SurgePays' Q3 2025 Earnings Call: Contradictions Emerge on Convenience Store Consolidation, Lifeline vs. LinkUp Priorities, and Economic Impact

Date of Call: November 12, 2025

Financials Results

• Revenue: $18.7M, up 292% YOY and over 62% sequentially
• EPS: Net loss $7.5M, negative $0.38 per share (Q3 2025)
• Gross Margin: Gross profit loss narrowed to $2.6M in Q3 2025, improved from a gross profit loss of $7.8M in Q3 2024; ClearLine gross margin expected to be positive by end of 2025
• Operating Margin: Loss from operations $7.0M in Q3 2025, improved from $14.3M in Q3 2024

Guidance:

• 2026 revenue guidance: $225 million.
• ClearLine gross margin expected to be positive by end of 2025.
• MVNO (Torch/LinkUp) gross margins expected to improve with aim to return to positive results.
• Immediate goal to achieve profitability with minimal cap-table impact/dilution.

Business Commentary:

* Revenue Growth Across Segments: - SurgePays reported revenue of $18.7 million for Q3, an increase of 292% year-over-year and over 62% sequentially. - Growth was driven by Torch Wireless under the subsidized Lifeline program, LinkUp Mobile prepaid services, and the wholesale HERO MVNE platform.

• Subscribers and Market Expansion:
• SurgePays' Torch Wireless subscribers grew from 20,000 to over 125,000 after activating in June.

• The increase is attributed to expanding market reach, strategic partnerships, and the stable, predictable recurring revenue base provided by the Lifeline program.

• Point-of-Sale and Prepaid Services Growth:

• Point-of-sale and prepaid services revenue increased significantly year-over-year to $13.1 million, a 177% increase.

• This growth was primarily driven by expanded retail distribution, targeted marketing, competitive pricing, and the development of the proprietary point-of-sale software.

• Wholesale Platform and Partnerships:

• HERO MVNE, SurgePays' wholesale platform, is a growing revenue engine with a robust pipeline.
• The platform's success is due to providing billing and provisioning services to other wireless companies, which is a high-margin model with minimal incremental costs.

• Strategic Partnerships and Data Monetization:
• SurgePays launched a new growth marketing and data partnerships division, transforming the legacy DigitizeIQ platform.
• This initiative aims to reduce customer acquisition costs, monetize the consumer data ecosystem, and generate high-margin recurring revenue, creating a competitive advantage.

Sentiment Analysis:

Overall Tone: Positive

• Management highlighted Q3 as an "inflection point" with revenue of $18.7M (up 292% YOY), narrowed gross loss to $2.6M from $7.8M, and stated "we remain confident in our 2026 revenue guidance of $225 million," emphasizing paths to profitability and scalable recurring revenue.

Q&A:

• Question from Edward Woo (Ascendiant Capital Markets LLC, Research Division): Congratulations on all your progress that you're making. My question is on the consumer that you're targeting the underserved market that goes to a lot of these convenience stores. What are you hearing from either the convenience stores owners of what they're seeing and whether this customer base is able to be receptive to these new products that you're introducing?
  Response: Customers are highly receptive and store owners view the offerings as incremental revenue; SurgePays' POS + ClearLine lets stores launch without cost, earn commissions on activations/top-ups (including SNAP/EBT-related offers), and drive foot traffic.

• Question from Edward Woo (Ascendiant Capital Markets LLC, Research Division): That sounds good. And my last question is, there's been a little bit of consolidation with the major convenience store brands. Is that going to impact your business at all? And do you think that's going to be the future of, I guess, the convenience stores?
  Response: Consolidation should not materially affect SurgePays because individual store owners retain significant autonomy; strong distributor relationships and integrated commission/payment systems preserve access and may increase awareness.

Contradiction Point 1

Business Impact of Convenience Store Consolidation

It involves differing perspectives on the potential impact of consolidation among major convenience store brands, which can significantly affect SurgePays' business operations and growth strategies.

