Earnings call transcript Q2 2023

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Operator

Good day, and welcome to the SurgePays Second Quarter 2023 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions]. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

to conference like Prenoveau, to now Relations. Investor would turn over the Brian I ahead. go Please

Brian Prenoveau

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

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

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

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

Investor In SurgePays's website. Relations for is quarter the Form also addition, XX-Q SurgePays available ended June on XXXX, XX,

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

Brian Cox

Brian. Thanks,

the we're like at I'd First, thank joining and in our to call. building interested shareholders SurgePays for those what

SurgePays at they grassroots we and underserved to of our the telecom to a continue like shop. are, our brings live brief a we populations products and who expand and to we what where As financial underbanked do level and give addressable market. I'd overview audience,

income convenience of a Our products lower of to and to thousands provide platform empowers clerks underbanked suite and consumers. prepaid at wireless stores financial fintech

products of this direct and well positioned subscribers. country. with goal to and the Our to services of thousands the services, service footprint in suite nationwide, grow distribution underbanked prepaid wireless are hundreds profitable building stores products of our underbanked of With companies provide of and convenience the we network owner-operator largest

most The of transactions is these counter. store underbanked convenience real their neighborhoods trusted SurgePays home. financial and the their at that's the do are distribution a influencer community their into in local these closest the behind of of points country the third to almost utilizes stores as The clerk communities. these

traditional activation transactions of and other words, provide the transactional daily to people of checking our the we prepaid as services need we wireless essential cards store along with with services credit and the and at those lives want. accounts. activating reloading without and such In to access platform, software the and and enable to motive register clerk As other payments, improving perform onboard the products banks, debit

growth stamped the EBT, stamps debt One those to business Veterans revenue Medicaid, of tablet device reduction our has that The driver essential bandwidth recipients a monthly of growing of benefit, called the or accomplish as for short-term program of our majority such for Pension, offers subsidy service and years. X, the SNAP. notably, now we Section the last or government goals to a program income-based food base the motivating ACP, to need services the of infrastructure the to name the stability. any subscribers profitability, which by federal goes historically into and and Connectivity case Program, SurgePays who most ACP Affordable shifted provide been our many most. is to bill, tied is we the aspects this how of revenue our was When two directly wireless

to have Several the to ACP program licenses public. the offer companies wireless

software management only ACP the customer T-Mobile database relationship are with FCC's and as also the we uniquely and the integrated However, networks. into with own AT&T CRM positioned platform company clearinghouse its

only of competitive transaction owns the way ACP that for company paved few Store ACP the sign-ups for convenience authorized prepaid company the loyalty ACP foot convenience always These advantages stores. we platforms to able community. initiate for only the nationwide and are that be Further, us ways are owners traffic to one their network has of brick-and-mortar stores. in to looking create more a inside

pipeline compelling we logic that soon XX,XXX stores and platform than our so XX SurgePays working to months. on of industrial staging The team with presence that inescapable a will our less have a is is of intake a target applied over

more areas, the in and through transactions out stores service some eligible free that ACP. for pulls who supermarket convenience card. Our is Every research than customer XX% use of shows EBT SNAP card

the research at fantastic With our presence customers it's the non-ACP Our wireless in to these the a push to of us. average, smartphones qualified and our also their one for pad months households same for monthly subscriber on is coming each pay plan. prepaid in shop these that has, four another just also ACP shown launch few prepaid prepaid stores wireless of on store, bills three company where ahead ability these

a owner phrase SurgePays The we sales. convenience environment, key are receptive interest is on products lines created big on these for the store with selling where endless owner relationship to rates creates readily that macro store profits, distributed where constantly business of profitable relationship SurgePays additional opportunities the inventory small their between beneficial squeezing and owners opportunities store. focus operator this credit to store In are the has

been us separate developers convenience software Our working have from the of further pack to store fintech companies.

flywheel products, register customer I'm into this screens to create I transition excited to touch the really LCD engagement. equipment what the customer-facing of phase of will think and be testing now our promote subscribers are business plan. activate wireless We our at

abilities marketing us the promote customer-facing solidifies the in part XX/X enable of solidify many transactions. our the to servers, and the strategy opens various This advancement for enter register next us a a at store. doors to It for SurgePays market as road their as own information products and in and leader to This and our provides inside down space. our touchscreen the innovative connected further our with opportunity roots our to customers needed step is

