Ispire Technology Inc. Reports Financial Results for the Fiscal Second Quarter 2024
- Total revenue increased by 30.7% to $41.7 million in the fiscal second quarter of 2024.
- Gross profit increased by 24.1% to $6.4 million compared to the same period in 2023.
- North American cannabis vaping hardware revenue saw a significant increase of 149% to $19.5 million.
- Strategic initiatives included ISO and GMP certification for the Malaysian facility and a path to receive Pre-market Tobacco Product Application approval in the U.S.
- The company launched a partnership with Nigerian Afrobeats star, Burna Boy, to enhance brand presence.
- Revenue for cannabis vaping products for fiscal year 2024 is projected to be in the range of $80 million to $90 million, representing growth of 100% to 125% from fiscal year 2023.
- Revenue for tobacco vaping products for fiscal year 2024 is projected to be in the range of $95 million to $105 million, representing growth of 33% to 47% from fiscal year 2023.
- Gross margin decreased to 15.3% from 16.1% in the same period of 2023.
- Total operating expenses increased by 114% to $10.3 million compared to the same period in 2023.
- Net loss was $4.0 million for the second quarter of fiscal 2024 compared to a net loss of $0.1 million in the same period of 2023.
- Gross margin decreased from 16.1% to 15.3% for the three-month period ended December 31, 2023.
- Net loss was $5.4 million for the first six-months of fiscal 2024 compared to a net loss of $2.1 million for the first six-months of fiscal 2023.
Insights
The report by Ispire Technology Inc. reflects a significant growth in revenue, primarily driven by their North American cannabis vaping hardware sales, which saw a 149% increase. This trend is indicative of the expanding cannabis market and the increasing acceptance of vaping as a method of consumption. The company's strategic initiatives, such as celebrity partnerships and efforts to obtain certifications, suggest a focus on brand positioning and market penetration. However, the decline in gross margin and the increase in operating expenses raise questions about cost management and the scalability of their growth model.
Investors should consider the potential of the cannabis sector's growth against the backdrop of regulatory changes and consumer trends. The company's projection of continued revenue growth for cannabis vaping products suggests confidence in their market strategy and product offerings. Nonetheless, the increased operating expenses and net losses reported could be a concern if not counterbalanced by future profitability improvements.
Analyzing the financial results, Ispire's revenue growth is robust, but it is overshadowed by a substantial increase in operating expenses, which have more than doubled. This has resulted in a net loss that is significantly higher than the previous year. These figures suggest that while the company is growing top-line revenue, it is doing so at a considerable cost. The gross margin compression from 16.1% to 15.3% also indicates that the company is facing increased costs of goods sold or pricing pressure, which could impact profitability in the long term.
The current cash and cash equivalents position of $17.5 million, alongside a working capital of $24.8 million, provides the company with a buffer to sustain operations. However, the net loss trajectory will require careful financial planning to ensure long-term sustainability. The forward-looking revenue projections for fiscal year 2024 are ambitious and will require close scrutiny to ensure that these targets are met without further eroding the company's margins or financial health.
The mention of Ispire's path to receive Pre-market Tobacco Product Application (PMTA) approval in the U.S. is a critical regulatory milestone. PMTA is a requirement by the FDA for tobacco products to demonstrate that allowing the product to be marketed would be appropriate for the protection of public health. Achieving this certification could significantly impact Ispire's ability to compete in the tobacco vaping industry. The certification process is stringent and costly, but it is a necessary hurdle for maintaining market access and could provide a competitive advantage if achieved.
Moreover, the company's ISO and GMP certifications for its Malaysian facility are important for ensuring product quality and safety, which are key concerns in the vaping industry. These certifications could also enhance the company's reputation and facilitate entry into new markets that have strict regulatory requirements. Investors should be aware of the potential risks and benefits associated with these regulatory aspects, as they could have a significant impact on the company's operations and market potential.
