Earnings call transcript Q4 2022

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Operator

Greetings and welcome to the SurgePays Inc. Fourth Quarter and 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] And as a reminder, this conference is being recorded.

pleasure to my with Brian now Relations. Investor is to you introduce Prenoveau It Brian. you, Thank

begin. may You

Brian Prenoveau

Thank you, call. Financial afternoon, call Chief XXXX March operator. Executive Good XXXX, today earnings fourth the XX, Tony Brian webcast quarter from SurgePays Officer, SurgePays and Cox, on and Officer. conference and Today's are is everyone. date the Welcome President, to Chief Evers,

bit like press wire notified we'd out begin, we to up, a release service in we know but the let momentarily. of Before that that bit The is queue. is jam, be a backed a everybody it log should been have

you So few next the necessary see should in minutes. anything

under XXXX. risks and Before subject the everyone we results forward-looking as statements. this certain remind the begin, These to materially Litigation a could call in that defined to that those Private Act Reform statements differ like forward-looking from Securities may are of I'd actual cause to contain uncertainties are statements they expressed

For this the SEC. risks a any reflect that with our statements to today may we no recent forward-looking current after obligation the and see reflect SurgePays to undertake discussion occur update uncertainties, only All call. filings and please statement of expectations events such

comparable SurgePays' XX-K. call, and be will Investor measures Also, Reconciliations release more directly today's non-GAAP be are to on of measures press the during financial of at included the Form these of GAAP Relations the discussing ir.surgepays.com. press course today's accessible most the measures. will in company one or Copies non-GAAP website release financial

website. available is ended year December on SurgePays' XXXX addition, In the for SurgePays' Relations Investor XX-K also Form XX,

and call the And Officer, Cox. now President to Brian to I'd Chief like Executive over turn

Brian Cox

like of Thanks XXXX ago. a Brian. The fourth lifetime quarter feels

through quarter. to want business we announced that in Affordable last ACP. eclipsed We announced So Connectivity some our our or listeners XXX,XXX items wireless subscribers the Program, remind had of in important I our

Jeremy importance XXXX expansion. has playing growth role Fintech. ignited we sustained as store business of discuss. will increased is grow will announced in our convenience I President which our Jeremy network, store in and addition of to as Gies for our lead expanding build an the as count efforts Adding the SurgePays Jeremy We on take

senior dedicated closing allows a us on November ordering XX. cost announced and from We credit order on move direct away manufacturer. the the facility the of financing from secondary This to tablets market high

Going facility direct financing device reduces over our efficiently. more to XX% per allows utilize and cost cost us our

market switching in the from us to overseas, it's real a think shipping the time purchasing, manufacturing, foot off than different higher spot on of from shifting that gears and logistics no buying secondary the our to important order take did I to accelerate state direct velocity. momentarily gas, force buying to at devices factory the

flows, cash activation, rhythm. are we'll choose of staff dedicated shipments I'm in of A to are these present happy always people say and of managing future a arriving inventory. and in value cash The the decision the the XX for cost averaged an faced we per appearance with ocean ocean were versus When example, there over were or but choose freight. the XX to additional was growth For staged timing March and now now XX the our savings air the of fulfilment maximizing current forced flows. of which shipment, started days between of shipments. optimizing $XX,XXX distribution difference,

of Rich ultimately way. Weisberg Directors of achieve election December, at wireless controlled minimize a either this the to disciplined our we we Sheffield. attain announced Jones the will we in subscriber grow pace simply for devices did base, resignation During In numbers, and Lori believe but and transition, from we our of overpaying to Jay Board

into telecom current an and industries. independent are and company former a SurgePays, senior the closer either work company. to This role move Lori he the experience Jay advisory to to continue member we the Rich announcement boon as as management. or where and will tech be with resigned with CEOs scale only will a in executive us board extensive

to their legal bring addition Lori expect operational respective fields, to with the grow. SurgePays issues level next familiarity governance Rich and and expertise In continues as in critical we invaluable

convenience to February, Subsequent allow The distributor into Gies the someone Candy, X,XXX New where adding announced to underbanked, Candy Jeremy will these family-owned stores. with for year convenience agreement team. like end, a in telecom England. SurgePays a sell deals XXXX, start impact and prepaid including we to signups new our wholesale like agreement of It's distribution we over with financial our Capital the products Capital in to to ACP stores see

