Surgepays (SURG) Q1 2025 earnings summary

Executive summary

• Q1 2025 revenue was $10.6 million, down 66% year-over-year due to the end of ACP funding and a strategic shift to Lifeline and retail-focused offerings.

• Net loss for Q1 2025 was $7.6 million, compared to net income of $1.2 million in Q1 2024, reflecting the revenue decline and margin compression.

• Platform service revenue grew to $8.3 million, up 232% year-over-year, offsetting some of the MVNO segment's decline.

• Completed nationwide AT&T integration, transitioning to a direct carrier partner model and launching as both MVNO and MVNE.

• Closed $7 million financing, including $6 million in cash, to accelerate expansion and growth initiatives.

Financial highlights

• Q1 2025 revenue: $10.6 million (down from $31.4 million in Q1 2024); net loss: $7.6 million (vs. net income of $1.2 million prior year).

• Gross margin for Q1 2025 was negative 27.8%, compared to 26% in Q1 2024, driven by the loss of ACP funding and higher cost absorption.

• Cash and equivalents were $5.4 million as of March 31, 2025, down from $11.8 million at year-end 2024.

• Operating cash flow for Q1 2025 was negative $7.0 million, compared to positive $4.0 million in Q1 2024.

• Working capital at March 31, 2025 was $4.1 million, with total assets of $15.7 million and total liabilities of $7.9 million.

Outlook and guidance

• Reaffirmed guidance for over $200 million in revenue for the 12 months beginning April 1, 2025.

• Expects to be cash flow positive by December 2025.

• Revenue from new MVNE partners anticipated to begin in Q2 2025, with recurring high-margin revenue.

• Strategic focus includes expanding retail distribution, growing the California Lifeline subscriber base, and leveraging new technology partnerships.

• Liquidity remains a concern; additional funding may be required to sustain operations over the next 12 months.