Total Revenue Increased
Gross Profit Increased
North American Cannabis Vaping Hardware Revenue Increased
Fiscal Second Quarter 2024 Financial Results
- Revenue increased
30.7% to$41.7 million as compared to$31.9 million in the same period of 2023. Tobacco vaping products contributed$22.1 million and cannabis vaping products contributed$19.5 million to revenue during the fiscal second quarter 2024; - Gross profit increased
24.1% to$6.4 million as compared to$5.1 million in the same period of 2023; - Gross margin decreased to
15.3% as compared to16.1% in the same period of 2023; - Total operating expenses increased
114% to$10.3 million as compared to$4.8 million in the same period of 2023; and - Net loss of
$4.0 million as compared to net loss of$0.1 million in the same period of 2023.
Michael Wang, Co-Chief Executive Officer of Ispire commented, "This quarter proved to be quite pivotal for not only our product expansions but also our business operations. We commenced several strategic initiatives, including ISO and GMP certification for our Malaysian facility and a path to receive Pre-market Tobacco Product Application approval in the
"As we further execute on our growth strategy, we continue to expand our footprint in existing and new markets, which helps to grow our diverse customer base. This quarter we launched a key celebrity partnership with Nigerian Afrobeats star, Burna Boy, highlighting our BRKFST-branded products and fortifying our global brand presence. We anticipate that our strategic initiatives this quarter will position Ispire to capitalize on emerging opportunities as well as drive sustainable and future growth across our key markets," concluded Wang.
Daniel Machock, Chief Financial Officer of Ispire, added, "In the fiscal second quarter of 2024, Ispire's key growth metrics highlighted rapid expansion for our cannabis vaping hardware business. Overall revenues increased
Financial Results for the Three and Six-Month Periods Ended December 31, 2023
Revenue increased
For the six-month period ended December 31, 2023, Ispire reported revenue of
Gross Profit increased by
Gross Margin for the three months ended December 31, 2023, was
Total Operating Expenses increased by
Net loss was
As of December 31, 2023, Ispire had approximately
Fiscal Year 2024 Outlook
Ispire is providing the following outlook for the cannabis and tobacco vaping products for fiscal year 2024, which ends on June 30, 2024. Revenue for cannabis vaping products for fiscal year 2024 is projected to be in the range of
Conference Call
The Company will conduct a conference call at 8:00 a.m. Eastern time on Wednesday, February 21, 2024, to discuss the results.
Ispire management will host the conference call, followed by a question-and-answer period.
Please call the conference call dial-in 5-10 minutes prior to the start time and ask for the "Ispire Technology Call." An operator will register your name and organization.
Date: | Wednesday, February 21, 2024 |
Time: | 8:00 am ET |
Dial-In Numbers:
| or 1-201-389-0879 |
This conference call will be broadcast live on the Internet and can be accessed by all interested parties at https://viavid.webcasts.com/starthere.jsp?ei=1655325&tp_key=b746afb9b3
Please access the link at least fifteen minutes prior to the start of the call to register, download, and install any necessary audio software.
A playback will be available through 11:00 am ET on February 21, 2024, to March 6, 2024. To listen, please dial 1-844-512-2921 or 1-412-317-6671. Use the passcode 13744317 to access the replay.
About Ispire Technology Inc.
Ispire is engaged in the research and development, design, commercialization, sales, marketing, and distribution of branded e-cigarettes and cannabis vaping products. The Company's operating subsidiaries own or license from a related party more than 200 patents received or filed globally. Ispire's tobacco products are marketed under the Aspire brand name and are sold worldwide (except in
Please visit www.ispiretechnology.com and follow us on Facebook, Twitter, Instagram, Linkedin, Pinterest, and YouTube. Any information contained on, or that can be accessed through, the Company's website, any other website or any social media, is not a part of this press release.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act") as well as Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the safe harbor created by those sections. Forward-looking statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by the use of forward-looking terms such as "believe," "expect," "may," "will," "should," "would," "could," "seek," "intend," "plan," "goal," "project," "estimate," "anticipate," "strategy," "future," "likely" or other comparable terms, although not all forward-looking statements contain these identifying words. All statements other than statements of historical facts included in this press release regarding the Company's strategies, prospects, financial condition, operations, costs, plans and objectives are forward-looking statements. Important factors that could cause the Company's actual results and financial condition to differ materially from those indicated in the forward-looking statements. Such forward-looking statements include, but are not limited to, risks and uncertainties including those regarding: the Company's business strategies, the ability of the Company to market to the Ispire ONE™, Ispire ONE™'s success if meeting its goals, the ability of its customers to derive the anticipated benefits of the Ispire ONE™ and the success of their products on the markets; the Ispire ONE™ proving to be safe, and the risk and uncertainties described in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Cautionary Note on Forward-Looking Statements" and the additional risk described in Ispire's Form 10-K annual report for the year ended June 30, 2023 and any subsequent filings which Ispire makes with the Securities and Exchange Commission. You should not rely upon forward-looking statements as predictions of future events. The forward-looking statements made in the press release relate only to events or information as of the date on which the statements are made in the press release. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events except as required by law. You should read this press release with the understanding that our actual future results may be materially different from what we expect.