veteran As exceeded of we XX similar agreements one $XX million, rate. XXXX reporting last with to XX-year compared those Sales, a of fourth and revenue more run assist the increase team recently stores. the times in directly X.X and XX through fact, a and of of partnerships, VP $XXX.X of year we a Jeremy being funnel exited the another to working times a added with quarter, to integrations revenue In over number to million convenience as matter several

by intentionally grow shareholder this value. will revenue we The growth, with this discipline dilution. XXXX year revenue note XXXX to compared XXX% and by rewarded earlier growth and sales increased continued that laid was to throttled during important timeframe plan were be the profitability to where without it's out management increased

customer off much As that devices the revenue clarifies shift gas our upfront, a with direct, the doesn't previously reached fourth lot gain foot it the of due $X taking million. fully to of line discussed, quarter bottom to net cash to when generates more buying of a SurgePays and us the to expense acquisitions have

the from a sticker, SurgePays. just have the not a XX beta but seen community the his prepaid Looking In store of seeing about convenience or the the for customer many from I've excited response years, providing under products to to gives prepaid our for to EBT, with If earnings SNAP, sees the like owner's through a on of we're customer's testing at SNAP never potential ACP telecom the willingness store us, products I we're and of cases, through the poster qualify ACP. forward, been FinTech access in are residents, used is underbanked is they to the closest in-store what convenience inside benefits response for that wireless bank stores all us sign the for which offer store. on and store. store usually signups; our which

idea base pop-up a retention tent, and will brick be a anticipate a already versus customer owners store have potential. customer by mortar store a we a Also, where from the their Our enrolling of customer good the interest sure are realizing subsidized to immediately higher store and knows go is residual so if remain if making help the can subscribers these get active he make he happy. has needed, commission, owner and to vested and a

gain to and Salvador, is we suite really utilize our the convenience program to access FinTech products and underbanked. relationships ACP nationwide by stores the to it The thousands of now at To deploying driver our XXX of Ultimately, and we encouraging more goal early of sales, is prepaid for entire tens maximize anticipate those this and this data office bilingual El our across revenue team center operations doubled growth, than have in further several for strong. prepare people over where support in a our being we've back verticals. major growth

watch main by see I channels synergy, in sales for back visualize sit the both how me. able and is unfolding, model I revenue being leaders, grow really experienced As this electric to spearheaded

of efficiency. and Now dollar and a with for is value-minded subscribers revenue company, serving we work multi-billion tens build aggressively millions time of thousands stores excellence to the where convenience the foundation of operational

stores that of our our value convenience The of our those leverage direct points to platform ability This We and distribution to add term. a economic we model the stores near over our in our success believe viable of of more network fundamental value will powerful be underbanked the the for into the measure create stores, an result and strategy network long be the a will shareholder as national M&A larger future. community. more

correspondingly our capital. higher We network stronger believe stores higher revenue, invested on to returns directly increasing translate profitability, can and of

continue to managing flow me, on cash focus that We deploying, best. cash and excuse our deploying

current we XXXX of with year are $X.X receivable I end we the assets from of as gauge of end a where where where throughout been, generally XXXX to $X increased the have at Accounts we've cash. the at million be. and want at look to million of million $X.X

million. guidance to to XXXX, for new $XXX additional with of allow will distributors and Turning we alignments signups believe in-store least at generate revenues leveraging SurgePays ACP

the line revenues March. quarter relatively anticipate first XXXX, remainder given expect to growth the in arriving our year. accelerating in devices fourth with started that be quickly We We of quarter

see to the flow We network cash expect to year. operating expect XX,XXX on during SurgePays stores positive operating the be and

to briefly Tony call. to the results, turn summarizing our call today's Tony? before I'll over review financial

Tony Evers

my good you, afternoon, of quarter full overview the financial begin Thank fourth and results. and Brian, I'll everyone. year's

revenues million $XX.X reported compared XXX%. we in $XX.X an quarter, of the to 'XX, fourth of of the quarter increase representing For million

to to XXXX, revenues and broadband primarily of growth during compared profit of increase million to the various personnel During management Gross the in one-time expense the SG&A Gross quarter The to $X.X our expenses and in increase XXX% prior $X.X XXX% business. insurance of ago. million bonuses year attributable $XX.X to XX-month to sales year for an year. by were a driven fourth the XXX% The for the million, year $XXX.X related paid X.X% $XX.X uplifting. by same profit NASDAQ increased prior reported over compared was period. million subscriber period increased we the the million increased primarily increased increased mobile to year.

