Breaking Down SRAX, Inc. (SRAX) Financial Health: Key Insights for Investors

You are defintely right to be asking the tough questions about SRAX, Inc. right now; the numbers from their recent filings tell a story of dramatic, high-stakes transition. Honesty, if you look at the financials reported in 2025, the headline figure is the revenue drop, which is a clear near-term risk: Q2 2023 revenue came in at just $1,903,000, a sharp 75% decline from the year before, which is a massive headwind. But here's the quick math on the opportunity: that revenue drop is largely due to the strategic shift to a cash-only payment model, moving away from accepting marketable securities, and the operational side is showing real discipline, with the Q2 2023 net loss narrowing to $(6,017,000), a significant improvement from the prior year's loss. Still, the balance sheet shows the pressure, with a working capital deficit of $5,627,000 as of March 31, 2023, and total liabilities at $16,156,000, so the market is watching closely to see if the core Sequire platform can drive enough cash revenue to overcome the liquidity challenge. We need to map this complex risk-reward profile to a clear action plan.

Revenue Analysis

You need to know where the money is coming from, and for SRAX, Inc. (SRAX), the answer is simple: it's all about the software. The direct takeaway is that the company is forecasting a significant revenue jump to $95 million for the 2025 fiscal year, but this projection follows a period of sharp, intentional decline due to a major strategic pivot.

For a long time, SRAX operated with a dual revenue model, but that has changed. The company now operates as a single reportable segment, focused almost entirely on its flagship investor intelligence and communications platform, Sequire (Software as a Service). This is a clean, focused model, but it means all their eggs are in one basket. That basket, however, is a strong one, accounting for a staggering 99.75% of total revenues in the first quarter of 2023. That's defintely a focused business.

Here is the breakdown of SRAX, Inc.'s primary revenue sources:

• Sequire SaaS Platform: The core business, providing licensing subscriptions, managed services, and ancillary data services to public companies.
• Geographical Concentration: The vast majority of revenue, approximately 99%, comes from customers within the United States.

The year-over-year revenue trend is complex and needs context. The latest reported six-month period ending June 30, 2023, showed a revenue of $5.917 million, which was a 61% decrease from the $15.221 million reported in the prior year period. Here's the quick math: that's a massive drop, but it was by design.

The significant change in the revenue stream stems from a strategic decision to transition to accepting only cash as compensation for services, moving away from accepting marketable securities. This shift, while dramatically cutting the top line in the near-term, cleans up the balance sheet and reduces the company's reliance on volatile, non-cash assets. What this estimate hides is the improved operational efficiency; even with the revenue decline, the company reported a positive income from operations of $482,000 in the second quarter of 2023, compared to a loss of $(936,000) in the prior year.

To get a clearer picture of the financial health of SRAX, Inc. (SRAX), you should also look at the full analysis in Breaking Down SRAX, Inc. (SRAX) Financial Health: Key Insights for Investors. Looking ahead, the forecast for $95 million in annual revenue for 2025 suggests that management expects the cash-only model to stabilize and scale significantly, driving a major turnaround from the recent contraction.

Profitability Metrics

You're looking for a clear signal on whether SRAX, Inc. (SRAX) can translate its strategic shift into sustainable profits, and the 2025 estimates suggest a notable turn toward positive net income. The short answer is: the market is forecasting a 15.37% Net Profit Margin for the year, a significant leap from its historical losses.

This projected profitability is a function of two things: the high-margin nature of its core Sequire Software as a Service (SaaS) platform and the aggressive cost management the company has undertaken. Honestly, for a company that has historically run at a loss, this pivot is the single most important metric to watch. You can learn more about the investor base driving this valuation in Exploring SRAX, Inc. (SRAX) Investor Profile: Who's Buying and Why?

