SurgePays, Inc.

Good day, and welcome to the SurgePays, Inc. Second Quarter 2022 Earnings Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brian Pregnimo. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to the SurgePays Second Quarter 2022 Earnings Webcast and Conference Call. Today's date is August 11, 2022, and on the call today from Surge Pays are Brian Cox, President and Chief Executive Officer, and Tony Evers, Chief Financial Officer. Before we begin, I'd like to remind everyone that this call may contain forward-looking statements, as they are defined under the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. For a discussion of such risks and uncertainties, please see surge pay's most recent filing with the SEC. While forward-looking statements made today reflect our current expectations only, and we undertake no obligation to update any statement to reflect the events that occur after this call. Also, during the course of today's call, the company will be discussing one or more non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure are included in the press release we issued this afternoon. Copies of today's press release are accessible on SurgePay's investor relations website, ir.surgepays.com. In addition, SurgePay's Form 10-Q for the quarter ended June 30, 2022 and will also be available on SurgePay's investor relations website. And now, I'd like to turn the call over to President and Chief Executive Officer, Brian Cox.

Thanks, Brian. We were tremendously busy in the second quarter of this year, and the hard work of the team is translating to not just growth, but growth with a strategic direction. Revenue exceeded $28 million for the second quarter, which is a 146% increase compared to last year. The revenue trajectory is in line with the growth that we laid out earlier this year. So we're thrilled with the progress we've been making, but even more excited about where the company can go in the future. Last month, we announced that we had eclipsed 150,000 subscribers in our mobile broadband business through the affordable connectivity program. Our target by the end of the year was 200,000 customers, which I believe will exceed. but I want to take time to speak more of the big picture about growing our business and the long-term opportunity that's available to us. The ACP program continues to provide affordable broadband internet access to low-income households. Estimates vary, but we believe anywhere from 30 to 50 million households are eligible for this program. This is all to say that while 200,000 subscribers is a nice goal for 2022, We believe there's significant room for growth beyond that, and we need to be strategic and long-term minded in our decision making and how we operate the business. Growth and progress are never linear, and we're working tirelessly to fine tune our operations, analyze performance, and tighten the screws where necessary. As an example, in some of our recent analysis, we noticed that our higher data users were driving up average usage costs. So we went back to our carriers, we negotiated a new wholesale plan, which would ensure that no user could use beyond the cost of $15 per month to us. By pushing heavy users to this plan, we can now hedge costs, which should allow us to drive our average costs back down to around $12 per month. Our estimates show this would be an immediate impact of roughly $100,000 in savings per month. We're not simply looking to get the highest subscriber level as quickly as possible. We're looking to build a successful business to maximize the opportunity that's been presented to us. One area where that's paramount is managing our cash and cash flow, deploying that cash in the best manner possible. I like to look at current assets as a gauge for where we've been, where we are, and if we're on target. Accounts receivable has steadily increased throughout the year from $3.2 million at the end of 2021 to $5.6 million at the end of the first quarter to $8.3 million at the end of the second quarter. At the end of the second quarter, we had $8.7 million of cash compared to $3.4 million at the end of the first quarter. The June 30, 2022 cash total includes the final cash payments made for the acquisition of Torch Wireless. Where this available cash could have been used to buy tablets and add subscribers, we believed and still believe that the acquisition of Torch provides us with a much better long-term growth opportunity. Recall that with Surge Phone Wireless, we were only licensed to offer this program in 14 states. With the acquisition of Torch Wireless, we can now offer the program in all 50 states and can significantly ramp up wireless subscribers online. Torch has the additional benefit of also being a licensed lifeline carrier in certain states as well. In addition to Torch Wireless, in the second quarter we purchased a client relationship management, or CRM, software platform that we had been using as a central nervous system for managing our wireless business. The CRM houses customer information, is integrated with underlying wireless carriers, manages the plans, metering, the customer service, compliance, billing, and is connected to the FCC's database clearinghouse. We were expensed for this service on a per-subscriber basis, and as subscribers increased, our costs also increased. Looking at the growth opportunity and our internal goals for subscribers of the next few years, we made the strategic decision to buy the system outright and believe it will be cheaper to buy now than what the annual expense would be at 500 to 600,000, up to a million subscribers. The CRM platform has been rebranded as Shockwave, and interested parties can check it out by visiting shockwavecrm.com. That's shockwavecrm.com. We're doubly excited about the Shockwave CRM because it can be licensed out to other companies as well and be another source of revenue for the company. The CRM currently has six other ACP and Lifeline companies using the system and provides high margin software as a service revenue to our business. This isn't the main focus of SurgePays, but it does provide nice ancillary revenue to stream the company. I wanted to highlight these opportunities to demonstrate how our team is thinking about the overall potential of this business. The cash used for Torch Wireless and to purchase the CRM could have easily been used to buy more tablets, sign up subscribers, and pump our numbers for the second quarter. However, we believe that's short-term thinking. In our analysis, the cash used to buy Torch and the CRM provide a far greater payoff down the road. We have the ability to offer ACP in all 50 states. We can manage our customer base more efficiently. We believe we can lower costs all while continue to grow our subscriber base at a really impressive rate. Going forward, we continue to balance the need for growth with the cash flow provided and the cash opportunities. We've discussed various financing opportunities in the past, and we are close to obtaining a receivables financing line. We believe a more significant line of credit backed by the US government receivable will allow us to ramp our wireless subscriber growth over a longer period of time with less dilution. Yes, this was probably not the easiest route and has created more strain on the management team than a simple equity race. However, we think the hard work and longer timeframe is worth it as we can raise money to fund growth while not diluting shareholders and keeping float essentially the same as where it was when we listed on the NASDAQ. I honestly couldn't be more excited about all of the progress we've made as a company, but also how much more we can achieve. I'm extremely proud of how much we've been able to accomplish in a short amount of time and that the results are starting to be demonstrated in our financial results. Revenue growth is accelerating. We're learning more and more about our subscriber base each month. We have more cash to fund growth and more tools at our disposal today than we did three or six months ago to drive growth even further. As I've said before, we believe we are uniquely positioned to best offer these products and services to the underbanked and underserved because for so long these communities have been overlooked by larger corporations. The ACP program is a great government initiative that provides invaluable internet access to households that previously could not afford it. We want to gauge success by growing revenue and profit, obviously, but also believe we can do this by providing valuable services that most of us on this call take for granted. Being a licensed provider of mobile broadband is a perfect complement to our existing business of providing financial services to underbanked and underserved communities. We still have a goal to reach $1 billion in annual sales with profitable growth and in communities that haven't been adequately addressed. We are now operating a business that has the ability to grow organically or through accretive acquisitions and better serve our customers. I'll turn the call over to Tony to provide a brief review of the financial results before summarizing today's call. Tony?