SurgePays 2025 Q1 Earnings Misses Targets as Net Income Drops 729.8%

SurgePays (SURG) reported its fiscal 2025 Q1 earnings on May 13, 2025, revealing a significant drop in both revenue and net income compared to the previous year. Total revenue for the quarter fell by 66.3% to $10.58 million, down from $31.43 million in Q1 2024. The company also posted a net loss of $7.64 million, a stark contrast to the $1.21 million net income reported in the same quarter last year. Despite these figures, the company remains optimistic about future growth due to strategic partnerships and operational developments.

Revenue

SurgePays' revenue for Q1 2025 decreased significantly, with the Mobile Virtual Network Operators segment contributing $2.29 million, and the Comprehensive Platform Services segment generating $8.29 million. There was no revenue attributed to Other Corporate Overhead, bringing the total revenue to $10.58 million for the quarter.

Earnings/Net Income

SurgePays experienced a substantial downturn in earnings, reporting a loss of $0.38 per share, a sharp decline from a profit of $0.07 per share in the previous year. This represents a 642.9% negative change, reflecting the company's challenging financial performance in this quarter.

Price Action

The stock price of SurgePays surged 22.18% during the latest trading day, increased 30.23% over the most recent full trading week, and rose 44.21% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing SurgePays stock when its revenue surpasses expectations and holding for 30 days is a straightforward approach that can be backtested to analyze performance. To evaluate this, one would define the strategy by using revenue beats as the entry point, select a relevant timeframe for backtesting, and gather historical data for SURG, including revenue reports and stock prices. The backtesting process would involve simulating the strategy on historical data, considering the 30-day holding period post-revenue beat event, and evaluating results based on returns and risk metrics such as drawdowns. Comparing this strategy to a buy-and-hold approach clarifies its potential advantages and disadvantages, helping to determine if revenue beats can effectively trigger positions in SURG.

CEO Commentary

Brian Cox, President and CEO of SurgePays, expressed confidence in the company's performance, stating, "Our first quarter results were in line with expectations" and emphasized the strategic financing that positions SurgePays for "the most significant revenue and cash flow growth in our company's history." He highlighted the successful launch of a partnership with AT&T, which provides access to a reliable network and supports their MVNO and MVNE businesses. Cox noted the importance of their robust retail network and innovative products, stating, "We believe this model unlocks exponential growth." He concluded with an optimistic outlook, declaring, "We're entering a phase of high growth and high impact."

Guidance

SurgePays targets $200 million in revenue for the 12-month period ending April 1, 2026, and expects to exit 2025 operating cash flow positive. The company anticipates starting to see revenues from MVNE partners in Q2 2025, with a focus on scaling operations to achieve 100,000 distribution locations. Cox indicated that they expect to maintain a gross margin of 20% to 30% per subscriber and noted their preparations for enhanced Lifeline products, potentially increasing revenue opportunities in various states.

Additional News

Recently, SurgePays secured a $7 million convertible note financing to accelerate its growth initiatives. This financing includes $6 million in cash from one of its largest shareholders, signaling strong investor confidence. Additionally, Derron Winfrey was promoted to President of Sales and Operations, where he will oversee the growth of LinkUp Mobile, prepaid top-ups, Lifeline programs, and ClearLine. These developments are part of SurgePays' strategic efforts to expand its market presence and enhance operational efficiency. The company also completed the integration with AT&T, marking a pivotal step in its transformation from a reseller model to a direct carrier partner, poised for rapid scaling in both retail and wholesale segments.