SurgePays (SURG -1.03%) reported its fiscal Q2 2025 earnings on August 5, 2025 (for the quarter ended June 30, 2025), with revenue rose 8.9% quarter over quarter to $11.5 million and issued revenue guidance of $75 million to $90 million for 2025 and $225 million to $240 million for 2026. The call highlighted a substantial acceleration in subscriber activations in the Lifeline business, with 20,000 activations in June, 57,000 in July, and a projection of 80,000 to 90,000 activations (approximately 3,000 per day) by September 2025, strategic operational realignment after the ACP wind-down, and SG&A expenses decreased 45% year over year, primarily due to reductions in non-cash employee compensation, contractors, and professional fees, all amid continued operating losses and cash and cash equivalents and investment balances were $4.4 million. Key insights from the call reveal how management is leveraging regulatory-driven segment shifts, competitive execution, and proprietary technology to scale both revenue and margin opportunities.

SurgePays issues aggressive multiyear revenue guidance

The company pivoted away from the terminated federal Affordable Connectivity Program (ACP) to focus on subsidized Lifeline wireless and its MVNO (Mobile Virtual Network Operator) LinkUp Mobile, underpinned by a new direct multi-year partnership with AT&T and rapid launches of new distribution channels. Current topline acceleration and subsequent months is attributed to higher subscriber activations and surging prepaid revenues, evidenced by a July 2025 run rate of over $60 million for top-up alone. Third-party distribution agreements are in place to drive ecosystem expansion into up to 100,000 retail locations.

"We have visibility on our growth and full confidence in providing revenue guidance of $75 to $90 million for 2025 and $225 to $240 million for 2026. Let me start with the subsidized Lifeline Wireless program through our Torch brand, which has scaled significantly. The Lifeline program is a government-subsidized benefit program that provides essential wireless connectivity to those who qualify. While the ramp in activations took about sixty days longer than we anticipated due to regulatory approvals and software platform adjustments, we are now 100% live, and activations are steadily increasing daily. After activating 20,000 Lifeline subscribers in June, we activated 57,000 in July, and are now projecting to activate 80,000 to 90,000 subscribers, approximately 3,000 per day by September. To put this into perspective, at our highest peak during ACP, we were activating roughly 3,000 per day. With Lifeline, we are approaching that level and have reached it in a significantly shorter period of time. What's even more exciting is that we're still operating well below our full capacity. Many sales channels are still being opened, so we expect continued sales growth."

-- Brian Cox, President and CEO

Hinging on rapid Lifeline subscriber growth and leveraging structural advantages as other digital and distribution channels are activated.

Gross loss narrows as cost discipline enhances margin recovery

Despite the temporary drag on profitability during the business model transition, management achieved a 45% drop in selling, general, and administrative (SG&A) expenses year over year, mainly through reductions in non-cash employee compensation, contractors, and professional fees, while funneling investment into technology and marketing. Gross loss (GAAP) narrowed to $2.7 million from $3.4 million in fiscal Q2 2024 as platform revenues increased but are still impacted by legacy ACP wind-down and frontloaded ramp-up costs.

"Gross profit was a loss of $2.7 million for 2025, compared to a gross profit loss of $3.4 million for 2024. As indicated, we continue the transition of our business model from ACP to LinkUp Mobile and Lifeline verticals. SG&A expenses decreased 45% year-over-year to $4.1 million during 2025 as compared to $7.4 million for 2024. The decrease was primarily due to a reduction in non-cash compensation to various employees along with a reduction in contractors and consultants and professional services, partly offset by an increase in computer and Internet, advertising and marketing, and other expenses. Loss from operations was $6.8 million in 2025 compared to a $10.9 million operating loss in 2024."

-- Tony Evers, CFO

SurgePays leverages technology and distribution for competitive advantage

Ownership of a proprietary enrollment and activation platform allows immediate adaptation to evolving compliance requirements and expedites sales agent onboarding, a critical point of differentiation in a fragmented and compliance-heavy industry. Active use of direct field sales (tents), digital channels, and not-yet-tapped major retail networks extends SurgePays' reach in both federal and more lucrative state-subsidized Lifeline markets, while the AT&T carrier integration and MVNE (Mobile Virtual Network Enabler) business layer open recurring B2B revenue streams. Strategic inventory control ensures sales velocity is not impaired during aggressive scaling phases.

"So incentivizing them, doing them right, a few things that we've learned over the years of really taking care of our distributors in the field is really how we've grown it this fast. And, you know, look. Everybody kinda wants to be a part of the new thing, the exciting thing, and that's what we are right now. It's a you know? But there's definitely other companies out there. There's companies who've been doing this for a long time. I think right now, we're while we don't pay as much commission, we are hands-on. A lot of the things we do, you know, we definitely utilize our, team El Salvador. You know, as for those of you out there, remember, we have a 125 specialists down there who assist in onboarding. And one of the other components that's a differentiator for us is we own our own platform. So that enrollment platform that a field agent is using that's our platform. Don't have to put in special requests and beg for a third party. And then hope somebody around the world gets around to doing the development for us."

-- Brian Cox, President and CEO

In-house technology and operational agility enable SurgePays to outpace slower-moving peers in onboarding, compliance, and agent satisfaction, accelerating subscriber and revenue growth in a high-volume market.

Looking Ahead

Management reaffirmed revenue targets of $75 million to $90 million for 2025 and $225 million to $240 million for 2026, supported by forecasts of daily Lifeline activations reaching approximately 3,000 by September 2025 and a projected run rate exceeding $60 million annually in prepaid top-up revenue as of July 2025. No additional explicit guidance on net margin, cash flow timing, or non-Lifeline business segment targets was provided in the transcript. Strategic milestones include nationwide expansion of retail distribution through HT Hackney and other partners, with a near-term goal of scaling to 100,000 active store locations on the SurgePays platform.