SurgePays Announces First Quarter 2023 Financial Results

Company to host conference call to discuss results at 5:00 p.m. ET / 2:00 p.m. PT

  • Net income of $4.5 million
  • Gross profit of $7.7 million
  • EPS of $0.32
  • $5 million EBITDA
  • Gross profit margin increased to 22.1%

BARTLETT, Tenn., May 11, 2023 (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 first quarter ended March 31, 2023.

First quarter 2023 Highlights

  • Revenue of $34.8 million in the first quarter, an increase of 64% over the prior year period.
  • Gross profit of $7.7 million in the first quarter, an increase of $5.1 million over the year-ago period.
  • Net income of $4.5 million in the first quarter, compared to a net loss of $(1.2) million in the year-ago period.
  • First quarter 2023 EBITDA of $5.0 million compared to a 1Q22 EBITDA loss of $(848) thousand.

Management Commentary

Commenting on the quarterly results, Chairman and CEO, Brian Cox said, “Hard work is paying off as financial results continue to exhibit the success of our multi-year strategy. As a microcap in this economic environment, to have a record-breaking quarter when our primary goal of this time frame was building for the growth later in 2023 is quite rewarding. Working diligently on efficiencies, development, and margin expansion, our team generated over $4.5 million in net income from operations and EBITDA of $5.0 million in the quarter.

“The first quarter demonstrated the cash flow and profitability of our plan, and we believe this is only the beginning with the best yet to come as we push to scale growth under this model. We’ve succeeded and continue to succeed in making significant advances in the financial profile of the company. The majority of all our departments have been focused on ramping up the number of convenience stores on the SurgePays network. Our development, sales, training, and support teams have all been progressing on enabling in-store Affordable Connectivity Program (“ACP”) wireless subscriber activations. This allows store owners to earn revenue by helping those in their underserved community get connected. We are utilizing this great program as the enticing catalyst to build what is now over 25,000 stores to be onboarded with a staging target of less than 12 months. This will create one of the largest direct distribution networks of underbanked products and services in the country.

“Handset and tablet devices started arriving in the last few weeks of the quarter, so we are seeing our inventory replenished by utilizing our non-dilutive financing facility. This has us primed for revenue expansion and coincides with accomplishing this groundwork for 2023 growth. We believe our company operations can thrive in any macro-economic climate, and posting more consecutive quarters like the earnings we are reporting today while scaling revenue higher will substantially enhance value for our shareholders,” Mr. Cox concluded.

Management Discussion & Analysis

SurgePays is a technology and telecom company focused on the underbanked and underserved communities. SurgePhone and Torch Wireless provide subsidized mobile broadband to over 250,000 low-income subscribers nationwide. The SurgePays fintech platform empowers clerks at thousands of convenience stores to provide a suite of prepaid wireless and financial products to underbanked customers.

During the first quarter ended March 31, 2023, overall revenue increased by $13.6 million or 64% as compared to the previous year. The increase was primarily due to revenues related to providing mobile broadband and wireless service to low-income subscribers through the Affordable Connectivity Program (“ACP”).

Operating income improved overall to $4.7 million in the first quarter of 2023 compared to a loss of $1.0 million in the first quarter of 2022.

Net income in the first quarter of 2023 was $4.5 million compared to a net loss of $(1.2) million in the first quarter of 2022. EBITDA increased to $5.0 million in the first quarter compared to ($848) thousand in the first quarter of 2022.

New wireless devices began arriving in March and continue to arrive weekly. The Company anticipates that the unthrottled sales capacity could result in considerably more than doubling the subscriber base in 2023. Beta testing of ACP sign ups in local convenience stores has exceeded expectations by capitalizing on our customer base paying with their SNAP (EBT) card. Management believes that the early positive results will result in higher sales at considerably lower cost per acquisition.

Business Outlook

For the full year 2023, the Company expects to achieve the following targets:

  • Total revenues of at least $190 million
  • Positive operating cash flow in 2023
  • 13,000 stores transacting on the SurgePays Network
  • Over 500,000 wireless subscribers

Conference Call and Webcast Information

The Company plans to release financial and operational results for the first quarter 2023 at market close on Thursday May 11, 2023. 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 1Q23 Webcast Link, as well as on the company’s investor relations website at

Telephone access to the call will be available at 877-407-9208 (in the U.S.) or by dialing 201-493-6784 (outside U.S.).

