SRAX Reports 75% Revenue Decline and $6 Million Net Loss for Q2 2023

SRAX, Inc. reported significant financial challenges in its latest 10-Q filing for the quarter ending June 30, 2023. The company generated revenues of $1.9 million for the three months ended June 30, 2023, a decrease of 75% compared to $7.7 million in the same period last year. For the six months, revenues totaled $5.9 million, down 61% from $15.2 million in 2022. The decline is attributed to a strategic shift from accepting marketable securities as payment to a cash-only model, which has slowed customer acquisition and reduced overall revenue.

The company's operating expenses also saw a notable reduction, totaling $2.3 million for the three months ended June 30, 2023, compared to $7.3 million in the prior year, marking a 68% decrease. This reduction was primarily driven by lower costs associated with revenues, which fell from $4 million to $138,000, and a significant decrease in depreciation and amortization expenses. Despite these reductions, SRAX reported a net loss of $6 million for the quarter, a substantial improvement from the $23 million loss reported in the same period of 2022.

In terms of strategic developments, SRAX completed the divestiture of its subsidiary, LD Micro, Inc., on March 3, 2023, which resulted in a gain of $594,000. The company also acquired assets from DNA Holdings, LLC in February 2023, issuing 1.3 million shares of Class A common stock as part of the transaction. This acquisition is expected to enhance SRAX's capabilities in the Web3 investment space.

Operationally, SRAX's customer engagement metrics have been impacted by the transition to a cash-only payment model. The company reported a working capital deficit of $8.97 million and an accumulated deficit of $65.4 million as of June 30, 2023. The total liabilities stood at $16.2 million, down from $27.3 million at the end of 2022, reflecting the company's efforts to streamline its financial position. The company had no cash on hand at the end of the reporting period, raising concerns about its liquidity and ability to fund ongoing operations.

Looking ahead, SRAX anticipates the need to raise additional capital to support its operations. The company is exploring various financing options but faces challenges due to its recent delisting from NASDAQ, which may hinder its ability to attract investors. Management remains focused on optimizing its cost structure and enhancing revenue generation strategies to improve its financial standing in the coming quarters.