Will consolidation among major convenience store brands impact your business? - Edward Woo(Ascendiant Capital Markets)

2025Q3: The convenience store market remains robust despite consolidation among brands. SurgePays has strong relationships with store owners, rooted in trust and integration with their businesses. The company does not expect consolidation to impact its operations negatively, and instead sees it as an opportunity to increase awareness and openness to new services. - Kevin Cox(CEO)

Are the new customers coming from competitors, and is there a risk of price competition in the future? - Edward Moon Woo(Ascendiant Capital Markets)

2025Q2: Competition is present, but our platform and enrollment speeds are enticing. Focus on taking care of distributors and field agents ensures growth. Owning our platform allows prioritization and rapid development. Differentiators include platform ownership and quick responses to regulatory needs. - Kevin Cox(CEO)

Contradiction Point 2

Lifeline and LinkUp Growth Priorities

It involves differing priorities and strategies for growth between Lifeline and LinkUp, which are critical for SurgePays' revenue and market expansion.

What are convenience store owners reporting about customer receptiveness to your new products? - Edward Woo(Ascendiant Capital Markets)

2025Q3: The drivers right now are in states with the higher-margin ACP, similar gross margins. Focus is on profitable customer returns. Platform adjustments and inventory controls have facilitated faster enrollments and experience from previous programs. Connections and sales channel expansion are expected to drive continued growth. - Kevin Cox(CEO)

How are you balancing priorities between Lifeline and LinkUp? Is this a dollar allocation issue? Are you prioritizing growth in specific areas or across all initiatives? - John Marc Andre Roy(Water Tower Research)

2025Q2: Priorities are based on known revenue models. Lifeline is seen as a sure return. LinkUp has slower market adoption but is a long-term growth opportunity. Focusing on Lifeline ensures cash flow positivity. LinkUp is a grind but expected to grow. - Kevin Cox(CEO)

Contradiction Point 3

Economic Conditions and Market Opportunities

It involves differing perspectives on the impact of economic conditions on the convenience store market and the potential for new services and opportunities, which is crucial for understanding the company's strategic positioning.

What feedback are you receiving from convenience store owners regarding customer acceptance of your new products? - Edward Woo(Ascendiant Capital Markets LLC, Research Division)

2025Q3: The feedback from convenience store owners is positive, indicating that people are more open to new products and opportunities during uncertain times. - Kevin Cox(CEO)

Are convenience store owners noticing any changes in their concerns about the economy or in consumer economic activity? - Ed Woo(Ascendiant Capital)

2025Q1: Store owners are not heavily affected by macroeconomic changes; their target customers are typically without access to 401(k)s and investments. - Brian Cox(CEO)

Contradiction Point 4

Economic Impact on Customer Base

It involves differing perspectives on how economic conditions affect the company's target customer base, which could influence business strategies and revenue projections.

What feedback are you receiving from convenience store owners about customer acceptance of your new products? - Edward Woo (Ascendiant Capital Markets LLC, Research Division)

2025Q3: The feedback from convenience store owners is positive, indicating that people are more open to new products and opportunities during uncertain times. - Kevin Cox(CEO)

How are working-class customers and their economic outlook affecting your business? - Ed Woo (Ascendiant Capital)

2024Q4: The target market remains consistent regardless of economic conditions. Times of economic stress can lead to increased awareness of value, fostering changes in service providers. - Brian Cox(CEO)

Contradiction Point 5

Impact of Consolidation in Convenience Store Market

It highlights differing views on the potential impact of consolidation among major convenience store brands on the company's business operations, which could affect strategic decision-making and investor sentiment.

Will convenience store industry consolidation impact your business? - Edward Woo (Ascendiant Capital Markets LLC, Research Division)

2025Q3: The convenience store market remains robust despite consolidation among brands. SurgePays has strong relationships with store owners, rooted in trust and integration with their businesses. The company does not expect consolidation to impact its operations negatively. - Kevin Cox(CEO)

What are the economics and margin profiles of the SIM cards? - Anja Soderstrom (Sidoti)

2024Q4: The convenience store market remains healthy with a robust number of stores. - Brian Cox(CEO)