market.
Yet, the anticipated depletion of ACP funds by April 2024 presents a significant risk. The company's adaptability to potentially shifting market conditions and its ability to transition smoothly to a non-subsidized Mobile Virtual Network Operator (MVNO) model will be critical for its long-term success.
Company Delivers Record Financial Results with EBITDA of
- 2023 Revenue of
$137.1 million - 2023 Net income of
$20.6 million - 2023
$22.3 million EBITDA - 2023 EPS of
$1.39 - Gross profit margin increased to
26%
BARTLETT, Tenn., March 12, 2024 (GLOBE NEWSWIRE) -- SurgePays, Inc. (Nasdaq: SURG) (“SurgePays” or the “Company”), a technology and telecom company focused on the underbanked and underserved, today announced its financial results for the fourth quarter and full year ended December 31, 2023.
Full Year 2023 and Fourth Quarter Highlights
- Revenue of
$137.1 million for the full year 2023 and$32.3 million for the fourth quarter, changes of13% and -11% over the prior year periods, respectively. - Gross profit of
$35.6 million for the full year 2023 and$7.4 million for the fourth quarter, increases of165% and11% over the prior year periods, respectively. - Net income of
$20.6 million for the full year 2023 and$3.0 million for the fourth quarter.
Management Commentary
Chairman and CEO Brian Cox commented on the year’s results, “2023 was an excellent year for SurgePays. Our management team has done an outstanding job executing our growth strategy and delivered record financial results. Compounding profits, execution, and momentum from 2023, in conjunction with our successful raise in January and subsequent warrants exercised, have put us in the best financial position ever, with over
The cumulative impact of our team's efforts has resulted in expanded opportunities and produced a year of solid profitability. We envision utilizing convenience stores and bodegas to become one of the largest distributors of unbanked financial technology and prepaid wireless services to the underbanked in the country. We believe we now have the product suite and war chest to make this vision a reality.
Additionally, in 2023, we acquired Clearline Mobile to integrate our SurgePays software with customer-facing touchscreen tablets next to convenience store registers. We feel this technology, combined with the planned nationwide launch of Linkup Mobile in the second quarter of 2024, our own prepaid wireless company, gives us a competitive advantage that separates us from the competition in terms of our suite of products and services, in-store marketing strategy, and support team. Our focus is now on building in-house and indirect sales channels and distribution.
In 2023, we produced
Management Discussion & Analysis
SurgePhone wireless companies provide mobile broadband (wireless internet service) to low-income consumers nationwide. SurgePays' technology-layered platform empowers convenience store clerks to provide a suite of prepaid wireless and financial technology products to underbanked customers. We are attempting to corner the underserved market directly to the consumers and in the stores where they shop.
During the year ended December 31, 2023, overall revenue totaled
Operating income improved to
Net income for 2023 was
EBITDA increased to
Fourth Quarter and Full Year 2023 Results Conference Call
SurgePays management will host a webcast at 5 p.m. ET / 2 p.m. PT to discuss these results.
The live webcast of the call can be accessed at 4Q23 Webcast Link, as well as on the company’s investor relations website at ir.surgepays.com.
Telephone access to the call will be available at 800-267-6316 (in the U.S.) or by dialing 203-518-9783 (outside U.S.) using the conference ID: SURGE.
A telephone replay will be available approximately one hour following completion of the call through March 26, 2024. To access the replay, please dial 844-512-2921 (in the U.S.) or 412-317-6671 (outside U.S.). Enter Access ID #1155155.
About SurgePays, Inc.
SurgePays, Inc. is a technology and telecom company focused on the underbanked and underserved communities. SurgePays technology-layered platform empowers clerks at over 8,000 convenience stores to provide prepaid wireless and financial technology products to underbanked customers. SurgePays prepaid wireless companies provide services to over 260,000 low-income subscribers nationwide. The company ranks as the 345th fastest-growing tech company in North America according to the 2023 Deloitte Technology Fast 500. Please visit SurgePays.com for more information.
About Non-GAAP Financial Measures
The Company believes that EBITDA (earnings before interest, taxes, depreciation and amortization) is useful to investors because it is commonly used to evaluate companies on the basis of operating performance and leverage.
