iPower Inc. Price & Performance (IPW)

And many of which are outside of our control. Our actual results and financial condition may differ materially those indicated in these forward looking statements. These forward looking statements are also subject to other risks and uncertainties that are described from time to time in the company's filings with the SEC including our annual report on Form 10 ks, which was filed with the SEC on 09/20/2024. [indiscernible] on any of the forward looking statements are being made only as of the date of this call. Except as required by law, the company undertakes no obligation to revise or publicly release the results of any revision to any forward looking statements. Our presentation today also includes certain non GAAP financial measures, including adjusted net income, EPS, supplemental measures of performance of our business. All non GAAP measures have been reconciled to the most directly comparable GAAP measures in accordance with the SEC rules. You'll find reconciliation tables and other important information in the earnings press release and Form eight ks we furnished to the SEC this afternoon. With that, would now like to turn the call over to iPower's Chairman and CEO iPower, [indiscernible] [indiscernible] Thank you, Kevin. And good afternoon, everyone.

We delivered strong results across all key financial metrics in our fiscal second quarter, while further enhancing in our Super Suite platform. Throughout the quarter, we continued to optimize operations, and the strength iPower presence across both our established and emerging sales channels.

We also remain focused on supply chain diversification by exploring new supplier relationships beyond our existing network. Reinforcing our commitment to build a new more resilient and adaptable infrastructure. Our super sweet platform is gaining further momentum as we drive sales growth for partners with innovative product catalogs. Additionally, The platform offers strategic insight that enhance our operational efficiency and competitive positioning in the market. Super Sweet's continued revenue acceleration underscores the value we bring through our expertise in supply chain management, fulfillment, and Merchandising. As we advance our pipeline of prospective partners, We are focused on scaling super suites capabilities and we anticipate it will grow as a larger share of our overall revenue This quarter, we took meaningful steps to strengthen Super Sweet by integrating critical functions from value added partners across logistics, merchandising and data analytics to optimize our service offerings. This enhancement reinforce our commitment to fostering a fully connected ecosystem where all partners collaborate towards a common goal that is driving sales in both U. S. And international markets. By creating seamless integration across the supply chain, we empower our partners with the tools to expand efficiently [indiscernible] and optimize their operations for long term success.

This collaborative approach positions Super Sweet as a leading comprehensive solution for today's We continue to make steady progress with our recently launched Super Sweet Supplier Portal as well. Refining its capabilities to enhance supplier collaboration and streamline operations. This platform is designed to optimize supplier interactions by providing data insights, facilitating access to multiple sales channels, improving shipment efficiency and enables seamless collaboration on merchandising strategies. As part of our ongoing innovation efforts, researching artificial intelligence applications to further enhance the platform's predictive analytics automate routine processes and provide smarter decision [indiscernible] Integrating these advanced features will enable us to foster stronger engagement between our suppliers, internal teams and the partners while driving greater efficiency across the supply chain.

We have always prioritized that prioritized diversifying our revenue streams As evidenced by the launch of Super Sweet and our continued expansion into new sales channels like AliExpress. Our approach to channel expansion is strategic. Focusing on strengthening our presence on our established channels like Amazon, where we have a proven sales track record and well defined operational processes. We at the same time, we continue to build our momentum on other channels like TikTok, which offer access to younger demographics and the growing social commerce space and Tmoo, which unlocks new revenue avenues for brand exposure and sales growth in rapidly expanding marketplaces. Our commitment to expanding across these diverse channels underscores our commitment to providing a comprehensive multi channel solution that enables our partners to reach and engage customers both in The U. S. And globally with greater efficiency and scale. At the operating level, our ongoing efforts to optimize our cost structure have delivered meaningful results as we continue to drive gross margin expansion and operating leverage in our business. We also have officially shuttered our legacy commercial hydroponics business as we are now focused on our core competency as a data driven technology driven, consumer products and services company.