share, for year. year a loss a $X Net a million million positive the $X.X were the million or $X.X million, was per per of the of in loss year loss loss to at a prior of or $X.XX compared a operations from loss last Income share $XX.X net year. to of $X.XX compared for

investment XXXX lower a of certain EBITDA items in the to Of the loss $XX,XXX in prior year debt on was the than discount. included negative loan amortization million $XXX,XXX compared for loss, million gain XXXX. non-recurring $X.X the interest a million loss and $X $X.X PPP from including in $XXX,XXX expenses year and Centrecom, the much

the to EBITDA fourth million in $X.X In compared quarter $X.X quarter, million positive fourth was of XXXX. the

have increased flow, XX, was as 'XX. to Account million. $X.XX sheet, to million our by to million over Turning of liquidity 'XX of from end receivable the the December cash year balance at $X.X $X million cash end $X and compared balance

receivable from a Payment after for and The XX to US broadband approximately usually mobile XX occurs up. verified the Government days subsidy. new is customer days is the signed

Given cash cash structure, ample in allocation increasing business, financial priorities our liquidity and our investing growth. business, balance in capital focus the and maintaining the on position, future strength higher for

Brian call remarks. some to for I'll the back closing Brian? now pass

Brian Cox

value a limited We business Tony. differentiating its by has Thanks have couldn't show excited encouraging The could trajectory set opportunities the are ahead. know about to more potential. on only to a our the today begun imagination. true foundation be model It's that's we that building we company only

I and and successes SurgePays and pride year's take of believe part our team, I'm a past hardworking working all and great for a are future smart of The to folks group of of thankful are talented, being build this something the successes lot I a who product important.

and the of Lastly, journey. we continue support shareholders interest I as growth this greatly our appreciate

We for open the now will Operator? questions. call

Session Question-and-Answer

Operator

Thank sir. you,

question-and-answer the Group. will question. Michael your line session. with first now instructions] comes with [Operator a the from Maxim proceed Diana conducting We question And be Please of

Michael Diana

Hey, thank you. Brian. Hey

about the heard I you late this is the way, arrived. new how So, tablets

mark. surpassing about talking pushed fact customer event that does get been it still or out had a XXX,XXX the in customer, ACP XXXX some. You Is

Brian Cox

going the No, and No, you'd Brian P as see well. That's was absolutely. Michael. release no, absolutely that's that, if there the log release, still of mentioned, event and year. XXXX press where growth see press trajectory the appreciate the jam a not, part question. Hey, the we as But I in a this

fact, of think was are there times round I out coming at of time XXX,XXX matter [ph] put PO over tablets we've a this it in couple a As XX,XXX devices. that a of initial XX,XXX,

prepped get that get ready and rolling definitely we're So that to up.

It knew about I pause. months in don't as much we them better I ad at What's when We're couple a it we rate. make to a said sure of very this, every to attrition want I is and looked at I wanted could before, a to didn't overspend later get just, call strategic. We on month. interesting careful tablets was want it and

to did so, So software. spend internally, we second. just little more with looking In time a give doing bit were was, negotiating able what looking me developing, we at carriers, our a

center. train and and it our folks cross our So spend a couple moments retrain down did in us of operations to to give plan prepare,

didn't without working we preparation, thumbs, to go still that tails idly off make I could and sure that year the so plateaus. this beyond sit numbers any just knows our hitting So We're want by we in to everybody expect twiddle that. hit we our

Michael Diana

it's in quarter percentage the Okay, given would as sales great. could to in And ACP, new like of the I growth of answer probably the a but come the stores? know this, point fourth fourth say stores you impossible the the quarter, your what through for customers

Brian Cox

field That's good a Michael, you hope, replace hope used, going guess, be my level. say let let hope. sales we let's me word me I to the maintain our replace what, I

more acquisition, baseline good but that's customer Now force. expensive of a a sales it's incoming

town, of a a just outdoor lot maintain competition not So exploding attrition where That's is feel where lot that's on like that, in of into to two of necessarily and we somebody else and four sales. want is, -- weeks out the four the field we is for town, is now. tent moves then when and there weeks, comes from months goes and then a