XXXX, expectation of $X the Even with and delivering the EBITDA growth, us of $X.X to trend net of focused quarter continue income of XXXX at net began $XX that end second puts in quarters the pleased this on first million that most of we This two the for million. million energy the and team with profitability see developers announce to over continues the trajectory. to income I'm

our beyond products more on the wireless more more is our for sales our transactions sign-ups, mean fintech more the of on new As future platform ACP key partner individual is I platform. the subscribers, over for quarter's in shelf, now mentioned stores new organizations. stores metric call, leveraging stores last SurgePays workforce on reaching More and stores. platform

quarter. You might during announcements of have the seen some our

platforms public resources was ACP social devoting Through enrollees to in that ParichuteConnect can looking raise drive to ParichuteConnect, worthy and impact arm causes. larger systems, leveraging we an Our state investment is ParichuteConnect, first a organizations. time, service money firm and sign SurgePays organizations investor city school community the for partnership sign-ups, platform. is with service social of media a and up ACP

Girls native through those we that reach Girls on expanding ParichuteConnect are lands It's Boys reps announced This began leverage household get the the SurgePays. we population Clubs to our eligible & that expense platform, working recently to & partnering Boys at Girls Boys to up. with setup We signed our with minimal Club. the & allows relationship

directly card to tens card LeadEx. Lastly, debit communicate card, partnership ACP ATM. ACP In or located of partnership new screen on you on prompt LeadEx owner-operated on if case, partnership SurgePays these might free an individuals the full you're thousands service who through we or of with benefit in the are other allows ATMs. via This qualify might in July, of front, see ATMs reloadable us Most with ad announced ATM convenience this a the from for an using a wireless stores. EBT for an

surface point, stores. subscribers to this has just drive SurgePays begun scratch means, the At potential the of additional we've and to

with cash to cash maximize growth and As always, on cash flow and our we're deploying managing focused discipline. that

cash second quickly towards partnerships beginning quarter third quarter, end with the the precisely continuing fruit of revenues these happened, benefit to second expected in the even with full first align and We the quarter stronger accelerating growth to bear of revenues, new flow. We half. what positive with but anticipate year's

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

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

Tony Evers

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

mobile broadband For primarily for the in $XX to reported representing compared of the to XX%. quarter second we $XX.X increase were revenues in million of the subscriber growth the our quarter, attributable XXXX, The increased sales of an quarter business. million

increased year quarter million million to the period. ago profit compared $XX $X.X the in Gross second XXX% in to

in second quarter paid improvement QX SG&A Second out primarily The quarter showed also XXXX. last the which were bonuses margin was year-over-year. -- personnel X% one-time paid up by driven year. in expenses to increase XX% gross XX%, increased person various by management significant of to versus

$X overall quarter for for period. per expense year quarter as last Income included in of the compared Net a the net ago Of a period. has million ago decreased loss from to of debt loss the quarter at -- $X income year $XX.X was our operations second $X.XX a share a loss was million compared a of the of $XXX,XXX $X.XX to positive year. significantly share, million million the or per that gain interest from debt or $X.X gain, lower than

balance flow. the sheet, to liquidity cash Turning and

million for million. year-end million up. broadband new XXXX. XXXX approximately of June to to government XX XX $X receivable year-end Our is Payment days the the a balance from after Receivable by as was signed customer verified cash the and increased $X.X compared $XX.X The mobile is at US from subsidy. million to accounts XX occurs $X usually have

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

I will now the to back pass for Brian remarks. Brian? closing call

Brian Cox

financial growth. is consistent sheet, great SurgePays team on a assembled and Tony. sound a footing healthy with balance Thanks, now earnings

cash to control weights. delivering flow. destiny direct poised proven and of the networks the results services positive distribution are These We and in goals while country vast in we and have underbanked with accomplish growth complete of discipline of own largest tremendous our and one can potential with market create persistence products a our

so time Thank today. for you much your

open up now will the to questions. call We Operator?

