Ispire Technology Inc. Reports Fiscal Third Quarter 2024 Financial Results
Ispire Technology (NASDAQ: ISPR) reported a 24% year-over-year revenue increase to $30 million for Q3 FY2024, driven primarily by a 57% increase in North American cannabis vaping hardware sales. Gross profit rose 35% to $6.1 million, with gross margins improving to 20.4%. However, operating expenses surged 64% to $11.8 million, leading to a net loss of $5.9 million, nearly triple the loss from the same period last year. The company also completed a $12.3 million public offering to fund expansion and streamline operations.
- Revenue increased by 24% year-over-year to $30 million.
- Gross profit increased by 35% to $6.1 million.
- North American cannabis vaping hardware revenue increased by 57% year-over-year to $11.9 million.
- Gross margin improved to 20.4% from 18.7% year-over-year.
- Successful completion of a $12.3 million public offering.
- Operating expenses increased by 64% to $11.8 million.
- Net loss increased to $5.9 million from $2.3 million year-over-year.
- Nine-month gross margin decreased to 16.8% from 17.2% year-over-year.
- Net loss for the nine-month period increased to $11.3 million from $4.5 million year-over-year.
Insights
Ispire Technology Inc. reported a
While revenue and gross profit have grown, the substantial increase in operating costs and net loss is concerning. The completed
Key takeaway: Though revenue growth is strong, the increasing net loss and costs raise concerns. The company's future profitability depends on effective cost management and successful integration of new ventures and facilities.
The significant increase in revenue from North American cannabis vaping hardware, growing by
However, despite these positive moves, the increased net loss and operational expenses imply that the benefits of these partnerships and innovations have yet to fully translate into profitability. The new manufacturing facility in Malaysia could potentially enhance operational efficiency in the long term, provided that the company can manage the initial setup and integration costs effectively.
Key takeaway: Strategic partnerships and innovation in vaping technology are promising, but the company needs to demonstrate that these will lead to sustained profitability amid rising costs.
Total Revenue Increased
Gross Profit Increased
North American Cannabis Vaping Hardware Revenue Increased
Closed
Fiscal Third Quarter 2024 Financial Results
- Revenue increased
24% to$30.0 million as compared to$24.1 million in the same period of 2023. Tobacco vaping products contributed$18.1 million and cannabis vaping products contributed$11.9 million to revenue during the fiscal third quarter 2024; - Gross profit increased
35% to$6.1 million for the three-month period ended March 31, 2024, compared to$4.5 $19.2 million $14.3 million - Gross margin increased to
20.4% as compared to18.7% in the same period of 2023; - Total operating expenses increased
63.7% to$11.8 million as compared to$7.2 million in the same period of 2023; and - Net loss of
$5.9 million as compared to net loss of$2.3 million in the same period of 2023.
Michael Wang, Co-Chief Executive Officer of Ispire commented, "the third quarter was important for Ispire as it demonstrated our continued ability to add new strategic partners and expand within existing market sectors as we execute on our mission to be an innovator and a leader in our markets. During the quarter, we entered into a joint venture with Berify and Chemular, and, subsequent to the end of the quarter, announced a partnership with a subsidiary of Acreage Holdings, Inc. (OTCMKTS: ACRGF). These partnerships will allow us to continue to expand our market share as we offer our cutting-edge products and technology globally."
"Also during the quarter, we successfully closed on a
Daniel Machock, Chief Financial Officer of Ispire, stated, "our third quarter results reflect Ispire's ability to capitalize on areas of strength and to quickly pivot to meet our expectations for our markets. We successfully demonstrated this ability in the third quarter, shifting our focus to increasing profitability due to the anticipated seasonal impact of Chinese New Year on our manufacturing partners. This ability allowed us to continue to invest in research and innovation, while expanding in our existing markets and ensuring that we were well-positioned to enter new markets where we believe there is significant market opportunity."
Financial Results for the Three and Nine-Month Periods Ended March 31, 2024
Revenue increased
For the nine-month period ended March 31, 2024, Ispire reported revenue of
Gross profit increased by
Gross margin for the three months ended March 31, 2024, was
Total operating expenses increased by
Net loss was
As of March 31, 2024, Ispire had approximately
Non-GAAP net loss for the nine months ended March 31, 2024 and 2023 | |||||||
Nine months ended March 31, | |||||||
2024 | 2023 | ||||||
Net loss | $ | (11,346,690) | $ | (4,512,513) | |||
add | Stock-based compensation expenses | 4,691,872 | - | ||||
add | Credit loss expenses | 3,318,772 | 2,330,835 | ||||
add | Patent expenses, net off capitalization | 380,768 | 1,534,899 | ||||
Non-GAAP net loss | $ | (2,955,278) | $ | (2,977,614) | |||
Conference Call
The Company will conduct a conference call at 8:00 am Eastern Time on Wednesday May 15, 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, May 15, 2024
- Time: 8:00 am ET
- Dial-In Numbers:
United States 877-451-6152 or International +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=1669249&tp_key=6a1ed4d261.
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 May 15, 2024, to May 29, 2024. To listen, please dial 844-512-2921 or +1 412-317-6671. Use the passcode 13746419 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 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 the
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: whether the Joint Venture may be successful in achieving its goals as currently contemplated, with different terms, or at all, the Joint Venture's ability to innovate in the e-cigarette technology space or develop age gating or age verification technologies for nicotine vaping devices, the Company's ability to collect its accounts receivable in a timely manner, 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 Annual Report on Form 10-K for the year ended June 30, 2023 and any subsequent filings which Ispire makes with the
For more information, kindly contact:
IR Contacts:
Investor Relations
Sherry Zheng
718-213-7386
ir@ispiretechnology.com
KCSA Strategic Communications
Phil Carlson
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, | ||||||||
2023 | March 31, | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 40,300,573 | $ | 39,453,727 | ||||
Accounts receivable, net | 24,526,262 | 47,732,178 | ||||||
Inventories | 7,472,108 | 9,813,782 | ||||||
Prepaid expenses and other current assets | 3,378,617 | 1,652,850 | ||||||
Investment - other | 9,133,707 | - | ||||||
Total current assets | 84,811,267 | 98,652,537 | ||||||
Other assets: | ||||||||
Property, plant and equipment, net | 1,088,131 | 2,166,563 | ||||||
Intangible assets, net | - | 968,033 | ||||||
Rental deposit | 732,334 | 725,979 | ||||||
Right-of-use assets – operating leases | 4,061,617 | 3,636,104 | ||||||
Long term investment | - | 2,000,000 | ||||||
Total other assets | 5,882,082 | 9,496,679 | ||||||
Total assets | $ | 90,693,349 | $ | 108,149,216 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,274,391 | $ | 3,667,581 | ||||
Accounts payable – related party | 51,698,588 | 61,030,319 | ||||||
Contract liabilities | 988,556 | 1,327,371 | ||||||
Accrued liabilities and other payables | 281,361 | 2,441,849 | ||||||
Due to a related party | 710,910 | - | ||||||
Income tax payable | 63,853 | - | ||||||
Operating lease liabilities – current portion | 944,525 | 1,275,923 | ||||||
Total current liabilities | 55,962,184 | 69,743,043 | ||||||
Other liabilities: | ||||||||
Operating lease liabilities – net of current portion | 3,356,232 | 2,730,574 | ||||||
Total liabilities | 59,318,416 | 72,473,617 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity: | ||||||||
Common stock, par value | 5,422 | 5,633 | ||||||
Preferred stock, par value | - | - | ||||||
Additional paid-in capital | 25,685,475 | 41,163,042 | ||||||
Retained earnings (accumulated deficit) | 5,847,804 | (5,498,886) | ||||||
Accumulated other comprehensive (loss) income | (163,768) | 5,810 | ||||||
Total stockholders' equity | 31,374,933 | 35,675,599 | ||||||
Total liabilities and stockholders' equity | $ | 90,693,349 | $ | 108,149,216 | ||||
See notes to unaudited condensed consolidated financial statements.
