Executive Summary
Ispire Technology reported a solid Q3 2024 with total revenue of $30 million, up 24% year over year, driven by cannabis hardware growth (+57% to $11.9 million) and tobacco vaping sales (+9% to $18.1 million). The quarter featured meaningful strategic progress, including a joint venture with Berify and Chemular to advance age-verification and product authentication for e-cigarettes, and a collaboration with Acreage Holdings to deploy Ispire ONE technology in its U.S. retail network. The company closed a $12.3 million public offering in March to fund strategic initiatives and Malaysian manufacturing expansion, which aided a margin improvement to 20.4% (cannabis 27.4%, tobacco 15.8%). Despite revenue strength, near-term profitability remains challenged by higher operating expenses and a planned transition in the cannabis ecosystem (Ispire ONE deployment delays). Management removed formal guidance due to regulatory and implementation uncertainty, but signaled a path back to breakeven and sustainable growth by the September quarter, aided by Burna Boy co-branding, open systems expansion in the UK/EU, and PMTA activity. Overall, the near-term focus centers on margin discipline, execution of hardware upgrades, cash-flow management through a stricter deal desk, and monetizing strategic partnerships while navigating regulatory headwinds.
Key Performance Indicators
QoQ: 62 515.50% | YoY:87 158.68%
QoQ: 61 906.21% | YoY:78 037.28%
QoQ: -143 722.85% | YoY:-186 266.02%
QoQ: -135 629.21% | YoY:-182 369.74%
QoQ: -35.71% | YoY:-72.73%
Key Insights
Revenue: $30.0M (Q3 2024), YoY +24%, Cannabis hardware: $11.9M (+57% YoY), Tobacco vaping: $18.1M (+9% YoY). Gross profit: $6.1M; Gross margin: 20.4% (vs. 18.7% prior year). Cannabis gross margin: 27.4%; Tobacco gross margin: 15.8%. Operating expenses: $11.8M (Q3 2024), up 63.7% YoY. Net loss: $5.9M (Q3 2024); Nine-month net loss: $11.3M. Three-month revenue mix: Cannabis hardware ~39.7% of revenue; Tobacco ~60.3%. Cash flow: Operating cash flow negative in nine months (-$16.9M); financing activ...
Financial Highlights
Revenue: $30.0M (Q3 2024), YoY +24%, Cannabis hardware: $11.9M (+57% YoY), Tobacco vaping: $18.1M (+9% YoY). Gross profit: $6.1M; Gross margin: 20.4% (vs. 18.7% prior year). Cannabis gross margin: 27.4%; Tobacco gross margin: 15.8%. Operating expenses: $11.8M (Q3 2024), up 63.7% YoY. Net loss: $5.9M (Q3 2024); Nine-month net loss: $11.3M. Three-month revenue mix: Cannabis hardware ~39.7% of revenue; Tobacco ~60.3%. Cash flow: Operating cash flow negative in nine months (-$16.9M); financing activities contributed +$10.1M; cash balance supported by a March 2024 equity offering (+$12.3M gross proceeds). Balance sheet: Working capital $28.9M. Net debt minimal with no long-term debt disclosed. Management commentary points to margin discipline, Malaysia production benefits, and PMTA investments as primary drivers of long-run profitability.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
26.19B |
87 158.68% |
62 515.50% |
| Gross Profit |
4.78B |
78 037.28% |
61 906.21% |
| Operating Income |
-10.59B |
-186 266.02% |
-143 722.85% |
| Net Income |
-10.86B |
-182 369.74% |
-135 629.21% |
| EPS |
-0.19 |
-72.73% |
-35.71% |
Key Financial Ratios
operatingProfitMargin
-40.4%
operatingCashFlowPerShare
$-219.24
freeCashFlowPerShare
$-217
Management Commentary
- Management underscored a strategic push on innovation and partnerships, including a Berify/Chemular joint venture for age-verification and product authentication in e-cigarettes. Quote: “We’ve entered into a joint venture with Berify and Chemular to leverage Berify's patented blockchain-based authentication technology and Chemular's regulatory expertise to create a next-generation point-of-use age verification technology for e-cigarettes.” (Michael Wang)
- Acreage Holdings collaboration to deploy Ispire ONE technology in U.S. retail, expanding precision-dosing devices and filling-machine capabilities. Quote: “On April 30, we announced a collaboration with a subsidiary of Acreage Holdings, expanding the use of our innovative Ispire ONE technology into Acreage retail facilities across the U.S.” (Michael Wang)
- Capital raise of $12.3M in March funded joint venture and Malaysian facility expansion; gross proceeds to “fund the previously mentioned joint venture with Berify and Chemular, as well as expanding and streamlining operations in our Malaysian manufacturing facility.” (Michael Wang)
- Ispire ONE delay and add-on messaging: larger MSOs and big brands require add-ons to existing filling machines, causing a 4–6 month revenue timing shift; smaller operators remain buyers of devices. Quote: “the process of designing the add-on capabilities… slowed down the revenue growth in the Ispire ONE family… impact our revenue by four to six months.” (Michael Wang)
- Breakeven timeline pushed to September quarter due to Ispire ONE timing and tobacco mix; Burna Boy co-branding expected to accelerate in the second half of the year. Quote: “we will also need to push the breakeven quarter out by another quarter… the Burna Boy collaboration will kick in this quarter, meaning the June quarter, and accelerate towards the second half of the year.” (Michael Wang)
- Margin discipline via “deal desk” process and Malaysia contributions supporting cannabis margin improvement; management anticipates continued gross-margin improvement on both cannabis and nicotine sides as the business scales. Quote: “we implemented a so-called deal desk process for a series of reviews to maximize gross margin through the process.” (Daniel Machock)
“We’ve entered into a joint venture with Berify and Chemular to leverage Berify's patented blockchain-based authentication technology and Chemular's industry-leading regulatory expertise to create a next-generation point-of-use age verification technology for e-cigarettes that will prevent underage access and improve user experience.”
— Michael Wang
“Gross proceeds from the offering will primarily be used to fund the previously mentioned joint venture with Berify and Chemular, as well as expanding and streamlining operations in our Malaysian manufacturing facility.”
— Michael Wang
Forward Guidance
Management elected to suspend formal revenue guidance for cannabis and e-cigarette segments given regulatory variability and execution risks, notably around Ispire ONE deployment. They indicated near-term uncertainty but expressed confidence in a path to profitability, with breakeven targeted for the September quarter. Key catalysts include: (1) Ispire ONE deployment with add-on capabilities now moving toward July+ shipments for MSOs and large brands, (2) Burna Boy co-branding contributions beginning in Q3–Q4 2024 and expanding in H2 2025, (3) ongoing PMTA submissions with Age-Verification technology estimated at up to $5M in fees, (4) Malaysia manufacturing ramp delivering higher gross margins as volume grows, and (5) Africa/Europe/UK/Middle East rollouts via BrkFst co-branding. Investors should monitor: (i) cadence of MSO onboarding for Ispire ONE and the profitability of add-ons, (ii) progression of PMTA approvals and the associated cash outlay, (iii) regulatory changes (e.g., UK disposable ban impact and 280E implications), and (iv) operating leverage as Malaysia facility scales. Overall, the company frames the outlook as constructive for long-term margin expansion and revenue growth, contingent on execution of partnerships and regulatory progress.