Reports In-Line 1Q24 Results; Outlines Bold Objectives for Prepaid
After the close on Monday, SurgePays reported in-line 1Q24 results. Total revenue of $31.4 million was in line with our $31.6 million estimate but easily beat consensus of $25.3 million. Upside to consensus may be the result of the Street taking a much more conservative approach to the cessation of the ACP. EPS in line with our estimate despite impact of one-time compensation items. SURG reported 1Q24 EPS of $0.07 versus our $0.08 estimate, despite management calling out $2 million in one-time, non-cash items related to management compensation. Adjusting for this, EPS would have been closer to $0.15, in line with consensus. Wireless up slightly despite the winddown of ACP funding. Wireless revenue was up just slightly Y/Y to $28.9 million, slightly better than our $28.7 million estimate. The slight Q/Q decline reflects the uncertain funding of the ACP program, which stopped enrolling new participants in early February. LinkUp Wireless launch imminent with management setting bold objectives for the new prepaid service. Although management has mentioned plenty of preliminary work, it indicated LinkUp will have online announcements over the next couple of weeks. In addition, it has reiterated that it can meet or exceed its ACP business within 12 months of launch. Plenty of activity in Washington DC to resume funding of ACP. Management feels confident regardless. With plenty of politicking going on, it remains unclear when and how (or even if) the ACP will be funded. However, based on management’s discussion, it would appear the program has plenty of bipartisan support, so hope is clearly not dead. With more than $40 million in cash and the imminent launch of LinkUp Mobile, SurgePays management believes it is in great shape regardless, and excellent shape should ACP live on.
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