IR Contact:
For more information, kindly contact:
Investor Relations
Sherry Zheng
718.213.7386
ir@ispiretechnology.com
KCSA Strategic Communications
212.896.1233
ispire@kcsa.com
PR Contact:
Ellen Mellody
570.209.2947
EMellody@kcsa.com
ISPIRE TECHNOLOGY INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
June 30, | December 31, | |||||||
2023 | 2023 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 40,300,573 | $ | 17,502,989 | ||||
Accounts receivable, net | 24,526,262 | 45,454,998 | ||||||
Inventories | 7,472,108 | 7,548,086 | ||||||
Prepaid expenses and other current assets | 3,378,617 | 3,183,215 | ||||||
Investment - other | 9,133,707 | 9,318,480 | ||||||
Total current assets | 84,811,267 | 83,007,768 | ||||||
Other assets: | ||||||||
Property, plant and equipment, net | 1,088,131 | 2,148,206 | ||||||
Intangible assets, net | - | 726,978 | ||||||
Rental deposit | 732,334 | 727,766 | ||||||
Right-of-use assets – operating leases | 4,061,617 | 3,969,437 | ||||||
Total other assets | 5,882,082 | 7,572,387 | ||||||
Total assets | $ | 90,693,349 | $ | 90,580,155 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,274,391 | $ | 5,972,530 | ||||
Accounts payable – related party | 51,698,588 | 48,999,001 | ||||||
Contract liabilities | 988,556 | 1,705,171 | ||||||
Accrued liabilities and other payables | 281,361 | 603,715 | ||||||
Due to a related party | 710,910 | - | ||||||
Income tax payable - current | 63,853 | - | ||||||
Operating lease liabilities – current portion | 944,525 | 1,244,565 | ||||||
Total current liabilities | 55,962,184 | 58,524,982 | ||||||
Other liabilities: | ||||||||
Operating lease liabilities – net of current portion | 3,356,232 | 3,067,909 | ||||||
Total liabilities | 59,318,416 | 61,592,891 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock, par value | 5,422 | 5,428 | ||||||
Preferred stock, par value | - | - | ||||||
Additional paid-in capital | 25,685,475 | 28,535,949 | ||||||
Retained earnings | 5,847,804 | 450,865 | ||||||
Accumulated other comprehensive loss | (163,768) | (4,978) | ||||||
Total stockholders' equity | 31,374,933 | 28,987,264 | ||||||
Total liabilities and stockholders' equity | $ | 90,693,349 | $ | 90,580,155 | ||||
See notes to unaudited condensed consolidated financial statements.
