SurgePays(US:SURG)2022-05-16 17:38Financial Data and Key Metrics Changes - SurgePays reported revenues of $21.1 million for Q1 2022, a 92% increase from $9.9 million in Q1 2021, primarily driven by subscriber growth in the mobile broadband business [29] - Gross profit increased by 133% to $2.6 million compared to $1.1 million in the previous year [29] - The net loss narrowed to $1.2 million, or a loss of $0.10 per share, compared to a net loss of $4.8 million, or a loss of $1.85 per share in Q1 2021 [31] - EBITDA loss improved to $873,000 in Q1 2022 from a loss of $4 million in Q1 2021, with expectations of becoming EBITDA positive in Q2 2022 [32][33] Business Line Data and Key Metrics Changes - The mobile broadband subscriber business showed significant growth, with over 100,000 subscribers enrolled in the Affordable Connectivity Program (ACP) [14] - Each subscriber generates $30 of monthly recurring revenue, with a gross margin of approximately 40% per subscriber [14] Market Data and Key Metrics Changes - The Affordable Connectivity Program is now a permanent part of the government budget, aimed at bridging the digital divide for low-income households [11][12] - The FCC plans to spend $100 million on ACP outreach programs over the next five years to reach underserved individuals and families [13] Company Strategy and Development Direction - The company aims to reach $1 billion in annual sales with profitable growth, focusing on underserved communities [28] - SurgePays is expanding its sales force and has ramped up ordering of phones and tablets to support growth [17] - The acquisition of Torch Wireless allows SurgePays to offer services in all 50 states, enhancing its market reach [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth trajectory, emphasizing the importance of grassroots approaches to reach underserved markets [22] - The company is focused on maximizing growth opportunities despite short-term cash flow challenges, with expectations of positive EBITDA in the near future [20][21] Other Important Information - The company has a cash balance of $3.4 million as of March 31, down from $6.3 million at the end of 2021, with accounts receivable increasing by almost 74% due to subscriber growth [34][35] - SurgePays has minimal debt, allowing for a focus on investing in business growth and maintaining liquidity [35] Q&A Session Summary Question: Do larger companies pose a competitive threat? - Management indicated that larger companies are not focused on the underserved market due to economic challenges and lack of a prepaid model [43][46] Question: Is borrowing for short-term cash flow a consideration? - Management confirmed that leveraging receivables from the FCC for lines of credit is being considered to manage cash flow challenges [48][49] Question: Are there issues with customer churn? - Management acknowledged some churn but noted that the ACP limits customers to one tablet per year, which helps retain subscribers [54][55] Question: Any supply chain issues or inflation impacts? - Management reported no significant supply chain issues and maintained good relationships with suppliers, ensuring device availability [58][60] Question: Update on LogicsIQ and spin-off plans? - Management confirmed that LogicsIQ is on track to meet revenue projections and that the spin-off is progressing positively with SEC feedback [77][82]