Ispire Technology Inc. Q2 FY2026 earnings call

• Cost-cutting and customer quality rationalization efforts led to improved financials, including reduced net loss to $6.6 million in 2026 from $8 million in 2025.
• Focused on higher quality nicotine sector customers, shifting away from cannabis and slower-paying clients, improving accounts receivable.
• Progress in age-gating technology joint venture with iQTEP, with increased interest from major tobacco players in the US.
• Gmesh technology garnering attention from nicotine companies, with potential licensing/partnerships in the coming month.
• Malaysian manufacturing facility build-out on track to ramp up production in fiscal 2026, moving to 80 production lines from 6.

For the 2026, Ispire Technology Inc. reported total revenue of $20.3 million, a decrease from $41.8 million in the prior year. Gross profit was $3.5 million, down from $7.7 million. Net accounts receivable improved to $37.9 million as of 12/31/2025, down from $47 million at 06/30/2025. Revenue decline was due to strategic realignment to higher quality nicotine sector customers. Gross margins decreased to 17.1% in Q2 2026 from 18.5% in 2025, primarily due to product mix changes.

• Expect top-line growth, consistent cash flow, and bottom-line improvement in future quarters through fiscal 2026.
• Anticipate pickup in revenue generation as the company moves closer to profitability.

• International headwinds in the nicotine sector with e-cigarette volume decline from Chinese manufacturers.
• Regulatory uncertainties and potential impact of changes in China's e-cigarette manufacturing policies.
• Uncertainties related to forward-looking statements and factors that could cause actual results to differ from projections.

Q: Just on US Retail, Walgreens resuming vape sales, thoughts on category and shelf space allocation?

A: Walgreens resumption is part of broader demand for flavored e-cigarettes in retail. Retailers like convenience stores are desperate for flavored products, and with FDA authorization, legal retail adoption could surge but enforcement and solution need to align.

Q: On iQTEC, color on Charlie's partnership, production numbers, regions, and interest from others?

A: Charlie's deal involves initial volume of 2-3 million chips/month with goal of 10 million devices/month over 12 months, launching in 2-3 months. Interest from MSOs and large cannabis brands in age-gated products, but focus on nicotine sector for volume.

Q: On Chinese imports spike and state measures, color on spike driver and impact on illicit mix?

A: Spike in exports late 2025 due to China's upcoming VAT tax on e-cigarette export effective April 2026. US state measures to combat illicit market have had little impact on demand side.

Q: On iQTEC joint venture ownership, funding for expansion, risk of dilution?

A: Ispire provides day-to-day funding. With potential deals, may need additional working capital. Confident in technology's advantages over others, like token transmission avoiding consumer info theft.

Q: On country mandates for age-gating technology, specific countries and use of technology?

A: Working with regulators in Europe, Middle East, Asia. UK has strong support, but no country has implemented yet. Interest in technology outside US, with potential launch ahead of US.

Q: On new deal in coming weeks, context?

A: New deal has much greater strategic and financial impact than Charlie's partnership