As we have mentioned before, we are continuing to benefit from healthier supply chain which enables us to operate with lower level of inventory as lead times have normalized compared to recent years. As of 12/31/2024, we reduced our inventory level by approximately 12% compared to 06/30/2024. As we often say, we remain committed to enhancing operational efficiency and building a more resilient adaptable supply chain. A key part of the strategy is our ongoing effort to diversify our supplier network reducing dependency on any single region and strengthening our ability to navigate global supply chain fluctuations. Last quarter, We took a significant step forward by expanding our manufacturing base to Vietnam, reinforcing availability of our sourcing strategy for both customers [indiscernible] As we further diversify and become generating [indiscernible] we expect to see meaningful benefit including lower production and logistics costs. Our optimized supply chain will also be able to react more quickly. Using our exposure to elevated lead times [indiscernible] [indiscernible] will enable us to offer more competitive pricing strengthening our margins and position iPower for long term sustainable growth. We plan to continue identifying new supplier partnerships to further optimize our cost structure and ensure a robust flexible [indiscernible] that supports our growing business.

Looking ahead, we are well positioned [indiscernible] on our momentum and execute our strategic initiatives. We will continue expanding our sales channels while further investing in super sweet to enhance its capabilities and drive greater value for our partners. We are committed to strengthening every aspect of our supply chain, ensuring a resilient efficient infrastructure that supports evolving demand of e commerce supply chain management and logistics. By leveraging our deep expertise in supply chain optimization warehousing and merchandising well positioned long term growth, both power and our partners. We will stage out adapting to market that kind of capitalized potential M and A opportunities [indiscernible] to lead our end to end appliance solutions. Will now turn the call over to our CFO, Kevin Daxley, to review our financial results in more detail.

Thanks, Lawrence. Unless referenced otherwise, all variance commentary is in comparison to the year ago quarter. So I'll dive right into the fiscal Q2 results Total revenue in the fiscal second quarter of twenty twenty five increased 14% to 90,100,000.0 compared to 16,800,000.0 The increase was driven primarily by growth in our Super Sweet supply chain business as well as greater product sales to our largest channel partner. Gross profit in the fiscal second quarter of twenty twenty five increased to 8,400,000.0 compared to $7,300,000 in the same quarter of fiscal twenty twenty four, As a percentage of revenue, gross margin increased 40 basis points to 44% compared to 43.6% in the year ago period. The increase in gross margin was primarily driven by improved pricing through key supplier negotiations.

Total operating expenses for fiscal Q2 improved 22% to $7,700,000 dollars compared to $9,900,000 for the same period in fiscal twenty twenty four. The decrease in operating expenses was driven primarily by lower selling and fulfillment expenses related to our largest channel partner. Net income attributable to iPower in the second fiscal quarter improved to $200,000 or or $0.01 per share compared to a net loss attributable to iPower of $1,900,000 or a loss of $0.06 per share for the same period in fiscal twenty twenty four. Moving to the balance sheet. Cash and cash equivalents were $2,900,000 as of 12/31/2024, compared to $7,400,000 as of 06/30/2024. As a result of our debt paydown, total debt was reduced by 31% to 4,400,000.0 compared to 6,300,000.0 as of 06/30/2024. Laurence mentioned earlier, we continue to benefit from the optimization initiatives we implemented last fiscal year.

Reflected by another period of gross margin expansion and improved operating leverage. We've also reduced our debt obligations by nearly $2,000,000 compared to 06/30/2024. Reflecting our commitment to strengthening our balance sheet. These initiatives coupled with our accelerating growth in our Super Sweet business should enable us to execute on our goals ahead. This concludes my prepared remarks. We'll now open it up for questions. Operator? Thank you. Our first question comes from Thierry Maloud with Water Tire Research. You may proceed. Yes. Good afternoon, Kevin and Laurence. A few questions on the product sales.

In the fourth quarter, if we look at seasonality, I mean the main driver there would be would be the FANS business, right? Kind of a slow quarter for fan, but with the other product categories, are there any other seasonality factors? [indiscernible] like products that [indiscernible] [indiscernible] [indiscernible] Performed well a little better than the orders on the fourth quarter. I'm sorry, on the quarter end.

Maybe first quarter. But that's a smaller share of our business.