Gross, Operating, and Net Profit Margins (2025 Forecast)

The core of SRAX's business is its Sequire platform, which is a financial technology product. This SaaS model naturally carries a high Gross Profit Margin (GPM) because the cost to serve an extra customer is relatively low. While specific 2025 Gross Profit figures are not public, we can map the analyst consensus for Net Income against industry benchmarks and the company's own reported operational efficiency improvements.

Here's the quick math on the Net Margin: Analysts forecast SRAX's full-year 2025 revenue at $95 million with an Earnings Per Share (EPS) of $0.50. Given the approximately 29.2 million shares outstanding, this translates to a projected Net Income of about $14.6 million.

Trends and Operational Efficiency

The trend in profitability is the most compelling part of the SRAX story, moving from significant losses to projected double-digit net margins. In the past, the company was heavily loss-making, with a trailing twelve-month (TTM) Net Profit Margin of -113.56% as recently as October 2025. That is a massive operational turnaround.

This shift isn't just a forecast; it's grounded in clear operational actions. The company has focused on cost management, reporting a significant reduction in operating costs, specifically in the cost of revenues. This focus on the Cost of Goods Sold (COGS) is what drives the Gross Margin. A pure-play SaaS company is expected to hit Gross Margins of 75% or more. If SRAX's core Sequire platform achieves this, it provides a very large buffer of gross profit to cover its Sales, General, and Administrative (SG&A) expenses.

The improvement is clear in the Operating Income (loss) line, too. For example, in Q1 2023, the company reported a positive income from operations of $0.890 million, which was a reversal from a loss of $1.328 million in the prior year period. This shows improved operational efficiency-they're defintely running a tighter ship.

• Net Margin Outperformance: The projected 15.37% Net Profit Margin for SRAX in 2025 is substantially higher than the median SaaS industry net margin of around 2%.
• Cost Discipline: The reported significant reduction in operating costs, especially in COGS, is the engine driving the potential for a high Gross Profit Margin, aligning the company more closely with top-tier SaaS benchmarks.
• Strategic Pivot: Divesting non-core assets like LD Micro in March 2023 and shifting to a cash-only payment model, while causing a sharp, temporary revenue decline, was a necessary step to streamline operations and focus on the high-margin Sequire platform.

What this estimate hides, however, is the execution risk of scaling revenue to the projected $95 million while maintaining that cost discipline. If revenue falls short, the margins will compress quickly.

Next Step: You should model a sensitivity analysis where 2025 revenue is 15% below the $95 million forecast to see the impact on Net Profit.

Debt vs. Equity Structure

You need to know how SRAX, Inc. (SRAX) is funding its operations, and the short answer is: the company is in a highly leveraged position with negative shareholder equity. This is a red flag that demands your attention.

As of the latest quarter (cited as October 2025 data), SRAX, Inc. reported Total Assets of only $4.90 million against Total Liabilities of $11.76 million. Here's the quick math: Total Assets minus Total Liabilities equals Total Equity. This leaves the company with a negative equity balance of approximately -$6.86 million. This structural issue means the company's liabilities exceed its assets, a clear sign of significant financial risk.

The Debt-to-Equity (D/E) ratio, which measures a company's financial leverage, is reported to be -39.42% for the latest quarter. A negative D/E ratio is not a sign of low debt; it's a direct consequence of that negative shareholder equity. Simply put, SRAX, Inc. is technically insolvent on a balance sheet basis.

Compare this to the industry. For a comparable sector like Advertising Agencies, the average D/E ratio is around 0.79 as of November 2025. A ratio of 0.79 means a company has 79 cents of debt for every dollar of equity. SRAX, Inc.'s situation is structurally different and far riskier than the industry norm. They are not simply using debt for growth; they are struggling with their capital structure.

• Total Liabilities (Debt Proxy): $11.76 million
• Total Assets: $4.90 million
• Calculated Total Equity: -$6.86 million
• Reported D/E Ratio (Latest): -39.42%

The $11.76 million in Total Liabilities represents the immediate financial burden. While the exact breakdown of short-term versus long-term debt for the 2025 fiscal year is not explicitly detailed in recent summaries, the sheer size of the total liability relative to the asset base is the main concern. This debt load creates a significant liquidity risk, meaning the company may struggle to meet its short-term obligations without raising new capital or selling assets.

