Ispire Technology (NASDAQ:ISPR) reported fiscal first-quarter revenue of $27.5 million, down 9.3% from a year earlier but up 3.2% from the preceding quarter, as management pointed to improving margins and progress on receivables alongside plans to expand production in Malaysia.
The company posted a net loss of $6.4 million, or $0.11 per share, for the quarter ended September 30, 2026. That compared with a loss of $3.3 million, or $0.06 per share, a year earlier and a loss of $13.8 million in the fiscal fourth quarter.
European weakness and credit losses weigh on results
CFO Jay Yu attributed the year-over-year revenue decline primarily to reduced European sales. He said restrictions on vaping products, including disposable-product bans and changes in excise taxation, prompted distributors to manage inventory more cautiously and delay purchases.
Gross profit declined to $4.5 million from $5.1 million a year earlier, while gross margin fell to 16.2% from 17%. Yu said competitive pricing pressure lowered selling prices for some products. President Steven Przybyla said gross margin had returned to historical levels after inventory impairments and return charges in the prior quarter.
Total operating expenses rose to $10.6 million from $7.8 million a year earlier. Credit loss expense accounted for $4.8 million, compared with $1.8 million a year earlier and $9.2 million in the preceding quarter. Excluding credit losses, operating expenses were $5.9 million, down 3.7% year over year, Yu said.
Net accounts receivable stood at $13.5 million, down 80% from peak levels in the second quarter of fiscal 2025, according to Przybyla. He said the company aims to finish its receivables cleanup in fiscal 2027 and does not plan further write-downs or major credit loss accounting in subsequent fiscal years.
Przybyla also said Ispire received a $3.4 million judgment against a former customer in mid-October and has begun enforcement efforts. The company believes the judgment is fully collectible, he said.
Cash flow and Malaysia expansion
Ispire ended the quarter with $15.6 million in cash and cash equivalents, down from $19.3 million at June 30, and had $0.5 million in total debt. Operating activities used $1.6 million in cash during the quarter.
That figure included a $3 million payment toward aged payables owed to a related-party manufacturer, Przybyla said. Excluding the payment, he said, operating activities would have generated approximately $1.4 million in cash. Investing activities used $1.8 million, primarily for a $1.6 million payment related to Ispire’s IKE joint venture investment, Yu said.
Przybyla described fiscal 2027 as the first full year of vapor and nicotine pouch production at Ispire’s company-owned Malaysian factories. He said Malaysian production carries an approximately 25% tariff advantage over Chinese production for exports to the United States and could benefit from the planned end of China’s 13% export VAT rebate for e-cigarettes in April 2027.
In response to an analyst’s question, Przybyla said quotes for significant Malaysian orders were currently slightly higher than Chinese pricing, but he expects costs to be at least comparable as orders scale and supply chains develop. Customers are also considering stability, intellectual property protection and supply-chain diversification, he said.
Ispire is in the closing stages of a potential manufacturing and product-development deal with a regional Southeast Asian e-cigarette brand, Przybyla said. He hopes to announce the relationship in January 2027 and begin production shortly afterward. The company also plans to enter the nicotine pouch market through its joint venture with Jincheng Pharma and its Malaysian production license.
IKE pilot planned
Ispire owns 40% of IKE Tech, whose component premarket tobacco product application remains under review by the U.S. Food and Drug Administration. Przybyla said IKE is also discussing potential supplemental applications with multiple companies using its age-gating technology.
IKE launched version 2.0 of its platform in September. Przybyla said the updated system will be tested on certain Charlie’s Holdings PACHA disposable e-cigarette products, with an initial pilot expected through Smoker Friendly before the end of 2026. He said the companies expect the pilot results to support updates to a number of Charlie’s Holdings’ pending product applications.
Looking beyond the United States, Przybyla identified Southeast Asia and South America as regions where Ispire sees opportunities from the expansion of mid-sized regional brands.
About Ispire Technology (NASDAQ:ISPR)
Ispire Technology, Inc (NASDAQ: ISPR) develops, manufactures and distributes vaping technology and related products. The company serves both the cannabis and nicotine markets, offering hardware such as vaporizer devices, cartridges, batteries and disposable vaping products.
Ispire provides products under its own brands and also works with business customers through original equipment manufacturing and product-development arrangements. Its offerings are designed for use with cannabis oils, nicotine e-liquids and other vaporizer formulations, with an emphasis on device design, heating technology and manufacturing.
The company serves customers through international distribution channels, including markets in North America and other regions where vaping and cannabis products are permitted.