A telephone replay will be available approximately one hour following completion of the call through Thursday, May 25, 2023. To access the replay, please dial 844-512-2921 (in the U.S.) or 412-317-6671 (outside U.S.). Enter Conference ID #0151927.

About SurgePays, Inc.

SurgePays, Inc. is a technology and telecom company focused on the underbanked and underserved communities. SurgePhone and Torch Wireless provide subsidized mobile broadband to over 250,000 low-income subscribers nationwide. SurgePays fintech platform empowers clerks at over 8,000 convenience stores to provide a suite of prepaid wireless and financial products to underbanked customers. Please visit 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,” 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. 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, 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, 2022. 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 
561 489 5315

Consolidated Balance Sheets

  March 31,
  December 31,
Current Assets        
Cash $8,862,085  $7,035,654 
Accounts receivable- net  9,659,552   9,230,365 
Inventory  15,521,970   11,186,242 
Prepaids  169,951   111,524 
Total Current Assets  34,213,558   27,563,785 
Property and equipment - net  572,991   643,373 
Other Assets        
Note receivable  176,851   176,851 
Intangibles - net  2,616,601   2,779,977 
Internal use software development costs - net  511,959   387,180 
Goodwill  1,666,782   1,666,782 
Investment in CenterCom  387,235   354,206 
Operating lease - right of use asset - net  420,665   431,352 
Total Other Assets  5,780,093   5,796,348 
Total Assets $40,566,642  $34,003,506 
Liabilities and Stockholders’ Equity        
Current Liabilities        
Accounts payable and accrued expenses $5,645,450  $5,784,374 
Accounts payable and accrued expenses - related party  1,963,209   1,728,721 
Installment sale liability  15,044,897   13,018,184 
Deferred revenue  713,321   243,110 
Operating lease liability  40,384   39,490 
Notes payable - related parties  1,108,150   1,108,150 
Notes payable - net  1,142,138   1,542,033 
Total Current Liabilities  25,657,549   23,464,062 
Long Term Liabilities        
Note payable  42,561   53,134 
Notes payable - related parties  4,026,413   4,493,798 
Notes payable - SBA government  470,378   474,846 
Operating lease liability  388,971   399,413 
Total Long Term Liabilities  4,928,323   5,421,191 
Total Liabilities  30,585,872   28,885,253 
Commitments and Contingencies (Note 8)        
Stockholders’ Equity        
Common stock, $0.001 par value, 500,000,000 shares authorized
14,176,914 and 14,116,832 shares issued and outstanding, respectively
  14,177   14,117 
Additional paid-in capital  41,097,399   40,780,707 
Accumulated deficit  (31,257,765)  (35,804,106)
Stockholders’ equity  9,853,811   4,990,718 
Non-controlling interest  126,959   127,535 
Total Stockholders’ Equity  9,980,770   5,118,253 
Total Liabilities and Stockholders’ Equity $40,566,642  $34,003,506 

Consolidated Statements of Operations

  For the Three Months Ended March 31, 
  2023  2022 
Revenues $34,776,443  $21,141,372 
Costs and expenses        
Cost of revenue  27,081,960   18,507,741 
General and administrative expenses  2,989,421   3,683,782 
Total costs and expenses  30,071,381   22,191,523 
Income (loss) from operations  4,705,062   (1,050,151)
Other income (expense)        
Interest expense  (192,326)  (169,645)
Gain (loss) on investment in CenterCom  33,029   (25,183)
Total other income (expense) - net  (159,297)  (194,828)
Net income (loss) including non-controlling interest  4,545,765   (1,244,979)
Non-controlling interest  (576)  (32,645)
Net income (loss) available to common stockholders $4,546,341  $(1,212,334)
Earnings (loss) per share - attributable to common stockholders        
Basic $0.32  $(0.10)
Diluted $0.31  $(0.10)
Weighted average number of shares outstanding - attributable to common stockholders        
Basic  14,131,276   12,063,834 
Diluted  14,535,223   12,063,834 

Reconciliation of Net Income (loss) from Operations to EBITDA

   Three months ended  Three months ended
  March 31, 2023 March 31, 2022
Revenue  $34,776,443  $21,141,372 
Cost of revenue (exclusive of depreciation and amortization)  27,081,960  18,507,741 
General and administrative expenses  2,989,421  3,683,782 
Loss from operations  $4,705,062  $(1,050,151)
Net loss to common stockholders  4,546,341  (1,212,334)
Interest expense  192,326  169,645 
Depreciation and Amortization  276,710  195,020 
EBITDA $5,015,377  (847,669)