2QFY24 Review - Lean and Toward Profitability?
iPower reported 2QFY24 revenue of $16.8 million versus $19.3 million a year ago, driven primarily by continued inventory tightening at its main online retail partner. Nevertheless, gross margin improved to 43.6% from 41.4% Y/Y, driven by a favorable product mix, lower warehouse costs, and service revenue. The secular inventory tightening, following the supply disruptions of 2022, has now run its course, and might have been exacerbated this quarter by iPower’s main retail online partner end of the year considerations. EBITDA remained negative (-$2.5 million) despite lower operating expenses. Nevertheless, the company reiterated its goal of being profitable at some point in 2024 as it sees attractive growth opportunities from these levels. Positive operating cash flow allowed the company to further reduce net debt, which now stands at $3.6 million versus $8.1 million at the end of the previous fiscal year. Product mix continues to be primarily in-house (about 90%), with hydroponics at around 25% of total sales, continuing iPower’s evolution toward a broader and diversified product offering. iPower continues to expand its distribution channels with progress reported by both Lowe’s and Home Depot. The company will initially sell its products on these new partners’ online channels and will then see its best-selling product gaining shelf space in stores. The company did not add to its two SuperSuite partners although it might be close to signing a third partner. iPower’s continued positive experience on the TikTok Shop has also become an additional selling point for its SuperSuite business, in addition to its supply chain, warehousing, and merchandising expertise.
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