Ispire Technology Inc. reported its financial results for the three months ended September 30, 2024, revealing a decline in revenue and an increase in net losses compared to the same period in the previous year. Revenue for the quarter was $39.3 million, down 8.2% from $42.9 million in Q3 2023. The decrease was primarily attributed to a significant drop in sales in the U.S. market, which fell from $17.9 million to $9.7 million. In contrast, sales in Europe increased from $19.9 million to approximately $22.0 million, and sales to other regions rose from $0.06 million to approximately $3.8 million, largely due to increased sales in South Africa.

Despite the revenue decline, gross profit improved to $7.7 million, representing a gross margin of 19.5%, up from 16.0% in the prior year. This improvement was driven by a shift towards higher-margin products. However, total operating expenses surged to $12.9 million, a 67.5% increase from $7.7 million in Q3 2023. The rise in expenses was largely due to increased sales and marketing costs, which rose by 191.9% to $3.0 million, and general and administrative expenses, which increased by 48.5% to $9.9 million. Consequently, the company reported a loss from operations of $5.3 million, compared to a loss of $0.9 million in the same quarter last year. The net loss for the quarter was $5.6 million, or $(0.10) per share, compared to a net loss of $1.3 million, or $(0.02) per share, in Q3 2023.

On the balance sheet, total assets increased to $129.0 million as of September 30, 2024, up from $122.6 million at the end of June 2024. Current liabilities also rose significantly to $96.4 million, leading to a decrease in working capital from $16.6 million to $12.1 million. The company’s accumulated deficit widened to $(14.4 million) from $(8.8 million) in the previous quarter.

Strategically, Ispire established a new subsidiary, Aspire AME Electronic Cigarettes Trading LLC, in July 2024 to enhance its sales and marketing efforts in the UAE. Additionally, the company entered a joint venture agreement to create IKE Tek LLC, focusing on age-verification solutions for vapor devices in the U.S. market, with an investment commitment of $10 million.

The company continues to face challenges, including regulatory pressures and market conditions affecting its product lines. As of September 30, 2024, Ispire had cash and cash equivalents of $37.7 million, an increase from $35.1 million at the end of June 2024, indicating improved cash flow from operations.