Okay. Maybe one more question on the product sales. You said you shuttered the commercial hydroponics business. I know you've been deemphasizing it and it's become a smaller and smaller percentage of your revenues, but why actually closing down that line of business rather than kind of letting it just letting it go. We are We are transitioning ourselves from a hydroponic center online retailer to a multi category retailer across multiple categories. With other categories growing much, much more meaningfully compared to hyponics. And we are also transitioning ourselves from a just online retailer to a services provider with a super sweet platform. And that's our goal to become a platform that connecting supplier chains, logistics, merchandising, and potentially financial services to for the sales to facilitate sales for onlineoffline channels. Here and globally. To as a steps to accomplish that goal. We have shuttered down the commercial It now no longer like [indiscernible] to our business revenue as they haven't it wasn't contributing any meaningful numbers anyway before like not long ago.

Okay.

Yes.

And Terry, it's Kevin.

Just to be clear, this is the commercial side. So this would be the business where we were selling product directly to commercial operators We still do have hydro as part of the product portfolio. And it's and we're selling that through our online channels. To consumers but it's the commercial piece that we've officially shuttered.

Okay. Okay, great. Moving on to Super Sweet, can you give us an update of how many partners you currently have? And then you talk about a strong pipeline. I'm kind of curious is there a limit in terms of many new partners you can onboard on a a quarterly basis or what's going to drive that business going forward? [indiscernible] I don't think the numbers of the partners [indiscernible] much What I can share with you is that we have last quarter, like December, it the Super Sweet side of business contributes about 20% of the sales. So it's growing a much, much it's growing fast.

Yes, maybe another piece of Another piece of data you can use, Terry, it's it's roughly $16,000,000 A year run rate So that's up pretty meaningfully from kind of the prior year.

Yes. Last year at this time, you were more on a [indiscernible] If I recall, dollars 2,000,000 or 2,000,000 annual run rate, right?

We might I think we were a little higher than that this time last year, but it was definitely well below where we are right now. So we're absolutely gaining progress or momentum with this with this approach.

Okay.

And is there any way to describe the pipeline of new partners or kind of just stay tuned and see see how things go. We [indiscernible] [indiscernible] like a number of partners that we are actively engaging at [indiscernible] onboarded continuously. What I can tell you is that we we are not part of [indiscernible] [indiscernible] Kind of summarize what he said.

Yes, that connection is breaking up.

Is it better now?

No, it's it's bad. Terry, how about we take the we can take that call in the follow-up call?

Okay. And I had just one more one last question. Kind of heard anecdotally that Amazon was kind of continuing to reduce their 1P relationship and kind of pushing some of the smaller players towards out of those that type of relationship. Can you like comment on that? And does it impact you in any way? I mean, the fact that you have a healthy relationship maybe even more attractive or Any thoughts around that whole dynamic there?

Just to re clarify, are you talking about like Amazon's [indiscernible] Okay. Yes, we don't get impact and actually that's probably good. Meaning that they are constantly resources to focusing all better servicing larger ones and that's actually I think it's a good good thing for us.

Yes. And yes, Terry, that dynamic is something that we've observed happening, probably probably starting six months to a year into the pandemic, [indiscernible] I think Amazon was pretty aggressive in inviting suppliers prior to that onto the first party platform but the pandemic I think, revealed some of the weaknesses that Yes.

Some of the vendors maybe with a little less operating history, etcetera, had in terms of execution and expectations that Amazon had set. And so I think this has been going on for some time. You are. Reiterating Lawrence's view, our view is that During that period, we We actually executed fairly well on the metrics Amazon [indiscernible] and anything, it has strengthened iPower relationship there. So In some ways, that can be a natural kind of market share opportunity for us Because I think you're better off in your ability to kind of consumer attention when you're selling to Amazon's OneP platform as opposed to trying to differentiate amongst the very, very large set of competitors on the third party platform. So we're encouraged by Great. Well, that does it for me. Thank you, guys.

Okay. Thanks, Terry. Thank you. I would now like to turn the call back over to Kevin Vasily for any closing remarks. Well, we want to thank everyone for dialing in today. We look forward to speaking with you again for our March earnings release and call and potentially at some conferences in the the near future. Thanks again and take care. Thank you. This concludes the conference. Thank you for your participation. [indiscernible] [indiscernible]