The company's financing strategy is clearly skewed toward managing an accumulated deficit, not balancing new debt versus equity for growth. When a company is in this position, new funding usually comes from equity issuances (selling more stock) to shore up the balance sheet, which dilutes existing shareholders. We haven't seen specific major debt issuances or refinancing announcements in 2025, suggesting the focus is on operational improvements and cost management, which is defintely a necessity.

The core risk here is that SRAX, Inc. is highly reliant on its ability to generate significant cash flow quickly or execute a large equity raise to turn its equity positive. You can dive deeper into the operational performance and risks in the full post: Breaking Down SRAX, Inc. (SRAX) Financial Health: Key Insights for Investors.

Liquidity and Solvency

You need to know if SRAX, Inc. (SRAX) can cover its near-term bills, and the simple answer is that the company operates with a significant liquidity shortfall. As of the Q1 2023 filing (reported in March 2025), SRAX had a working capital deficit of $5,627,000, a clear sign of pressure on its short-term financial health.

This deficit means the company's current assets-cash, receivables, etc.-are substantially less than its current liabilities (bills due within a year). For context, a healthy company typically has a Current Ratio (current assets divided by current liabilities) of 1.5 or higher. SRAX's historical Current Ratio was already low at 0.41 for the fiscal year ending December 31, 2022, indicating a persistent inability to cover obligations with liquid assets.

The core of the issue is the working capital trend. The company's strategy has been to streamline operations, which led to a transition to a cash-only payment model for services, but this caused a sharp decline in revenue to $4,014,000 in Q1 2023. Management is focused on cost-cutting, which is good, but they still acknowledge a heavy dependence on the sale of marketable securities to meet future obligations. That's a red flag. You don't want a business model that relies on selling off assets just to pay the electric bill.

• Current Ratio: Historically low at 0.41 (FY 2022), signaling poor short-term coverage.
• Quick Ratio: Likely even lower, given the reliance on marketable securities which can be volatile.
• Working Capital: A deficit of $5,627,000 (Q1 2023) confirms the immediate liquidity crunch.

Cash Flow Statement Overview and Trends

Looking at the cash flow statement, the picture is mixed, but the underlying trend is concerning. Cash flow is broken into three main activities: operating, investing, and financing. Here's the quick math on the TTM (Trailing Twelve Months) data as of mid-2023:

The core business is still burning cash, with a TTM Operating Cash Flow of negative $11.31 million. This means SRAX is not generating enough cash from its primary activities-like its Sequire platform-to sustain itself. The positive cash from investing activities, which was $5,942,000 in Q1 2023, is mainly from divestitures like the sale of LD Micro and asset monetization. This is non-recurring, and you cannot build a sustainable business on one-time asset sales.

Near-Term Liquidity Concerns and Outlook

The most significant risk is the company's ability to continue as a going concern (staying in business). The negative working capital and reliance on asset sales for cash are major weaknesses. However, the market is pricing in a significant turnaround, with analysts forecasting a full-year 2025 revenue of $95 million and earnings per share (EPS) of $0.50. This forecast implies a massive, profitable shift in the business model, likely driven by the Sequire platform. If they hit those numbers, the liquidity issue disappears overnight.

What this estimate hides is the execution risk. The company must successfully transition to a high-margin, cash-generating business quickly. Your clear action here is to monitor the Q4 2025 and Q1 2026 filings for a sharp, sustained move toward positive operating cash flow and a Current Ratio above 1.0. If you are interested in the strategic direction that is supposed to drive this turnaround, you should review the Mission Statement, Vision, & Core Values of SRAX, Inc. (SRAX).