Operator

begin [Operator first Ascendiant with ahead. Ed will question the comes session. the go question-and-answer Please Instructions] Our Woo from now Capital. We

Ed Woo

your that strong on With any competition? Congratulations to or or -- people enter the change market and be quarter. in success, have in Yeah. step-up track the record other your enticed

Brian Cox

the I you're I Ed, the assume ACP appreciate talking Hey, business… about question.

Ed Woo

Yes, the ACP business.

Brian Cox

… model. or just overall talking about

Ed Woo

business. the ACP Mainly

Brian Cox

appreciate question. good No, it. I Yeah.

October of longevity the our think also aside with it's not strength last it's what money Congress but I the last setting program awareness to that And adoption ACP the into on country. in payments the recently FCC ACP, areas the is assumption as million just as with the in rural week, $XX get where of expand in more of certain worked program. the then also to Congress

going now is wouldn't the that in I budget plan or expanding program each there's think to don't to continuing the there's understanding be they around fund that program the -- the they on be year.

But tool and labeled has up ACP to to ACP we've So competition. never be have a using accomplish hopefully, as as want picked We people company. overall I our it, brought that business on goals. an about, think we're talked just as

upsell. ACP company, part where talked company have about. all opens verticals does only us broader of There's for goal we've doors not many other on really but in been the goal, the our of it's short-term up metaphor, value. so for that There's really program opportunities ACP subscribers greater roots other which and a thesis software of to great company to community each no that does, using was But so the program It the ACP our build our the builds relationships business because being no just to no us us kind further not just stacking a unfurl along. different moat. top we're really expand and And and a a a the goals actually product leveraging that's accomplish it accomplish

use can there tent to that get and sign and stores of and of competition up in that there doing convenience is business tool development what a So companies and ACP dollars up development companies use can go we're ACP years have and No. into out as consumers? take pop of Yes. a there do Are our millions case?

Ed Woo

thank and you answering wish Well, I for good you guys Great. Thank my luck. questions you.

Brian Cox

Ed. Thanks,

Operator

from next go Michael Our question Maxim Diana Group. comes with Please ahead.

Michael Diana

Brian. Hey, Okay.

most few network. store actually are One that in leaning you solutions, the did about convenience it the their So of to ATMs convenience into a like ask your store. sounds building you're say inside the I'd things out like of mentioned really LeadEx being you stores?

Brian Cox

hate in call run Bank to the for phrase mind, Wells Fargo. Regions, one of independent use keeping -- the of is their be operator, And LeadEx the like America, -- LeadEx software networks see, let's territories that I Yes. it, wouldn't owner to independent, example, own network of providers those is but independent folks say, that the ATMs, of

no-name ATMs stores and the and you find these retail that it's would stores areas. in convenience grocery in So stores

So convenience they would be store primarily in a setting. bodega-type

Michael Diana

Okay.

great. Okay. That's

you And have ACP? when an to you're saying so to are ad introduce uses them someone the going ATM, trying to

Brian Cox

card what know and of bank you a things that the well. ATM is. put one Yes, a card this happen of what experience been instantaneously. When is, -- machine, your in has it type of lot they as the learning There's us the instantly for

which have would benefit. So be some benefit we they also underbanked that that account? a category is as person in they have credit, an type that designated categories a debit would a a because account. of that fall someone designated Don't somebody most checking reloadable don't are feel debit don't have there's likely likely most would more a chances underbanked, grouping they But have card checking feel household obviously we don't that income-based into means card, has card of be our debit probably your on immediately. the card of some and You don't, has

of would when you graphic and would card show maybe it's their the in, immediately they you transaction it processing at transaction of of and process So put who ascertained the the normally during are look those the where a counted it it's good is people usually machine, screen of -- the behind convenience focused, Number one, being cash because behind the in store the have it's screen. you're all the Two when folks we times money the attention your things you scenes. think that about counting a that.

it's to have great opportunity for attention. So a focus us and their

the example, be, it screen, on and paraphrasing. will what And it up pop will for

our If reference did EBT sign hit is specialist, goes engagement number Veterans Pension, will can telephone glove there immediately put work benefits, and -- you customer enter, call enter, and just household they the fact just SSI, they or out communicate of our, anyone your to SNAP, government hit on their Medicaid, in in let's that just then what now them, to and up. the reach white and that enrolling who they with that customer created and

Michael Diana

great. sounds Okay. That

So it's or? that's that Or ready to -- that's Is already place in right? already go.

