SurgePays, Inc (SURG) reported its fourth-quarter earnings after the close on Tuesday, revealing a GAAP EPS of $0.19, which fell short of the consensus estimate of $0.40. The company's revenue for the quarter was $32.3 million, also missing the consensus estimate of $33.55 million and reflecting an 11% decline from the same quarter last year. Following the earnings release, SurgePays' stock price plummeted by 25%, indicating a strong negative market response to the earnings and revenue miss.
Despite the fourth-quarter shortfall, SurgePays experienced a strong full year in 2023, with a 13% increase in annual revenue to $137.1 million. The company's gross profit for the year soared by 165% to $35.6 million. The net income for the full year was reported at $20.6 million, a significant turnaround from a net loss of -$0.7 million in the previous year. The company attributes its yearly success to the growth in its Mobile Virtual Network Operations (MVNO), which saw a subscriber count increase to over 260,000 wireless ACP subscribers by year-end 2023.
Chairman and CEO Brian Cox commented on the company's performance, "2023 was an excellent year for SurgePays. Our management team has done an outstanding job executing our growth strategy and delivered record financial results." He also highlighted the company's vision to leverage convenience stores and bodegas to distribute financial technology and prepaid wireless services to the underbanked.
The company's earnings miss for the fourth quarter was driven by lower-than-expected revenue, which was impacted by the ACP's cessation of new applications for enrollment in February, with the program expected to run out of funding in April 2024. SurgePays is hopeful that Congress will continue to fund the ACP, which assists over 20 million households.
Looking ahead, SurgePays plans to focus on expanding its ACP customer base and growing its non-subsidized MVNO business and Comprehensive Platform Services. The company's strategy includes organic sales growth, key hires, and potential acquisitions that align with its business model.
Investors reacted negatively to the fourth-quarter earnings and revenue miss, as reflected in the significant drop in the company's stock price. SurgePays will now be focusing on regaining momentum and executing its growth strategy in the upcoming quarters.