EBITDA is not intended to represent cash flows for the periods presented, nor have they been presented as an alternative to operating income or as an indicator of operating performance and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with SEC Regulation G, the non-GAAP measurements in this press release have been reconciled to the nearest GAAP measurement, which can be viewed under the heading “Reconciliation of Net Income (loss) from Operations to EBITDA” in the financial tables included in this press release.
Cautionary Note Regarding Forward-Looking Statements
This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” “attempting,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.
Although we believe that the expectations reflected in these forward-looking statements such as regarding our market potential along with the statements under the heading Business Outlook are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements including but not limited to, the funding of the ACP program by the US government for the periods after April 2024, which at this time has not been funded. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including, without limitation, the assumption that the ACP will be funded after April 2024, statements about our future financial performance, including our revenue, cash flows, costs of revenue and operating expenses; our anticipated growth; and our predictions about our industry. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The forward-looking statements in this press release speak only as of the date on which the statements are made. We undertake no obligation to update, and expressly disclaim the obligation to update, any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.
Investor Relations
Brian M. Prenoveau, CFA
MZ Group – MZ North America
SURG@mzgroup.us
561 489 5315
| SurgePays, Inc. and Subsidiaries | |||||||
| Consolidated Balance Sheet | |||||||
| December 31, 2023 | December 31, 2022 | ||||||
| Assets | |||||||
| Current Assets | |||||||
| Cash | $ | 14,622,060 | $ | 7,035,654 | |||
| Accounts receivable - net | 9,536,074 | 9,230,365 | |||||
| Inventory | 9,046,594 | 11,186,242 | |||||
| Prepaids and other | 161,933 | 111,524 | |||||
| Total Current Assets | 33,366,661 | 27,563,785 | |||||
| Property and equipment - net | 361,841 | 643,373 | |||||
| Other Assets | |||||||
| Note receivable | 176,851 | 176,851 | |||||
| Intangibles - net | 2,126,470 | 2,779,977 | |||||
| Internal use software development costs - net | 539,424 | 387,180 | |||||
| Goodwill | 1,666,782 | 1,666,782 | |||||
| Investment in CenterCom | 464,409 | 354,206 | |||||
| Operating lease - right of use asset - net | 387,869 | 431,352 | |||||
| Deferred income taxes - net | 2,835,000 | - | |||||
| Total Other Assets | 8,196,805 | 5,796,348 | |||||
| Total Assets | $ | 41,925,307 | $ | 34,003,506 | |||
| Liabilities and Stockholders’ Equity | |||||||
| Current Liabilities | |||||||
| Accounts payable and accrued expenses | $ | 6,439,120 | $ | 5,784,374 | |||
| Accounts payable and accrued expenses - related party | 1,048,224 | 1,728,721 | |||||
| Accrued income taxes payable | 570,000 | - | |||||
| Installment sale liability | - | 13,018,184 | |||||
| Deferred revenue | 20,000 | 243,110 | |||||
| Operating lease liability | 43,137 | 39,490 | |||||
| Notes payable - related parties | 4,584,563 | 1,108,150 | |||||
| Notes payable | - | 1,542,033 | |||||
| Total Current Liabilities | 12,705,044 | 23,464,062 | |||||
| Long Term Liabilities | |||||||
| Note payable | - | 53,134 | |||||
| Notes payable - related parties | - | 4,493,798 | |||||
| Notes payable - SBA government | 460,523 | 474,846 | |||||
| Operating lease liability | 356,276 | 399,413 | |||||
| Total Long-Term Liabilities | 816,799 | 5,421,191 | |||||
| Total Liabilities | 13,521,843 | 28,885,253 | |||||
| Stockholders’ Equity | |||||||