So contributes was that the us to one like feel bit of it here. get drivers we but to the do of definitely attrition, that little a

baseline. that keep to want we So

about acquisition acquisition. field The than cost is the XX% sale store less

sales upfront would So of acquiring a you store. for skew tents, because pay doesn't because owner the -- cost significant from and hotels, lower pop start customer such one They're that commission. depending their is a our that would a store money livelihood paying need travel, on store to that we're seeing up hope standpoint, flow from a we the the of cash coming

is add-on for an This them. product

convenience software better FinTech company only to that does and do So a ACP long stores the different it's for term and that company through us company, model because to that's ACP dynamic only this I a far it's excuse me, transactions a stores. the sustain we're the feel the owns we're and able only platform we're

given even So really we very get We competitive We competitors a as hard to because thing this we in there as not want advantage rush land out want to we to That's have channel. quickly. specifically want leverage, it's don't this from can. to I've, as these green funnel, England, get of on to Jeremy the on light the down way folks New sales as basically sales to manage everything to all why he many the all California bring needs Florida. deals board,

over the integrations country. various got all We've going

XX%-plus my looking you're coming numbers skew. we sales And continue quarter stores. expect by of to definitely fourth those the So from see the our to it's that hope at XX%,

Michael Diana

year. And XX,XXX right as expect guidance, your said part you the of I you of number? by stores think to that the have the than end Is more

Brian Cox

number go That's put want beyond hope we can the attain. that a going it's good number My we're is that now. we but to Yes. number, to that out feel we with right

Michael Diana

Great. Thanks Okay. Brian.

Operator

Capital. of question And line Ed the proceed Please next from your Woo Ascendiant with with comes question. the

Ed Woo

this year. Yes. Congratulations growth on a tremendous

to a guys will little for base money. have look I the customer to at three think Have past your that Whether in in I've ladder are you months? in targeting all? your about consumers It's obviously, moving down economic people the asked you business changes in is opportunity how significant any save bit seen are the past countercyclical. increased

Brian Cox

an to question. one little of us going impact. that's That's instant while such take see. interesting an it's I those don't That's know to that a

an they're made say federal the want Now, to an it, I made putting phrase, promote it will this. comes right government put companies it sign ACP to definitely has, folks I emphasis where effort not that's grants The on don't up. into when say easier, but not for of the a awareness companies or program. not there's an to They out lot it areas to making

of we're don't the be into I the to type that. pushing is, know all category, at as far able arena, know And see hyper-growth basically we of being everything call but we the impact the it falling as on kind global such that we people devices directly we'd are have. the a a success, going that's reason out of the world, macroeconomic in program's that So our

So hey, group get growth I new came to slowing to to that down there's oh, of that think your have almost a in. edge see, you

blip. growth, see to so able we a We're or our would got the now, has that that expanded. grow don't fast So can right we know see I market now

that Now off one potential of of things, there's the using without the know weeds, things in out getting and millions up of we definitely that to about of is using one the get customers I'm there, about, of one subscribers the as -- keep sign way mind in that but passionate the ACP text in we stores also data. and every using the talk we've talked is these one

to carriers giving Well, better ultimately that's the negotiate us leverage a that's the with more carriers; building pricing. relationship on with

to market, same the prepaid convenience a stores, ability opportunity other there. to relationship now use the that's use offer accounter, for to the equipment use these lower same them that's the us out So to the give come upsell at going than the cost folks back on same the to wireless

A Verizon very an to your own margins. MVNO lot out pretty most most help an take us the the the for paid MVNOs to slim We customer familiar We're there. folks our they have watched there. for, of brand do with by had own and that and able Mobile then very sold ability of out just plans out that's rates for platform. be to of what be transaction with payments the aggressive to To over family and has MVNOs

not to do So party, transaction. X%, third paying XX% XX%, we're the a X%,

by customer getting with to the want That's here internet. way, products way, by the have help way, another ACP. the to through also And them by your -- then, in that take, same these It's card, by a significant upsell. we the the we we way reloadable maximize really the advantage other helped door competitive debit have we the

philosophy this -- our of that's that's really rollout. So really

home think you're seeing the customers hard, stores. I without think So ACP to coming also going only driving skewing not customers to you're the QX, start start going over it I convenience through by too seeing in

think are bills. of I who going you're own number paying the start their prepaid customers to see to

household, the after rural an to already Remember I ACP and devices, more phones, store and urban average, per there's We more other and of a be we is per then service to underbanked survey smartphones community. they're that money, convenience those enable other more four limited pay one at other go to average that want in and household. to of his five them people guess able with did to save both areas, those those with be convenience save store travel a allow go them and and the to partner owner going as serving

Ed Woo

for I good you. my Thanks question Great. you and guys, answering wish Thank luck.

Operator

reaches of your session, conference. for question-and-answer This today's Thank you you. concludes the the Thank also this participation. end and

your this lines disconnect rest your may time. Have You at great a day. of

SurgePays (SURG) 30 Mar 232022 Q4 Earnings call transcript