SurgePays (NASDAQ:SURG) reported a sharp increase in first-quarter 2026 revenue as management said the company’s efforts to diversify beyond a single product line began to show up in its financial results.
Chief Executive Officer Brian Cox said revenue rose approximately 51% year over year to $16 million, driven primarily by growth in point-of-sale and prepaid services. Interim Chief Financial Officer Chelsea Pullano later confirmed that revenue for the three months ended March 31, 2026, was $16 million, compared with $10.6 million in the prior-year period.
Wireless Subscriber Base Tops 200,000
Cox said total wireless subscriber lines across the company’s LinkUp Mobile and Torch Wireless brands surpassed 200,000 during the quarter. He described the milestone as the result of several quarters of work to scale the prepaid wireless business internally.
The company also initiated a buy-one-get-one promotional campaign in its prepaid wireless business, which Cox said was designed to increase subscriber growth and market penetration across both retail and digital channels.
During the question-and-answer portion of the call, Edward Woo of Ascendiant Capital Markets asked about the company’s long-term subscriber target. Cox said the company would be “happy once we’ve surpassed the 1 million subscriber mark,” referring to subscribers under the LinkUp and Torch Wireless brands, while adding that management ultimately wants to move beyond that level.
Cox said the company is focused on improving margins and reducing acquisition costs before scaling more aggressively. “Instead of just scaling for the sake of scaling, let’s reduce our costs, if not eliminate the cost to acquire customer,” he said.
In-House Marketing Lowers Acquisition Costs
A major operational shift during the quarter was SurgePays’ move to bring subscriber acquisition in-house after relying on third-party advertising agencies for the past five years, Cox said.
Since making that transition, Cox said the company has reduced cost per lead by approximately 28%, lowered cost per enrollment by approximately 48% and increased its lead-to-enrollment conversion rate by approximately 39%.
“We are paying less to acquire each new customer,” Cox said. “Fewer of those leads fall out of the funnel, and the customers we bring on cost materially less than they did one quarter ago.”
Cox also highlighted ProgramBenefits.com, which he described as both a unified intake and decisioning platform and a monetization layer for the company’s subscriber base. He said internal upsells, top-up cross-sell, affiliate offers and data partnership initiatives are now generating revenue against those subscribers, partially offsetting acquisition costs.
Distribution and Retail Monetization Expand
SurgePays said it closed six new wholesale distribution partners during the quarter, including three master agent agreements covering more than 3,000 retail locations under contract and three independent sales organization agreements. Cox said onboarding is underway, with initial volume contributions expected in the second quarter of 2026.
The independent sales organization additions alone are expected to lift monthly prepaid top-up volume on the company’s distribution platform by approximately 30% once fully integrated, Cox said.
The company’s retail footprint now includes more than 9,000 convenience store locations nationwide. Cox said SurgePays has added new revenue opportunities on top of that network, including a stored value and loyalty program that allows merchants to offer branded gift cards, store credit and loyalty programs through the SurgePays point-of-sale system.
SurgePays also deployed a managed marketing services platform that turns standard smart TVs in stores into a media network controlled by the company for its own products and third-party advertisements.
Loss Widens Despite Revenue Growth
Pullano said general and administrative expenses were approximately $3.5 million in the first quarter, down from approximately $4.6 million in the prior-year period. She said the decline reflected cost discipline initiated in 2025.
However, SurgePays’ loss from operations widened to approximately $11.2 million from approximately $7.6 million a year earlier. Pullano said the change reflected the mix of revenue growth against current cost of revenue, along with increased interest expense and non-cash items.
Interest expense, including amortization of debt discount, was approximately $0.9 million, compared with approximately $0.1 million in the prior-year quarter. Pullano said the increase reflected financing activity executed during the second half of 2025 and into 2026.
Net loss available to common stockholders was approximately $12.1 million, or $0.51 per basic and diluted share, compared with approximately $7.6 million, or $0.38 per share, in the prior-year period.
Net cash used in operating activities improved to approximately $4.6 million from approximately $7 million in the prior-year period. Net cash provided by financing activities was approximately $5 million, and the company reported a positive $0.4 million net change in cash equivalents and restricted cash for the quarter. Cash and cash equivalents totaled approximately $2 million at March 31, 2026, while total cash equivalents and restricted cash were approximately $2.4 million.
Management Points to Second-Half Contributions
Looking ahead, Cox said SurgePays expects continued revenue growth driven by point-of-sale and prepaid services, supported by the buy-one-get-one wireless campaign and the expansion of its wholesale distribution channel.
He said the six new distribution partners signed during the quarter are expected to begin contributing volume in the second quarter and ramp through the back half of the year as master agent locations come online.
On the wholesale wireless side, Cox said signed contracts with multiple MVNO and MVNE customers on the company’s Hero Wireless platform are in various stages of technical integration. One customer has already taken delivery of custom SIM cards ahead of launch, and initial customer rollouts are expected in the second quarter, with wholesale wireless revenue anticipated in third-quarter results.
Cox also said the company continued advancing its strategic relationship with Alpha Modus Holdings. According to Cox, the framework was executed after quarter-end on May 1, and the joint pilot launch was announced on May 12.
“SurgePays today is no longer a single product story,” Cox said. “Every consumer we acquire is now a multi-product opportunity rather than a single product transaction.”
About SurgePays (NASDAQ:SURG)
SurgePays, Inc, together with its subsidiaries, operates as a financial technology and telecom company in the United States. It operates through three segments: Mobile Virtual Network Operators, Comprehensive Platform Services, and Lead Generation. The company offers subsidized and non-subsidized mobile virtual network operators for internet connectivity through mobile broadband services to consumers; ACH banking relationships and fintech transactions platform to convenience stores; wireless top-up transactions and wireless product aggregation; and lead generation and case management solutions primarily to law firms in the mass tort industry, as well as call center activities.