Valuation Analysis

You're looking at SRAX, Inc. (SRAX) and wondering if the stock is a deep value play or a value trap, especially with its current micro-cap status. The direct takeaway is that SRAX is technically undervalued based on its Price-to-Sales ratio, but the negative book value and lack of profitability indicate a high-risk scenario that makes standard valuation metrics non-meaningful.

As of November 2025, the stock trades around $0.01 per share, reflecting a market capitalization of roughly $324 thousand. The fundamental issue is not overvaluation, but financial distress. The company's Trailing Twelve Months (TTM) Net Income is a loss of approximately $(15.7) million, which means the Price-to-Earnings (P/E) ratio is not applicable (NM). A negative P/E is a flashing red light for any analyst.

Key Valuation Ratios: What the Numbers Say

When a company is unprofitable, we look to other metrics, but even those signal significant risk. Here is the quick math on the most telling ratios for SRAX, Inc. (SRAX):

• Price-to-Book (P/B) Ratio: The P/B is approximately -2.18. A negative P/B ratio means the company has a negative book value, indicating that its total liabilities exceed its total assets. This is a severe balance sheet issue.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio is non-meaningful (NM) because the TTM Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) is a loss of about $(11.9) million. The Enterprise Value is roughly $5.8 million, so the ratio is negative, which offers no useful comparison to profitable peers.

The negative P/B is the most defintely concerning figure here. It's a sign of a deeply troubled balance sheet.

Stock Performance and Analyst View

The stock price trend over the last 12 months maps directly to the financial uncertainty. SRAX, Inc. (SRAX) has seen its price decrease by over 81.50%. The 52-week trading range was between <$0.01 and $0.38, showing extreme volatility and a consistent downward trajectory. This is a stock that has been in freefall.

You should also know that SRAX, Inc. (SRAX) does not currently pay a dividend, so there is no dividend yield or payout ratio to consider for income-seeking investors. Furthermore, current analyst consensus is largely unavailable, which is often the case for micro-cap stocks facing financial challenges. While a few older ratings from 2021-2023 were a Buy with price targets as high as $10.00, these are completely disconnected from the current $0.01 price. This tells you that the market has completely discarded those prior forecasts. If you want to understand the company's core business model, you can review its Mission Statement, Vision, & Core Values of SRAX, Inc. (SRAX).

The action here is clear: treat the stock as highly speculative. The negative P/B and massive stock decline mean the market is pricing in a significant risk of fundamental restructuring or failure, despite any optimistic revenue forecasts from earlier in the year.

Risk Factors

If you're looking at SRAX, Inc. (SRAX), you need to be a realist. The company is in a deep strategic transition, and while they've cut costs, the financial risks are substantial. The direct takeaway is this: SRAX is a turnaround story facing a significant liquidity crunch, and its ability to continue as a going concern is a major, stated risk.

As of April 2025, the negative Price-to-Earnings (P/E) ratio of -0.24 tells you the company is losing money, and the market's assessment of its financial distress is high. Macroaxis estimates the probability of financial distress for SRAX is currently over 60%, which is a number you absolutely cannot ignore.

Financial and Liquidity Risks: The Going Concern Question

The most critical risk is financial. SRAX has been operating at a loss, accumulating a deficit of approximately $(65,383,000) as of June 30, 2023. This is a massive hole to climb out of.

The core issue is liquidity risk-the company's ability to generate enough cash to meet its short-term obligations. Historically, SRAX relied heavily on marketable securities for cash flow, but they are now transitioning to a cash-only payment model. This shift is necessary for long-term health, but it caused a sharp decline in near-term revenue. For the six months ended June 30, 2023, Total Revenues plummeted to $5,917,000, a 61% drop from the same period in the prior year.

The company's own filings, reported in April 2025, highlight a heavy reliance on converting existing marketable securities to cash, and they anticipate the need to raise additional capital to fund future operations. That's plain English for: they need to find more money, defintely.

Operational and External Headwinds

Beyond the balance sheet, SRAX faces a tough operating environment, particularly in the digital advertising and marketing technology space.