Brian Cox

of methodology At is out We're there's leads that tell seeing, a the their want way anymore. to up. number, the to is time weeds. the the rolling you're moment, anything that too What absolute And a fine-tune window happy store, And number you're -- ATM far we're now. we very enters with. that front we're where getting we're mean out. an in what reach We're watching time without for standing you of when best that wait the following not there's a to working cash. the get consumer about right But doesn't in best convenience for the numbers you, get in it the reason your off to and I'll is, that's don't

the and cash forth purpose ATM. enrollment cash click on of wallet the car, are your the because You're it sure you're you do to back going your able put make form and to to you're take the text get first on there and not register out and whole and that sit going in phone to getting an your and

phone the the know best messages methodology, you timing So we're text how the for mixed with makes follow-up, is on best. it call working

they create said working right we're Right with we that's converting through pleased and want I'm them So getting, to the -- maniac But now. want now, a get to A said of protocol the raised said a is through this hand, they're into good best have great. just service. plowing their we're on sales. leads onboarded. the qualified, number about They We that and qualified. do out ATMs. leads going we customer we're I'm they way that bluntly

Michael Diana

Okay.

convenience So ATM virtually, has an every store machine.

talking -- sort that Now device I would you? you an is about, would would have has the is that of LCD screen -- next that thing this to that supply something your think, that you're relate own just to just

Brian Cox

is, where example, to Yes, we the for coffee screen This and it register. they the visual, $X the that whether flip would of it boost whatever be bit for same wireless And running because different we the all And all would LCD that counter the tip we little us. technology XX-inch of these own over give would XX/X, phone that of be undercut, -- and be ours carry this kind equipment. screen we other we the over sometimes ads, whether than a ACP, constantly coffee, be ads would out, to to and we whatever go our next benefit products to track places they're really able transaction. technology, allowing on running could staring the except a a at brand that roll different to tip looking guys, we're prepaid the go able consumer out it the It's it the be promote and of same big be on facing cup and burden time. to

certain the I marketing control Michael, can push It's real things your time. For also ability or number, to in the so enter payment example, your that. telephone like

when one knows cell of material, in And the is could stickers, competition servers the wall, it's anybody instantly. door, This what time ATM is other poster control distribution the guys could have space. it the it us, argue posters, a biggest we from network, ever the the with on Every there's dealt would products your focused front behind are and in matter and convenience whoever convenience gets of turnover in the is things something store. other standing money, is, when especially I singly there's be a And a challenges up, would buys also beer that's register, register. you things cash we the on on the real product or And cigarette would low-income your point constant cash if store, which there last the a put -- surrounding a the the come doesn't focus introduce, most moment of the there all time, them. at any a in impulse than you're usually store, our time in we counting be promote we actually why the

that that's us some in excited This macro on to for particularly made We going presented down. a it all kick were doors wasn't been really crazy plan along. doors the before mention now, the I of on we're being business opened has about right release an press So we the has of opportunity the planning prepared but stuff that. has itself. part actually

one advantage present that's to moves those. the cool and So take going having profitability, us of make of they to themselves. we're flow And things cash enables it about when

Michael Diana

Okay.

you, I they'd actually depend direct to help you there, would imagine. operator convenience screen put it upon Now they could strategy have store maybe mean, this people's I attention the assisting there, take the you heavily would let right? then and I owner

Brian Cox

or clock hourly register, doesn't clerk. every an or don't dime And on they're on I you goes -- that is. an clerk me home. owner are a engage that that success the mean and they're the save doing Michael, on assistance sometimes They not go engagement. the the money -- chain other store behind how today if through you're And out clerk on when take to bill" help your Hey, at me them. man? operator, It's what they're customer, is, to that make actually counter talk depends your have really the in, let clock EBT. store, Man, whether let just They're to incentivized you products trying push “Hey, to hey, wireless have

