Release Date: February 13, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• iPower Inc (NASDAQ:IPW) reported a 14% increase in total revenue for the fiscal second quarter of 2025, reaching $19.1 million.
• Gross profit increased by 15% to $8.4 million, with gross margin improving by 40 basis points to 44%.
• The company successfully reduced operating expenses by 22%, primarily due to lower selling and fulfillment expenses.
• Net income improved to $0.2 million, or $0.01 per share, compared to a net loss of $1.9 million in the same period of fiscal 2024.
• iPower Inc (NASDAQ:IPW) has made significant progress in diversifying its supply chain, including expanding its manufacturing base to Vietnam.

Negative Points

• Cash and cash equivalents decreased to $2.9 million as of December 31, 2024, from $7.4 million as of June 30, 2024.
• The company officially shuttered its legacy commercial hydroponics business, indicating a shift away from this segment.
• Despite revenue growth, the company still faces challenges in optimizing its cost structure and ensuring a robust supply chain.
• There is uncertainty regarding the impact of Amazon's changes in vendor relationships, although iPower Inc (NASDAQ:IPW) believes it may benefit from these changes.
• The company is still in the process of scaling its Super Suite platform, which requires continuous investment and development.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Sign with IPW.

Q: Can you provide insights into the seasonality of your product sales, particularly regarding the fan business and other categories? A: Historically, the hydroponics business performed well in the fourth quarter, but it's now a smaller share of our revenue. We are transitioning to a multi-category retailer, focusing on other categories that are growing more significantly. (Respondent: Unidentified_4)

Q: Why did you decide to close down the commercial hydroponics business instead of letting it phase out naturally? A: We are transitioning from a hydroponics seller to a multi-category retailer and services provider with our Super Suite platform. The commercial hydroponics business was not contributing meaningful revenue, so we shuttered it to focus on more promising areas. (Respondent: Unidentified_3 and Unidentified_4)

Q: Can you update us on the progress and potential of the Super Suite platform, including the number of partners and growth expectations? A: The Super Suite business contributed about 20% of sales last quarter, with a $16 million annual run rate, showing significant growth from the previous year. We have a healthy pipeline of partners and are continuously onboarding new ones. (Respondent: Unidentified_4 and Unidentified_2)

Q: How is the relationship with Amazon evolving, especially with their shift in focus from smaller to larger vendors? A: We are not impacted negatively by Amazon's shift. In fact, it benefits us as they concentrate resources on servicing larger vendors like us. Our strong execution on Amazon's metrics has strengthened our relationship, potentially offering us market share opportunities. (Respondent: Unidentified_3 and Unidentified_2)

Q: What are the financial highlights from the fiscal second quarter of 2025? A: Total revenue increased by 14% to $19.1 million, driven by growth in the Super Suite business. Gross profit rose by 15% to $8.4 million, with gross margin improving to 44%. Operating expenses decreased by 22%, and net income improved to $0.2 million. (Respondent: Unidentified_2)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.