• Intense Competition: SRAX competes with larger, more established players in the sector, putting constant pressure on pricing and market share for its Sequire platform.
• Market Volatility: The company's future operations are challenged by general market volatility and the rising costs of regulatory compliance, which hits smaller companies disproportionately hard.
• Revenue Concentration: The business is now heavily concentrated on the Sequire SaaS platform, which accounted for 95.40% of total revenues for the six months ended June 30, 2023. This focus is strategic, but it also means the company's fortunes are almost entirely tied to that single product's performance.

Mitigation Strategies and Clear Actions

To be fair, management isn't just sitting still. They have executed a clear strategy to streamline the business and reduce the burn rate. This is the opportunity map.

The primary mitigation strategy revolves around cost management and focusing on the core Sequire business, which you can read more about in their Mission Statement, Vision, & Core Values of SRAX, Inc. (SRAX).

Here's the quick math on their cost control: Operating Expenses for Q2 2023 were drastically reduced to $2,311,000, down a whopping 68% from the same quarter in the previous year. This cost-cutting is why the Net Loss for the six months ended June 30, 2023, decreased to $(3,390,000), a significant reduction from the prior year's loss.

The action for investors is simple: monitor the cash position and the revenue trajectory of the Sequire platform. If the cost cuts and the strategic shift don't translate into positive cash flow soon, the need for external capital will become urgent and highly dilutive.

Growth Opportunities

You want to know where SRAX, Inc. (SRAX) goes from here, and the answer is simple: deeper into the data moat they've built around their core product. The future growth isn't about chasing new verticals; it's about dominating the investor intelligence space with their Software as a Service (SaaS) platform, Sequire.

The market tailwind is undeniable. The broader 'Big Data' industry is projected to hit an estimated $229.4 billion by the end of 2025, and SRAX is positioned to capture a slice of that by providing actionable insights to public companies.

Future Revenue and Earnings Trajectory

Based on current analyst forecasts for the 2025 fiscal year, we see a clear expectation for significant performance from the Sequire platform's client growth. Here's the quick math on what's expected:

• Forecasted Annual Revenue: $95 million
• Forecasted Annual Earnings Per Share (EPS): $0.50

What this estimate hides is the power of a recurring revenue model. Sequire's subscription-based structure means that once a company is onboarded, the revenue stream is sticky, making those future projections more reliable than a pure advertising model.

Competitive Moat: Product Innovations as a Barrier

SRAX's main competitive advantage, or 'economic moat,' is the proprietary data and machine learning capabilities baked into the Sequire platform. This isn't just a dashboard; it's a predictive tool that is incredibly difficult for a competitor to replicate quickly. You can't just copy the code; you need the years of accumulated data on investor behavior.

Two key features illustrate this data-driven moat:

• Deal Center: This feature uses artificial intelligence to help issuers predict the outcome of financing transactions. It can forecast how long a specific investor will hold their position and the potential price at which they might sell the shares, allowing the issuer to optimize the deal before it even closes.
• Shelf Registration Feature: This includes a real-time Shelf Prediction Tool that explores potential 'market windows' for capital raises, showing the impact of market volatility to improve funding plans.

This level of predictive insight creates high switching costs, which is the defintely strongest type of moat in the SaaS world. Once a company relies on this data for capital markets strategy, they won't easily jump to a generic competitor.

Strategic Initiatives and Market Expansion

The core strategic initiative remains the continuous expansion of the Sequire platform's capabilities and its client base. The company's focus is on being the premier operating system for publicly traded companies, a mission you can read more about here: Mission Statement, Vision, & Core Values of SRAX, Inc. (SRAX).

The strategy is to integrate more critical data sets, like the integration of Short Interest Data from S3 Partners, which provides corporate users with the same timely information that institutional investors use to gauge sentiment. This continuous feature roll-out is what drives client acquisition, especially among smaller and mid-cap public companies that lack the in-house investor relations teams of a BlackRock-sized firm.

The table below summarizes the key growth levers and their impact on the business: