Ispire Technology Inc. Reports Revenue Increase but Widened Net Losses for Quarter Ended December 31, 2024

Ispire Technology Inc. reported its financial results for the three and six months ended December 31, 2024, revealing a slight increase in revenue but a significant rise in net losses compared to the previous fiscal period. The company generated $41.8 million in revenue for the quarter, a marginal increase of 0.3% from $41.7 million in the same period last year. However, for the six months, revenue decreased by 4.0% to $81.2 million from $84.6 million. The gross profit for the quarter rose to $7.7 million, up 23.5% from $6.3 million, reflecting an improved gross margin of 18.5%, attributed to a favorable product mix.

Despite the increase in revenue, Ispire's net loss for the quarter widened to $8.0 million, or $(0.14) per share, compared to a loss of $4.0 million, or $(0.07) per share, in the prior year. For the six-month period, the net loss escalated to $13.6 million, or $(0.24) per share, from $5.3 million, or $(0.10) per share. The increase in losses was primarily driven by a substantial rise in operating expenses, which surged by 48.3% to $15.1 million for the quarter, largely due to increased sales and marketing efforts and higher general and administrative costs.

Ispire has also made strategic moves to enhance its operational capabilities, including the establishment of new subsidiaries in the United Arab Emirates and California to bolster its sales and logistics operations. The company is focusing on expanding its market presence, particularly in Europe and Africa, where it has seen significant revenue growth. Sales in Europe increased by $8.3 million year-over-year, while sales in Africa rose from $0.1 million to $2.7 million. However, sales in North America and Asia Pacific declined, contributing to the overall revenue decrease for the six-month period.

Operationally, Ispire's accounts receivable increased significantly, leading to a higher allowance for credit losses, which rose to $11.3 million from $5.9 million. The company reported a net cash inflow from operating activities of $0.4 million for the six months ended December 31, 2024, a notable recovery from a cash outflow of $20.2 million in the same period last year. This improvement was attributed to better management of working capital, despite the ongoing challenges in collecting receivables.

Looking ahead, Ispire Technology Inc. anticipates continued challenges in the regulatory landscape affecting its nicotine and cannabis products. The company is actively working on submitting additional Premarket Tobacco Product Applications (PMTAs) to the FDA to re-enter the U.S. market for electronic nicotine delivery systems. Furthermore, Ispire has initiated a cost reduction initiative expected to yield annual savings of over $4 million, aimed at improving operational efficiency and profitability. The company remains focused on leveraging its global resources to navigate the evolving market conditions.