That number, to having also And money. to on to activation it's quicker, make a focused doing that and inputting have a the reduce LCD type store to LCD convenience allow things of and rep that inputting allow train the will that more if promoting things bit is their clerk address. in allow we that will if screen, store the that be the that burden of out more input a clerk they're name, to time owner some their someone some So being little at can if of consumers more they're people going out of transaction. inputting information, carry their customer amount doing e-mail get products going to

by money. money every that they theirs. them pocket with the don't where out we're the especially a out-of-pocket with made getting come have bringing of shelf does to register. a is on that so convenience money very in squeezed products they're reception time far So when make Every transaction, way presenting part per actually with sell dealing of transactionally lines they inventory, and of they've owners that They money that store crazy their in them not SurgePays. the hope take are and the payment, receptive, putting credit things we're cost world And a to while on is a

that's think very unique. I So a

Something of store, the into owner. where all positive that We're few store of one are I the for can't the say relationship. transactions sell vendors enough the our in

Michael Diana

Yeah. No, that's all very, very interesting.

percentage it sign-ups competitive if of what or last reasons, you stores? in total whatever your come appropriate for disclose is, have through So or period quarter sort month convenience of the last the can ACP

Brian Cox

component like acquisition it field of Michael, things throttling we're in for rollout. this -- would XX% in cost by trouble kind and soundboard don't that gradually going because phasing because we've good we're I sales in suspect to your we're been watching. think of is store, the question, As we field got been other this have you of me, your less base that's things a that phasing you've There's a where white talked down et where store or have the really a has if but the There's about, competition, other want compliance I cetera. and number sales to glove something and we've of we're lot it. a of phasing than things front to

done I to So things we And to talked and that and if to say, before is get up. been we've or very ATM. certain raised drives and very, everything with there's me how hand I where it. see look lost qualified we've very, signed that we do the we careful about they've said, which want somebody with their shrinkage earth nuts. That let's make we sure hell want want and it, I move customer can leads,

on one of working the how perfect So been that things it. to that's we've

sure. sales is the burdened intake, how the areas as bring -- we've hiring, the part train here of really, That's to company your be salespeople at that's roll keep bringing on. out, up added best company added we're our me, and one one right things folks for of add And materials, to this excuse Memphis stores. to on fulfillment out, stores. business looking with say, just I'd sending we looking burdened helping of sending we of and the these but folks where which of areas try better point-of-sale So the to and But at stores we've now in the that's

Michael Diana

is convenience XX,XXX year And the stores. of think Okay. for the I you target end the said

the what stores? imagine through that you percentage, be convenience would hit made what ACP would you then sign-ups part your target, of If

Brian Cox

that a through it it's doing, to good the goal That's increase by be of just but It's year splitting with increase XX-XX, the split the end My shift. simultaneous question. but also subscribers we're what them would to store. not

field your constant you've the per increasing a store. -- while So got sales would remain sales

So be I'd positive with would that. subscribers, what together, now, but more hand-in-hand XX-XX which we're also doing them to like than have a net

one most our really I'm non-ACP big the about, valuation which excited part is probably picture of subscribers. of And things is our a

watching or accelerated from third who before green gentlemen the MVNOs whether got parties. with I'm board, me rollout the and folks weekly have you all owning conventions, prepaid start-up meetings. roll the what's run have would normally the be that on ASAP. right it's now, I've having have we developers. absolute need We're a of wireless They've onboard out where branding companies brought all light luxury of about of to prepaid company. to working wireless say, events, But would the you the category what that the, other with in software already the unique attending ours have of third-party is normally We across platforms that. let's

buying the of of thousands have hundreds AT&T and with T-Mobile already We subscribers. of power

and competitive throat do and do with unique that's they the shelf I We have don't we already Like inventory So ear. their a their have somebody store making as opposed to we you. trying do to the money jam space. by advantage upsell have really -- It's owner where see do they said, -- operator, down relationship us a way, a profit partner. with it's, very to that store unique that's the as

So we're going that leverage and to it. utilize

Michael Diana

all interesting. That’s Thank All very very, right. Brian. you,

Brian Cox

the Appreciate questions. Thank you, Michael.

Operator

Brian closing remarks. concludes This for conference any like session. our over the back to would to question-and-answer Cox turn I

Brian Cox

I SurgePays in for Again, shareholders, to and you, joining for forward the call. look next you are interested and of those everyone who Sure. thank you quarter. to Thank talking Thank appreciate you. you

Operator

now for presentation. attending conference concluded. The today's Thank has you

disconnect. may You all now

SurgePays (SURG) 10 Aug 232023 Q2 Earnings call transcript