ISPIRE TECHNOLOGY INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||||||
COMPREHENSIVE INCOME (LOSS) | ||||||||||||||||
Three Months Ended | Six Months Ended | |||||||||||||||
2022 | 2023 | 2022 | 2023 | |||||||||||||
(Restated) | (Restated) | |||||||||||||||
Revenue | $ | 31,897,399 | $ | 41,685,561 | $ | 58,840,449 | $ | 84,550,208 | ||||||||
Cost of revenue | 26,758,821 | 35,309,355 | 48,909,768 | 71,285,710 | ||||||||||||
Gross profit | 5,138,578 | 6,376,206 | 9,930,681 | 13,264,498 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing expenses | 906,372 | 1,517,715 | 2,407,528 | 2,586,378 | ||||||||||||
General and administrative expenses | 3,922,363 | 8,809,127 | 8,428,178 | 15,540029 | ||||||||||||
Total Operating expenses | 4,828,735 | 10,326,842 | 10,835,706 | 18,126,407 | ||||||||||||
Income (loss) from operations | 309,843 | (3,950,636) | (905,025) | (4,861,909) | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income, net | 76,301 | 198,619 | 76,811 | 270,865 | ||||||||||||
Exchange gain (loss), net | 23,212 | 30,856 | (477,582) | 34,517 | ||||||||||||
Other income (expense), net | (21,286) | 51,017 | (40,487) | 7,813 | ||||||||||||
Total Other income (expense), net | 78,227 | 280,492 | (441,258) | 313,195 | ||||||||||||
Income (loss) before income taxes | 388,070 | (3,670,144) | (1,346,283) | (4,548,714) | ||||||||||||
Income taxes - current | (518,312) | (352,180) | (785,713) | (848,225) | ||||||||||||
Net loss | $ | (130,242) | $ | (4,022,324) | $ | (2,131,996) | $ | (5,396,939) | ||||||||
Other comprehensive loss | ||||||||||||||||
Foreign currency translation adjustments | 149,306 | 114,327 | 142,430 | 158,790 | ||||||||||||
Comprehensive income (loss) | $ | 19,064 | $ | (3,907,997) | $ | (1,989,566) | $ | (5,238,149) | ||||||||
Net loss per share | ||||||||||||||||
Basic and diluted | $ | (0.01) | $ | (0.07) | $ | (0.04) | $ | (0.10) | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 50,000,000 | 54,270,236 | 50,000,000 | 54,258,224 | ||||||||||||
See notes to unaudited condensed consolidated financial statements.
ISPIRE TECHNOLOGY INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Six Months ended | ||||||||
2022 | 2023 | |||||||
Net loss | $ | (2,131,996) | $ | (5,396,939) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization | 13,660 | 75,160 | ||||||
Credit loss expenses | 1,029,655 | 2,126,284 | ||||||
Stock-based compensation expenses | - | 2,850,480 | ||||||
Inventory impairment expenses | - | 130,452 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (10,818,728) | (22,762,155) | ||||||
Inventories | (5,724,630) | (206,430) | ||||||
Prepaid expenses and other current assets | 134,307 | 199,970 | ||||||
Accounts payable and accounts payable – related party | 25,487,786 | 1,759,301 | ||||||
Contract liabilities | (665,242) | 629,430 | ||||||
Accrued liabilities and other payables | 159,577 | 322,354 | ||||||
Operating lease liabilities | 102,375 | 103,897 | ||||||
Income tax payable | 788,866 | (63,853) | ||||||
Net cash provided by (used in) operating activities | $ | 8,375,630 | $ | (20,232,049) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property, plant and equipment | (478,473) | (1,130,620) | ||||||
Acquisition of intangible assets | - | (731,593) | ||||||
Net cash used in investing activities | $ | (478,473) | $ | (1,862,213) | ||||
Cash flows from financing activities: | ||||||||
Advances from related parties | 1,934,855 | - | ||||||
Repayments of advances from a related party | (45,509) | (703,322) | ||||||
Net cash used in financing activities | $ | 1,889,346 | $ | (703,322) | ||||
Net increase (decrease) in cash | 9,786,503 | (22,797,584) | ||||||
Cash - beginning of period | 74,480,651 | 40,300,573 | ||||||
Cash - end of period | $ | 84,267,154 | $ | 17,502,989 | ||||
Supplemental non-cash investing and financing activities | ||||||||
Leased assets obtained in exchange for operating lease liabilities | 3,714,979 | 507,292 | ||||||
See notes to unaudited condensed consolidated financial statements.
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SOURCE Ispire Technology Inc.
FAQ
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