Upbeat vape growth lifts Ispire revenue in Q2

Ispire Technology Inc. (NASDAQ: ISPR) reported decent growth in its fiscal second quarter ending Dec. 31, 2023, despite facing rising operational costs and a deepening net loss.

The Los Angeles-based vape maker saw its revenue climb 30.7% to $41.7 million for the quarter, up from $31.9 million in the same period the previous year. That increase was driven by strong sales in both its tobacco and cannabis vaping products, with tobacco vaping contributing $22.1 million and cannabis vaping products adding $19.5 million.

However, the firm’s financials faced challenges as gross profit marginally rose by 24.1% to $6.4 million, with gross margin slightly decreasing to 15.3% from 16.1% year-over-year. Operating expenses saw a hefty jump, more than doubling to $10.3 million from $4.8 million, largely due to heightened marketing efforts and the costs associated with maintaining its manufacturing plant in Malaysia and navigating its public company status.

Consequently, Ispire reported a net loss of $4 million, a substantial increase from a minor $100,000 loss reported in the same quarter the previous year.

In their statements, Ispire’s leadership focused on the company’s initiatives and expansion efforts.

“This quarter proved to be quite pivotal for not only our product expansions but also our business operations,” CEO Michael Wang said in a statement. “As we further execute on our growth strategy, we continue to expand our footprint in existing and new markets, which helps to grow our diverse customer base.”

That includes obtaining ISO and GMP certification for the firm’s Malaysian facility and pursuing Pre-market Tobacco Product Application approval in the U.S.

Wang also pointed to a notable partnership with Nigerian Afrobeats star Burna Boy to promote their BRKFST-branded products as a way to strengthen the company’s global brand presence.

CFO Daniel Machock cited growth in cannabis vaping hardware sales, which saw a 149% increase to $19.5 million.

Looking ahead, Ispire projects significant growth for its cannabis and tobacco vaping products in fiscal 2024, with revenue for cannabis vaping products expected to increase by 100% to 125% and tobacco vaping products by 33% to 47% from fiscal year 2023.

As of December 31, 2023, Ispire reported having approximately $17.5 million in cash and cash equivalents, with a slight decrease in working capital from $28.8 million in the previous quarter to $24.8 million.