With a very productive 2019 in the books for Surge Holdings, Inc. (OTC QB: SURG), the Company has come out of the gates quickly in 2020. So far in January, the Company was recognized in Deloitte’s 2019 Technology Fast 500™ – a ranking of the 500 fastest growing technology, media, telecommunications, life sciences, and energy tech companies in North America, announced the launch of the SurgePhone Wireless Unlimited Plan with unlimited talk, text and nationwide LTE data for only $30 a month, taxes and fees included and updated shareholders and potential investors in a well-received conference call with CEO Brian Cox. What will we see next from the company? Here are some thoughts taken from past news and interviews with SURG.
First a refresher on who is Surge Holdings, Inc. (SURG) is led by CEO Brian Cox, a veteran in the fintech and supply chain markets, and an impressive team of industry veterans from key industries that the Company operates in. SURG operates the SurgePays™ Marketplace, a product sales channel that disrupts the traditional convenience store supply chain model by providing independent and local retailers direct access to regional manufacturers from around the country. Surge leverages its wholly owned subsidiaries (value driven prepaid wireless and fintech products) to build relationships with convenience stores, bodegas, tiendas and community markets that serve the underbanked and unbanked – approximately 35% of the US population. With another 18% of the population are labeled as credit invisible.
Again, by way of a refresher, who are the underbanked? The underbanked are consumers where no one in a household has a checking or savings account or where a household has a bank account but goes outside of the bank for financial services such as money orders, check cashing, payday loans and more. This is an underserved and massive audience for Surge to provide a range of services to. Roughly 51% of the US population that is credit challenged with sub-prime credit or credit invisible.
One of the keys to the fast start in 2020 has to do with milestones achieved in 2019. As Cox states, “With the infrastructure and SurgePays™ Marketplace software platforms that we built and completed in Q3 2019, we are now able to leverage our prepaid, cellular top off software to build the relationship with the corner stores, convenience stores, bodegas, that serve the underbanked market and offer these stores and thereby their customers, other consumable hot selling products that we can either save them money or provide them access to because they may be out of the reach of traditional sales channel efforts.”
As stated above, SURG reaches this market through a network of convenience store community “hubs”. For mobile phone service, electronic check service, and a range of products, and services provided through a network of convenience store community “hubs”, SURG is an innovator at targeting this underbanked market. SURG provides these community “hubs” a digital supply chain solution, developed similar to Alibaba’s approach eliminating middlemen creating efficiencies and cost savings.
The retail stores become a profit partners to SURG as well as providing access to this large consumer addressable market. Now that the pipeline is created, SURG scales exponentially as they add new stores and products to their network.
The pipeline mentioned above grew late in 2019 with the acquisition of a key competitor the ECS Prepaid Wireless Business and Software Platform. This move instantly adds almost 10,000 locations that ECS is already profit partners with. Now, add to that the $48.7 million in annual projected revenue that ECS brings, and a total of 165 salespeople that come with ECS. Then add to that the growing sales force Cox has talked about in recent interviews and you can see that his oft mentioned goal of having the SurgePays™ Marketplace software platform in 100,000 stores by 2021 is very doable.
Thanks in large part to the to the acquisition of ECS, Surge has gone from a company with an annualized revenue run rate $15 million in 2018 to an annualized revenue run rate of approximately $60 million. Anthony Nuzzo, President of Surge, stated, “In just a few short years, we grew from a monthly revenue run rate of approximately $125,000 to over $5 million per month. We achieved these results while 2019 was primarily focused on product development and building our infrastructure to support our anticipated continued growth going forward.”
Now in 2020, SURG has once again tapped into a hefty market of 100 million in the no-contract “pay as you go” customers in the United States with its SurgePhone Wireless Unlimited Plan. This is the low cost, flat rate and value driven unlimited plan that their core consumer base has been asking for. SurgePhone Wireless is also offering a $10 a month starter plan with unlimited text, 16 hours of talk and 1 Gig LTE data. Anthony Nuzzo, President of Surge, stated “We believe this disruptive product will attract more convenience stores to the SurgePays™ Marketplace due to retailers looking to cash in by selling the retail SIM kits and additionally making monthly commissions from processing the $30 payments. This product, along with our complementary $10 Basic plan rounds out our branded wireless offerings. Incentivizing discounts for our customers using SurgePhone, the SurgePays™ Prepaid Debit card and our recently launched rewards programs will help build brand loyalty within our Surge ecosystem.”
This new offering falls right in line with other products and services offered by SURG that build off each other. Which plays out a recurring theme in the Surge strategy: add mores “hubs” then add more products and services to sell into those” hubs”. To sum it up, Surge is building a digital solution for selling goods and services to an overlooked market segment of 100 million US residents unable to participate in 21st century digital consumer activity because of a lack of access to core banking and credit services.
2020 is the year that Brian Cox has pointed to throughout 2019. This is the year where the foundation and software platform that was built in 2019 will be coupled with aggressive expansion plans for not only growing the sales team but adding to the rapidly growing list of new “hubs”.
About the Author
Stuart Smith is the CEO and Founder of SmallCapVoice.com. SmallCapVoice.com. is a recognized corporate investor relations firm, with clients nationwide, known for its ability to help emerging growth companies build a following among retail and institutional investors. SmallCapVoice.com utilizes its stock newsletter to feature its daily stock picks, audio interviews, as well as its clients’ financial news releases. SmallCapVoice.com also offers individual investors all the tools they need to make informed decisions about the stocks they are interested in. Tools like stock charts, stock alerts, and Company Information Sheets can assist with investing in stocks that are traded on the OTC BB and Pink Sheets. To learn more about SmallCapVoice.com and their services, please visit https://www.smallcapvoice.com/small-cap-stock-otc-investor-relations-financial-public-relations/
