Executive Summary
Ispire Technology’s fiscal second quarter 2024 results reflect meaningful top-line momentum driven by cannabis vaping hardware and brand partnerships, offset by margin compression and ongoing cash burn as the company invests in manufacturing, regulatory initiatives, and market expansion. Total revenue reached $41.7–$41.8 million for the quarter, up approximately 30% year over year, with cannabis hardware revenue up 149% to $19.5 million and tobacco vaping contributing $22.1 million. Management highlighted strategic initiatives (Malaysian manufacturing, ISO/GMP certifications, PMTA activity, and Berify joint venture) as catalysts for margin improvement and longer-term growth, while acknowledging near-term profitability pressures and working-capital needs. The company also maintained a growth-oriented FY2024 outlook, projecting cannabis hardware revenue of $80–$90 million and tobacco vaping revenue of $95–$105 million, underscoring the path to expanding margins through production transition to Malaysia and scale across key geographies. The near-term risk profile remains elevated due to regulatory headwinds (EU disposable bans, FDA PMTA process), AR reserve implications from CECL adoption, and ongoing cash burn, but ISPR carries a differentiated growth thesis through premium precision-dosing technology and high-profile brand partnerships.
Key Performance Indicators
QoQ: -99.90% | YoY:20.80%
QoQ: -39.85% | YoY:-86.30%
QoQ: 99.86% | YoY:-98.86%
QoQ: 99.86% | YoY:-88.93%
Key Insights
Revenue: $41.7–$41.8 million for Q2 2024, +30% YoY per management; Cannabis hardware: $19.5 million, +149% YoY; Tobacco vaping: $22.1 million; Gross profit: ~$6.3–$7.7 million in the period with gross margin ~15.3% (Q2 2024) and 6-month margin ~15.6%; Operating expenses: ~$10.3 million in Q2 2024, up ~114% YoY due primarily to AR reserve under CECL, marketing, and plant-related costs; Net loss: ~$4.0 million in Q2 2024 (6-month net loss ~$5.4 million); EBITDA: about -$6.825 million; EPS: -$0...
Financial Highlights
Revenue: $41.7–$41.8 million for Q2 2024, +30% YoY per management; Cannabis hardware: $19.5 million, +149% YoY; Tobacco vaping: $22.1 million; Gross profit: ~$6.3–$7.7 million in the period with gross margin ~15.3% (Q2 2024) and 6-month margin ~15.6%; Operating expenses: ~$10.3 million in Q2 2024, up ~114% YoY due primarily to AR reserve under CECL, marketing, and plant-related costs; Net loss: ~$4.0 million in Q2 2024 (6-month net loss ~$5.4 million); EBITDA: about -$6.825 million; EPS: -$0.14 for the quarter; Cash and liquidity: cash position ~ $27 million post-quarter, with ongoing AR and working-capital management; Balance sheet: Total assets ~$132.0 million, total liabilities ~$107.8 million, stockholders’ equity ~$24.2 million; Key ratios: current ratio ~1.06, gross margin ~18.4%, net margin ~-19.1%, price-to-sales ~6.81, EV/Revenue negative or high due to negative earnings; Management guidance implies substantial top-line growth in 2H 2024 and margin expansion from Malaysia production.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
41.83M |
0.34% |
-99.89% |
| Gross Profit |
7.70M |
20.80% |
-99.90% |
| Operating Income |
-7.36M |
-86.30% |
-39.85% |
| Net Income |
-8.00M |
-98.86% |
99.86% |
| EPS |
-0.14 |
-88.93% |
99.86% |
Key Financial Ratios
operatingProfitMargin
-17.6%
operatingCashFlowPerShare
$-0.06
freeCashFlowPerShare
$-0.06
Management Commentary
Key management insights from the earnings call: 1) Growth trajectory and product strategy: “Overall sales reached $41.7 million, an increase of 30.7% over the same 3-month period last year. Cannabis hardware revenue increased by 149% to $19.5 million.” 2) Strategic partnerships and branding: “BRKFST-branded high-tech wafer products in collaboration with Burna Boy… 5-year exclusive global manufacturing and distribution agreement… third celebrity/brand collaboration.” 3) Operational leverage from Malaysia: “ISO and GMP certifications for the new Malaysian manufacturing facility… we expect to start seeing a meaningful impact from this facility on our financial performance as early as next quarter.” 4) Margin expansion plans: “We believe that the Malaysian operation can achieve >40% gross margin on products manufactured there” and a path to improving margins as production shifts offshore. 5) PMTA and U.S. market expansion: “pursuing PMTA applications with the FDA… opportunity to sell into the $80 billion U.S. nicotine market.” 6) Ispire ONE rollout and customer validation: “Ispire ONE… two MSOs initially; now entertaining another 6 MSOs; larger purchases take time but medium brands are showing orders.” 7) Cash and capital strategy: “We filed registration to raise additional capital” and AR risk management via a new deal desk to improve collections. 8) Near-term outlook and risks: disposables bans in France/UK; EU consideration of disposables ban; 12-month working capital runway; continued burn to fund growth; “breakeven cash flow at some point in the future.”
"This quarter, we were pleased to accomplish many key operational and business milestones. Overall sales reached $41.7 million, an increase of 30.7% over the same 3-month period last year."
— Michael Wang
"We expect cannabis vaping hardware revenue to generate between $80 million and $90 million for the current fiscal year. That represents another 100% to 125% growth rate over the last fiscal year."
— Michael Wang
Forward Guidance
Management-guided FY2024 targets suggest continued strong top-line growth and margin expansion through Malaysia manufacturing. Cannabis vaping hardware revenue is guided to generate $80–$90 million, implying roughly 100%–125% YoY growth from the prior year, while tobacco vaping revenue is guided to $95–$105 million, implying ~33%–47% growth. The company expects the Malaysian facility to drive gross margins meaningfully higher (targeting >40% gross margin on Malaysia-produced goods) and foresees improved supply chain efficiency and cheaper shipping costs as the Malaysian operation scales. Management also highlighted strategic initiatives (PMTA approvals, Berify JV for age-verification, and BRKFST/Electronic-cigarette distribution networks) as accelerants for future revenue diversification and margin improvement. Risks to the outlook include regulatory headwinds in Europe (disposable bans), the time required to convert MSO customers to ISPR ONE, AR collection risk under CECL, and the need for additional capital to fund Malaysia expansion. Investors should monitor: (1) progress of PMTA submissions and potential approvals in 2024–2025, (2) AR quality improvements from the new deal desk, (3) tangible margin gains from Malaysia ramp and product mix shifts, and (4) cash runway and the timing of any capital-raising actions.