ISPIRE TECHNOLOGY INC. | ||||||||||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND | ||||||||||||||||
COMPREHENSIVE LOSS | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
2023 | 2024 | 2023 | 2024 | |||||||||||||
Revenue | $ | 24,136,297 | $ | 30,015,036 | $ | 82,976,746 | $ | 114,565,244 | ||||||||
Cost of revenue | 19,616,098 | 23,893,083 | 68,699,245 | 95,345,545 | ||||||||||||
Gross profit | 4,520,199 | 6,121,953 | 14,277,501 | 19,219,699 | ||||||||||||
Operating expenses: | ||||||||||||||||
Sales and marketing expenses | 948,302 | 1,754,760 | 3,182,451 | 4,174,386 | ||||||||||||
General and administrative expenses | 6,261,326 | 10,047,116 | 14,689,504 | 25,587,145 | ||||||||||||
Total operating expenses | 7,209,628 | 11,801,876 | 17,871,955 | 29,761,531 | ||||||||||||
Loss from operations | (2,689,429) | (5,679,923) | (3,594,454) | (10,541,832) | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income, net | 391 | 27,296 | 77,202 | 298,161 | ||||||||||||
Exchange gain (loss), net | 660,760 | (53,904) | 183,178 | (19,387) | ||||||||||||
Other income (expense), net | (67,953) | 12,265 | (108,440) | 20,078 | ||||||||||||
Total other income (expense), net | 593,198 | (14,343) | 151,940 | 298,852 | ||||||||||||
Loss before income taxes | (2,096,231) | (5,694,266) | (3,442,514) | (10,242,980) | ||||||||||||
Income taxes - current | (237,992) | (255,485) | (1,069,999) | (1,103,710) | ||||||||||||
Net loss | $ | (2,334,223) | $ | (5,949,751) | $ | (4,512,513) | $ | (11,346,690) | ||||||||
Other comprehensive loss | ||||||||||||||||
Foreign currency translation adjustments | (157,704) | 10,788 | (15,274) | 169,578 | ||||||||||||
Comprehensive loss | $ | (2,491,927) | $ | (5,938,963) | $ | (4,527,787) | $ | (11,177,112) | ||||||||
Net loss per share | ||||||||||||||||
Basic and diluted | $ | (0.05) | $ | (0.11) | $ | (0.09) | $ | (0.21) | ||||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic and diluted | 50,000,000 | 54,347,729 | 50,000,000 | 54,287,624 | ||||||||||||
See notes to unaudited condensed consolidated financial statements.
ISPIRE TECHNOLOGY INC. | ||||||||
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
Nine Months ended | ||||||||
2023 | 2024 | |||||||
(Restated) | ||||||||
Net loss | $ | (4,512,513) | $ | (11,346,690) | ||||
Adjustments to reconcile net loss to net cash provided by (used in) | ||||||||
Depreciation and amortization | 20,878 | 138,546 | ||||||
Credit loss expenses | 2,330,835 | 3,318,772 | ||||||
Stock-based compensation expenses | - | 4,691,872 | ||||||
Inventory impairment | - | 168,585 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (9,428,024) | (26,553,830) | ||||||
Inventories | 343,395 | (2,510,259) | ||||||
Prepaid expenses and other current assets | 143,682 | 1,732,122 | ||||||
Accounts payable and accounts payable – related party | 13,737,398 | 11,904,642 | ||||||
Contract liabilities | (940,014) | 350,227 | ||||||
Accrued liabilities and other payables | 273,565 | 1,160,487 | ||||||
Operating lease liabilities | 128,865 | (63,853) | ||||||
Income tax payable | (481,113) | 131,253 | ||||||
Net cash provided by (used in) operating activities | 1,616,954 | (16,878,126) | ||||||
Cash flows from investing activities: | ||||||||
Purchase of property, plant and equipment | (495,065) | (1,205,716) | ||||||
Acquisition of intangible assets | - | (979,295) | ||||||
Purchase of short term investment | (9,604,418) | - | ||||||
Maturity of short term investment | - | 9,133,707 | ||||||
Acquisition of long term investment | - | (1,000,000) | ||||||
Net cash (used in) provided by investing activities | (10,099,483) | 5,948,696 | ||||||
Cash flows from financing activities: | ||||||||
Payment made for dividends | (3,384,678) | - | ||||||
Advances from related parties | 1,934,855 | - | ||||||
Repayments of advances from a related party | (40,512,691) | (703,322) | ||||||
Proceeds from a secondary offering | - | 12,300,000 | ||||||
Costs of a secondary offering | - | (1,514,094) | ||||||
Net cash (used in) provided by financing activities | (41,962,514) | 10,082,584 | ||||||
Net decrease in cash | (50,445,043) | (846,846) | ||||||
Cash - beginning of period | 74,480,651 | 40,300,573 | ||||||
Cash - end of period | $ | 24,035,608 | $ | 39,453,727 | ||||
Supplemental non-cash investing and financing activities | ||||||||
Leased assets obtained in exchange for operating lease liabilities | $ | 4,882,220 | $ | 495,739 | ||||
Unpaid long term investment in accrued liabilities and other payables | $ | - | $ | 1,000,000 | ||||
Supplemental disclosures | ||||||||
Cash paid for income taxes | $ | 1,666,543 | $ | 1,355,110 | ||||
Cash paid for interest | $ | 587 | $ | 7,399 | ||||
See notes to unaudited condensed consolidated financial statements.
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SOURCE Ispire Technology Inc.
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