SurgePays(SURG)2024-08-13 23:37Financial Data and Key Metrics Changes - SurgePays reported revenues of 35.9 million in the same quarter last year, primarily due to the lack of additional federal funding for the Affordable Connectivity Program (ACP) [14][8] - Gross profit swung to a loss of 10 million in the same quarter last year, attributed to the end of ACP funding and the decision to maintain subscriber services [15][9] - SG&A expenses increased by 101% year-over-year, mainly due to additional non-cash stock compensation and contractor fees [16] Business Line Data and Key Metrics Changes - MVNO revenues were 30.2 million in the same quarter last year, reflecting the impact of the ACP funding cessation [8][14] - Surge Logics lead generation services did not contribute any sales in Q2 2024, compared to 5 million has been announced to align interests with long-term investors [11] - The company is focused on achieving positive free cash flow by the end of the year through various initiatives, including growing the ACP revenue stream and scaling up third-party wholesale transactions [12] Management's Comments on Operating Environment and Future Outlook - Management expressed uncertainty regarding the renewal of the ACP program, indicating that optimism has waned as time progresses [20] - The company is positioning itself to transition customers to alternative plans while maintaining service continuity during the funding gap [22][29] - Management believes that the current challenges present opportunities for growth and innovation, particularly in the underbanked market segment [34][40] Other Important Information - The cash balance as of June 30, 2024, was 42.9 million at the end of the first quarter, reflecting cash used to support operations during the transition [17] - The company is exploring unique market opportunities that could provide positive short-term cash flow [12] Q&A Session Summary Question: What is the outlook for the ACP funding renewal? - Management indicated that optimism regarding ACP renewal has decreased, with a threshold date set for August 1 to transition to Plan B if necessary [20][21] Question: How will the ClearLine customer engagement platform perform? - Management expressed confidence in ClearLine's technology and its potential to enhance customer engagement at convenience stores [24][25] Question: How dependent is the company on ACP for achieving cash flow positivity? - Management stated that the goal of being cash flow positive by year-end assumes the ACP is no longer available, focusing on alternative revenue streams [29] Question: Are there opportunities with carriers to mitigate costs? - Management noted that carriers may offer discounted rates to help maintain subscribers, but initial aggressive discounts have been scaled back [30][31] Question: Is the company considering other acquisitions? - Management confirmed ongoing evaluation of potential acquisitions that align with the company's growth strategy, emphasizing a focus on cash flow and market opportunities [33][37] Question: What feedback is the company receiving from the underserved market? - Management reported that the underbanked segment remains stable regardless of broader economic conditions, with opportunities for value-added prepaid wireless services [39][40]