Key Points:
1.Income and profit under pressure: In the third quarter of fiscal year 2025, revenue decreased by 12.7% year-on-year to $26.2 million, with a gross profit margin of 18.2%; net losses widened to $10.9 million. Cumulative revenue for the first nine months decreased by 6.3% year-on-year.
2.Adjustment of product structure affects gross profit: Quarterly gross profit declined year-over-year, primarily due to an increase in the proportion of low-profit products; however, the gross profit margin for the nine-month period rose to 18.8%, benefiting from an increase in the proportion of high-profit products.
3.Manufacturing base relocated to Malaysia: To address geopolitical risks and control costs, the company is moving its daily operations to Malaysia, with an expected annual savings of $8 million in operational expenses.
4.Global Compliance and Regulatory Framework: Obtained temporary manufacturing approval for nicotine products in Malaysia, with plans to obtain official federal-level licensing; partnering with IKE Tech to submit a PMTA component application to FDA based on blockchain age verification.
5.Product launch and brand expansion: Collaborating with Raw Garden to introduce an all-in-one cannabis vaporization device, Sprout™.
On May 12th, Ispire (NASDAQ: ISPR) released its financial performance for the third quarter of the 2025 fiscal year, which ended on March 31, 2025.
In the third quarter ending on March 31, 2025, Ispire reported revenue of $26.2 million, a decrease of 12.7% compared to the same period last year when it was $30 million. Gross profit also dropped by 21.3% year-on-year to $4.8 million, lower than the $6.1 million reported in the same period last year. The gross profit margin decreased from 20.4% to 18.2%, primarily due to changes in the product mix resulting in lower profitability from products sold during the reporting period. Operating expenses increased from $11.8 million to $15.4 million. Net loss widened from $5.9 million to $10.9 million, with a loss per share of $0.19 compared to $0.11 for the same period last year.
During the nine-month period ending on March 31, 2025, cumulative revenue totaled $107.4 million, a 6.3% decrease from $114.6 million in the same period last year. The decline in revenue was mainly due to decreased sales of e-cigarette products in North America and lower sales in the Asia-Pacific region. Gross profit was $20.2 million, with a gross margin of 18.8%, higher than last year's $19.2 million and 16.8% gross margin. This growth was primarily attributed to changes in the product mix, selling more high-margin products. Operating expenses amounted to $43.4 million, resulting in a net loss of approximately $24.5 million, or a loss of $0.43 per share.
Ispire's Co-CEO Michael Wang stated that the progress made in the third quarter shows that the company has made significant advancements in transferring its manufacturing operations to Malaysia, effectively reducing production risks in the current geopolitical environment. Daily functions have been shifted to the Malaysian campus, and it is expected that this will result in an annual reduction of $8 million in operating expenses.
He also mentioned that the company has obtained a temporary license to produce nicotine products in Malaysia, with expectations of receiving the final license within the next few months. Upon receiving the license, Ispire will have the first federal nicotine production license in Malaysia. Recently, together with joint venture partner IKE Tech, they have submitted an innovative ENDS product utilizing blockchain technology for age-gated PMTA components to the FDA.
"In the third quarter, we were pleased to collaborate with Raw Garden to launch Sprout TM. This advanced all-in-one cannabis vaporization device was designed with a focus on purity and safety, showcasing our commitment to consumer well-being."
It is worth noting that Ispire’s fiscal year begins on June 30. Accordingly, the quarter ended September 30, 2024, is reported as the first quarter of FY2025; the quarter ended December 31, 2024, as the second quarter; and the quarter ended March 31, 2025, as the third quarter of the fiscal year.
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