Wetouch Technology Inc. reported its financial results for the third quarter and nine months ended September 30, 2024, showing a modest increase in revenue but a decline in profitability compared to the previous fiscal period. The company generated revenues of $11.5 million for the third quarter, a 3.6% increase from $11.1 million in the same period of 2023. For the nine-month period, revenues rose to $38.6 million, up 3.5% from $37.3 million in 2023.

Despite the revenue growth, gross profit for the third quarter decreased by 8.3% to $4.4 million, resulting in a gross profit margin of 38.4%, down from 42.9% in the prior year. The decline in gross profit was attributed to a 12.7% increase in the cost of revenues, which rose to $7.1 million, driven by higher material, utility, and labor costs. Operating income also fell to $3.5 million, down 18.6% from $4.3 million in Q3 2023. Net income for the quarter was $2.7 million, a decrease of 6.9% from $2.9 million in the same quarter last year.

For the nine-month period, net income dropped significantly to $5.9 million from $10.3 million in 2023, reflecting a 43.4% decline. The decrease in profitability was primarily due to increased operating expenses, including a 125% rise in selling expenses and a 10.5% increase in general and administrative expenses. Research and development expenses also surged by 113.1% to $129,808, reflecting the company's commitment to innovation.

Wetouch's cash position improved, with cash and cash equivalents increasing to $106.7 million as of September 30, 2024, compared to $98.0 million at the end of 2023. However, the company reported net cash used in operating activities of $0.7 million for the nine months ended September 30, 2024, a stark contrast to the $9.0 million provided in the same period of 2023.

Strategically, Wetouch completed a public offering in February 2024, raising approximately $10.8 million. The company also initiated a stock repurchase program in July 2024, allowing for the buyback of up to $15 million in common stock, which may impact stock price volatility and cash reserves.

The company continues to face challenges, including material weaknesses in internal controls over financial reporting, which management is working to address. Additionally, Wetouch's common stock began trading on the Nasdaq Capital Market under the ticker symbol "WETH" in February 2024, marking a significant milestone for the company.