Solid Start to FY24; Demonstrates Several Avenues for Further Growth
iPower reported $26.5 million in revenue in 1QFY24, its highest quarterly revenue ever, compared with $26.0 million in 1QFY23. The company’s performance was helped by business generated by its SuperSuite supply chain partnerships, currently on a $7 million annual run rate. The company’s TikTok Shop sales also contributed to the solid sales results. Gross margin was very strong at 44.0% versus 38.4% in the year-ago quarter. Gross margin benefited from the reduction in high-cost inventory (caused by historically high shipping costs a year ago) and from a favorable product mix. EBITDA improved to about a $1 million loss. We expect further progress there in subsequent quarters. The company’s net debt was reduced to $4.3 million, compared with $8.1 million at the beginning of the quarter. Inventories of $15.1 million are back to a normalized level after several quarters of excess inventory. Hydroponic sales represented less than 25% of total sales, continuing the trend of strong growth in other product categories. This should continue as the SuperSuite business and the TikTok Shop channel continue to grow. iPower is well positioned ahead of the holiday season. The company has indicated an expectation of operating margin improvement in FY24. We will be focused on progress on this front in the coming quarters.
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