| Common stock, | 14,404 | 14,117 | |||||
| Additional paid-in capital | 43,421,019 | 40,780,707 | |||||
| Accumulated deficit | (15,186,203 | ) | (35,804,106 | ) | |||
| Stockholders’ equity | 28,249,220 | 4,990,718 | |||||
| Non-controlling interest | 154,244 | 127,535 | |||||
| Total Stockholders’ Equity | 28,403,464 | 5,118,253 | |||||
| Total Liabilities and Stockholders’ Equity | $ | 41,925,307 | $ | 34,003,506 | |||
| SurgePays, Inc. and Subsidiaries | |||||||
| Consolidated Statements of Operations | |||||||
| 2023 | 2022 | ||||||
| For the Year Ended December 31, | |||||||
| 2023 | 2022 | ||||||
| Revenues | $ | 137,141,832 | $ | 121,544,190 | |||
| Costs and expenses | |||||||
| Cost of revenues | 101,499,341 | 108,074,782 | |||||
| General and administrative expenses | 16,777,107 | 12,835,623 | |||||
| Total costs and expenses | 118,276,448 | 120,910,405 | |||||
| Income from operations | 18,865,384 | 633,785 | |||||
| Other income (expense) | |||||||
| Interest expense | (595,975 | ) | (1,843,396 | ) | |||
| Gain (loss) on investment in CenterCom | 110,203 | (89,082 | ) | ||||
| Amortization of debt discount | - | (115,404 | ) | ||||
| Gain on forgiveness of PPP loan - government | - | 524,143 | |||||
| Other income | - | 336,726 | |||||
| Total other income (expense) - net | (485,772 | ) | (1,187,013 | ) | |||
| Net income (loss) before provision for income taxes | 18,379,612 | (553,228 | ) | ||||
| Provision for income tax benefit (expense) | 2,265,000 | - | |||||
| Net income (loss) including non-controlling interest | 20,644,612 | (553,228 | ) | ||||
| Non-controlling interest | 26,709 | 127,535 | |||||
| Net income (loss) available to common stockholders | $ | 20,617,903 | $ | (680,763 | ) | ||
| Earnings (loss) per share - attributable to common stockholders | |||||||
| Basic | $ | 1.45 | $ | (0.05 | ) | ||
| Diluted | $ | 1.38 | $ | (0.05 | ) | ||
| Weighted average number of shares outstanding - attributable to common stockholders | |||||||
| Basic | 14,258,172 | 12,395,364 | |||||
| Diluted | 14,922,881 | 12,395,364 | |||||
| Reconciliation of Net Income (loss) from Operations to EBITDA | |||||||
| Three months ended | Three months ended | ||||||
| December 31, 2023 | December 31, 2022 | ||||||
| (unaudited) | (unaudited) | ||||||
| Revenue | $ | 32,318,122 | $ | 36,226,330 | |||
| Cost of revenue (exclusive of depreciation and amortization) | 24,876,429 | 29,502,361 | |||||
| General and administrative expenses | 6,575,444 | 3,180,094 | |||||
| Gain (loss) from operations | $ | 866,249 | $ | 3,543,875 | |||
| Net gain (loss) to common stockholders | 3,021,269 | 3,044,806 | |||||
| Interest expense | 117,047 | 473,160 | |||||
| Depreciation and Amortization | 277,082 | 271,940 | |||||
| EBITDA | $ | 3,415,398 | $ | 3,789,906 | |||
| Twelve months ended | Twelve months ended | ||||||
| December 31, 2023 | December 31, 2022 | ||||||
| (audited) | (audited) | ||||||
| Revenue | $ | 137,141,832 | $ | 121,544,190 | |||
| Cost of revenue (exclusive of depreciation and amortization) | 101,499,341 | 108,074,782 | |||||
| General and administrative expenses | 16,777,107 | 12,835,623 | |||||
| Gain (loss) from operations | $ | 18,865,384 | $ | 633,785 | |||
| Net gain (loss) to common stockholders | 20,617,903 | (680,763 | ) | ||||
| Interest expense | 595,975 | 1,843,396 | |||||
| Depreciation and Amortization | 1,107,582 | 1,104,104 | |||||
| EBITDA | $ | 22,321,460 | $ | 2,266,737 | |||
FAQ
What was SurgePays' revenue for the full year 2023?
What was the EBITDA for SurgePays in 2023?
What was the net income for SurgePays in 2023?
What was the gross profit margin for SurgePays in 2023?
What did SurgePays acquire in 2023 to enhance its services?
What new product is SurgePays planning to launch in 2024?
What is SurgePays' strategy for revenue growth?
What potential funding issue is SurgePays facing?
